The Minister in Paraguay (Howard) to the Secretary of State

No. 196

Sir: In a conversation with Dr. Stefanich, Minister for Foreign Affairs and ad interim Minister of War and Marine this morning, he stated that during his recent visit here, Lieutenant Colonel Oscar Moscoso, representing the Bolivian Government in the exchange of prisoners, requested an interview with President Franco. Dr. Stefanich stated that he inquired the purpose of the interview and was informed that it was very confidential going on to explain that Colonel Moscoso suggested that the new Government in Bolivia desired to acquire prestige with the populace of that country and suggested that the international road leading north from Villa Montes to Santa Cruz and now under Paraguayan control be placed under Bolivian control, thus giving the new government the desired prestige. Dr. Stefanich stated that the Government here in Paraguay was in somewhat the same situation as the new Government in Bolivia and was not desirous of losing any prestige and could not therefore consider the suggestion. He stated however that orders were given, and Colonel [Page 52] Moscoso informed thereof, to the effect that the best and most tactful officers and troops would be utilized in the control of said road so as to facilitate Bolivian use thereof and avoid any annoyances or cause of complaint.

Speaking of Paraguayan troops in the Chaco, he stated that these forces comprised between 1,000 and 1,100 men.

Dr. Stefanich also stated that Colonel Caballero Alvarez in command of the Paraguayan forces in the Chaco is now here and had brought an invitation from General Peñaranda for President Franco to meet President Toro of Bolivia at Villa Montes to discuss all matters pending between the two countries. He stated that upon the return to the Chaco of Colonel Caballero Alvarez he would deliver a reply to General Peñaranda, that the reply had been drafted and would be to the effect that Paraguay received the suggestion in the most cordial spirit but that the ground should be properly prepared for such an interview, that the subject matter of the interview should be clearly defined and the interview only held with the knowledge and approval of the Peace Conference.

Dr. Stefanich also stated that Colonel Moscoso had made vague and veiled references to the possibility that the payment to be made to Paraguay on the completion of the exchange of prisoners might be delayed. He stated that he has informed Colonel Moscoso that Paraguay was scrupulously complying with the Protocol with reference to the exchange of prisoners and that he could see no possible grounds for Bolivia to protest such payment.

Respectfully yours,

Findley Howard