Memorandum by the Under Secretary of State (Welles) to the Liaison Officer (Wilson)3
Mr. Orme Wilson: The Minister of Paraguay came to see me this morning, accompanied by his two officers. I had a very satisfactory talk with them, particularly with regard to general inter-American policy and with regard to the policy of the United States vis-à-vis [Page 474] the Axis powers. I was gratified to have categorical statements made to me by the two officers that the Paraguayan Army is 100 percent in accord with the United States in its determination to prevent any German aggression against the Western Hemisphere and that there was no pro-German sentiment of any kind within the Paraguayan Army. I was further informed by the officers that, while there was a certain amount of Axis propaganda going on among civilian elements of Paraguay, the Army was determined to stop this and had already taken some effective measures in that sense. (I wish you would draft some letter for me to send to Wesley Frost4 communicating this to him.)
In brief, I think that you should insist that the War Department expedite immediately a satisfactory arrangement with the Paraguayans covering their requests along the general lines of the memorandum attached.5 It is of course imperative that the Paraguayan officers and the War Department first agree upon the list of matériel and the time schedule for deliveries before the Lend-Lease people can take up the question of compensation. When this latter stage is reached I wish you would personally see that the most elastic provisions possible be included with regard to compensation. I said this morning that anything like a 99-year period was of course impossible for us to accept but that we wished to recognize their present economic situation to the fullest extent in any arrangement that might be made. As a practical question, it would seem to me that compensation could be agreed upon on the basis of the delivery to us over a period of years of quebracho in bulk or in extract and, barely possibly, canned meat for defense needs. Naturally all these questions will have to be investigated in the fullest detail but I think that general line would be the only one which would be practical, since I know you are well aware of the financial and economic situation of Paraguay. Please keep me informed every few days of the progress which is being made in this matter.