810.20 Defense/1028b: Telegram

The Acting Secretary of State to the Minister in Paraguay ( Frost )

53. The Department this morning handed to the Paraguayan Minister a draft of basic agreement for the lend-lease program of transferring military matériel to Paraguay. The principal financial provisions are as follows: Paraguay is to receive a total of $11,000,000 of war and navy matériel of which it is expected $2,000,000 of army matériel and $1,000,000 of navy matériel will be transferred during the fiscal year ending June 30, 1942. This delivery date is subject to change if broad defense considerations so require.

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With respect to repayment, Paraguay is expected to pay $50,000 in each fiscal year until 1947, making a total of $300,000 to be repaid prior to June 30, 1947. In consideration of the broad objectives of the program and of certain very general economic concepts, the entire obligation of Paraguay to the United States would be considered discharged by such payments.

For your strictly confidential information, the terms being offered Paraguay are the most favorable being offered any of the American republics. The amount of matériel to be delivered is relatively large compared to the amounts to be delivered to other nations, and the repayment specified is very low.

The Department hopes to transmit to you information regarding the progress of Export-Import Bank arrangements in the very near future.