834.51/354: Telegram

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

81. Your 130, August 19, 5 p.m. The Department is gratified that the Paraguayan Government finds the loan proposals of the Export-Import Bank acceptable. With respect to the Finance Minister’s first point, the credits totaling $900,000 have been approved by the Bank in two instalments after careful consideration, and the amount cannot be changed without a new consideration by the Bank, which the Department is not now prepared to request. As to the second point, the Lend-Lease Act permits only the transfer of physical [Page 494] goods essential for defense, and does not permit local expenditures for labor and materials which would be involved in the construction of roads. Local expenditures would be such a preponderant part of the cost of feeder roads that consideration of assistance under Lend-Lease for this purpose is believed impracticable.