810.20 Defense/1015: Telegram

The Acting Secretary of State to the Ambassador in Uruguay (Dawson)10

156. Your 281, July 3, 4 p.m. The Department on July 8 handed to the Uruguayan Minister a draft of basic agreement for the lend-lease program of transferring military matériel to Uruguay. The principal financial provisions are as follows: Uruguay is to receive a total of $17,000,000 of war and navy materiél 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.

With respect to repayment, Uruguay is expected to pay $1,300,000 in each fiscal year until 1947, making a total of $7,800,000 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 Uruguay to the United States would be considered discharged by such payments.

The Minister stated that he believed that Uruguay would not need the full $17,000,000 originally provided for, and that he would request his military expert to prepare a list which would probably amount to $6,000,000 or $7,000,000. He was informed that of course the United States did not wish to force additional arms upon Uruguay, and that the matter could be further discussed. In reply to his question, he was informed that the amounts to be repaid were based on an appraisal of Uruguay’s economic outlook; that they were in no way proportionate to the amount of arms to be furnished, which was based purely on defense and strategic considerations; and that if the total were reduced markedly, the repayment proportions would undoubtedly be increased proportionately.

The Minister stated that he fully understood the situation, indicated his gratification at the generous treatment to be accorded Uruguay, and stated that he would inform his government in general terms only, not transmitting any figures until he had taken up with the Department a specific list of arms in the much lower total amount.

  1. The Legation in Uruguay had been raised to the rank of Embassy earlier in the year.