The Chargé in Uruguay (Chapin) to the Secretary of State
[Received 7:36 p.m.]
200. Department’s telegram No. 88, May 17, 9 a.m. [p.m.] Yesterday I again discussed with Guani the Rio Negro Hydroelectric Project and informed him that the Department would require copies of all contracts and commitments entered into with the German Syndicate before making final decision. I said that although the Department had not yet received my last two despatches especially the one transmitting the memorandum73 clarifying the relationship between the Uruguayan Government and the German Consortium, the Department had indicated that it would not feel inclined to assist in the matter until “German influence had been eliminated entirely.”
Guani said that if by “influence” the United States meant “participation” what [it was] asking was in effect a total rescission of the German contract and that although such a course was possible theoretically in the case of “unreasonable delay” the German Government [Page 601] had already made clear what interpretation is placed on the words “unreasonable delay” in the cancellation clause and had made it known that a rescission of the contract now would be considered by the German Government as a direct affront—a step which Uruguay was obviously not prepared to undertake.
The whole interview was friendly and although Guani professed that the fulfillment of a separate contract by an American firm would not materially assist the German interests, it was clear to me that he realized that his arguments were not very forceful. In conclusion he reiterated that the turbo generating equipment was of vital interest to Uruguay, again expressing the hope that the Department might be disposed to accept the Uruguayan Government’s contention that German influence would be eliminated from the proposed American contract and to assist Uruguay after it had had an opportunity to examine the memorandum transmitted with my despatch 970, May 17.74