The Ambassador in Uruguay ( Dawson ) to the Secretary of State
[Received January 10—1:06 p.m.]
38. For Duggan. Coincidently with the receipt of your letter of January 2, Guani mentioned to Spaeth and to me a tentative proposal under which he would take up in Washington the question of a 50 million dollar loan for a 5-year public works program.
On being apprised of the contents of your letter and our doubts concerning a 50 million project, he said that he would not present the 50 million proposal but would like to discuss in Washington the possibility of obtaining later as needed a complementary loan or loans.
Guani recognized gracefully that the sum of 7½ millions is even somewhat in excess of the 10 million pesos which President Baldomir [Page 731] suggested to me as necessary. He said however that the President had underestimated the country’s needs and had considered the matter from the viewpoint of the outgoing rather than the incoming administration. He said that he would discuss the situation with President-elect Amezaga.
This morning Guani told me that Amezaga appreciates our willingness to assist and understands fully that the figure of 7½ million is in accordance with Baldomir’s suggestion but that he feels that it is inadequate and hopes that considerably more can be obtained. Guani mentioned 25 millions which might be made available in two installments.
Spaeth and I both feel that in order to maintain Uruguay’s fiscal and economic situation and also for the domestic and international political effect, the loan contract to be signed by Guani in Washington should be for a larger sum. We recommend that the amount of the loan to be granted immediately be substantially increased and that in addition some formula be worked out which, without involving us in a firm commitment, will indicate our willingness to give due consideration to Uruguay’s future needs up to some specific sum. Spaeth suggests something along the lines of the arrangement which he understands was made with Bolivia.49
Guani tells me that he will bring with him an authorization to sign a loan contract ad referendum to be submitted for approval to the Council of State when it meets in February.
[An agreement was signed on February 4, 1943, between the Government of Uruguay and the Export-Import Bank under which the latter opened a credit of $20,000,000 in favor of the former.]