The Ambassador in Paraguay (Frost) to the Adviser on Political Relations (Duggan)

Dear Larry: Two things keep pressing on my consciousness here,—(a) the implementation of the Paraguayan program for using the last $1,000,000 of the second Exim Bank $3,000,000 loan, and (b) the absolute lack of Lend-Lease matériel for the Paraguayan Navy.

(a) When we were in Washington the Paraguayans requested Exim aid under the new loan in setting up industries to produce cement, jute products, and citrus concentrates; and also asked if they could be helped to get some cold-storage plants going (which the country obviously needs). Collado’s44 replies at a conference presided by Mr. Welles and attended by Phil Bonsal45 and myself, gave varying degrees of encouragement and discouragement; but Mr. Welles promised that experts would be sent at once on at least three of the four proposals to make surveys. He indicated that they would reach Paraguay almost immediately. Subsequently, Finance Minister Espinoza asked Mr. Welles at New York in the presence of Argaña, Morinigo and Valázquez,46 when the experts might be expected, and the indication was again given that it would be within a very short time. As soon as I returned to Asunción Dr. Argaña got after me about the failure of the experts to arrive; and on telegraphing to [Page 693] the Department I was informed that only one expert had been promised (i.e. for cement) and that a suitable person had not been located. (See the Department’s telegram No. 330 of August 7, 7 p.m.)47 This reply has of course not had a good effect on Argaña and Espinoza. They suspect that the Export-Import Bank is so thoroughly committed to the theory that nothing can be done in Paraguay except roads that it may not be trying very hard to help out on any of the other projects. I feel that the Export-Import Bank does realize now that new industries and a way of communication to Brazil must be furnished to Paraguay. I wrote very briefly to Bonsal last week to see if his memory checks mine on the statements given to the Paraguayans in Washington about the arrival of the experts to make surveys. I don’t know whether you would wish to have this matter in mind.

[Here follows a paragraph on the failure of the United States to provide any Lend-Lease navy material.]

With cordial regards,

Sincerely, as ever,

Wesley Frost
  1. Emilio G. Collado, Special Assistant to Under Secretary of State Sumner Welles.
  2. Chief of the Division of the American Republics.
  3. Celso R. Velásquez, Paraguayan Ambassador in the United States.
  4. Not printed.