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

No. 1333

Sir: Referring to my telegram No. 422 of July 31 (1943) 3 p.m.,50 I have the honor to report that Foreign Minister Argaña and Finance Minister Espinoza still insist that during their visit to Washington and New York last June the Under Secretary of State promised on behalf of the American Government to send experts to Paraguay promptly to assist in preparing plans and specifications not only for a cement industry here but also for jute, citrus concentrates, cold storage and dried milk enterprises.

The three cement experts mentioned in the Department’s telegram No. 358 of August 25 (1943) 10 p.m.50 have arrived, and the Paraguayan authorities are impressed by the competence and sincerity of these advisers. The estimate made by Mr. Hillegass that definite plans cannot be begun for three or four months, and that some eighteen months would be necessary, after the plans are completed, before even a small plant could be placed in operation, is of course a disappointment; but on the whole the effect of the presence of these gentlemen is highly favorable, and the Paraguayan authorities are sincerely appreciative.

The two Ministers mentioned, however, profess an inability to understand the situation with regard to the experts on the other four proposals. When Dr. Argaña took the matter up with me on July 30th, [Page 695] my own recollection of the statements made by the Under Secretary was in accord with this, and I consequently did not raise the question of accuracy. This has handicapped me in subsequent conversations. At the time of the interviews at Washington and New York I had been traveling and living with the Paraguayan group long enough so that I listened to the conversations in the Department and the Waldorf-Astoria Hotel almost with Paraguayan ears. I thus understood how pleased they were, after the rather adverse statements made by Mr. Collado, when the Under Secretary added very graciously that of course the American Government would be glad to send experts to aid them in surveying the possibilities on the various industries, and then added in response to a question that these experts would reach Paraguay probably within three or four weeks. In my association with the Paraguayan party during the fortnight which followed I heard them refer several times to the prospective advent of the experts, which seemed to them to indicate that our Government intended to interest itself closely in their economic aspirations rather than merely to furnish funds. It was therefore not a surprise, although Dr. Espinoza had not informed me of his intentions, when he requested from the Under Secretary in the Waldorf-Astoria Hotel on June 22nd a confirmation of this undertaking which had impressed him and his associates so agreeably. The Paraguayans present on that second occasion all understood, as did I, that the Under Secretary renewed the undertaking and indicated that probably the experts could be sent to Paraguay almost immediately.

It is of course now evident that both the Paraguayans and myself misunderstood the statements in question; and I have pointed out to them repeatedly that there is no reason why they should not themselves employ American experts for the purposes in question. They admit that from the standpoint of expenditure the matter is not of substantial consequence, as the cost of securing experts for the purpose in question would be only a few thousand dollars; but they unquestionably feel that the misunderstanding with regard to the statements made to them may possess a good deal of significance, and also that it indicates that the interest of our Government in their proposals to promote new production in Paraguay is less than they had believed and hoped.

Another member of the Paraguayan Cabinet has now informed me that at a Cabinet meeting early this week Finance Minister Espinoza dealt with this matter at some length and in a way to affect adversely the view of his colleagues with regard to the desire of the United States to tone up Paraguay’s economy. I understand that Foreign [Page 696] Minister Argaña, although, more discreet in his tone, shared the general point of view thus expounded.

I am doing everything in my power to attenuate the feeling which has arisen, and to instill a rational spirit here with regard to Paraguayan plans for new lines of production. I am particularly emphasizing the importance and friendliness shown by the Department’s willingness to arrange for the fabrication in the United States at this time of machinery and plant equipment. As the weeks and months pass an understanding will grow here of the helpfulness which our Government is manifesting.

Respectfully yours,

Wesley Frost
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