833.51/1024: Telegram

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

200. Your 341, March 25, 4 p.m. The Department has examined Articles 5, 8 and 9 of the Agreement with officers of the Bank who inform the Department as follows: Article 5 establishes mechanism for making advances and is procedure heretofore adopted by Bank for public works contracts. Article 8 is required by United States legislation. Article 9 is likewise a standard clause which appears in all contracts due to the necessity Bank has of being able to report on manner in which public funds which it has advanced under loan agreements have been used. These provisions appear in all contracts of similar nature signed by Bank with other countries.

The Embassy’s attention is called especially to the following two points: (1) The Agreement of February 4 signed with Dr. Guani was first taken up with him in both English and Spanish and each clause explained in the light of adopted procedure of long standing or legal requirements. (2) The Bank is an official institution of this Government handling public funds and it must at all times be in a position to render full accounting of funds advanced by it. Furthermore it should be pointed out that the terms of no other loan agreement of like character signed by the Bank with any other country are more liberal or favorable to that country than those contained in the Agreement with Uruguay.

In view of instructions to Uruguayan Ambassador in Washington from his Government the Department believes that it will be more satisfactory for all concerned to have matter resolved through him with the Bank and the Department in Washington.