740.34112A/73
The Ambassador in Paraguay (Frost) to the Secretary of State
[Received April 20.]
Sir: …
. . . . . . . . . . . . . .
Among the special factors which at the outset limited the rendering effective of the Proclaimed List in Paraguay may be mentioned the following:
- (a)
- From 20% to 30% of the commercial business of Asunción was in the hands of German or Italian firms when the List was instituted in July 1941, and perhaps 10% more in the hands of Argentine firms. As to certain essentials, such as hardware and drugs, the percentages were very much higher.
- (b)
- The German population of Paraguay has been estimated carefully by our Legal Attaché at 26,000 in a total of 1,000,000. In and around Asunción it has been some 5,000, in a total population of about 120,000. (In 1941 there were less than 30 American citizens in Paraguay, [Page 1496] and less than 300 British; with virtually none of these engaged in commercial effort, and very few resident in Asunción.) The Germans and Italians constitute the most useful foreign element here,—respected and liked because of their intelligence, efficiency and character. Paraguay has deeply craved good immigrants, and the Germans and Italians have been the only desirable races to arrive and settle here. When the present Government took power, and was still precarious, they and their friends were its promptest supporters, partly because of its authoritarian ideology.
- (c)
- The proximity of Argentine sources of supply for the manufactured and other goods handled by the large German and Italian firms here enables the latter to maintain full stocks without recourse to English or American supplies. (In 1941 the Argentine supplying of the local Proclaimed List firms was simply a natural continuation of long established relationships. In recent months, since the Argentine Government has shown itself anti-American, permission for Argentine goods to be exported to Paraguay may conjecturably have been somewhat more freely obtainable by Listed firms in both countries than by non-Listed firms.)
In view of the foregoing conditions,—German ascendency in certain military and governmental circles, German predominance in trade, German strength in the general life of the country, and German aid from Argentina,—this Embassy has at all times been forced to proceed cautiously in its endeavors to render the operation of the Proclaimed List effective.
In drawing up the original List it was decided to include first of all those Axis firms here whose members were most definitely known as participating in the Nazi and Fascist activities, so that the local Government and public could see that the listings were not made capriciously or without justification. My British colleague here concurred in the view that it was inadvisable at once to broaden the List to a degree which might be thought gratuitous. He was also in agreement that it should not be expanded in such wise as to dislocate local commercial and private trade conditions too abruptly and disturbingly. (At this juncture the Embassy had no Commercial Attaché, and a total of only two secretaries, both very junior. The List-building had to be handled along simple lines.)
As a result of this policy of carefulness the Paraguayan Government, which at that time (July 1941)72 had not decided its general policy on the war, and was generally regarded as inclining toward the Axis, took no formal umbrage at the creation of the List. It was induced by me to recognize, even before Pearl Harbor, that measures of this type are natural from the standpoint of the practical interests and necessities of the United States and of Great Britain. The Foreign [Page 1497] Minister had for years been the attorney of the largest Italian firm which I placed on the List, and he at once discussed the case with me in detail. Our conversations ranged over many aspects of the war, and gave opportunity for justifying rationally our point of view on the Proclaimed List. They were successful to such an extent that when the firm in which he was interested declined to sign an undertaking73 (about December 1941) he informed me that he fully accepted and sympathized with our objectives and methods.
From that day forward Dr. Argaña was our ally in seeing that no complaints from Axis firms, many of whom have had excellent relations within the Morínigo régime, should be taken up by his Government. He was handicapped by the need for defending his position in the Government, but at least secured absence of interference with our efforts.
A Decree-Law exists (it was designed to combat hoarding) under which any firm in Paraguay is forced to sell to any purchaser any commodities which it has on hand. A Listed firm seeking to buy goods, even American goods, on hand in a non-Listed firm thus has the legal right to institute suit against the latter to compel sale. This could mean that the Listed firms could secure supplies of Allied goods. For weeks and months we received rumors that such suits were about to be brought,—which would have undermined our efforts. They were not brought, fortunately; and it seems clear that the German and Italian merchants were led to feel from the attitude in governmental circles that any attempts of theirs along this line would be unsuccessful. In other words the Government, beyond doubt, has informally protected us from the subversion of our Proclaimed List system which otherwise under its own Decree-Law could have been wrought.
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Respectfully yours,
- The proclamation authorizing the Proclaimed List of certain Blocked Nationals was issued by President Roosevelt on July 17, 1941. For texts of the proclamation and press release, see Department of State Bulletin, July 19, 1941, p. 41.↩
- A term applied to a promise to have no business dealings with persons on the Proclaimed List.↩