834.51/8–1745: Telegram

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

429. It will be noted from my despatch 1011 Aug 951 that a near crisis has developed here with ref to percentage of Paraguayan budget which will be devoted to armed forces. Minister of Finance maintains that unless President52 substantially accepts his view that needed budget reductions must be at expense of armed forces rather than of civilian agencies or foreign creditors he will insist that his resignation, already tendered, be accepted. If it is accepted probability is he will be succeeded by a person53 more sympathetic to continued demands of armed forces for what present Minister of Finance considers excessive percentage of govt revenues.

I have been urging Minister of Finance personally and confidentially not to abandon his post at this time but it would be helpful to me, in my own thinking on the subject, if Dept could give me an idea of what steps if any are contemplated to meet what probably is a general problem throughout American Republics arising out of unusual budgets devoted to armed services during war and to desire of armed services to retain their favored position at expense of civilian agencies which have insufficient funds adequately to perform their functions. It seems to me that extent of our economic cooperation with individual American Republics in the future should be related to extent to which those republics economically make use of their own ordinary revenues. If I could say this confidentially to President or to Minister of Foreign Affairs within next few days it might strengthen the hand of civilian elements here who are endeavoring to prevent continued military domination of the govt during peacetime. It might of course precipitate a crisis in which the military would win out but in event the military have the strength that such a victory would indicate, it is probably just as well that we should determine this at an early date and adjust our policy accordingly.

Dept may wish to indicate to me whether general problem raised herein may be treated at October meeting of Ministers of Foreign Affairs in Rio54 or at Washington economic conference.55 Please inform me also whether Inter-American Financial and Economic Advisory Committee has transmitted urgent request for information [Page 1305] on economic, financial and monetary situation of Govts of the American Republics provided for in paragraph 1 of resolution 17 of Mexico City Conference.56

  1. Not printed.
  2. Gen. Higínio Morínigo.
  3. The Minister’s resignation and the succession of the Minister for Foreign Affairs as Acting Minister of Finance was reported by the Ambassador in his telegram 437, August 22, 1945, not printed.
  4. For documentation on the postponement of this Conference, see pp. 154 ff.
  5. For documentation of this proposed Conference, see pp. 172. ff.
  6. Pan American Union, Final Act of the Inter-American Conference on Problems of War and Peace, Mexico City, February–March, 1945 (Washington, 1945), p. 54; for documentation on the Conference, see ante, pp. 1 ff.