Memorandum by Mr. Louis J. Halle of the Division of American Republics Analysis and Liaison 57

The attached draft telegram to Asunción58 raises fundamental questions with respect to this Government’s commitments on non-intervention.

Ambassador Beaulac’s action in urging the Paraguayan Minister of Finance not to resign, together with other actions in the field of domestic political and economic developments, might be regarded as intervention of a sort that the American republics agreed to eschew at Montevideo in 193359 and Buenos Aires in 1936.60 The somewhat similar actions that our representatives have taken in Argentina during the past couple of years may be justified by the special situation existing there in which the Argentine Government was cooperating in some degree with the enemy and impeding the war-effort of the American republics. However, this element of intelligence with the enemy apparently does not enter into the Paraguayan picture, where our concern is based on the undemocratic character of the local government.

The attached draft telegram authorizes the Ambassador to inform the authorities in Asunción that the Department is concerned with the use by the Government of a disproportionate share of the national income for the maintenance of the military establishment. I suggest that we cannot properly have such a concern under the terms of our non-intervention commitment. We would not tolerate Paraguayan concern with our military budget.61

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The telegram further authorizes the Ambassador to inform the authorities that United States economic cooperation with individual American republics will “probably” be influenced by the manner in which they manage their own economies. This is, of course, reasonable when examined at short range. However, if the United States is going to make its cooperation contingent upon the management of their economies by the other American republics in a manner of which it approves, then it may find itself taking a position in which it can dictate the management of those economies. Certainly we have not, in recent times and as a matter of policy, insisted on general adjustment of domestic economies in the other American republics as a condition of our cooperation. Although the Bolivian economy, for example, is badly mismanaged and almost 50% of the Bolivian budget is for the maintenance of the military establishment, we have not therefore withheld the extensive economic and social cooperation that we are extending to Bolivia.62

I believe that this may be one of those cases where short range considerations tempt us to drift into a policy of intervention that was abandoned 12 years ago when the Good Neighbor Policy63 was inaugurated.

Louis J. Halle, Jr.
  1. Addressed to the Chief of the Division of River Plate Affairs (Butler), the Director of the Office of American Republic Affairs (Warren), and to Assistant Secretary of State Rockefeller.
  2. Not printed.
  3. The Seventh International Conference of American States; for documentation, see Foreign Relations, 1933, vol. iv, pp. 1 ff.
  4. Inter-American Conference for the Maintenance of Peace; for documentation, see ibid., 1936, vol. v, pp. 3 ff.
  5. Two marginal handwritten notes on the original read as follows: “I believe we can properly express concern as long as Paraguay requests financial aid from us. G. H. B[utter],” and “We might have to tolerate it if we were trying to borrow Paraguayan money to support it. P. O. C[halmers].”
  6. Marginal handwritten notes appear as follows: “My guess is that our long range program of economic cooperation will take into consideration the fiscal honesty and efficiency of other governments. G. H. B[utler]”; “I certainly hope so. P. O. C[halmers]”. Another note reads: “Perhaps we should begin to now. P. O. C[halmers].”
  7. Policy enunciated by President Roosevelt in his inaugural address, March 4, 1933, Congressional Record, vol. 77, pt. 2, p. 5, and given special application to the American Republics in his address before the special session of the Governing Board of the Pan American Union, April 12, 1933, The Public Papers and Addresses of Franklin D. Roosevelt, vol. ii, p. 129.