The Acting Secretary of State to the Embassy in Paraguay
Sir: Reference is made to previous correspondence (especially the Department’s airgrams A–85 of May 7, 1947 and A–36 of March 15, 19481) concerning six picket boats which were leased to the Paraguayan Government in September 1945 under a Charter Party Naval Lend Lease Agreement signed between the Paraguayan and the United States Governments.
On January 21, 1948 the United States Government offered to sell these six picket boats to Paraguay, by a letter from the Foreign Liquidation Commissioner to the Paraguayan Naval Attaché in Washington. The sale price offered was a total of $6,750 U.S. for the six boats. This price was reached under a formula being uniformly applied in the settlement of all such Charter Party Naval Lend Lease Agreements, and represented approximately 5% of the original purchase price. Although the Office of the Foreign Liquidation Commissioner and the Department of State informally attempted on several occasions to obtain an early reply, it was not until November 29, 1948 that a letter was received from the Paraguayan Military Attaché (there is not now a Naval Attaché attached to the Paraguayan Embassy) [Page 717]in response to the offer. Copy of that reply is attached;2 it will be seen that the offer of this Government has not yet been accepted. However it is noted that the Paraguayan Government by decree no. 19,090 of April 7, 1947 authorized the purchase of these launches for a total price of $6,600 U.S. Informally it has been learned that there still are no funds available to the Paraguayan Embassy in the United States for carrying out the terms of this decree. The Foreign Liquidation Commissioner acknowledged the letter from the Paraguayan Military Attaché on December 3, suggesting that an early date be arranged for the signing of the contract, payment and transfer of title. A copy of this letter also is enclosed.2
Since this decree is more than twenty months old, the question arises as to whether Paraguay is still interested in the acquisition of these launches. It is the Department’s understanding that at one time Paraguay was considering returning these vessels to the United States since it found them too fast for river use and too expensive to operate, all being powered by gasoline engines.
At various times the Uruguayan Government has manifested some interest in acquiring these vessels. If Paraguay does not want to purchase them, the OFLC probably would sell them to Uruguay. A sale to Uruguay would release Paraguay of the obligation and expense in connection with returning the vessels to a port in the United States since they could be delivered to a Naval Attaché in the area, probably Montevideo.
However, the Department must of course know whether Paraguay is still interested in acquiring these vessels and when funds are expected to be available.
The Department of the Navy is urgently pressing for an early liquidation of this phase of lend lease, and the Department of State also is anxious to terminate this matter since the time for selling these vessels at surplus property prices is rapidly drawing to a close.
You are requested in your discretion to discuss this matter with the appropriate Paraguayan officials including, if necessary, the President. You should urge that a definitive reply to the OFLC offer be made as soon as possible and that steps be taken to conclude a contract of purchase, and for the payment of the purchase price. While there is a difference of $150 between the offer of this Government and the sum mentioned in the Paraguayan decree, the latter will be acceptable if the sale can be terminated promptly. The Department is prepared to transfer title immediately upon receipt of that sum. It should be noted that the agreed price is probably less than the expense the Paraguayan [Page 718]Government would incur in returning the vessels to a port in the United States.3
Your early reply will be appreciated.
Very truly yours,
Acting Director for American Republic Affairs