1941: Paraguay

In spite of a close censorship on political developments in Paraguay, indications of chronic unrest under the Morínigo régime have leaked out from time to time. The dictatorial methods of the President and a return to the intervention of the Army in politics have made his administration unpopular. The Army itself is divided, the younger officers, led by Lt.-Col. Dámaso Sosa Valdés, opposing the veterans of the Chaco War. Rumors are repeated of a public demand for the return of Col. Rafael Franco, President of Paraguay during the Chaco War; and the unsuccessful coup d'état in April was believed to be an attempt to put him in General Morínigo's place. The tenor of the present administration can be judged from the pledge required of the officers of the armed forces. The oath of loyalty, binding them to President Morínigo 'until completion of the 3-year plan,' reads: 'The liberal, individualistic system is the principal cause of the nation's political anarchy and economic misery.' A nationalist cult, lauding the 19th century dictators, Francia and López, as heroes, is being officially promoted.

The rapid decline in value of the paper peso led to the adoption, in March, of new foreign exchange regulations, one of them requiring the settlement of all internal transactions in the national currency, thus putting a stop to the free circulation of the Argentine peso in Paraguay. Means of stabilizing the Paraguayan peso, under a bilateral agreement between Argentina and Paraguay growing out of the River Plate Conference (see URUGUAY), are under consideration. Reports that Paraguay is shifting its orientation from Argentina to Brazil are supported by a number of economic agreements with the latter country signed this year: one authorizes a branch office of the Banco do Brasil in Asunción, which will serve to increase Brazilian-Paraguayan trade; another covers a railroad from the Brazilian-Bolivian frontier to Concepción, of which Brazil undertakes to pay the costs; and a third provides for the establishment of a free port for Paraguay at Santos, a concession of prime importance to this land-locked country.

A lend-lease agreement of undisclosed amount was signed with the United States in September for the purchase of defense materials. See also PAN-AMERICAN AFFAIRS.