810.79611 Pan American Airways, Inc./97

The Minister in Nicaragua (Eberhardt) to the Secretary of State

No. 712

Sir: With reference to the Department’s instruction No. 331 of March 17, 1928, I have the honor to transmit herewith a copy and translation of the contract signed by the Nicaraguan Government and Mr. John D. MacGregor as representative of the Pan American Airways, Incorporated, for the establishment of an air mail and passenger service between the United States, Nicaragua, and the Canal Zone.

Upon Mr. MacGregor’s arrival in Nicaragua I introduced him to the President and explained briefly the interest of the United States in the proposed air mail service. I subsequently extended to Mr. MacGregor such additional assistance as seemed proper. He encountered no opposition in connection with his contract and its signature was delayed only by the necessity of waiting for the arrival of his power-of-attorney from his own company and by the inevitable mechanical delays in the Department of Fomento. I am transmitting herewith for the Department’s information a copy of a letter from Mr. MacGregor in which he expresses his appreciation of the Legation’s assistance.62

When Mr. MacGregor’s proposal was first presented to the President the latter said that he had recently promised Mr. Goodell, the manager in Honduras for the United Fruit Company, to give him preference for the establishment of an air mail service from Honduras to Nicaragua if the fruit company should decide to extend to this country the service already operated between Tela and Tegucigalpa. The President was therefore reluctant to conclude a new contract without being released from this promise. Mr. MacGregor assured both the President and the Legation that the United Fruit Company was favorably inclined to the establishment of his own service and would cooperate in every way and he promised to obtain immediately instructions from the United Fruit Company to Mr. Goodell to cable to the President, releasing him from the promise referred to. While no such cable arrived before Mr. MacGregor’s departure from Managua, the President signed the concession on this assurance. I am transmitting herewith for the Department’s further information a copy of a further letter which Mr. MacGregor wrote to me in this connection.62

It will be noted that the concession provides for the establishment, without subsidy from the Government, of a passenger and mail [Page 783]service for which the company will be free to establish such tariffs as it sees fit. The Government promises to deliver to the company all correspondence to be delivered by air mail. Mr. MacGregor stated at the outset that this was the only special or exclusive privilege which the company desired. Article 21 of the concession as signed however contains certain additional provisions designed to safeguard the company against interference in the conduct of its service, which could perhaps be interpreted in such a manner as to make it impossible or very difficult for a rival company to engage in commercial aviation in Nicaragua. This article, which underwent some changes after the original draft of the contract had been submitted to the Legation, was not brought to the Legation’s attention in its final form until the contract itself had been signed.

Mr. MacGregor returned to Tegucigalpa on June 21 on the airplane which was sent to bring an instruction transmitted by the Department through the Legation there. He informed me that he expected to conclude his negotiations in Tegucigalpa without difficulty and that the establishment of the service would be assured when the concessions from Honduras and Nicaragua were ratified by the congresses of these two countries. It cannot however be actually inaugurated until about one year after such ratification, because of the necessity for building planes and constructing airports in the meantime. While the company desires to extend its service also to the other Central American countries it will not be necessary to do so in order to assure a through service between the United States and the Canal Zone.

I have [etc.]

Charles C. Eberhardt

Contract Between the Government of Nicaragua and the Pan American Airways, Inc., Signed June 18, 1928

XXI. Due to the circumstance that the Company is the one which will establish for the first time the service to which this contract refers, and in consideration of the large expenditures which the said Company will have to make in order to commence and operate this service, the Government agrees not to concede to any other company, person or corporation rights and privileges which might interfere with or injuriously affect in any way those which by means of this contract are conceded to the said Company, or which might disturb or interrupt the proper maintenance of this service, or which might endanger the life or property of the officers or passengers of the Company or of its clients in Nicaragua, such as authorizing that the radio stations, telegraph stations, air ports, or other like equipment, whether the property of the Company or of the Government, could [Page 784]be used in common with other companies, firms, individuals, or organizations that interest themselves or desire to interest themselves in the field of commercial, experimental, or amateur aviation in the Republic of Nicaragua.

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