810.796/12

The Chargé in Peru (Hanna) to the Secretary of State

[Extracts]
No. 932

Sir: I have the honor to refer to the Department’s telegraphic instructions Nos. 4 of January 19, 3 p.m. and 6 of January 25, 7 p.m., regarding the desire of the Huff Daland Dusters and the Keystone [Page 803] Airplane Corporation to obtain concessions from Peru and other West Coast countries for the operation of an airplane line along the West Coast to Panama.

Mr. Woolman, the representative of the companies above mentioned, has been here since the first of the year submitting a draft of a concession to the Peruvian Government and attempting to obtain its approval. As soon as Mr. Woolman’s concession was submitted to the Government, German interests, notably the Dornier Wal Company through its agent, Mr. Beeck, submitted a proposal for the carrying of air mail and passengers from Mollendo to Paita and asking in addition for authority for a line from Sechura or Paita to Iquitos. This proposal originally contemplated an annual subsidy by the Government amounting to Lp. 30,000 for two years, eventually to be reimbursed from the earnings of the line. A local company was to be organized, and some of the stock was to be subscribed by the Government. A careful study of the prospects of this company was presented, showing a prospect for yearly dividends of 8% or 9% on the basis of the carrying of 1,200 passengers a year along the coast and 512 to Iquitos. The latter figure, at least, is optimistic for the time being. 6 Merkur-Wals are proposed as the coastal equipment and 6 Dorniers as the equipment on the Iquitos line. The terms of the project of Mr. Woolman were apparently communicated to the Dornier agent by General Faupel, and the Dornier agent has since submitted a project which is understood to be considerably more favorable to the Government than his original project. The German proposal has the support of General Faupel and the other officers of the Military Mission of Germans at present directing the staff operations of the Peruvian Army.

As has been outlined in the Embassy’s despatch No. 854, dated November 1, 1927,80 the object of the German aeronautical interest obviously is to link up with their present air lines operating in Bolivia and Colombia, possibly as part eventually of a system dominated by the European Air companies extending from Panama or Northern Colombia down the West Coast to Ecuador, Peru and Chile and also across Northern Peru to Iquitos, Para and Pernambuco, across from Valparaiso and Santiago, Chile to Buenos Aires, north from Buenos Aires to Rio de Janeiro and Pernambuco and across the South Atlantic to Dakar, Spain, France, Germany and England. It may be noted that according to the press the French-controlled air mail line from Santiago to Paris is already in operation as are the Bolivian and Colombian German-controlled lines. It is reported that a company under French influence is also applying for a concession in Chile to carry the mail and passengers from Santiago to Arica.

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Mr. Woolman’s activities in addition to being hampered by the opposition of the German officers has met with the opposition of an American, Mr. Fawcett, who has done very creditable flying in Peru for the past eight years. Until recently Mr. Fawcett flew a Curtiss Oreole plane, but that was put out of commission a short time ago by an accident and he is now contemplating the possibility of buying several planes and operating a local line in Peru from Lima to Paita. He feels that Mr. Woolman’s project would prejudice his interests and accordingly went to the President in January to protest against it.

. . . . . . . . . . . . . .

A strong supporter of the Keystone Company’s efforts has been Captain Grow, formerly of the United States Navy, who is now Inspector General of Aviation for Peru, and directs the Army Air Service as well as the Naval Air Service besides having supervision over commercial and civilian flying. This enlargement of his previous authority as head of the Naval Air Service was effected about two weeks ago by Presidential decree and is of considerable significance in the interest of the United States in that it removes a German officer from control of the Army Air Service and replaces him by an American.…

. . . . . . . . . . . . . .

The matter is now in the hands of the Minister of Gobierno, Sr. Rubio, who is friendly to the United States. Both President Leguia and Sr. Rubio seem anxious to grant this concession (which, in its latest draft, is in the form of a contract) to Mr. Woolman’s company provided the project can be considered as being as favorable as the German proposal. Sr. Rubio yesterday expressed himself as satisfied with the terms of the contract and stated that he would present it to the President for signature today.…

It was not until a day or so ago that Mr. Woolman furnished the Embassy with a copy of his proposed contract and I have not yet had an opportunity to translate it or to study it carefully. Moreover, it does not contain the latest modifications made to it to meet the objections of the Peruvian authorities. The Embassy has been following his negotiations closely and giving him all appropriate assistance, and will continue to do so. Captain Grow’s exceptionally favorable relations with Peruvian officials concerned in the matter, including President Leguia, have made him very useful and his cooperation has been effective.

I have [etc.]

Matthew E. Hanna
  1. Not printed.