810.79611 Tri-Motors Safety Airways/43
Memorandum by the Chief of the Division of Latin American Affairs (Munro) of a Conversation With the President of the American International Airways, Inc. (Montgomery)
Mr. Montgomery said that he happened to be in Washington to help christen the Tri-Motors survey plane, and that he had therefore stopped to inquire what progress had been made in obtaining permission from the various countries to be passed over on the American International Airways non-stop flight to Chile. I told him that I thought that we had informed his Company in each case where one of the countries concerned had granted permission. He said that he [Page 619] had been so busy working on the merger of the two companies that he had not had time to go into the matter recently.
I remarked that I was interested in knowing that his company and the New York-Rio and Buenos Aires line had been merged. He said that his company had bought a large block of stock in the other corporation and would work with it in establishing air mail routes.
I remarked that we had recently received information indicating that the Tri-Motors Company was entering into some kind of an agreement with French interests, and that we were naturally interested in such a report. Mr. Montgomery said that it was true that they were “dickering” with the Latecoere but that the matter was in process of negotiation and he did not wish to say anything about it. He said that any arrangement which they might make would be entirely in accordance with the law and with the rules laid down by the Postoffice Department governing foreign participation in air mail contracts. He would tell me that they had already arranged to use all of the Latecoere fields on the east coast on a rental basis.
I said that I did not wish to ask for any information which he did not feel able to give me but that the Department always had to give careful consideration to connections with foreign interests in deciding whether or not to extend support and assistance to American concerns when they requested such support and assistance. I thought, therefore, that the Department might have to request specific information about the relations of the New York-Rio and Buenos Aires line with the Latecoere if any further assistance was desired from the Department, in order to enable it to decide how far such assistance could be extended.
Mr. Montgomery said that he would be very glad to give us the fullest information about the agreement with the French interests when the agreement was concluded. At present each party was naturally endeavoring to get as much as possible out of the other. The American interests at present had an option on a larger block of stock in the French company than the block of stock in the American company which was under option to the Latecoere. The general plan was to effect a combination by the exchange of stock and by the joint use of facilities and connection of air mail routes. The French were at present demanding, for example, that the Tri-Motors turn all mail over to them at Natal to be carried south from there by the service which the French had been operating for over a year. This was one of the points upon which an agreement had not yet been reached.
Mr. Montgomery further said that his Company proposed to buy a substantial minority interest in the Scadta. They had had an opportunity to buy the control of this company but did not do so because they were informed that its concession would be cancelled if they [Page 620] passed into American hands. I asked whether such information came from the Colombian Government. Mr. Montgomery replied that it came from Dr. Bauer, who had attempted to sell the control of the Company to American interests on a previous occasion but had hastily abandoned the negotiations upon being informed through grapevine channels that the Government was about to cancel his concession if the deal went through. Mr. Montgomery said that the feeling in Colombia toward us was very bad, although certain American interests like Baker, Kellogg & Co., which was one of the firms supporting them, stood well with the Government. He felt that his company could establish a foothold through its minority interest in the Scadta and later perhaps absorb it, and that it would be better that the Scadta should be partly American-owned than completely German and Colombian.