814.796 Latin American Airways/14

The Minister in Guatemala (Geissler) to the Secretary of State

No. 2416

Sir: Referring to despatch 2403 of May 15, 1929, I have the honor to report that Mr. George L. Rihl has withdrawn from the agreement he made, on May 14, with Mr. Lee C. Balch, to the effect that the Pan American Airways, Incorporated, and the Mexican Aviation Company will no longer seek to get a contract from the Government of Guatemala granting air transportation privileges between Tapachula, respectively Mariscal, and the city of Guatemala and that on the other hand Mr. Balch will aid the Pan American in an effort to obtain a contract under which it would carry passengers and mail from Belize, Barrios or Tela to the city of Guatemala, returning thence to say Tela; and that, according to Mr. Balch, a revised contract between the Government and the Latin American Airways has been recommended by the Council of State, signed by the Minister of Fomento and the President and transmitted to the National Legislative Assembly, whereas the projects of the Pan American and its subsidiary are still pending before the Minister of Fomento.

There is enclosed herewith a copy of a Memorandum of conversations Secretary of Legation Hawks had with Mr. Rihl, on May 20, and also a copy of a Memorandum by Commercial Attaché Bohan,97 regarding conversations he had with Mr. Balch on May 21 and 22.

I also beg leave to report that Mr. Bohan has received a cablegram from the Bureau of Foreign and Domestic Commerce, dated May 21, 1929, 6:30 p.m., which reads as follows:

“Latin American Airways incorporating for three million dollars purchasing first ship a trimotored to be sent to Guatemala according to contract if it is approved finally. According to report contract favorably reported by Legislature Committee please try to verify report.”

I have [etc.]

Arthur H. Geissler

Memorandum by the Third Secretary of Legation in Guatemala (Hawks)

Mr. George L. Rihl, Vice President of the Pan American Airways, Incorporated, called at 2:30 this afternoon, Monday, to see the Minister, who however, was not in. He informed Secretary Hawks as follows:

On Saturday night, May 18, Mr. Rihl received a telegram from [Page 644] Mr. Trippe, President of the Pan American Airways, Incorporated, from New York stating that the Post Office Department of the United States had ordered the Pan American Airways to extend, with the consent of both Governments, i. e. the Governments of Mexico and Guatemala, their air service from Mexico City to Guatemala, establishing a regular weekly service. Mr. Rihl explained, that under the contract which the Pan American Airways has with the United States Post Office Department, for the Brownsville-Mexico City line, the latter can demand, at any time, that the Pan American Airways extend its service farther south. The telegram also said that nothing would be done until Mr. Rihl could have a conference with Mr. Trippe. Mr. Rihl hopes to leave Guatemala, on May 22, Wednesday morning for Vera Cruz, taking the train that night to Mexico City, telephoning the next morning to New York and arranging for this conference, and proceeding there probably Friday. Due to this order of the Post Office Department, the Pan American Airways would now have to extend its service from Tapachula, Mexico to Guatemala and this would mean that the Compañía Mexicana de Aviación would be the organization used for this purpose. He had told Mr. Geissler that he would use an American company in Guatemala, which now is impossible, due to the fact that commercially he could not have an American organization simply for the trip between the city of Guatemala and the Mexican border, since this would not be profitable and also it would in reality be a local company and would thus run into difficulties in connection with the Gordon contract, et cetera.

In reply to a question by Mr. Hawks, he said that if the Post Office Department of the United States ordered the Pan American Airways to extend its lines farther South through Salvador to Managua, then it would be possible to organize an American corporation to carry on this service between the Mexican border and Nicaragua.

When he and Mr. Balch of the Latin American Airways had come to an agreement, that the Latin American Airways be allowed to have the service on the West coast and the Pan American Airways would come in from Tela or British Honduras, he had told Mr. Balch that that agreement was subject to the approval of his principals and that, of course, if the Post Office Department ordered the Pan American Airways to extend the service which it is now running between Brownsville and Mexico City and Vera Cruz to Guatemala, then there would remain nothing for him to do but endeavor to obtain a contract with the Government of Guatemala for the Compañía Mexicana de Aviación for service from Mexico City to Guatemala.

He had tried to find Mr. Balch this morning but had been unable [Page 645] to do so, as the latter was busy in conference with the Council of State but that as soon as he saw him he would inform him of the abovementioned telegram.

He stated that while Mr. English and Mr. King Gillette were reliable people and while Mr. Balch had been very fair in attempting to get an air mail contract here, nevertheless, it was his, Mr. Rihl’s, absolute opinion that the Latin American Airways would not operate its own service here, in the event that it did get a contract. …

He said that he had given the Minister of Fomento a short flight around the city this morning and had an appointment with him for 3:30 this afternoon, at which time the Minister had promised to definitely conclude the contract with the Pan American Airways. Despite this promise, he did not believe that the Minister would settle this matter and, according to his feeling, his contract would not be agreed upon in time to be submitted to the Assembly prior to May 25, the last date upon which new business could be brought before it according to a recent extension of time ordered by that body. Also, that although the Latin American contract might reach the Assembly before that date, he did not think that it would be approved by that body.

The contract which Mr. Rihl is now proposing to the Government is made out in the name of the Pan American Airways, Incorporated, and its subsidiary companies. There is no definite route prescribed for the service and, therefore, if this contract be approved, the Compañía Mexicana de Aviación would be able to extend its service from Mexico City and Vera Cruz via Tapachula to the city of Guatemala. However, as he does not believe that this contract will be approved, he said that he would probably merely request the Government to give him a permit so that planes of that Company could enter Guatemala and bring in mail.

The Government had requested that he amend his contract so as to make it read for four years instead of twenty; so as to enable the Government to cancel it at any time it desired, and also so as to allow the Government to take over the airplanes of the Company in time of war or national disturbance. He said, that while certain other points had been accepted by him, these last three he had refused definitely to accept.

He did not know whether the Latin American Airways had accepted these points or not. In his contract he agreed to carry mail for the Guatemalan Government but added a clause under which he would conclude a separate contract with the Guatemalan Post Office Department providing that the mail would be carried but only if it were paid for and if all the matter of the issuing and sale of stamps were taken care of by the Post Office Department.

[Page 646]

I saw Mr. Rihl in the lobby of the Palace Hotel at seven o’clock this evening and he said that he had not yet seen Mr. Balch and, therefore, had not told him concerning the telegram which he said he had received from Mr. Trippe saying that the Post Office Department of the United States had ordered the Pan American Airways to extend its service to Guatemala.

He said that he and the Minister of Fomento had again discussed the contract that afternoon and had agreed upon all points and that he was having the final draft typed out tomorrow morning and would give the Legation a copy of it. I asked him if my impression was correct that the contract did not provide for any specific route. He replied that the contract provided for a connection with the lines of the Pan American Airways to the North. I asked whether that would authorize him to connect at his choice with Mexico or the Miami-Belize line. He said that this had been his impression, but that now he had been told that in Guatemala to the North does not mean Mexico, as this was considered as being to the West and, therefore, it would only mean the permission to connect with the Miami-Belize line. He said that he had asked the Minister of Fomento concerning a landing permit for the establishment of a weekly service with Mexico, as ordered by the Post Office Department of the United States, and that the latter had told him to apply for two permits, one to bring in the planes and the other to bring in the mail. He said that he would do so.

  1. Commercial Attaché’s memorandum not printed.