814.796 Latin American Airways/16

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

No. 2426

Sir: With reference to despatch 2416 of May 22, 1929, and previous correspondence, I have the honor to report that the President of Guatemala and the Minister of Fomento today informed Mr. George L. Rihl, of the Pan American Airways and Mr. Lee C. Balch, of the Latin American Airways, that it would be difficult to obtain approval of their respective air transport contracts before the Legislative Assembly adjourns on May 31; that, therefore, the Government will not press for action prior to a special session likely to be called for July or August, and that meanwhile the Executive, as soon as the Assembly has adjourned, will grant their respective companies permits to fly.

I also beg leave to report that Mr. Rihl has told me that he will [Page 647] urge the Minister of Fomento to let his permit read “the Pan American Airways and affiliated companies” which is meant to include the Compañía Mexicana de Aviación, a Mexican corporation, and to word it so that his Company may enter Guatemala from Mexico as well as from the East. Mr. Balch still acquiesces in the granting of a permit or contract to the Pan American to enter Guatemala from the East proceeding thence from the Capital to Salvador, but he asserts that if more than one concern were to conduct an international aviation service between Guatemala and Mexico City, the business would not be profitable to either. The correctness of that contention is freely admitted by Mr. Rihl. Mr. Balch takes the position that since his contract was signed by the Minister of Fomento before anybody else had even applied for a Mexico-Guatemala air transport concession, he is entitled to a preference. Minister of Fomento Hernández concurs in that view.

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Mr. Rihl said to me today that he feels that since the contract of Mr. Balch is in the name of the Compañía de Transportes Aéreos Latino Americana, a Mexican corporation, he feels that I should support his request that the Pan American’s permit include affiliated companies and that it be worded so as to allow one of those affiliated companies, namely the Compañía Mexicana de Aviación, a Mexican corporation, to fly between Tapachula, Mexico, through Guatemala to Salvador. He said that he appreciates that Mr. Balch has informed the Legation that the contract of the Latino Americana will be operated by the Latin American Airways, a company incorporated in the United States, but that the company might find it inconvenient to comply. I said that I should inquire of Mr. Balch on behalf of which corporation he will ask for a permit. Mr. Rihl meanwhile reiterated that it would be inconvenient for any international air transport company to operate in Guatemala under a charter other than the one under which it does business in Mexico. From previous conversations I knew, that he had made much of it in Mexico that the Compañía Mexicana de Aviación would every day be carrying the name and the flag of Mexico through Guatemala and thence through other states of Central America and that he has been accepting the aid of the Mexican Embassy in Guatemala for the project of the Compañía Mexicana. It is evident that he feels that he cannot now very well undertake to change that program. I told him, that I have not undertaken to say to either him or Mr. Balch under what charter they should operate in Guatemala.

Later in the day Mr. Balch informed me that his application for a permit would be presented on behalf of the Latin American Airways. The Minister of Fomento says that that is very agreeable [Page 648] to him and that he will request the Legislative Assembly to translate the name of the Company in the concession from Spanish into English and to specify that it is a company incorporated in the United States.

When I informed Mr. Rihl of what Mr. Balch had said to me, he stated that he appreciates the interest that I have taken in his matter and that he feels that without my help he probably would not have accomplished as much as he has and that he regrets that he did not appear in Guatemala ahead of Mr. Balch.

I have [etc.]

Arthur H. Geissler