814.796 Latin American Airways/18

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

No. 2433

Sir: Referring to despatch No. 2426 of May 29, 1929, I have the honor to report that Mr. George L. Rihl, of the Pan American Airways, informed me today, that, on May 30, the Minister of Fomento, Colonel Daniel Hernández, received him and Mr. Lee C. Balch, of the Latin American Airways, and informed them, that, as soon as the National Legislative Assembly has, on May 31, adjourned its regular session, he will grant the Latin American a provisional permit to fly between the Mexican border town of Mariscal and the Republic of Salvador, via the city of Guatemala; that he will then also be ready to grant a permit to the Pan American to fly from the eastern, respectively northern, coast of Guatemala via the Capital to Salvador or Honduras and return, and that he will not grant a permit to the Compañía Mexicana or any concern other than the Latin American to establish an international air service between Mexico and the city of Guatemala.

Mr. Rihl also stated, that until about two weeks ago, such an arrangement would have been very satisfactory to him, but that now, in view of word received since from the President of the Pan American, he deems it advisable to go immediately to New York for a conference, before deciding whether the Company’s attorney here should be authorized to agree to operate under a permit not permitting it to fly between the city of Guatemala and Mexico. …

The Legation has indirect information to the effect, that the Latin American Airways has completed its incorporation, under the laws of Delaware, with a capital of $3,000,000; that it is pleased with the position taken by the Minister of Fomento and that it will in view of it begin operations under the permit at an early date, between Mariscal and the city of Guatemala.

[Page 649]

Reverting to the Pan American, I beg leave to state that it is extremely unlikely that it would have made much progress toward getting a permit and later on a contract, but for the support given it by the Legation. On the other hand, since Mr. Rihl and Mr. Balch concurred in saying that only one Company could operate an international service between Mexico and Guatemala without loss, I deemed it my duty not to comply with the desire of Mr. Rihl, reported on page 2 of despatch 2426, that I support his request that the Government grant to a subsidiary of the Pan American Airways, namely the Compañía Mexicana de Aviación, a Mexican corporation, a permit or a contract, in the face of the contract entered into by the Executive with the Latin American before the Pan American and its subsidiary had asked for a contract or a permit covering that route.

I have [etc.]

Arthur H. Geissler