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

No. 2202

Sir: Referring to Despatch No. 219615 and previous correspondence regarding the matter of P. W. Shufeldt, I have the honor to transmit herewith a copy and translation of a memorandum presented to his representative, Mr. David M. Davidson, by the Ministers of Agriculture and of Finance, on November 30,16 from which it will be seen that the Government now proposes to pay him, for claims arising in connection with his chicle concession, the sum of $100,000, of which sum $10,000 is to be paid at once, $15,000 in one year, and installments of $25,000 each in two, three and four years, the deferred payments to be evidenced by negotiable documents.

Before that proposal was made to Mr. Davidson, I had had unofficial talks about the matter with President Chacón and also with Minister of Finance Solares and Minister of Agriculture Solorzano. They said, that the Government is thoroughly disposed to make an amicable settlement of Mr. Shufeldt’s claims; but with regard [Page 135] to his desire that the $100,000 be paid within four months from December 1, 1928, they stated, that no appropriations are available for that purpose, and that the proposed payment is the equivalent of what Mr. Shufeldt has told Mr. Solorzano would be the profits, accruing successively during the next four years, if Mr. Shufeldt had been permitted to continue operation, and that he should be willing to let the payments from the Government be similarly extended. Mr. Solorzano says, that Mr. Fred W. Wilson, representative of Mr. Shufeldt, proposed to him some months ago, that the Government pay $100,000, in four annual installments.

As regards the alternative desire of Mr. Shufeldt to have arbitration under the terms of his contract, Messrs. Solares and Solorzano said, that the Government takes the position that the contract is illegal and that, so long as the courts have not held the contract to be legal, Mr. Shufeldt is not entitled to demand arbitration under it.

With reference to Mr. Shufeldt’s contention, reported in Despatch No. 2196, that Mr. Arturo Ramírez, Subsecretary of Agriculture, had, on behalf of the Government, offered to pay $100,000 within four months, Minister of Agriculture Solorzano said, that Mr. Ramírez had negotiated subject to approval of such tentative agreement as he might make by the President and the Cabinet, and that Mr. Ramírez had subsequently told Mr. Shufeldt in his presence that such had been the limitation on his authority. Mr. Solorzano added, that, although the President and the Cabinet are disposed to pay $100,000, they rejected the proposal that the payment be made within four months.

Mr. Davidson has told me, that the Minister of Agriculture had said to him, on December 1, that the Government is willing to accept in substance the terms of the agreement proposed by Mr. Shufeldt (see enclosure No. 2 with Despatch No. 2196)17 if the same is amended as regards the terms of payment along the lines indicated by the abovementioned memorandum of November 30.

On December 1, Mr. Davidson sent Mr. Shufeldt information of the Government’s offer, adding that he will endeavor to ascertain for how much the negotiable documents could be sold. On December 3, Mr. Davidson said to Mr. Hawks, that he had inquired at various banks, in the city of Guatemala, whether they would discount that paper and that each of them had replied that it did not care to take the paper. Possibly the banks took into consideration the fact, that there appears to be much doubt as to whether the paper would be a binding obligation on the Government before it [Page 136] is approved by the Legislative Assembly, which body does not meet in regular session until March 1.

Since many members of the Assembly are opposed to paying Mr. Shufeldt anything, there would probably be an advantage in having the proposed agreement, if it has to go before that body, signed at an early date, so as to afford ample time for making sentiment in its favor.

I have [etc.]

Arthur H. Geissler
  1. Dated November 24, 1928; not printed.
  2. Not printed.
  3. According to the agreement set forth in the enclosure under reference, Shufeldt was to sell for $100,000; $50,000 in cash and the remaining $50,000 in four drafts of 30, 60, 90, and 120 days sight.