611.1431/70

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

No. 332

Sir: With reference to my recent despatches in connection with the proposed commercial agreement between the United States and Guatemala, I have the honor to report that in conversation with the Minister for Foreign Affairs this morning he mentioned the following matter to me.

He stated that a concession which the United States might make and which would be of material benefit to Guatemala would be to impose a [Page 287] duty on chicle imported into the United States, and then exempt Guatemala from the payment of the duty. Dr. Skinner Klee said this arrangement would tend to correct the contraband traffic in chicle originating in Guatemala and exported to the United Spates through Belize and Mexico as being of origin in British Honduras and Mexican territory. He was of the opinion that thirty thousand quintals yearly would be a conservative estimate of the quantity of such chicle on which this Government is losing the export tax of $5.00 per quintal. The Minister added that there was an even greater loss to Guatemala arising from the much lower wages paid for gathering this contraband chicle and the further fact that these wages are paid with merchandise furnished by merchants in British Honduras and Mexico. He estimated that the total loss might be reasonably fixed at somewhere between $300,000 and $400,000 annually.

In discussing the foregoing Dr. Skinner Klee suggested that, if this arrangement could be made, this Government might forbid the shipment of alcoholic and spirituous liquors in transit through Guatemalan ports, and thus extend its assistance in preventing the contraband shipment of such liquors to the United States. He recalled in this connection the shipment of liquor which was recently landed at Puerto Barrios in bond (See my despatch No. 324 of August 31, 19345) and immediately trans-shipped to other ports, probably with the United States as its ultimate destination.

Respectfully yours,

Matthew E. Hanna
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