824.796/98: Telegram

The Minister in Bolivia (Jenkins) to the Secretary of State

38. Department’s 21, March 21, 6 p.m.12 L. A. B. stockholders meeting has been postponed until April 24.

In a preliminary consideration of aviation question last night by Minister of Finance and Vidal and Campbell13 of Panagra it was [Page 408] agreed informally that following points might be used as basis of discussion for plans of reorganization:

Securing of full voting rights for Government owned stock and issuance of additional stock to be purchased by Government in order to reduce minority interests and ensure Bolivian Government control; purchase of new stock might be financed by Panagra with this stock as collateral.
Extension of present Panagra contracts to give operating rights, express and local, over La Paz–Corumba run, equipment used to be two DC–3–A’s, and option on La Paz–Porto Velho route.
Operation of other domestic routes by L.A.B. with present Bolivian Government subsidy and loan from Panagra or other American source to purchase needed flying equipment including one or two additional DC–3–A’s and to extend ground facilities, and so forth, equipment serving as collateral.
L.A.B. to be managed either by American technical man chosen by Panagra or by Panagra itself through management contract. Minister preferred former but seemed willing to consider latter which appears preferable to Vidal and Campbell and the Legation.
Guarantee of continued operations both international and domestic for a prescribed period, say 5 years.

It should be emphasized that this was merely a preliminary informal conversation with no commitments of any kind and that when something more detailed is tentatively agreed upon it will have to be submitted to Cabinet as a whole.

Vidal and Campbell are cabling their principals in New York who will undoubtedly consult the Department.

An expression of the Department’s views on this rough program would be of material assistance.14

  1. Not printed.
  2. Douglas Campbell, vice president of Pan American–Grace Airways.
  3. This plan, with some modifications proposed by the Pan American–Grace Company officials, was satisfactory to the Department.