811.20 Defense (M)/7778: Telegram
The Minister in Guatemala ( Des Portes ) to the Secretary of State
[Received July 16—12:29 a.m.]
249. From Holt,31 Guatemala City, for Bicknell,32 Rubber Reserve Company, Washington. Further to my letter of July 10.33 Guatemala still insists that exchange of diplomatic notes serve in lieu of formal contract, that Government alone may buy and sell, that no tonnage be fixed for domestic use and that 10% of cost of production accrue to Government. Guatemala proposes to use all possible means to increase production, to designate chicle companies and United Fruit Company to make payments to producers, to limit domestic use to maintenance of essential industries and to sell all surplus to Reserve.
I fear many Pacific planters will not tap for the Government and that 10% profit to the Government will make price in Petén too low to compete with chicle. Nevertheless in order to get started I join American Minister in recommending acceptance Guatemalan note 7719 transmitted with despatch no. 2988,34 with proviso that maximum price to be paid by Reserve for scrap will be 33 cents f.o.b. Guatemalan ports for 2 years. It will then be incumbent upon Guatemala to prove that her system will work. We can soon judge to [the] results. Please telegraph instructions. [Holt.]