740.00112A European War, 1939/32546

The Ambassador in Guatemala ( Long ) to the Secretary of State

No. 97

Sir: I have the honor to report that under cover of a note dated June 8, 1943, the Guatemalan Ministry of Foreign Relations has forwarded to this Embassy copies of three contracts signed by the Banco Central de Guatemala, for the Government of Guatemala, and Salvador Delgado, representing the firm of J. A. Medina Company of New York, covering the purchase of 162,750 quintals of cleaned coffee from properties on the Proclaimed List and intervened by the Banco Central. The contracts cover the following amounts and prices:

12,400 quintals Maragogype, at $14.00 per quintal.

75,305 quintals arábigo, at $15.00 per quintal.

75,045 quintals arábigo, at $15.00 per quintal.

All prices are f.o.b. Puerto Barrios, and a credit of $2,400,000 has been opened in the Guaranty Trust Company of New York in favor [Page 360] of the Banco Central de Guatemala to cover the purchase. Delivery is to be made as soon as possible, with August 31, 1943 named as the time limit. We have been advised by the Banco Central that shipments will be made direct to the United States Army by the bank, the coffee having been purchased for sale to the Army.

This Embassy’s despatch No. 39, of May 31, 1943,30 outlined in detail the steps taken to advise the Guatemalan Government that the Proclaimed List coffee crop for 1942–43 would be permitted to enter the United States, and to give all American firms, or their representatives, in Guatemala simultaneous notice that this coffee might be purchased without specific license. Copies of the communications with the Foreign Office and the letters to the trade will show that at no time did this Embassy give any indication whatsoever of preference as to the manner in which the Banco Central should sell the coffee, or the customers to whom it should be sold. The report received by the Department, as stated in the Department’s Telegram No. 276 of May 25, to the effect that our Government was insisting on a public auction of the coffee, was a complete misrepresentation of fact.

It was realized that the Army was anxious to get this block of coffee, and this Embassy would have been glad to do anything consistent with our instructions, to assist the Army to secure it. Purchases of other foodstuffs which the Army needs have been discussed with the Quartermaster Corps’ local representative and any assistance possible rendered him. It is difficult to understand why, when the Army has one of its own men here as a purchasing representative, it could not have instructed him to buy this coffee, thus avoiding the large profit for the agent. The fact that this was not done, and that the purchase was handled as it was, has created such a generally unfavorable impression that it is felt that the Department should be advised of the situation.

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The note submitted by this Embassy to the Guatemalan Foreign Office was handed as a public document, to the Coffee Advisory Board, so that it should have been recognized that we had specifically asked for equal treatment for all coffee buyers, American and Guatemalan alike. However, there is strong evidence to support the report that considerable resentment is felt against the Embassy in local coffee circles, and that even in fairly high Guatemalan Government circles the impression exists that we were instrumental in securing the business for Mr. Medina. The exclusive way in which the Army handled the business, and the fact that the Ministry of Finance took the matter out of the hands of the Banco Central, have also been widely criticized. [Page 361] It is reported that better prices could have been secured for the coffee, and the repeated accusation of under-grading on the types of coffee purchased is taken as an indication of excessive profits to be made on the transaction. This Embassy is not in a position to vouch for these statements, nor can it deny them. The fact that they are current is considered extremely unfortunate.

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Respectfully yours,

For the Ambassador:
Archibald R. Randolph

Acting Commercial Attaché
  1. Not printed.