The Ambassador in Honduras (Erwin) to the Secretary of State

No. 67

Sir: I have the honor to refer to the following communications:

Despatch No. 2624, of February 12, 1943
Despatch No. 2631, of February 16, 194317
Department’s instruction No. 1185, of March 26, 194317
Despatch No. 2835, of March 30, 1943
Department’s instruction No. 1218, of April 16, 194317
Despatch No. 2910, of April 26, 1943
Department’s instruction No. 1262, of May 17, 1943.

[Page 368]

The Embassy regrets that its despatch No. 2910 seems to have been interpreted as implying that the Honduran Government has acceded to demands of the highway contractors that the entire 8% consular charge be waived. The Embassy merely stated that, “It should be noted that the full 8% has until the present been waived by the Honduran Government in response to the demands by the Highway contractors direct to the Ministry of Finance and the President”. The Honduran Government was presented a threat of complete stoppage of work on the Inter-American Highway by the Highway contractors, if the consular charge were collected. Rather than place itself in the position of having stopped such construction the Honduran Government agreed with the contractors to waive temporarily collection of the charge. The Embassy informed the Honduran Government informally that the matter would be submitted to the Department of State. The Hondurans stated that a record would be kept of all imports by the contractors, which the Embassy interprets to mean that if eventually the London Bondholders contest the waiving of the 3% consular fee, the Honduran Government will be in a favorable position to make a claim against the contractors. It will be noted that the waiver of collection of the consular charges is entirely on an informal basis, and the contractors could be prosecuted legally in the Honduran courts at any time. Such action may be unlikely, unless the London Bondholders press the matter.

It is the Embassy’s belief that it might be advisable to reach a definite agreement on the matter through consultation with the parties concerned as suggested in despatch No. 2624 of February 12, 1943.

Respectfully yours,

For the Ambassador:
John B. Faust

Secretary of Embassy
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