740.00112A European War 1939/36610: Airgram
The Secretary of State to the Ambassador in Guatemala ( Long )
A–343. Reference your airgram no. 240 of May 16, 1944 and Department’s recent airgram61 with regard to its conversations with Dr. López-Herrarte, [Page 1161] Counselor of Guatemalan Embassy, concerning Guatemalan Proclaimed List coffee.
Department agrees that the approach suggested in the antepenultimate paragraph of your airgram no. 240 of May 16, 1944 would be desirable in the absence of an expression of active interest in the matter by Guatemalan officials. However, Dr. López-Herrarte, has for some time been pressing the Department for a definite answer with regard to this Government’s attitude toward purchase of the current year’s Proclaimed List coffee crop. He has stated that the coffee is ready for shipment, that there is inadequate storage space for it in Guatemala, and that his Government is very anxious to be informed of this Government’s position. In the circumstances the Department considered it advisable, in justice to the Guatemalans, to inform him in this regard.
Dr. López has apprised the Department that he cabled his Government advising it of the information received by him and has received a reply stating that the Guatemalan Government had approached the American Embassy at Guatemala and had been informed that you had no instructions in the matter. Dr. López is being informed that instructions are being sent to you in the matter and it is assumed that the interested Guatemalan officials will take the matter up with you. You are requested to inform the appropriate officials that this Government does not feel itself in a position to approve the purchase of Proclaimed List coffee by entities subject to its jurisdiction unless effective measures are taken to implement the Guatemalan Government’s expressed intention to nationalize the properties owned by the most objectionable Axis spearheads. In discussing this matter the Embassy may wish to emphasize the following points:
- (1)
- This Government is desirous of applying its Proclaimed List sanction in such a manner as to impose a minimum of hardship on the economy of the other American republics. It has therefore in the past approved purchase of Guatemalan Proclaimed List coffee by United States firms and the United States Army in view of the expressed intention of the Guatemalan Government to nationalize the producing properties owned by inimical interests. It is felt however that continuance of the present arrangement results in a perpetuation of the enemy ownership of the properties and has the effect of bringing the Proclaimed List into disrepute.
- (2)
- This attitude is in accord with the general policy followed by this Government with regard to all countries in which the question has arisen.
Your discussions with the Guatemalan Government in this regard should be facilitated by the fact that the desire of this Government that the influence of inimical persons over the economic life of countries of this hemisphere be removed through the nationalization of [Page 1162] enemy owned properties does not represent a new policy but is merely a reiteration of the views expressed by it on numerous occasions.
It is felt that this Government should merely communicate its attitude toward the purchase of coffee by persons subject to its jurisdiction and leave to the Guatemalan Government the question of the advisability of adopting further measures. The initiative in the formulation of a definitive program should be left to the Guatemalan Government. If the question is raised with you however, you are authorized to state that this Government does not take the position that all spearhead plantations must be nationalized before purchase of the coffee will be approved and that an effective start with regard to nationalization of the properties owned by Axis spearheads coupled with an assurance by the Guatemalan Government that it will proceed to completion of the program would afford sufficient basis for relaxation of the Proclaimed List sanctions in so far as this year’s crop is concerned.
The British Embassy at Washington has informed the Department that the Ministry of Economic Warfare has expressed the opinion that a stand should be taken to prevent the Guatemalan Government from exploiting these properties for their own financial advantage without implementing their undertaking to nationalize such properties. It is understood that the Ministry of Economic Warfare is desirous of acting in concert with this Government in the denial of permits for the export of the products of Proclaimed and Statutory List properties.
With regard to your statements that the Guatemalan Constitution requires compensation for expropriation and that the President might be reluctant to take any action which might even remotely be open to charges of unconstitutionality in view of recent developments in El Salvador, the following observations are made:
While the Department would prefer from a Proclaimed List point of view that the claims of the Proclaimed List owners be left for settlement after the war, it would rather have the property expropriated and compensation deposited in a blocked account in favor of the Proclaimed List owner than to have the properties owned by Axis spearheads remain in their names. Expropriation laws passed by other Central American countries provide for deposit of the appraised value of the expropriated property in a blocked account in favor of the Proclaimed List owners. Your despatch no. 3774 of April 8, 194362 reported that the Minister of Foreign Affairs63 had stated that payment for properties would have to be made in view of the Constitutional provisions and added that at the end of the war these amounts would be set off against Guatemala’s claims against the [Page 1163] Axis Powers for direct or indirect losses arising from the War. At that time the Minister indicated that the price to be paid for the properties would be based on the evaluation declared by the owners for tax purposes, which value was uniformly far below the real value of the properties. Adoption of this policy would appear to have obvious advantages over a retention of ownership on the part of Axis spearhead firms and persons.
Please report by telegram concerning any further developments in this regard and concerning any discussions held with members of the Guatemalan Government.