821.73/9–1344
The Ambassador in Colombia (Lane) to the Secretary of State
[Received September 23.]
Sir: I have the honor to inform the Department that on September 11 last the Counselor for Economic Affairs had an extended conversation with Dr. Luis Guillermo Echeverrí, Colombian Minister of Posts and Telegraphs, concerning recent telecommunications developments in Colombia. The Minister was shown the clippings from local newspapers concerning the signing of an Executive Decree authorizing the establishment of a national telecommunications company.
The Minister was asked to what extent the Decree would affect the operations of foreign communications companies, such as All-America Cables, Inc., the Compañía Telefónica Central, and other private companies. He replied that for the present such companies would not be affected in any way, except that they would be required to connect their lines with any Government lines now existing or that might be established. The Minister went on to say, however, that he had in mind the organization of a large official company with three classes of stock: “A” stock to be owned by the Government, “B” stock to be taken by private companies which might wish to consolidate [Page 860] their properties with those of the official company, and “C” stock to be sold to private investors. This plan is very similar to the capital set-up of the Bank of the Republic. The Minister said that All-America Cables, for example, might receive X shares of stock for the property which it might contribute to the official company, but said that if All-America did not wish to enter the official company it would not be required to do so and could continue its operations independently. This statement is at variance with that recently made by Mr. Frederick Munro, local manager of All-America Cables, who said that he had been warned that the company’s concession for doing domestic business in Colombia would probably not be renewed after February 15, 1945. Dr. Echeverrí indicated that the present decree was merely the first of a series of measures which would be taken to build up a strong official communications company and provide the Government with facilities throughout the country independently of the private companies. He made it clear that one of the chief motives of President López in fostering an official company was of a political nature, apparently growing out of the recent Pasto revolt.31
Dr. Echeverrí was then asked whether the new plan would have any effect, adverse or otherwise, on the rates agreement signed by his predecessor, Dr. Gómez Picón, with Commissioner Wakefield. He replied that regardless of the plans for the organization of an official company, they could not accept the rates agreement, at least not in the immediate future. He said that he had discussed this matter in detail with President López, who had stated that he did not wish to change any of the existing rates, if at all, until they had made further progress with their plans for the reorganization of the entire official communications system. The Counselor for Economic Affairs got the impression that it was futile to expect any implementation of the rates agreement, and the Minister tacitly admitted that it would probably never be accepted. He justified this position on the grounds that the Colombian official company could not afford to operate at the same rates as the large American companies could, since the Colombian company had to pay much higher prices for its equipment. The Minister was again reminded that there was a formal exchange of notes outstanding on this agreement and was asked whether he thought that the notes should be withdrawn. He replied that his predecessor, Dr. Gómez Picón, should never have signed the agreement without the approval of the President and the latter’s signature. He also said that the Minister of Foreign Relations had no authority to bind the Colombian Government on such an agreement without the President’s approval and signature.
The Counselor for Economic Affairs then explained how the agreement [Page 861] had been reached with Mr. Wakefield. He said that Mr. Wakefield and his associates had left a memorandum with Dr. Gómez Picón, which they had felt had convinced the latter that the proposed rates agreement was sound and in the best interests of Colombia. He explained that Mr. Wakefield’s motives had been of the very highest and that the latter sincerely felt that the proposed agreement was convenient for Colombia, as well as for the other South American countries concerned. Dr. Echeverrí said that he did not doubt Mr. Wakefield’s sincerity but that Mr. Wakefield apparently did not fully understand the problem in Colombia, which was the only one of the countries involved which operated an official communications company. The point as to whether the notes should be withdrawn was not pressed and the matter was left in this rather vague status, the inference being that, while neither President López nor Dr. Echeverrí would probably ever accept the agreement, they did not wish to give a formal reply to this effect until some later date.
The Counselor for Economic Affairs next discussed with Dr. Echeverrí the latter’s plan for modernizing and expanding the present official telecommunications system in Colombia. The Minister again said that he wished to install service to the most remote parts of the country, so that the President could communicate instantly and efficiently with any point independently of the existing private facilities. The Minister inquired whether there was any possibility that the desired equipment would be supplied and financed by American companies, or through the Export-Import Bank. He was told that no definite information on the latter point could be supplied as yet, although there was some indication that the Export-Import Bank felt that Colombian commitments to it were as much as they should be at the present time. The Minister than remarked that he was under considerable pressure from the Swedish Ericsson Company to enter into a contract for the supplying of the desired equipment, and that they had offered very attractive terms for financing the business. He said that he much preferred to deal with an American company, but that he could not delay the matter indefinitely, and that if no American company wished to handle the business he would be forced to go ahead with the Swedish company. At this point he picked up a letter on his desk and said that there was one American company which had shown some interest. He also said that he had discussed a possible deal with Señor Manuel Toro, local representative of the International Telephone & Telegraph, but that over a month had passed without a reply having been received. The Minister was then asked what American company had shown an interest in the business. Although at first he said that he was not at liberty to divulge the name, he later said it was the Radio Corporation of America. He also said that the Radio Corporation of America had manifested its [Page 862] interest in supplying the desired equipment, but had not made any definite offer.
Dr. Echeverrí then commented on what he felt to be the financial soundness of the proposed business. He said that, although in the past the Ministry of Posts and Telegraphs and the official communications company had been badly mismanaged, it had always shown a profit to the Government. He felt that with more modern equipment and better management, its net revenues would reach at least 1,000,000 pesos a year. Under the new decree, he said, the enterprise would be of an autonomous nature and would be free of political influence, similar to the municipal utilities of Medellín and Barranquilla. He therefore felt that under the new set-up there would be ample security for any financing to be done, and that such financing could well be accomplished by any interested American company through private banking channels. He said that he saw no real reason why this kind of business need be handled by an official institution like the Export-Import bank. The Minister again requested the Embassy’s assistance in enabling him to carry out his plan so that he could obtain American equipment at the earliest possible moment. He said that he could not afford to delay the matter much longer, and that if he could not make some arrangement with the Radio Corporation of America or some other American company he would be forced to do business with the Swedes.
There is being transmitted to the Department a separate report32 on the executive decree of September 12, 1944 creating a new and expanded national radio communications company (Empresa Nacional de Radio Communicaciones), together with the Spanish text of that decree.
Respectfully yours,
Counselor of Embassy for Economic Affairs