The Acting Secretary of State to the Ambassador in Guatemala (Kyle)

No. 36

Sir: Reference is made to your Embassy’s despatches no. 2391 of April 19, 1945 and no. 70 of May 25, 1945,6 and to previous correspondence with reference to the intervention and later expropriation of Aerovías de Guatemala, S. A., whose capital was almost wholly owned by American citizens. The expropriation was effected by a decree dated February 6, 1945, published in the Diario Oficial on February 8, 1945, but the Department has received no indication that the Guatemalan Government has made any effective progress towards the liquidation of Aerovías, or towards the payment of just compensation to the owners thereof. In consequence of this situation, and of the proposed organization of the new concern, Compañía Guatemalteca de Aviación, S. A., to which the Government of Guatemala is to contribute the property and equipment which it expropriated from Aerovías, you are requested in your discretion, to deliver the enclosed note7 to the Guatemalan Government.

It is the Department’s feeling that this note should be delivered in the near future. It is realized that certain Guatemalan officials and an important sector of public opinion in Guatemala, consider Aerovías and Alfred Denby as a single entity, and look upon both with an emotional antipathy.8 The Department, on the other hand, must view the situation in dispassionate appraisal, with full weight given to the legal aspects involved. The bare facts are that an American concern has been expropriated without any arrangements having so far been made for the payment of prompt and adequate compensation.9 [Page 1085] The Department can only view such a situation with concern. If the Guatemalan Government has any charges to bring against Mr. Denby, as distinct from Aerovías, it is entitled to do so and, if necessary, to freeze Mr. Denby’s share of the proceeds of Aerovías to guarantee payment of any unsettled obligations; but it is not considered that this should lead the Department to abandon the principle—upheld in the interest of all American citizens with investments abroad—that the owners of expropriated properties should receive prompt and adequate compensation. It is for this reason that the Department emphasizes the distinction between Aerovías as a company, whose stock was held almost entirely by American citizens, and Mr. Denby, who was one of the stockholders therein. The Embassy might wish, in its discretion, to emphasize this distinction, and the principle involved, to the Guatemalan Government.

Should the Embassy wish to suggest any changes in the text of the enclosed note, the Department will be happy to give its most careful consideration to such proposals.

The expropriation of Aerovías was, according to the decree in question, based on Article 28 of the Constitution of 1935, providing for just compensation in case of expropriation. You are requested to provide the Department with any legislation which may have been adopted to carry out the provisions of Article 28 of the Constitution of 1935, as well as with any available information concerning the bases which have been used in Guatemala in the past in reaching a “just value” for expropriated property.

Very truly yours,

For the Acting Secretary of State:
Nelson Rockefeller
  1. Neither printed.
  2. Not printed.
  3. Alfred Denby, an American citizen, had been closely associated in personal, political, and financial affairs with former President Jorge Ubico, and had been forced to flee from Guatemala immediately following the President’s overthrow on October 20, 1944 (414.11 Denby, Alfred/1–1545). Denby owned approximately 80 percent of the Aerovías stock (814.796/9–2245).
  4. Pan American Airways, Inc., owned almost all the shares of the Aerovías stock not controlled by Denby (414.11 Denby, Alfred/9–345).