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

No. 557

The Acting Secretary of State refers to the Embassy’s airgram no. 404 of September 16, 194629 stating that the Embassy’s files contain little or no helpful information in regard to the original negotiations concerning the Airport Development Program and that it would therefore be helpful if the Department would endeavor to ascertain the position of the War Department with regard to the continued maintenance of the field and, if possible, to inform the Embassy with regard to the position it should take in discussing this [Page 102] matter with officials of the Guatemalan Government, or in endeavoring to clarify the question with the Commanding Officer of the Army Air Base.

As of possible interest to the Officer in Charge, the following information concerning the early development of the Airport Development Program is quoted below from a memorandum prepared in the Department on September 13, 1945:29a

“The War Department in 1940 came to the conclusion that it was essential to the security of the United States to have available for use by American military aircraft, in the event of hostilities, suitable airports and air bases in various locations in this Hemisphere. At that time the United States was at peace as were the countries in Latin America and it was not considered advisable or possible to negotiate directly with those governments for the provision of these facilities. The War Department finally decided to have this work done through a procedure which involved the use of Pan American Airways and its subsidiaries and connecting companies as a cloak. A contract was concluded between the War Department and a corporation known as the Pan American Airports Company which had been organized by the Pan American Airways System. Additional contracts were concurrently concluded between the Airports Corporation and the Pan American companies. Under the terms of these contracts various airfields were to be improved or built with funds supplied by the United States but the projects were to be handled as though they were entirely the program of the carriers. All arrangements between the carriers and the foreign governments concerned which might be necessary were to be made by the carriers ostensibly acting on their own behalf. This basic contract was concluded in November of 1940. It has been supplemented by at least ten additional agreements and it finally expired in June of 1944. The subsequent contract was signed by these parties coinciding with the date of expiration of the original contract, the new agreement being known as the Maintenance Contract. This contract provided that certain provisions of the original contract should continue in effect. Its principal provisions were to have certain airfields, including those built under the ADP program and others which had been built by the Army itself, maintained and operated by Pan American at the expense of the United States. The contract provides for the addition or deletion of the fields at the pleasure of the War Department.

“After the entry of the United States into the war and the similar action of other governments in Latin America, considerable discussion took place as to whether the contracts should be made public or at least made known officially to the governments of the countries involved. In this connection it should be noted that the original contract was classified ‘Secret’ and the Maintenance Contract was not only classified ‘Secret’ but contains a provision that prior to a declassification of the contract, Pan American shall be given thirty days’ notice and an opportunity to present its views on the subject to the appropriate government [Page 103] agencies.30 There were two principal bars to declassifying the agreements, the first being the reluctance of officials of the State Department to have the agreements declassified prior to the negotiation of particular military rights for the United States in certain foreign countries and secondly a fear of the War Department that disclosure of the contract would result in widespread public criticism because of the fact that Pan American Airways is in a position as a result of the contract to acquire exclusive or at least special benefits beyond those granted other United States carriers as a result of the expenditure of United States public funds.

“In the latter connection it should be pointed out that the original contract signed in 1940 contained no provisions as to the ultimate commercial utilization of the airfields in question. It was not until 1942 that a supplementary agreement was signed, which agreement the War Department has described as the best it could do at the time but which is neither clear nor satisfactory. This supplementary agreement provided that Pan American Airways and affiliated companies would permit for a period of ninety-nine years free use of the airfields by aircraft of the Armed Forces of the United States or by civil aircraft operated under contract to the United States Government.31 It further provided that for the duration of the war similar privileges would be extended to any United States carrier as defined in the Civil Aeronautics Act which was certificated by this Government to operate a service requiring the use of the airfield in question and which was authorized by the government of the country in which the airfield is located to operate such a service. In the case of both military and civil aircraft, no landing fees were to be charged except such fees as might be required by the government of the country in question. Pan American, of course, limited its agreement in this connection to the extent to which it was possible for it to perform but also agreed to exercise its good offices to secure whatever governmental clearances might be necessary to give effect to the provisions of the agreement. The agreement further provided that within six months after the war ended, there should be an arbitration proceeding to determine the extent to which it was equitable to continue the provisions of the agreement with respect to landings of civil aircraft without fee. Pan American’s position in this connection seems to be that it would have no objection to a continuance of this provision in the case of an airfield constructed wholly with United States funds but that it did not believe [Page 104] it just to continue the practice in the case of airfields which were originally exclusive Pan American property and which had been improved or enlarged solely to meet the needs of the United States Armed Forces.”

According to a report received from the War Department in February 1946,32 one ADP airport (Guatemala City) and one non-ADP airport (Puerto Barrios) were being maintained in Guatemala by War Department funds pursuant to the provisions of the Maintenance Contract at a monthly cost of $19,500 and $2,875, respectively. (It should be pointed out that War Department funds were expended for the construction of installations and facilities at the Guatemala City airfield under two different arrangements, i.e. (1) through ADP the field itself was improved and maintained, and (2) by direct arrangement with the Guatemalan Government the War Department constructed additional installations and facilities there in the category of barracks, hangars, etc. The latter facilities were also maintained by Pan American Airways, Inc. under ADP as a measure for conserving military personnel.)

On February 28, 1946 the War Department formally notified Pan American Airways, Inc.33 that the United States Government had decided to terminate the maintenance of air bases in the other American Republics under the Maintenance Contract, and not to exercise the ninety-nine year option provided for in the ADP contracts. The War Department requested Pan American Airways, Inc. to confer with the Chief of Engineers and prepare detailed disposal recommendations for both real and personal property at each field for consideration by interested governmental agencies. As reported in the Department’s airgram no. 227 of August 30, 1946,34 the Chief of Engineers and Pan American Airways, Inc. are now engaged in preparing joint recommendations for disposal of all property at air bases constructed or improved under the Airport Development Program, including the bases in Guatemala, and these recommendations will be forwarded to the Department for comment and concurrence.

Pan American Airways, Inc. replied under date of April 25, 1946 that in view of the foregoing notification, the company proposed to give up immediately after such termination all maintenance and operation not required by its commercial operations. This would mean, the company explained, that some airports would be abandoned completely and that the extent of maintenance and operation would be curtailed at others.

[Page 105]

The foregoing information will make it clear that in the view of the War Department no military requirement exists for the continued maintenance of the field at Guatemala City and that this Government has no responsibility to continue such maintenance. The War Department is presently engaged in expediting the completion of its recommendation regarding the disposal of the United States interest in the field. As indicated above, this recommendation will be forwarded to the Department for review. In the view of the Department it is a matter of national interest that aviation facilities developed during the war be disposed of in a manner which will promote the world-wide air commerce of the United States.

The Embassy has previously reported that it is a matter of public knowledge that the airport at Guatemala City was constructed and maintained with public funds of the United States. In discussing with the Guatemalan authorities the question of the continued maintenance of the field, the Officer in Charge will wish to dispel the “feeling of the Guatemalan authorities that the United States Government still maintains or is in some way obligated to maintain the field.” The Officer in Charge also should ascertain and report to the Department what steps are being taken by the Guatemalan Government or the interested airlines to assure continued maintenance and operation of the field and what technical assistance may be required in this connection.

  1. Not printed.
  2. Not printed.
  3. In circular telegram of January 17, 1946, 2:30 p.m., not printed, the Acting Secretary of State informed diplomatic representatives in certain American Republics as follows: “… the Secretary of War in a letter of November 16 served the necessary thirty days’ notice on Pan American World Airways, upon the expiration of which the Government would feel free to declassify the contracts or any portion thereof. … Pan American expressed its opposition to any declassification of the contracts or revelation of their contents. However, this Government is now free to declassify these contracts or any portion thereof at any time that such action should appear to be in the national interest.” (810.7962/1–1746)
  4. In a letter of February 19, 1946, to the Secretary of State, the Secretary of War (Patterson) stated: “… this Government does not desire to extend the Maintenance-Operation Contract beyond its current expiration date of April 30, 1946, and further, that this Government does not desire to exercise the option for a 99-year agreement, as provided in Article I of the contract under reference.” (810.7962/2–1946) Secretary Patterson was informed in a letter of February 26, that the Secretary of State concurred in these proposals (810.7962/2–1946).
  5. Reference is to the letter of February 19 (see footnote above) which enclosed a list of airfields in Latin America currently being partially maintained by War Department funds through the Airport Development Program.
  6. Copy of letter of February 28 transmitted to Secretary Byrnes by Secretary Patterson on the same date, not printed.
  7. Not printed.