814.5045/11–3046

The Assistant Secretary of State for American Republic Affairs (Braden) to the Chairman of the Board, International Railways of Central America (Simpson)

My Dear Mr. Simpson: I have received your courteous letter of November 30, 194614 with further reference to the difficulties experienced by the International Railways of Central America. I appreciate very much your courtesy in keeping me advised of developments both by the means of this letter and through Mr. Tennyson’s telephone conversations with Mr. Newbegin on December 2.15

I was happy to be able to inform the Guatemalan Ambassador, during his call last Monday,16 that the matter had apparently been satisfactorily settled. I took the occasion of his visit, however, to impress upon him the concern which was felt with regard to the possible nationalization of the Company and particularly to point out that it would be difficult to make adequate or effective compensation if nationalization were contemplated. The Ambassador denied [Page 892]that such a procedure had ever been under consideration. He did, however, mention the fact that certain American Companies had been operating under long standing contracts some of which had been granted in contravention of the Constitution operating at the time the contracts were entered into. In this regard, he was referring particularly to exemption from certain Guatemalan taxes. He mentioned the commission set up by the Guatemalan Congress to review contracts from the taxation angle.17 He stated further that he had been authorized by his Government to approach some of the American companies directly in an effort to reach a fair and voluntary agreement with them. I am writing you the above in confidence for your background information as I am sure it will be of interest to you to know that such an approach is contemplated. I very much hope that mutually satisfactory agreements can be reached. I wish to assure you that the Department is always ready to be of any appropriate assistance.

Very sincerely yours,

Spruille Braden
  1. Not printed.
  2. Memorandum of conversation not printed; Mr. Tennyson reported that the strike of Guatemalan railroad workers had been averted as a result of President Arévalo’s mediation; he also reported the President’s having stated to the President of the International Railways of Central America (Bradshaw) that the Guatemalan Government had no intention whatsoever of nationalizing the property (814.5045/12–246).
  3. Memorandum of conversation with the Guatemalan Ambassador on December 2, 1946, not printed.
  4. American officials were concerned that this action had been taken to find grounds on which the Guatemalan Government might base cancellation of these contracts.