814.504/8–447
Memorandum by the Chief of the Division of Central
America and Panama Affairs (Newbegin)21
confidential
[Washington,] August 4, 1947.
In accordance with instructions from the Department, I proceeded to
Guatemala on July 29 and met with the Foreign Minister22 on July 30 to discuss
the Guatemalan Labor Code and its effect on the United Fruit Company. A
copy of the memorandum of that conversation is attached. It will be
noted that it follows closely the Department’s stand, as agreed upon
before my departure. It was unfortunate that the visit coincided with
the resignation of the Foreign Minister who announced his action during
the conversation itself. He did however bring the substance of the
conversation to the attention of the President,23 and was himself in
complete accord with the views of the Department.
In a conversation with President Arévalo on July 31 Ambassador Kyle was
informed that the President would be pleased to receive the views of the
company, in as much as certain changes in the code would have to be made
at the September session of Congress. The company presented its views in
a communication to the President dated August 1. It emphasized not only
the two articles, 13, 243, which the Department viewed as discriminatory
but mentioned a number of other articles which the company itself
regarded as discriminatory. Unfortunately, the communication to the
President was not presented in person by representatives of the company,
although the latter expected to see him within a few days following the
presentation.
Before my departure Mr. Corcoran of the United Fruit Company suggested
that a formal protest be made. He was informed that in view of my
comment to the Foreign Minister, and in as much as the company officials
had not yet seen the President, this did not appear to be the
appropriate time to make such a protest. Furthermore, clearance had not
been obtained from the Department on this point.
In a conversation with Senator La Follette24 this morning, I informed
him of my views in this regard. He said that while he had come to the
Department prepared to urge that a protest be sent immediately, he felt
it well to postpone this action until he had communicated again with his
representatives in Guatemala.
It was most regrettable that my visit to Guatemala coincided with
[Page 708]
a cabinet crisis, the outcome
of which is not yet clear. It appears, however, that President Arévalo
has definitely decided to throw in his lot with PAR and the more radical Guatemalan groups. It is still too
early to tell what the effect of this will be, or even whether any very
useful purpose was served by my trip.
[Annex]
Memorandum of Conversation, by the Chief of the
Division of Central America and Panama Affairs (Newbegin)
confidential
Guatemala, July 30,
1947.
| Present: |
Minister for Foreign Affairs |
|
Ambassador Kyle |
|
Mr. Donovan25
|
|
Mr. Newbegin |
Accompanied by Ambassador Kyle and Mr. Donovan, I called on the
Foreign Minister, Silva Peña, on July 30. I began the conversation
by informing the Foreign Minister that the purpose of my trip was
solely to discuss with him the Guatemalan Labor Code and its effect
upon the United Fruit Company.
I explained that the United States Government was most seriously
concerned, both with regard to certain discriminatory Articles of
the Code and the over-all result as it related to the operations of
the Company. I told him that I had not come prepared to present any
formal protest, although we felt there were at least two provisions
of the Code which would justify it. It was our hope that no formal
protest would become necessary.
Reference was then made specifically to Articles 13 and 243 of the
Code, relating to employment of aliens and the right to strike
against agricultural enterprises respectively. The Foreign Minister
stated that no reference had been made to Article 13 in the
Department’s Memorandum of May 28, and that he himself, because of
his many duties, had been unable to give the attention to the Code
which it deserved. Upon reading Article 13 he expressed complete
surprise and said that he had been unaware of the fact that
employment of aliens could be limited to the extent set forth
therein.
With regard to Article 243, he at first claimed that, since the
products of the United Fruit Company were subject to deterioration
during the harvest period in case of a strike, he felt that there
was no danger involved. However, he subsequently admitted that the
wording was ambiguous and that our cause for concern might well be
justified.
[Page 709]
The Foreign
Minister was then informed that there were various other articles in
the Code which appeared discriminatory, but upon which we were not
prepared at this time to determine whether they might serve as the
basis for any formal protest. I then told the Foreign Minister that,
aside from the question of discrimination, we were very much
preoccupied lest the effect of the law be such as to seriously
interfere with and possibly make impracticable the further
operations of the company. I told him that I knew that the company
officials were studying the matter with great care, taking into
account the possibility that they might find it necessary to
withdraw from Guatemala. I said that, whereas I could give no
definite information as to whether they would do so or not, I
believed the possibility should be taken into consideration. I said
that I was mentioning this not by way of any threat of any sort, but
merely because it was desirable to face the situation as it was. It
was pointed out that any such development might well have a serious
effect upon relations between the two countries; that, whereas the
United Fruit Company might take a serious loss in any such move, the
importance to Guatemala likewise would be paramount.
Reference was made to the many contributions which the United Fruit
Company had made and was making to the economy of Guatemala,
specifically with reference to the large amounts of money paid in
salaries, the purchase of bananas from independent growers, the
payment of taxes, and other contributions of a social nature.
Reference was likewise made to the effect which the United Fruit
Company withdrawal would have upon possible investors from the
United States who would, of course, be ultra-cautious if it were
felt that the United Fruit Company had been treated unfairly here.
The point was made again that the United Fruit Company was entirely
willing to meet any requirements of law which applied to all other
enterprises but that the company felt that in adopting the Code, the
Guatemalan Government had definitely had the Fruit Company in mind
and had drafted its provisions accordingly. I expressed the hope
that in its own interest as well as that of the Company and of the
relations between our two countries the Guatemalan Government would
find it possible to review the Code in an effort to amend it so that
the Company could operate with sufficient guarantees and assurance.
It was suggested that it would, of course, be preferable to make
such an arrangement directly with the Company itself. The Ambassador
pointed out that foreign investments at this stage of its
development were particularly desirable for Guatemala. He said that
in the early days of American history there were large-scale
investments on the part of the British, particularly in railroads
and in Texas ranches. He asserted that these investments
[Page 710]
had been particularly
beneficial to us and had played a very important part in our
development. He continued that the British no longer had holdings of
such importance and that they had passed to American owners
naturally and not as a result of pressure or legislation.
The Foreign Minister replied that he was in entire accord with our
views set forth during the conversation, but that he thought that in
all frankness he should inform us that he would probably no longer
be a member of the Government after a day or so, and that he had
already submitted his resignation to the President. He stated that
his views on a number of subjects were not in accord with those of
the administration and he did not feel that he could retain his
present position when he foresaw certain obligations which other
members of the Government were unwilling to meet. He said that he
would in any case inform the President of our conversation. He was
requested to do so, emphasizing:
- 1.
- The existence of the two discriminatory Articles under
reference;
- 2.
- The existence of a number of other Articles which appeared
discriminatory and would seriously affect the operations of
the Company; and
- 3.
- Notwithstanding 1 and 2, the desirability, in the interest
of Guatemalan economy and of relations betwen the two
countries, of reaching an arrangement which would not
prejudice the Company’s operations.
