Memorandum of Conversation, by Mr. Albert H. Gerberich of the Division of North and West Coast Affairs

Subject: Discussion of Colombian loan applications and reaction of certain U.S. interests thereto.

Participants: Mr. Mills Mr. Bauer —ED
Mr. Espy —NWC Mr. Palmer —FN
Mr. Gerberich Mr. Walker —CP 1
Mr. Saugstad —TRC/S Mr. Hobbs
Mr. Wolf —AV
Mr. Young —OFD

Mr. Mills explained that the meeting had been called largely because of observations made by Mr. Saugstad regarding representations brought by U.S. shipping interests to hold up the approval of loans [Page 445] to Colombia unless that country agrees to remove discriminations against foreign shipping.

Mr. Mills said that he has understood it to be our policy to consider all loan applications on their economic merits, and not to use the loans as a club to exact economic advantages. He asked Mr. Saugstad to explain the attitude of the shipping interests.

Mr. Saugstad said that the National Federation of American Shipping exercises strong and continual pressure upon Congress. He understands that there is a bill2 now pending before one of the Congressional committees which, though it is phrased to indicate nothing more than protection of U.S. interests, nevertheless, was introduced for the purpose of combatting some of the discriminations put into effect by several Latin American countries, including Colombia.

A representative of the Federation has taken up with Mr. Saugstad the pending loan applications and asked that we insist on the repeal of existing shipping discriminations before we consider them favorably.3 Grace and Co. is the U.S. interest principally affected, but the United Fruit Company, Lykes Brothers, and other smaller interests are also involved. Mr. Saugstad asked if there would be any objection to telling the Federation’s representative that because of various complications there is no likelihood that the loan application will be passed upon in the immediate future.

Mr. Mills replied that we are anxious to do what we can to expedite action on the Colombian loans, and he did not think we should tell the Federation’s representative anything that might indicate the contrary. Mr. Bauer suggested that we tell him that we are trying to negotiate a new treaty with Colombia and that in the course of the negotiations we will keep in mind the shipping discriminations and give careful consideration to the Federation’s request.

Mr. Palmer suggested that the Department’s representative in the National Advisory Council4 be instructed to bring the situation before [Page 446] that body and ask that it express its opinion regarding the Federation’s request. This seemed to appeal to Mr. Saugstad, but Mr. Wolf of AV felt that it would be setting a bad precedent, as the NAC would in the future be approached in similar fashion when other loan applications come up. Mr. Wolf also referred to the impasse that has been reached in the negotiations for a bilateral air agreement with Colombia, due principally to the opposition of U.S. airlines to permitting Colombian lines to obtain landing rights in the United States as long as U.S. lines are refused similar rights in Colombia.

  1. Sheldon T. Mills, Chief, Division of North and West Coast Affairs; Jesse B. Saugstad, Shipping Adviser, Office of Transport and Communications; Joseph J. Wolf, Divisional Assistant, Aviation Division; John Parke Young, Adviser on International Monetary Fund, Office of Financial and Development Policy; Walter Bauer, International Economist, Division of Investment and Economic Development; Gardner E. Palmer, Foreign Service Officer assigned to the Division of Financial Affairs; Herman Walker, Jr., Commercial Treaties Branch, and James A. Hobos, Far and Middle Eastern Branch, Division of Commercial Policy.
  2. Reference is to a bill presented in the House of Representatives on April 3, 1948 by Congressman Henry Latham, which would “prohibit the entry at United States ports of ships of countries which discriminate against the United States merchant shipping”, according to despatch 250, April 8 from Colombia, not printed (811.1561/4–848).
  3. For Embassy note to the Colombian Foreign Office expressing this Government’s concern about the discriminatory practices, see instruction no. 1273 of August 20, 1947 to the Embassy in Colombia, in Foreign Relations, 1947, vol. VIII, p. 554.
  4. The National Advisory Council on International Monetary and Financial Problems was established by the Bretton Woods Agreements Act of July 31, 1945 “in order to coordinate the policies and operations of the representatives of the United States on the Fund and the Bank and of all agencies of the Government which make or participate in making foreign loans or which engage in foreign financial, exchange or monetary transactions”; the Council was composed of the Secretary of the Treasury, as Chairman, the Secretary of State, the Secretary of Commerce, the Chairman of the Board of Governors of the Federal Reserve System, and the Chairman of the Board of Directors of the Export-Import Bank of Washington (Message of President Truman to the Congress, March 1, 1946, in Department of State Bulletin, March 10, 1946, p. 380).