The Ambassador in Colombia ( Beaulac ) to the Department of State


No. 179

Subject: Embassy recommends that U.S. Government give urgent consideration to means to defend American lines against discriminations

I have the honor to refer to the Embassy’s despatch No. 161 of August 10, 1950, transmitting Presidential Decree No. 2657 of August 5, 1950,1 providing for the conversion into dollars or the currency of the respective country of pesos collected by foreign steamship lines for southbound freight.2

The Conference representatives expressed themselves as well pleased with the provisions of this decree and with the informal interpretations given to it. If honestly carried out, the Decree should have the result of placing the foreign lines in a position to compete once more with the Flota Mercante Grancolombiana which, as the Department knows, succeeded in obtaining a nearly complete monopoly of the carrying trade from the United States to Colombia as a result of discriminatory practices made possible by the existence of exchange control in Colombia.

Whereas the Conference representatives are pleased with the outcome of the present negotiation,3 the troubles of the foreign lines are by no means over. Officials of the Flota Mercante Grancolombiana, in conversations with Conference representatives following the promulgation of Decree No. 2657, have threatened to commence collection of northbound freights in pesos. These northbound freights consist [Page 834] principally of coffee. The Flota has had little participation in this trade. Grace Line representatives attribute this to 1) failure to solicit business and 2) inefficient service. The Flota, according to Grace Line officials, has no one soliciting coffee business. Grace Line has twenty-one solicitors. Furthermore the Flota makes little effort to give the regular service which the Grace Line has specialized in for many years. Coffee importers therefore cannot depend on Flota vessels to deliver coffee on any particular date or indeed at any particular place because of the wharfage difficulties the Company has had in New York. As reported already, Conference representatives are returning to Bogotá on September 5 to begin conversations with the Flota looking to a pooling arrangement for coffee exports.4

So long as exchange control exists in Colombia, and in other countries for that matter, the Colombian Government and the governments of the other countries will have a device which it has been proven is capable of driving foreign lines, including American Lines, from these waters. The Government of the United States, so far as the Embassy knows, has no device which is capable of defending American Lines from this kind of discrimination. I have grave doubts that the interests of American Lines can be adequately protected through diplomacy. Whereas Decree No. 2657 is satisfactory under the circumstances to American Lines, it can be modified or abrogated at the will of the Colombian Government. The Colombian Government has it within its power to engage in new discriminations against foreign lines at any time it may wish, and the fact that the Department of State of the United States claims that discriminations exist may not 3be sufficient to furnish protection to American Lines.

I see little prospect that exchange control will be abolished in many countries of this area in the near future. Assuming that exchange control will continue, I wish seriously to recommended that our Government give urgent consideration to means, probably legislative, which will place the Government of the United States in a position to defend American Lines against discriminations made possible by the existence of exchange control in other countries, and means to prevent foreign governments from dictating the terms on which maritime trade between the United States and the countries concerned shall be carried out.5

Willard L. Beaulac
  1. Neither printed. (921.531/8–1050)
  2. In despatch 174 from Bogotá, August 14, 1950, the Embassy reported in part that representatives of the Flota Mercante Grancolombiana and of the Atlantic-Gulf Caribbean Steamship Conference had agreed that the Flota should bill its southbound freight customers a surcharge equivalent to the stamp tax on exchange conversions. (921.532/8–1450)
  3. Reference is to negotiations among the interested steamship companies which began in Bogotá on July 6 and which resulted in the arrangements mentioned above and in footnote 2.
  4. In despatch 330, September 21, 1950, the Embassy stated in part that representatives of the U.S. lines in the Steamship Conference had signed with Flota officials an agreement giving the Flota a minimum of 35% of the total coffee movement to that line’s regular U.S. ports of call. (921.532/9–2150)
  5. At the conclusion of a letter of September 1, 1950, to Mr. Miller, Ambassador Beaulac commented: “When this Flota business first came up, we made a lot of silly and useless threats to the Colombians. I say silly and useless because they were empty. If we had some real power with which to defend American lines, we would not have to make any threats.” (921.53/9–150)