Office of the Historian

814.2376/9–650

The Chargé in Guatemala (Wells) to the Department of State

confidential
Guatemala [City], September 6, 1950.

No. 249

Ref: Department’s (ARA: MID) Memorandum of Conversation on August 14 on “Ambassador Goubaud’s Trip to Guatemala”.1

Subject: United Fruit Company Contract.

In the referenced memorandum of conversation, Ambassador Goubaud is recorded as saying the United Fruit Company has not at any time offered to negotiate a new contract with Guatemala, although the Company has renegotiated its contracts with Costa Rica and Honduras.

While the Ambassador’s statement is literally correct, in as much as the Company has never made a formal offer, it conveys an erroneous impression. Company officials on several occasions have intimated that the Company would be very happy to give Guatemala the same type contract, if the Guatemalan Government would take the first necessary step by correcting the present discriminatory and hostile treatment of the Company in this country. Specifically, this refers to the discriminatory clauses of the Labor Code, and the unilateral and retroactive implications given Article no. 101 of the Constitution in respect to the revision of contracts. According to Mr. Taillon, Guatemalan Manager of the United Fruit Company, he mentioned this personally to Minister of Economy, Alfonso Bauer Paiz in early 1949, and had talks along these lines with Bauer Paiz’ predecessor (Augusto Charnaud MacDonald). Also, Vice President Turnbull of the United Fruit Company discussed the matter with President Arévalo, leaving with the latter a draft copy of the Costa Rican contract as an example of what the Company is willing to do for Guatemala.

It is apparent the Company believes strongly that the first move is up to the Guatemalan Government to create a favorable atmosphere for renegotiation. Local politics, of course, virtually preclude any outward change in the Government’s attitude until after the forthcoming elections, and the Embassy is inclined to the opinion the Company has nothing to gain by approaching either the Government or the [Page 912] several Presidential candidates on the subject at the present time. However, after the new administration takes office there is a possibility new overtures on the part of the Company may fall upon more receptive ears.

Milton K. Wells
  1. Not printed.↩