The Secretary of State to the Deputy Director of the Office of International Trade, Department of Commerce (Macy)

top secret

My Dear Mr. Macy: As you may be aware, the Department has for some time been seriously concerned with the infiltration of communist elements into positions of power and influence in the Republic of Guatemala. In recent months, their activity has been markedly increased. The new Administration of Colonel Arbenz, which in its pre-inauguration period gave some promise of exercising a moderate influence, has so far been unwilling or unable to act against the communists. Consequently, the Department recently saw fit to review its policy towards Guatemala and, as a result, adopted certain measures designed to persuade that government that its best interests do not lie in the perpetuation of its present attitudes.

The measures covered in this policy include the withholding from Guatemala of those types of assistance which the United States is not obliged to render, the suspension of United States investment on the Inter-American Highway in Guatemala, no expansion of technical assistance under the Point IV Program, a selective curtailment on the selling of United States arms and ammunition to the Guatemalan Armed Forces, opposition to any loans to Guatemala by the United States or international lending agencies, and the application of economic pressure on Guatemala through this Government’s controls on the allocation and export of scarce materials. Implementation of this last-mentioned phase would of course require the cooperation of the Department of Commerce. Conversations held with Mr. George Wythe1 have revealed definite practical possibilities for action.

Procedurally, the Department envisages the establishment of quotas and allocations for Guatemala, from the growing list of commodities subject to export controls, at levels relatively lower than those for comparable countries in the area and at the lowest point justifiable on an historic trade and/or consumption basis. This action should result in initial pressure, forcing Guatemala to return with special requests for quota enlargement, priority assistance, etc. Failure to meet such requests as well as delays in the shipment of approved materials will be attributed on our part to the critical world situation and other technical and procedural reasons better known to the experts in your Department. The Guatemalans will be left to draw their own deductions, and we will attempt to insure that at no time will their officials have any tangible grounds on which to accuse the United States of discriminating against Guatemala for political reasons or of attempting to [Page 1444] intervene in her internal affairs. To achieve this purpose it will be necessary, from time to time, to give partial or full satisfaction to certain requests. This will prevent Guatemala from being able, by comparison with other countries, to document a case proving that the United States is applying economic sanctions against it. It must be accepted that United States interests in Guatemala, such as the United Fruit Company, the railroad, etc., will, to a certain extent, suffer a pinch on their needs about equivalent to that suffered by the Guatemalan economy in general.

I know that you will agree that it is of the utmost importance that this policy be made effective in the strictest secrecy; as, were it to become known to Guatemala, the repercussions would be far-reaching and might well prejudice the best interests of this country and its relations with other nations. The Department, therefore, believes that the necessary information of what this policy consists of should be restricted to the several key officers in the Department of Commerce who would be entrusted with its implementation.

I hope that the Department of Commerce will agree to lend its cooperation in this matter and would appreciate receiving your views and recommendations. A resumé of the procedure to be followed with reference to the allocation and export of controlled materials to Guatemala would be most helpful to officers in the Department who will have liaison with the appropriate officials of the Office of International Trade.2

Sincerely yours,

For the Secretary of State:
Edward G. Miller, Jr.3

Assistant Secretary
  1. Director, American Republics Division, Office of International Trade, Department of Commerce.
  2. No reply to this letter was found in the files of the Department of State or the Department of Commerce, but see the memorandum of conversation, by Edward W. Clark of the Office of Middle American Affairs, dated December 18, 1951, p. 1448.
  3. Assistant Secretary of State for Inter-American Affairs.