Under Secretary’s Meetings, Lot 53 D 250

Notes of the Under Secretary’s Meeting, Department of State, 9:30 a.m., October 3, 1951

UM N–402

[Here follow a list of those persons present (20) and discussion of matters unrelated to Guatemala.]

Situation in Guatemala

3. Ambassador Schoenfeld reviewed the current political and economic situation in Guatemala. He reported that the political situation is obscure and inconsistent. There is a latent antagonism towards the [Page 1445] U.S. The new President is leftist in labor matters but is not a Communist. He is not as antagonistic towards the U.S. as others might have been. However, he is surrounded by many leaders who are basically antagonistic towards the U.S. The Communists and extreme leftists are in key positions and occupy positions of strength in the labor movement. Very few of these leaders understand communism, but they have adapted themselves to communist discipline.

4. The church is a potential ally of the U.S. but its power has been shattered. The army is also a potential ally but the Ambassador has not seen great political acumen in the military organization. The substantial classes in Guatemala take no interest in polities.

5. Ambassador Schoenfeld reported that if the problem with the United Fruit Company is not settled properly, the present Guatemalan administration, as well as the entire country, would be wrecked. Our greatest problem in Guatemala is our own psychological adjustment of playing an intermediate role. We must do things invisibly and this requires great experience. At the present time, however, our staff in Guatemala is very new and has not built up the necessary experience in that country. We must attempt to take apart the communist core in Guatemala without affecting the present administration and our general Latin American policy.

6. The problem with the United Fruit Company began as a wage problem, when the company stated that they were unable to increase the wages of the workers. Before the wage contract expired, the workers asked for a wage increase, but the labor court suggested that they continue to use the present contract. Recent disastrous storms have ruined the United Fruit banana farms which has made a wage increase impossible. About the same time the dock workers asked for more money. The question now facing the United Fruit Company is whether they should attempt to rehabilitate the area, or whether it is economically sound for them to continue to operate in Guatemala. Unless this problem is handled with great care, the country will go to pieces. The country at the present time is in serious financial difficulties with Standard Oil and others. Nationalization of the banana farms is a possibility because of the peculiar economic theories which are expounded by some of the leaders in Guatemala. Ambassador Schoenfeld felt that it would be disastrous for Guatemala, as well as for US-Guatemalan relations, if the United Fruit Company left. This is especially true in Guatemala, but also what is done in Guatemala will affect the surrounding countries. The Ambassador emphasized that any visible interference by the U.S. would bring the latent antagonism against the U.S. to the surface.

[Here follows discussion of Guatemala’s signature of the Japanese peace treaty and another matter unrelated to Guatemala.]