715.00/6–1253

Memorandum by Gordon S. Reid of the Office of Middle American Affairs to the Deputy Assistant Secretary of State for Inter-American Affairs (Mann)1

secret

In view of my forthcoming departure after six years as desk officer, it appears reasonable to set forth some information about Honduras for the benefit of those who will be here after I leave.

[Page 1296]

In early 1947, a telegram2 was received in the Department which described Honduras as being a “paradise” in the midst of a world of tension and uneasiness. For months thereafter, Honduras was known as the “paradise of the Western world” and this joke became more and more a facetious description of the events in that country. At that time it was still under the dictatorship of Carias 3 who, admittedly, reigned as a beneficial and austere tyrant for sixteen years. His regime brought certain benefits to the country which fell into two main categories, political peace and financial rehabilitation. Honduras has had 116 presidents in 120 years and its external debts, when Carias took office, amounted to around $11 million and its internal debt amounted to about $36 million. However, the cost to Honduras for his regime was not only in the loss of civil rights for the entire population, but also in the shutting off of the country to progress and development. Until 1943, Carias built no roads, maintained his social welfare program at the lowest possible level, and lived primarily on proceeds derived by yearly agreements with the United Fruit Company, Standard Fruit Company, and the New York & Honduras Rosario Mining Company.

In foreign affairs, Honduras maintained a policy of strict neutrality and its army was maintained at about 6,000 men some of whom actually showed up for roll calls, barracks duty and other normal military services. The political hangers-on around Carias devoted most of their attentions to grafting and the Comandantes of the provinces were strong-arm men known to be loyal to Carias.

It is my personal opinion that a part of the trouble now facing the American companies arose from the feeling of security and stability resulting from Carias’ policies. They lulled themselves into a belief that Honduras would never change and that their activities were above reproach. During these years, many Hondurans departed in self-imposed exile and came to the United States where they went through school and college and, in some cases, became United States citizens. A smaller number in late years became infatuated with the social experiments in Guatemala and one became the secretary to President Arbenz.

This “paradise” was, therefore, misleading and our Embassy during those years did nothing to look beneath the surface.

[Page 1297]

Part II

At present the “paradise” has disappeared. With the inauguration of Galvez 4 in 1949, civil rights returned to Honduras and with them came a return of many of those who had been in exile. No political party activities occurred until 1952 when the climate began to warm up for the elections to be held in 1954. Under the Honduran Constitution, a candidate for a party cannot begin his campaigning until one year prior to the election. The Galvezistas, all normally members of the Nationalist Party, began to put pressure on President Galvez to run for office again. The President resisted this pressure and in various statements assured the country that the constitutional requirement that no man succeed himself would be followed. However, after increasing pressure, the National Reform Party was established. It is sponsoring a constitutional amendment to allow Galvez to run again. In the last few months he has made no efforts to stop the activities of this group and it would appear that he is now willing to be reelected.

This action would appear to be about to cause a split between Carias and Galvez and it would also appear that an important, new party has been established in Honduras. The Nationalist Party, headed by Carias, will have to seek a candidate. While they may rely on Carias, it is unlikely that he would again be a candidate at the age of 78. For the future it would appear that a great deal of turmoil will take place and that a dangerous split may arise during the electoral campaign. The bitter feelings engendered might be a forerunner of longtime trouble in Honduras. In the event of Galvez running for reelection against either Carias or another candidate of the Nationalist Party it is very likely that a reasonably honest election would occur and it now appears equally certain that Galvez would win easily.

Philosophically, there is little difference between Galvez and Carias in theory, but in practice Galvez is a much more liberal person, devoted to the rights of the population and abler in the development of his country economically. Both are anti-communists and both fear Guatemalan impingement on Honduran territory and life. The nationalistic trend shown under Galvez would probably continue under Carias, but the American companies would probably once again be able to make “special arrangements” with a Carias government which they could not make, and have not been able to make, with Galvez. The weaknesses of the Galvez regime are obvious. Mainly they are that he relies to a large extent on Ministers who are not experts in their fields and who are easily swayed by nationalistic arguments.

[Page 1298]

The third party in Honduras’ political life is the Liberal Party. This party is suffering a period of doldrums resulting primarily from a loss of leadership and its revolutionary tendencies during the Carias regime. It has no real hope in the near future and would probably join with the Reformed Party in reelecting Galvez.

Part III

Financially, Honduras is in excellent condition. Galvez devoted the first year and a half of his term to paying off the last of the external debt and today Honduras owes no bondholders or bankers anywhere in the world. Its internal debt has been cut to $8 million which is well within its ability to service. Dollar reserves now stand at $27 million and each year the budget has shown a surplus averaging about $1,500,000. This type of unbalanced budget would appear to give Honduras a fine place in international credit.

The economic development of the country has progressed under Decrees No. 104 and 105 of April, 1950, which set up an orderly plan for development and one within the Honduran’s ability to absorb. Roads have been opened and are being opened. Port development is under consideration and first changes in the reorganization of the government are underway. In cooperation with the Point Four Program of the United States, developmental activities in agriculture, public health, education, and government services are moving ahead. From the beginning of these programs a coordinating committee was established and as a result duplication of effort after the first few months has been unknown in Honduras. United Nations technical assistance has been very limited and is not considered a problem at the present time.

The Honduran policy is to avoid seeking loans for the development work and to set aside a part of the budget each year to accomplish the purposes for which a loan would cover. The Galvez Government may be criticized by Hondurans for slowness in its development program, but it would appear that their approach is a more thoughtful one than is usually found in the Central American countries.

While economic nationalism has grown in Honduras during the last four years, it is not unexpected since a country which had for sixteen years found itself at the mercy of the Carias regime; and special arrangements with American companies, is to be expected to confuse license with freedom. Until the commercial laws of Honduras are revised and the tax laws reviewed, Honduras cannot be said to be a safe place for American investment except under the strictest terms and understandings. While the American companies have complained that their treatment is not as good as under Carias, nevertheless, their profits indicate that they are not suffering so bitterly as they might like the public to believe.

[Page 1299]

Part IV

In foreign affairs, the Galvez regime has maintained the Carias policy of neutrality in all Central American matters. At the same time it has joined ODECA, joined U.N. agencies, and has been reasonably firm with Guatemala.

Galvez reduced the Army to 2,600 persons all of whom are supposedly actually on duty and of that group a 400-man battalion is under training by a United States Military Mission. At the same time, a small United States Air Force Mission is training the small Honduran Air Force. The Honduran Government has just recently purchased $492,000 worth of military equipment in the United States and from time to time purchases airplane equipment.

A policy of neutrality is so deeply ingrained in Honduras that it is very difficult to get the Hondurans to participate actively in any multilateral organization where commitments for the future are being made. As a result, it is usually necessary for an education job to be done by our Embassy before Honduras will, with any enthusiasm, join in an international effort.

Part V

General Carias is 78 years old, 6 ft. 4 in., weighs about 260 lbs., and is noted for his mustache and his hulking shoulders. He is a quiet and reserved man with little or no humor and as the years have gone on he has tended to be more and more pleased with his position as an elder statesman of Central America.

President Galvez is a charming six footer with a rather sad face but a person of great good humor and intelligence. He was at one time a lawyer for the United Fruit Company and he has had to live down that part of his career. He is vigorous, stomach ulcerish and has, reputedly, bad kidneys. He is approximately 55 years old. He is the father of two sons both of whom reside in Honduras; and Roberto is the Chief of Civil Aviation….

Julio Lozano is the Vice President of Honduras, Minister of Justice, Minister of Fomento, Minister of Labor, and a leading businessman. He is about 65 years old; is considered to be the strong man in the Administration, and Galvez defers to him in matters of economic policy but not on matters involving civil rights. Lozano is an extreme conservative, partially anti-U.S., and given to terrible temper tantrums during which he always resigns. Galvez lets him cool off and then sends his letter of resignation back to him. His presidential ambitions seemed to have been quashed for the moment and perhaps for always since he has never been a popular person and is likely to receive the candidacy only by extra pressure from either Galvez or Carias.

[Here follow additional comments about members of President Gálvez’s cabinet and the Honduran Embassy in the United States.]

[Page 1300]

Section5 VI—Outstanding Problems

1. Inter-American Highway Agreement.

Honduras has never ratified the Inter-American Highway agreement and has stated as its reason that the highway does not run through Tegucigalpa. It is anticipated that when the connecting road is finally built Honduras will probably sign the agreement

2. Economic Nationalism Affecting American Interests.

This situation has become more and more of a problem in recent years and is one which will have to be followed very closely by the Department and our Embassy in that country. It is my opinion that the Embassy could do more in the way of discussing these problems with officials of the Government and by that effort perhaps mitigate some of the nationalistic measures now under consideration.

3. Strengthening Honduras’ Anti-Communist Position and its Ability to Withstand Communist Propaganda and Infiltration.

This speaks for itself and again requires an Embassy made up of officers able to be persuasive along these lines.

Section VII

At the present time we have a Consulate at San Pedro Sula on the north coast of Honduras serving the largest commercial city in the country and one growing more rapidly than any other. It is the communication hub of the area and it is in this area where communist seepage will be probably the greatest. It is my belief that the Consulin-Charge, Mr. Pedersen,6 has done a very good job and my only comment would be that his reports be sent directly to the Department instead of through the Embassy in Tegucigalpa.

Our Embassy in Tegucigalpa is not competently manned at the present time and is, therefore, becoming more and more unable to handle the problems enumerated above. Mr. Erwin was the originator of the “paradise” theory and firmly believes that by saying and doing nothing, his “paradise” may be maintained. While he has a very large knowledge of Honduras, and is popular with almost all Hondurans and many Americans, his administration of the Embassy and his activities regarding United States problems have not in my mind been satisfactory. During the interim period of five years when he was out of office, [Page 1301]Ambassador Daniels,7 Ambassador Bursley,8 and Byron Blankinship 9 demonstrated that Hondurans are as much receptive to persuasion and to education as are any other citizens and that major successes in policy could be achieved by some hard work. It is my belief that without a change in Ambassadors, and probably changes in the staff, no adequate representation in Tegucigalpa is possible.

Section VIII

If one believes that a “paradise” is not possible in Honduras at the present time it is necessary to think ahead to what may be forthcoming in that country. In my mind, Honduras is awakening from a long sleep and is beginning to understand that it has potentialities not yet exploited. I am fearful of the weaknesses of its Foreign Minister and its general tendencies to believe that one can live with communism on an equal basis. Therefore, I come to the conclusion that the job ahead for the United States is to protect our citizens from economic nationalism, communist infiltration in the form of men and ideas and, lastly, to preach the importance of emphasizing that Honduras is part of an area of major interest to the United States where communism must be faced and defeated.

  1. Addressed also to Special Assistant to Assistant Secretary Woodward, Deputy Director of the Bureau of Inter-American Affairs Neal, and Officer in Charge of Central America and Panama Affairs Leddy.
  2. Not identified.
  3. Tiburcio Carías Andino ruled Honduras from 1933 to 1949.
  4. Juan Manuel Gálvez.
  5. At this point in the source text, the drafter began using the word “Section” to denote portions of the memorandum.
  6. Alfred J. Pedersen.
  7. Paul C. Daniels, Ambassador to Honduras, Apr. 10–Oct. 30, 1947.
  8. Herbert S. Bursley, Ambassador to Honduras, Dec. 18, 1947–Dec. 12, 1950.
  9. Between 1947 and 1952, Mr. Blankinship served as Second Secretary and then First Secretary of the Embassy in Honduras.