HO–15. Memorandum of Conversation, by the Officer in Charge of Honduran Affairs (Chaplin)1
SUBJECT
- Political Situation and United Fruit Company Plans in Honduras
PARTICIPANTS
- ARA—Thomas C. Mann—Assistant Secretary
- AFL/CIO—Andrew McClellan
- ARA/RPA—Mr. Henry Hammond
- ARA/OAP—Mr. Chaplin—OIC—Honduran Affairs
- ARA—Mr. Pryce
Mr. McClellan, who had recently returned from a visit to Honduras, requested an appointment to discuss the political consequences of the reported plans of the United Fruit Company to withdraw from some public services on the North Coast of Honduras and to lease its banana farms to private Honduran producers. He said that if United withdraws from the hospital, the schools and the commissary, the Government will be unable to take them over, and the result will be their collapse. The prospect of this withdrawal is causing great anxiety in Honduras, and the plans to lease banana farms, to local producers are viewed by the Fruit Company union, SITRATERCO, as a maneuver to break the union.
Mr. McClellan stressed the unemployment, economic stagnation, increasing political stability in Honduras, and the alarming growth of influence of the pro-Castro, communist, and extreme left-wing Liberal groups. He said that, the Villeda Government is riddled with unreliable individuals, many of, whom are pro-Castro. He emphasized that the reported plans of the United Fruit company to disengage from its Honduran operations would have grave political consequences, which might force Villeda to compromise with the extreme left faction of his party, or might result in his replacement by a pro-Castro government.
Mr. Mann expressed his concern over Mr. McClellan’s reports, and said that he would ask the Embassy to make an urgent assessment of the political trend in Honduras.2 Mr. Mann called Mr. Sunderland, [Typeset Page 824] President of the United Fruit Company, relayed the general substance of Mr. McClellan’s reports, and requested that [Facsimile Page 2] Mr. Sunderland defer execution of any new United Fruit programs for disengagement from Honduras pending a discussion of their political impact. He said that he would be in a position to discuss the matter as soon as the Embassy had submitted a report now being requested. Mr. Sunderland agreed to defer action and agreed to discussions with the Department in approximately 10 days.
Mr. Mann suggested that it might be productive if Mr. McClellan were to go to Boston and discuss the Honduran problem with United Fruit officials. Since Mr. McClellan was leaving shortly for Central America, it was agreed to explore this idea further upon his return. Mr. Mann observed that in principle, the United program to turn more of its operations over to local operators was desirable, but serious political and economic problems could arise, not only in Honduras, but in other countries where United operates and may be planning similar programs.