Created: 7/1/1955

OCR scan of the original document, errors are possible

fori Chief wh

lioablng of British Ship SS ^prln^jcrd

British freighter,as bonbed andat anchor in the port of San Jose, Guatemala, onuneto roports, boebs sere dropped by an unidentified pleno,was attached to tho forces of Carlos CA1TILL0truggle to overthrow the government of Jacobowere lost, but the cargo, veined ataoloss.

shio ens Insuredorwolglan subeidary of Lloydo'o. Themericanwhich shared the underwriting of the earpo,inalwith the owners forl6. The American underwriter cXaics

were subsequently taken over by tho Now for* City admiralty law firm of Hla^hart, &igler, Jones and Houston, ao representative of she Americanisk Reinsurance Rxchange.

horough study of the background cflnu, after receiptable froa Guatemalathat an urgent settlement was advisable* Conclusions of thethat theSprlngfJord was borabed by CASTIi-LO Armas forces, bythe Lincoln field command, without authorization cither fromor from Lincoln, and that tho pilot was an American national

eho volunteered to fly for CASTILLO and who ls now living in Guatemala. Tierue identity la known to unauthorised persons, and it was reported that ho had boasted locally that heresponsible for tho sinking.

h> Onk headquarters advised

that the Embassy should aak CASTILLO to make an immediate settlement eitn the British representative. CAST"LLOauthorised tootal0 for the ship and cargo, using th* argument that while the presence

of theprlngfjordortevolution o'ibjoctod it to unwarranted risk the Ouatomalan government va* anxious to show ita good faith by royaenteasonable sum. The British government had previously statedoteuly that the attack was clearly illegal. CASTILLO was asked to Take clear thet his government was in poor financialr!0eat sacrificeesture of friendship .for Great Britain.

adopted this suggestion and co ^tunicated withLegation along the lines outlined onctober, Duringweeks there wore no further develonr-ents, and onanuaryMann of the American Ertoassy suggested to CASTILLO thatOffice prod the Britisheply to the Guatemalan offer.

1 larch the British governnentote to Guatenala requesting clarification as lo whether0 was intended to cover onlyp and that portion of thonsured in Great Britain.

connection with tha reference in this note to car.;oGreet urltain, it should be noted that onh the Londonof Sinclair, Roche and Temperley advised the Ouateaalanthoy were acting on behalf of the underwritershipmentcotton, which naa reported to have been on the Siinvestigation made through the facilities provided by Coverthat there wase item on the ship which wa3 not 1the group settlement made by thefrican Insurance companies.

This item consistedales ofhich waa insured by the Hanover I'leurance Coraoony of Hoston, through th* American International Underwriters. Ho detailed check of the ship's manifest has been made. The insurance contact of Cover Division made the statement that he had heard reports to the effect that the clni* forales hartcr placed twice, but this statement *as not amplified.

replyuery of the 0 covered, Headquartera statea thatos thothe sun was to provide for all Iossps to the shirr.Om original suggestion was madeTU0 it was evidentlythe cargo was largely insured in Groat Britain. It wasthat CASTILLO us; this line of reasoning in making anto the British, and that heh the British and thsof the African underwriters that0 la theand that it be split between the two grouos in proportioninvestment of each in the ship and cargo.

i). There were no further developments untiluneCharge d'affaires ttann was briefed by an official of the British Loga-^ion,ewspaper leak concerning negotiations between thend President CASTUXG. It was reported that American underwriters hadlaim0 with the Guabenalan ^toaasyasfdngton, and that later this amount was increased to British unaerwriters havelaim0 to the British Foreign Office. Of this0 is stated to be for cargo and the balance for thed such miscellaneous items as tha cost of repatriating

the crew. It waa indicated that the Urltish Foreign Office regards this figurenflated and doubts the validity of0 cargo plain. The British Ambassador in Washington has been ir.atnucted by histo approach the Departnent of State rogardine; the oosMbilltyoint demarche to the 'luatemalan govomaent. In the opinion of the British Legation in Guatemala thef tne shipin ton act and the claim ahould therefore be pressedatter of principle.

9* o ofune,

nas doubtful whether the matter coula oe seiuLeuX)he Qnatemftlaii government ls still using this figure in itsore realistic figure was stated to It is ooliovertat the British willeasonable viewettlement of theirs they are aware of the financial cornition of thetomalan government and of the fact tliot any rayaent, by reducing funds availableomestic dovelocental program, is tied in with aid fro* tha United States. It nas suggested by the 'tation thate authorised to increase the offerC0 In an attempt touick settlement. In replying ifeadnuarters said that the additional funds would be made available if necssary butdded that all possibilities be exhausted before authorizingLIX)attleo'wit. It was reasoned that the underwriters, aware of the financial condition of the Guatemalan government, -ay boo settle for what they can get. In conclusion it was swted that af:orts were being made toompetent admiralty lawyer, who would be able to offer the legal advice needed Vy'fllXO in his negotiations.


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