forwarded toetter from Mr. Lawrence
CIA HISTORICAL REVIEW PROGRAM RELEASE AS SANITIZED
President of Ptuiocean Company, Inc. which in turnetter froa w. w. Stevens, Vice President of the sane company. Idthereopy of Jackson's reply to Mr. Smith.
Mr. Smith in his letter points out that Panocearimall company operating, among other places, in Guatemala, lie states that they are having difficulties there. These difficulties are not with the govern-neat but are of the Company's own making and the result of tbe fear in. Government. public of the Cuateaalan Coraminist He states that they have operated lumber millsearalf lo that country and have bad no difficulties with the government, but are unable to re-finance. capital because of the fear in this country of communion In Guatemala. He states. policy le doing nothing to straighten out the mess in Guatemala.
Mr. Stevens in his letter brings out the same points stating that most of the difficulty stems from outsoded contracts with United Fruit Company and International Hallways of Central America. These contracts
C. D. Jackoon notes In his memorandum to you that to* simply confirms
give distinct advantage to the companies at the expense of thcpeople. The Communists have seized on this to further thc causei urn. He believes thereeedore reasonablethe problem by. Government in handling tbe delicatethe United Fruit
bin "the neceeelty for our getting
and effective work done. After
have seenill forward it to DD/P.
THE WHITE HOUSE
WASH INQTON
August3
Dear Mr. Smith:
I am most grateful to yon for writing me as you did onnd might add that your letter arrived at the precise moment when we ourselves were discussing the same situation, so it received an intensive reading not only by me but by some of my associates slso.
You will understandm not able to comment in detail on the matter you discussed.an say, however,hink your points axe well taken. The whole situation in that country is not being overlookedm hopeful thateasonable time the situation can be Improved. In any event, we are not idle.
Again my thanks for your confidence in writing me aa you did. as pleased that you thought well of the report of the Bill Jackson Committee. It Isendency of most people to consider psychological warfareeparate entity, whereas actually It is nothing more than the element which shoujd be injected into every word and action of thia Government to help create an uniform and sense-making presentation.
Had regardsope you will not hesitate to give me the benefit of your comments at any time.
Sincerely yours.
CD. Jackson
Mr. Lawrence M. C. Smith President
Panocean Company, lac.
enjamin Franklin Parkway
Philadelphiaennsylvania
bc--Mr. Allen Dulles (with original)
- AdJ.mii
Inc.
isconsin Ave. N. W. WASHINGTON. C.
Kr.olfnockeeport, liaine.
'2ear Ur. Uadth:
In connection with your recent request for an appraisal of the situation in "uatemola and the problems involved in trying to rofinance our lumber operations downm Riving you the followinc sunmary of my exporience of long years in Latin -imerican countries and attempts in this country to raise finances for these projects.
Due to localproblems involved in our original set-up in Guatemala, not connected with the Goverment, we found the company needs refinancing as well as now management. In an effort to arrange the refinancing, we have contacted eight financially responsible persons or croups, and while we found then interested in the operation and our objectives of bettering the living standards in tho backward.-countries, as well aseaaonable profit motive for our operations, theyightened off by the news on Guatemala.
Thereumber of ilnerican conpanies that have boon working in iuatenala for many years with little or no trouble. They work under the laws of the country, pay taxes, and do all of the things that the local people ao down there. the two conpa-ies mentioned ln roport of the lnterwUonal 3ankonstruction and Development in their report ofateoala, appear to be the source of friction and fuel for the ^omnunist flame. The Bank reports:
"It is the view of the -ission thatew obvious adjustments can be made, both in the general attitudo townrd foreignand in some positive aspects governing, it, the way might be paveduccessful revision of tho loRal status governing activities of the united Fruit Company and the International Hallways of -entral limerica in -Awtenala.
"ihe basic philosophy of the present contract with theof Central -wierica, concluded3 and running until theoes not appear to be fundamentally different from that of the first concession granted bv the ad -niniatration of=>arrioa as early ihe original contract was concluded1 vrith the united Fruit ^mpany. ijiese dates by themsolvoa illustrate the outmoded character of these agreements.
i'here is need to approach their revisionair aiyi open-minded nanrer, rather thane.-alistic way, since no solution can be found if each partyrmly on what it considers to be its own njhts.
s arparent that, even at present, both the foreign conpanies
Mr. L. U. C. Smith.
and the Government find it in their own interests to naintain working economic relations. Once these relations arc putirm and mutually satisfactory basis by the revision of the
contracts, an extremely important cause of friction between Guatemala, private foreign investors, and perhaps some sectors of public opinion in other countries may well be eliminated.'1
Somewhat similar remarks are made about the contract with the Slectric Conpany of Guatemala, the other major enterprise involved in the present difficulties.
How you may ask me why it is important to discuss these contracts in connection with our own operations. VJell the answer is simple. We need to go ahead with our operations down there and we can not obtain financial assistance as long as articles such as those published by Edward Tonlinson in the iiashin^ton Daily ifews and other newspapers throughout the country are continued. (See on example which appeared in yesterdays News.) They obviously will be continued unless our fermentirm stand and leads our U. S. firms out ofwhich are forerunners of mistakes like the Anglo-Iranian Oil Conpany fiasco in Iran.
There is much development that can take place in Central and South America, and which would provide much needed markets for U. S. products, as well as provide some additional trade for our Allies. However, without this development, which private enterprise should undertake,uch faster scale than is now possible under present policies, the area is ripe for continued revolutions, changes of ideologies,s experience ofears in Latin America has notetter world there for the mass of people, and they are looking for something, without knowing just what. Anyhange appears logical to them, as Jenocracy, as it has been practiced down there until now, haseries of revolutions, killings, and the same people reaping the benefits all of> the time. The vast majority of the people are stillorm of peonage that is most shocking.
of ranocean are attempting in our small way to improve conditions dorm there, and to interest others in developing Latin Anerica, butelieve, that in view of the possible inroads that Communism might make in Cuatenala that all of us should put all of our possible forces to licking them in that country, before they can get strong enough toajor problem. It can be done. It willore reasonable understanding of the problem than is now apparent on the part of the I'.pverment in handling tho delicate situation of the United Fruit Company, which is the fuel needed and used by Corcurlsm to build up their strength.
ord about this situation that is irritating to then down there as well as to us. The Fruit wrapsny controls the railroad and the ocean shipping rates. The tariffs :'or bananas are at les3 than cost. The tariffs on other commodities are unreasonably high on both inland and ocean freight. In view of this situation the general public ha3 been inflamed by the Connunists and others intoevision of the contract with the "ruit -ompany so that the Government can exercise some control over tho tariffs, which they arc prohibited from doing under existing contracts.
i-'r.. C.
As hu been pointed out by tho Bank as loneashis situation may be irritating other countries into taking actions against foreign investments to avoid siniliar situations arising. T'e have foundumber of countries where we have operated that if an industry enters such countriesooperative attitude and leads the way in this cooperation, they seldom find any trouble from the people or the Government. We have found the Government of Guatemala helpful in Our operations down there, as we operated under local laws entirely,
without any special concessions, and suggested to then various improvements that would bo helpful to us as well as to them such as fire control
measures, forost protection measures, and in general an improvement of working conditions, heheap low-cost houseoans
nd the Governnentample for display at all of
Province fairs. Any industry can do the same thing.
There is some bocsuriina in Guatemala. The leaders aro Moscow trained. However, they have espoused the popular' causes such as that of the Fruit Company. They have been given more importance than they rate in the U. S. press, which has increased their influence in Guatemalaower to be reckoned with.
A build up of industry in Latin America will provide for raising the living standards of the people, will permit more ownership of homes and property, and this one thing alone would stabilise those Governments down there. This program would have toastne rather than the slow approach now being used in Latin America. The whole situation in Guatemala could be cleared up in short orderrecedent established in this situation which would win many friends for the U. d. as well as be in keeping with the President's program and objective in sending his brother down there.
At the present tine our various interested parties have indicated that they do not wish to undertake any steps until theylearer picture in Guatemala. We have to do something to get this cleared up. If you have any suggestions toight talk ln the u. S.hink that we canympathetic ear in the Guatemalanas Just informed this morning that the Guatemalans would welcome an invitation to sit down and discuss this problem and try to work it out.
Sincerely yours,
W. Iff. atevens,esident.
B.pcct-lwpxi Atftluc* PANOCEAN6 WiKMula Avenue,WIiiojwu. C
company inc.
PHILADELPHIAA.3
Cable
Pwoccia; PbilnJelpbi
The Honorable C. D. Jackson Special assistant to the President The White House Washington, D. C.
Dear Br. Jackson:
I am taking the liberty of writing to you about the situation in Guatemala for several reasons. First, yon are widely credited with havingreat deal of President Eisenhower's speech ofh which I,emocrat, found refreshing. Then your name has been in my memory for many years froa my old close friend, Freddie Bally, who was at Princeton withelieve, and who has long since passed away. ead suraaries of your recent committee report, on which another friend, Barklie Henry, served, and it seemed to me again that you were going down the right road.
Our Company, Pan ocean,mall company which has beenthe war in various countries, Including Persia and Centralhad the first offshore shipment under EGA, froa Salvador to France. interested in foreign development because of my experience duringabroad, in Africa and Europe, not onlyhink it can bebut also because we want to work out the techniques of economicin under-developped areas through private investment. Inwe have operated Lumber mills for the last yearalf, we havein the reorganisation and refinancing of that company, anythe .Guatemalan government but, rather, the climate of opinion inStates primarily has prevented our proceeding.
Recognising that there is communism in Guatemala, one must also recognise that this fear nay have been stimulated and exaggerated for other . reasons. The net result is that Instead of trying to overcome communism In 11 Guatemala by helping that country economically, we are building it up by our /1 attacks. It is all part of the Central American picture in an area in which 11 we have been operating for the past six or seven years. ope that you might be able to contribute to the solution of this situation.
For yourmemorandum datedhich was written by my associate. In bringing this to yourealise that we may be taking steps which are commercially unwise because of thewe nay incur. Ae are not unfriendly toward any company or group, as any problems we have had have been of our own making and not those of outsiders. The fact remains, however, that conditions in Guatemala areess and that the present. policy seems to me to be helping/-
The Honorable3
The White House Washington, D. C.
to continue that mess.
If we con be of any assistance in this natter, we would welcome the opportunity to discuss it further.
Sincerely yours,
Lawrence M. C. Smith President
LMCS/f
enjamin Franklin Parkway Philadelphiaennsylvania
tomijnson :
General. Nations la
told.Washington It sron'fceWhecent expropriation of: Arr-ertcanownedhere "hi- 'It (expropSnr^'S
N .resolution '
-re-
i^he State.
Lheroewatoreorth, of rUnlled Slates' investments in Ijilin America fJ^lESHoptetatioa-Without?toe;
cmiires olUnited. Fruit! CoT^nd. .
Agrarian ReUmn[wrds. the value thexompany -had declared, them tor tax ssstss-"In-:
JOHN MOO IIS CABOT. his'was an old valuation and rate ofember of the and voted8 the government Itself government opposition, Bui repre- Asiatic nations.' 1
ew valuation which It. sentatlves of other Latin American Gloom over tho Guatemalan ^that hare Indulged In the ddent arises because It come* when .
But Investors.an not so modi confiscation were Its most uncom the'MsetJioww Administration Is over the method and promising champions, alone with trying to rebuild confidence1 andGuatemala has offered the 'he Near Eastern. South Asian and respect In South America company. Chief concern is Sovietbrother, MUton,com-
that after expropriation Guatemala The delegate of Mexico, whichAMBtfVNeven to discus* the sullied took over American oil companies tour ta South America.takes refuge In the UN. If this and land holdears ago, was Secretary of Stale Johna precedent, any counlry an eloquent spokesman for It. Cabot and other* have beencan take foreign proper* Argentina was tor it. Even Brazil more privatenvestmentwithout regard to owner's backed IL Fern. Costa Rica, Eeua- latin America to help boostand Cuba wen- among lhe few Uon and "
feelthat
y cham*
- of this reiolu-wlU be a- threat loenterprise. Purtner-long as it remains fa
Tho there was publicity about It southern nations toood the time. most. Including officials word on our tor
solution was
Introduced by Sen. Angel Maria Cusano. an extremenational!,del?
here, apparently had forgotten or In Uie end. all theepublics plonsnot know the circumstances, either voted lor It. or abstained tIon.they are all nowup the Irom voting. The five which abere Cuba. Haiti, Nica- more.
Original document.
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