821.796 Avianca/48: Telegram

The Secretary of State to the Ambassador in Colombia (Braden)

20. Your 18, January 31, midnight.25 A thorough discussion of the general policy of this Government with respect to relations with Colombia and the defense of the Canal was held yesterday in the Department with Messrs. Trippe26 and Thomas Morgan (latter Chairman of the Executive Committee of Pan American Airways). General Strong, Assistant Chief of Staff,27 was also present. Trippe and Morgan stated that Pan American Airways fully appreciated the importance of the general objectives of national policy involved and gave assurance that this policy would be the guiding consideration of the Company in its operations in Colombia, commercial considerations being secondary. We were also assured that until the present situation has been satisfactorily adjusted, the Company will keep in the closest touch with the Department, informing us in advance of the [Page 724] steps which it proposes to take. Rihl is already under instructions to be guided by your views concerning the local situation.

The situation described in your recent telegrams is very disquieting in that first of all the Company is apparently about to be asked to surrender its present controlling interest in Scadta,28 to accept a minority position in Avianca,29 and to furnish, without assurances as to their adequacy, technical personnel that might well be shouldered with mistakes of Avianca over the commission of which they had no control; and secondly, there would seem to be no assurance that the Colombianization process would be carried to a conclusion.

With regard to the Government’s latest proposal, Trippe and Morgan have indicated that they would be willing to withhold the sale of their Scadta stock unless a prior arrangement satisfactory to this Government for the de-Germanization is agreed to by the Colombian Government. While appreciative of the cooperative attitude of Trippe and Morgan, this action might lead to far-reaching complications; on this, we would appreciate your advice.

… Despite your latest reports of the President’s ideas, we still harbor a hope that given a set-up that would be politically feasible and ultimately command the support of Colombian public opinion, the President would go along on some sort of arrangement leaving Pan American in control of management during a transitional period. This would permit an orderly and safe turnover of management to Colombian personnel and would ensure completion of the de-Germanization. We feel that it would be desirable, therefore, for you to seek a further interview with the President (and such other high officials of the Colombian Government as you may desire to interview) before the Company takes the definite step of agreeing, at the meeting proposed for February 7, to the set-up as now proposed. We hope that you can talk this over informally with the President, as friend to friend, impressing upon him the real desire of both this Government and the Company to be of the utmost assistance.

The points to be brought out, as we see them, are:

(1)
We understand and appreciate the natural desire of the Colombian Government to control the operations of its national aviation company. Hence, the objective of any comments and suggestions offered by this Government are and will be with a view to the attainment of this aim. Furthermore, this Government readily understands the desire of the Colombian Government to effect this at as early a date as practicable. This view is likewise subscribed to by Pan American Airways.
(2)
There are, however, difficulties and even dangers in attempting to do this overnight. Starting from the premise that safety of operations is essential, it follows that the change to Colombian personnel must be gradual. We sincerely hope that the Colombian Government would prefer American to German technical assistance in training the Colombian personnel. Not only has German management over 20 years demonstrated a singular lack of interest in preparing Colombian personnel, but the importance to Germany of important participation in the enterprise must not be overlooked. It seems to us that a workable transitional arrangement can only succeed free from European influences.
(3)
Pan American Airways is ready to cooperate on the basis of control by the Colombian Government (or the Government in collaboration with Colombian nationals …) of Avianca during this interim period, but feels it highly desirable that the realities of administration and operation and the obvious difficulties which would result from divided or ambiguous operations be taken into account. Whether the interim arrangement be based on a management contract or otherwise would appear subordinate to avoidance of divided operations authority.
(4)
The duration of any interim arrangement would be for agreement between Pan American Airways and the Colombian Government having in mind the period necessary for adequate training of Colombian operating and flight personnel. The Company offers to cooperate wholeheartedly in the acceleration of this program with a view to turning over operations at as early a date as practicable. This Government if desired by the Colombian Government will also be glad to cooperate to the fullest extent feasible.
(5)
During the transitional period the company will be prepared to replace personnel with Colombians as rapidly as competent individuals can be trained. It is suggested that this might follow a fixed schedule to be agreed upon in advance. We believe that the German management and senior flight personnel should be replaced at once, but the company is entirely willing to discuss individual cases with the Colombian Government in an entirely sympathetic manner taking into consideration previous services, length of stay in Colombia, et cetera.
(6)
With respect to payment by the Colombian Government for the shares of Scadta now owned by Pan American Airways, which will be relinquished in order to make possible the legal establishment of Avianca, Pan American Airways is prepared to accept any equitable arrangement for their liquidation over a period of years which the Colombian Government desires to make. For your confidential information the company states that it would not insist on the liquidation of the entire amount prior to the end of the transitional period.
(7)
The company is prepared to pare to the bone its costs should it be requested to take over the management of Avianca.

We hope that after his conversation with you, the President will at least agree to the postponement of the meeting now scheduled for February 7 in order to permit more time for consideration of this very difficult problem. We now feel that Trippe and Morgan are entirely [Page 726] disposed to collaborate in the solution. If we can provide opportunity for further discussion we will at least have postponed consummation of an arrangement that is most unsatisfactory.

In conclusion, since our primary objective in this Colombian aviation matter is to insure the safety of the Panama Canal, we would with reluctance see an arrangement agreed upon that left uncertain the problem of the elimination of the German personnel in Scadta. In fact, as long as German personnel is in control of the management and operation of airplanes flying within a few hundred miles of the Panama Canal, the uninterrupted operation of the Canal, which is of interest not only to Colombia and the United States, but to all of the American republics, remains insecure. We are confident that the Colombian Government, which has evidenced so sincerely its realization of the necessities of continental defense, will be sympathetically disposed towards an early solution of the present problem.

The foregoing has been read and agreed to by Trippe and Morgan.

Hull
  1. Not printed. The telegram dealt firstly with a clarification by George L. Rihl, vice president of Pan American Airways, then in Colombia, of a company press release dated January 30, 1940, New York, to the effect that the company would assume technical administration of the Scadta system and would replace German personnel before reaching an agreement with the Colombian Government. Secondly, it reported President Santos’ reaction to the January 30 release. Despite the clarification by Mr. Rihl, the President “demanded that Rihl forthwith categorically accept or reject Government acquiring 51 percent ownership in Avianca.” Rihl was also reminded by Minister of War José Joaquin Castro that, “in case of rejection, the company’s franchise expired in May 1942, in which event the Government would know what to do.” For Rihl there was no alternative but “to accept this ultimatum” which he did “subject to the fulfillment of their agreement that the bylaws would be so drafted as to guarantee to the minority interests a strictly commercial operation and full protection against political intervention irrespective of any future change in government.” (821.796 Avianca/48)
  2. Juan Trippe, president of Pan American Airways.
  3. In charge of the War Plans Division.
  4. Sociedad Colombo-Alemana de Transportes Aêreos.
  5. Aerovias Nacionales de Colombia.