810.74/470
Memorandum of Conversation, by Mr. Louis J. Halle of the Division of the American Republics
| Participants: | General Davis, Chairman of the Consortium Trust; Colonel Sarnoff, President of the Radio Corporation of America; Mr. Winterbottom, Acting President of RCA; Mr. Long, Assistant Secretary; Mr. Hackworth, Legal Adviser; Mr. deWolf, IN; Mr. Bonsai, RA (first part of meeting only); Mr. Halle, RA. |
Mr. Long gave the substance of a telegram just received from Buenos Aires (1720, September 7),66 indicating that the Argentine Government might insist on the appointment of an Argentine as Manager of Transradio Internacional,67 rather than the American, George Hayes, who was about to be appointed by the Board of Directors in accordance with a decision taken at the meeting of Consortium trustees in New York. In the course of the meeting it was decided that RCA would immediately instruct its representatives on the Board of Directors to insist on Hayes’ appointment.
Mr. Long then requested that RCA take action to discontinue the Consortium circuits with the Axis, saying that company initiative in this matter would be preferable to action by the Argentine and Chilean Governments as it would avoid the political issues involved. He cited the recent order of the Argentine Minister of the Interior to the Director of Posts and Telegraphs to implement Resolution XL of Rio, an order that has not been carried out.
General Davis said the impression he had gathered on his recent trip was that our Embassies in Argentina and Chile were in accord that if the companies close the circuits on their own initiative, the governments might take them over. He thus explained the wording of the minutes of the recent trustees meeting in which the trustees had gone on record as approving any action the companies might take in accordance with any “suggestion” from the governments that they abandon any international circuits they were operating.
Mr. Bonsai raised the question of whether the franchises under which the companies were operating their Axis circuits actually did not allow them to abandon those circuits without permission of the governments. Neither General Davis nor Colonel Sarnoff could give a categorical answer, but the General expressed his belief that reason had to be given to the governments for taking such action.
[Page 143]Colonel Sarnoff said that, speaking for RCA, he would gladly waive consideration of the commercial interests at stake. He said the only question was whether RCA had it in its power to achieve the desired end. He pointed out that first the British Consortium interests would have to concur in the proposed action. If they did so, the question would arise as to whether the trustees had the requisite authority. If they did, would their order be obeyed by the local management in each case? If so, what action would the Argentine Government, in particular, take? He was fearful that the Argentine Government would then take over the company and he wished to know what support this Government would then give to RCA. Mr. Long indicated that this Government would do all it appropriately could to protect RCA from the consequences of any action it might take to close the circuits.
Mr. Long indicated confidentially that IT&T was prepared to discontinue immediately its telephone circuit between Buenos Aires and Berlin. Colonel Sarnoff stated that, if IT&T could do this, there was no reason why the Consortium company could not also do it. He then went on to say that, if we wished RCA to go ahead with this after we had considered all the consequences, RCA would show no hesitation.
The question was raised of whether there were any physical means, such as inadequate machinery, by which the circuits might be abandoned. Colonel Sarnoff and Mr. Winterbottom indicated they did not believe there were any such means, since the machinery required was for the most part interchangeable.
Mr. Winterbottom expressed the belief that if the Argentine company closed the Axis circuits, the Argentine Government would the next day open and operate them by itself, and he indicated that it had the facilities with which to do this. It was pointed out that such action by the Government would not interfere with the continued operation of its other circuits by the company. The following course of action was then agreed upon:
- (1)
- RCA would immediately issue instructions to its representatives on the Board of Directors of the two companies to have the companies discontinue the Axis circuits immediately on their own initiative, the action to be taken by a Directors’ meeting in each case. RCA would also instruct its representatives to insist on the appointment of Hayes.
- (2)
- The Department would approach the British Foreign Office immediately with a request that it do what was necessary to have identical instructions issued forthwith to the respective Directors of the two companies who represent Cable and Wireless, Limited.
It was agreed that this would be a more practical approach to the matter than would be an attempt to achieve the same results through [Page 144] another meeting of the Consortium, which would require 30 days notice to the trustees in any case.
Mr. Winterbottom complained at the fact that the Department, in its own communications with its missions in South America, gave preference to All America Cables over the RCA Radio Companies. Colonel Sarnoff stated that the common view that cable traffic was more secret than radio traffic was erroneous, and that in point of fact the reverse was true. He also complained bitterly that IT&T had spread the report in Government circles that RCA was preventing the establishment of additional circuits with Europe and the Near East needed by the War Department by invoking a consent decree. He said that he had been called to Mr. Thurman Arnold’s68 office in the Department of Justice and that Mr. Arnold was preparing to have the consent decree abandoned on the basis of misinformation that he had received from IT&T.