| HARRY S. TR 
RETAR 
COPY NO. 1 
FOR THE PRESIDENT 
OF THE UNITED STATES 
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Pubished 27 July 1950 
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CENTRAL 
INTELLIGENCE AGENCY 
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HARRY’S, TRUMAN ; 
Papers of 
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HARRY S. TRUMAN 
PRESIDENT 'S SECRETARY FILE 
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TRUMAN 
PRESIDENT 
SR-46 
GUATEMALA 
TABLE OF CONTENTS 
SUMMARY 
CHAPTER I—POLITICAL SITUATION 
. GENESIS OF THE POLITICAL SITUATION 
. PRESENT GOVERNMENT STRUCTURE 
c. The Judicial Branch 
. 
i 
d.-The State and Local Government 
. POLITICAL PARTIES 
a. Administration Parties 
b. Anti-administration Parties 
. OTHER INFLUENTIAL GROUPS 
CURRENT ISSUES 
. STABILITY OF THE PRESENT Recor 
CHAPTER II—THE PRESENCE OF SABOTEURS AND SUBVERSIVE ELEMENTS 
SABOTAGE 
CHAPTER III—ECONOMIC SITUATION 
. GENESIS OF THE PRESENT ECONOMIC SITUATION 
a. Introduction 
b. Capital 
c. Land. 
d. Labor 
. 
e. Economic Ideology 
f. Conclusion 
. DESCRIPTION OF THE Paesent oonosaic Srruarion 
h. Transportation 
i. Public Utilities 
j. Money and Finance 
k. Foreign Investments 
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c. Forest Products 
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PRESIDENT. ts 
TRUMAN . 
SECRETARY FILE 
Papers oF 
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CHAPTER IV—FOREIGN AFFAIRS 
1. GENESIS OF GUATEMALAN FOREIGN POLICY 
2. PRESENT FOREIGN POLICY AND INTERNATIONAL Issuzs 
a. Belize. 
; 
b. Encouragement of Sympathetic ¢ Governments 
c. US Relations 
CHAPTER V—MILITARY SITUATION 
1. GENESIS OF THE PRESENT MILITARY POLICIES 
-2. THe CURRENT MILITARY SITUATION 
CHAPTER VI—STRATEGIC CONSIDERATIONS AFFECTING US SECURITY. 
CHAPTER VII—PROBABLE FUTURE DEVELOPMENTS 
POLITICAL 
. 
SUBVERSIVE 
ECONOMIC 
. 
FOREIGN AFFAIRS 
. MILITARY 
. STRATEGIC CONSIDERATIONS: Ayrecrna US SECURITY 
Den 
APPENDIX A—Important Personalities 
APPENDIX B—Terrain and Climate 
MAPS: 
’ #11556 Guatemala: British Honduras—Transportation 
#11557 Guatemala: Physiographic Regions 
#11558 Guatemala: Dominant Land Use and Natural Resources 
SSRRS 
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SUMMARY 
Guatemala has some strategic importance 
to the United States because of the following 
factors—none, it is true, peculiar to Guate- 
mala alone: (1) its privilege, as an independ- 
ent nation, of taking action incompatible with 
US security interests; 
(2) its production of 
tropical hardwoods and abac4, and its poten- 
tialities as an oil producing area; (3) its po- 
tential influence over neighboring Central 
American 
countries; 
and 
(4) 
its location 
within the US defense sphere. 
The Guatemalan Government, independent 
and republican in form, has in the past been 
dominated 
by 
strong 
dictator-presidents 
whose personal policies favored the interests 
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of a small, wealthy, upper class. 
President 
Arévalo, elected for the term 1945-51, repre- 
sents a break with tradition. 
The policies of 
his administration, strongly nationalistic and 
influenced by modern socialistic ideas, favor 
the interests of the heretofore politically im- 
potent laboring class. 
Opposition to his so- 
cial and economic reforms has undermined 
the stability of his regime, despite its popular 
support among the working class and por- 
tions of the middle class. 
The policy of the Arévalo government in 
employing, subsidizing, and encouraging Com- 
munists and their sympathizers is a potential 
threat to US security interests. 
Material 
sabotage by Communists or unfriendly ele- 
ments in Guatemala would not greatly handi- 
cap US military preparedness or military op- 
erations, but a possibility exists that the fa- 
cilities of the Guatemalan Government are be- 
ing used by Communists to further the plans 
of the 
Soviet 
Union. 
Guatemalan 
labor 
- groups and pro-government political parties 
are, to some extent, Communist influenced, 
and various Communist front groups are per- 
mitted to operate. However, it is believed that 
Guatemala’s basic alignment with the US 
would result, in event of a US-USSR war, in 
the suppression of Communist activities. 
Guatemala’s economy rests upon the coffee 
and banana industries, which provide 81 per- 
cent (by value) of all exports. 
These indus- 
tries have been built up largely by foreign 
capital and have been organized, in part, in 
terms of land and labor relationships typical 
of colonial times. 
Arévalo’s socialistic ideas, 
which attack foreign capital, land monopoly, 
and the traditional employment pattern, have 
therefore discouraged foreign investors and 
have aroused internal class antagonisms. 
Guatemala’s welfare is almost entirely de- 
pendent upon the US as a market and a source 
of imports. 
US interests control virtually all 
shipping to and from Guatemala, all internal 
railroad transportation, much of the inter- 
national 
air transport 
operating 
through 
Guatemala, and much of the electric power 
production 
within 
the 
country. 
Trucks, 
busses, and other manufactured 
products 
basic to the modern economy are imported 
predominantly from the US, which supplies 
65-75 percent of all imports. 
The US takes 
about 90 percent of Guatemala’s exports, but 
about 95 percent of all exports are of no 
essential 
strategic 
importance. 
However, 
Guatemala 
does produce mahogany, some 
abaca, and small amounts of chrome and 
lead. 
It is a potential producer of oil, but the 
nationalistic policies of the present adminis- 
tration have prevented the exploitation of sus- 
pected deposits of petroleum. 
Guatemala recognizes that its political in- 
dependence and economic security are de- 
pendent upon the US. 
In foreign affairs, 
therefore, a fundamental alignment exists 
with the US, but to the degree that Guate- 
mala’s general welfare is not jeopardized by 
independent action, the Arévalo government 
has allowed its pursuit of certain foreign ob- 
Note: The intelligence organizations of the Departments of State, Army, Navy, and the 
. 
Air Force have concurred in this report. 
It is based on information available to CIA 
as of 30 March 1950. 
TRUMAN” 
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HARRY s, 
jectives to conflict with US interests. 
In ad- 
vancing its claims to British Honduras it has 
worked to create pressure blocs within the 
inter-American system and to embarrass the 
US as a “colonial” power; it has questioned 
the sincerity of US foreign policy, and on co- 
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lonial issues it has sometimes sided with the 
USSR in UN disputes. 
Guatemala has also 
sought to bring about the establishment of 
sympathetic 
governments 
in 
neighboring 
countries by giving aid to international revo- 
lutionary movements. 
Although the positive contribution which 
Guatemala could make toward US security is 
slight, its geographic position makes it of con- 
ceivable value to an enemy of the US. 
It 
could be used for propaganda dissemination 
and espionage, or as a base for attacks against 
the Panama Canal, the Venezuelan’ oil fields, 
Caribbean shipping, or other potential West- 
ern Hemisphere targets. 
In general, however, 
its importance to an enemy is limited by the. 
absence of military facilities of consequence 
and the existence of other, more suitable (or 
more easily obtainable) sites for bases in the 
Caribbean area. 
Nevertheless, a friendly and stable govern- 
ment in Guatemala favors US security, and 
because Guatemala is incapable of defending 
itself against a strong enemy, denial of its 
facilities and resources to an enemy power is 
primarily 
a 
responsibility. 
Because 
Guatemala’s national welfare is dependent 
upon imports of non-strategic materials by 
the US, extreme dislocation of the economy 
might occur in event of an East-West war, 
with resultant political instability. 
Effective 
guarantees of US economic aid in event of 
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war would therefore contribute materially to 
the maintenance of a friendly and stable gov- 
ernment. 
Before the end of Arévalo’s administration 
in 1951, internal violence may break out be- 
tween extreme 
leftist factions 
(backed by 
militant labor groups) and moderate-conserv- 
ative factions (backed by the army). 
In gen- 
eral, it is believed that Arévalo is desirous of 
completing his legal term of office without 
incident and of abstaining from a display of 
partisanship in the 1950 presidential cam- 
paign. 
This course will cause him to con- 
tinue the more moderate policy noticeable 
since late 1949, and to avoid controversial de- 
cisions. 
The national economy should 
re- 
main sound, and no basic change in foreign 
policy is anticipated, although a more con- 
ciliatory attitude toward the US may develop 
and effective aid to foreign revolutionaries 
may diminish. 
No change is foreseen in the 
functions or capabilities of the armed forces 
or in the strategic significance of Guatemala 
to the US. 
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POLITICAL SITUATION 
1. 
Genesis of the Present Political Situation. 
Spanish conquistadores first invaded and 
conquered the territory that now comprises 
Guatemala in the year 1524. 
Ever since that 
time, the political life of the country has been 
dominated by those of Spanish descent (under 
1 percent) or mixed Spanish-Indian descent 
(34-44 percent). 
The majority of inhabitants, 
of unmixed Indian ancestry (55-65 percent) 
has had little voice in political affairs. 
In 1544, Guatemala became part of the 
Captaincy-General of Guatemala, a political 
entity that extended from Chiapas in Mexico 
to Costa Rica, and at first also included Yuca- 
tan and Tabasco. 
With few changes, the Cap- 
taincy-General existed (with the exception 
of one brief period) until the end of the Span- 
ish colonial regime. 
It included five prov- 
inces, corresponding to the modern republics 
of Guatemala, El Salvador, Honduras, Nicara- 
gua, and Costa Rica. 
Following the lead of Mexico, representa- 
tives of the five provinces declared their in- 
dependence of Spain on 15 September 1821, 
retaining, for the moment, a centralized ad- 
ministration in Guatemala City. 
The follow- 
ing year, the ruling junta, backed by the 
wealthy class, voted to join the new Mexican 
Empire under Iturbide, and a Mexican army 
was sent to quiet dissident elements. 
How- 
ever, with the fall of Iturbide and the army’s 
withdrawal, the five provinces reasserted their 
independence as a single federal republic. 
At 
this time Guatemala lost the territory com- 
prising Chiapas, which was still occupied by 
the Mexican army, and (perhaps in conse- 
quence) voted to join Mexico. 
From the time of its inception, the Central 
American Federation was weakened by sec- 
tional jealousies and conflict between Liberal 
and Conservative political factions. 
The Con- 
servatives, including the large landowners, 
wealthy merchants, and the clergy, at first 
favored union with Mexico and later, after the 
establishment of the Federation, favored a 
strong central government under their con- 
trol, rather than a loose federation of semi- 
autonomous states such as favored by the 
Liberals. 
The Liberals, including the middle- 
class merchants, artisans, and salaried em- 
ployees, generally held the upper hand during 
the early struggle for power and, in conse- 
quence, Guatemala remained a member of the 
federation. 
The federal capital, however, had 
been moved from Guatemala City to San Sal- 
vador in 1831. 
With the decisive victory of the Conserva- 
tives under José Rafael Carrera 
in 1838, 
Guatemala officially withdrew from the Fed- 
eration. 
Carrera, a mestizo who had seized 
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control with the aid of an Indian army, be- 
came the first Guatemalan Dictator-President 
to hold power for an extended period, con- 
tinuing to rule until his death in 1865. 
Dur- 
ing his regime, the dominance of the landed 
aristocracy and the clergy was firmly estab- 
lished. 
A few years after Carrera’s death, a Liberal 
leader, Justo Rufino Barrios, gained domi- 
nance and later became officially President 
from 1873 to 1885. 
He re-enacted some of the 
- 
liberal laws which had been repealed by Car- 
rera. 
Church properties were expropriated, 
and the influence of the church in public af- 
fairs was brought to an end. 
At the same time, Barrios increased the 
power and authority of the provincial gover- 
nors, advocated the improvement and expan- 
sion of agriculture and industry, and built 
roads which connected the capital with all the 
provinces. 
He sought to set up free public 
T'S SECRETARY FILE) 
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HARRY 
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primary schools, did establish a central nor- 
mal school and six secondary schools, sup- 
ported a school of arts and trades and a mili- 
tary school, and brought the university under 
state control. 
In accordance with Liberal 
ideals, Barrios advocated restoration of a Cen- 
tral American 
union. 
However, 
while 
at- 
tempting to effect the union through military 
force, he was killed in action in 1885. 
The Liberal Party policy under Barrios was 
crystallized in the Constitution of 1879. 
The 
main outline of this document has never been 
radically altered, though changes and addi- 
tions have been made several times. 
More 
than a statement of basic principles, the 
Guatemalan constitution includes many de- 
tailed articles which have the effect of specific 
laws. 
Although it has always been liberal 
and democratic in theory, it has, in practice, 
been subject to the will of a powerful execu- 
tive who can ignore or alter its provisions. 
The political history of Guatemala since 
Barrios has been one of periods of partisan 
dissension alternating with years of peace 
maintained 
by strong-handed 
presidents. 
The 
conservatives—wealthy 
landowners— 
have avoided direct participation in politics, 
fearing a revolt which would cause their work- 
men to be recruited into the army and would 
perhaps lead to the destruction or confisca- 
tion of their properties. 
The upper class has 
therefore countenanced venality in the gov- 
ernment and perpetuation of personal regimes 
in exchange for freedom from political repris- 
als. 
Manuel Estrada Cabrera, whose presi- 
dency lasted from 1898 to 1920, held the long- 
est tenure of all recent presidents. 
He was 
succeeded, after an interval, by General Jorge 
Ubico, who maintained himself in office from 
1931 to 1944, when he was forced to resign. 
Ubico’s administration, beneficial 
to the 
country in some ways, became a personal dic- 
tatorship. He built roads, enforced honesty 
in public office, created a modern police sys- 
tem, renovated the army, and extended public 
health and sanitation services. 
Yet in pro- 
moting his program, he eventually stifled all 
opposition and became increasingly arbitrary, 
suspicious, 
and 
unreasonable. 
Simultane- 
ously with the United States, Guatemala de- 
clared war on Japan and Germany, and 
Ubico’s anti-Nazi precautions, extended to all 
opposition groups, further suppressed indi- 
vidual liberties. 
After 1942, rapidly rising liv- 
ing costs and governmentai economic controls 
intensified dissatisfaction with Ubico’s presi- 
dency, which had been extended for a second 
time through personal control of a constitu- 
tional assembly. 
The resignation of Ubico, after thirteen 
years in office, was forced by a desire, among 
all classes, to escape dictatorial controls. 
The 
initiative was first taken by students, who, 
influenced by twentieth century ideas of lib- 
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-eralism, conscious of the intellectual freedom 
that existed in Mexico, and encouraged by the 
Salvadoran student revolt that overthrew the 
Dictator Martinez, demanded reforms in the 
university. 
The forceful suppression of the 
student revolt by Ubico’s National Police, and 
particularly the indiscriminate shooting of a 
number of women by these police, created a 
general public demand for the President’s res- 
ignation, which he met by depositing his man- 
date with three obscure generals. 
One of 
these, General Frederico Ponce, was desig- 
nated by Congress (still dominated by Ubico’s 
Liberal Independent Party) 
as provisional 
President. 
Fear that General Ponce, with the aid of 
Ubico’s party organization and Indian “ma- 
chete men” from the large plantations, would 
perpetuate himself in office led to a military 
revolt backed by the same popular forces that 
opposed Ubico. 
This was led by three men: 
Jorge Toriello (member of a conservative mer- 
chant family and brother of a student leader) ; 
Major Francisco J. Arana (a career soldier, 
commander of a tank battalion and later Chief 
of the Armed Forces); and ex-Captain Jacobo 
Arbenz (a well-educated man with leftist af- 
filiations, subsequently Minister of Defense). 
The triumvirate held power until a new Presi- 
dent, 
popularly 
elected 
by constitutional 
means, could take office. 
This President was 
Juan José Arévalo, a reform-minded intellect- 
ual of humble parentage who had spent seven 
years teaching in Argentine universities as a 
voluntary exile from the Ubico regime. 
The revolutionary movement that forced 
Ubico to resign, and which overthrew his suc- 
cessor, Ponce, represents more than a simple 
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HARRY 
change in political administration. 
With the 
election of Arévalo to replace the revolution- 
ary junta of Toriello, Arana, and Arbenz, the 
fundamental character of the revolution as a 
broad social reform movement was assured. 
Arévalo’s writings show him to have been 
acutely aware, long before his election, of basic 
social and economic problems handicapping 
the small, backward, 
antagonistic 
Central 
American countries—problems which he felt 
arose from the racial and cultural heteroge- 
neity of the inhabitants, from the social and 
intellectual barriers between the classes, from 
the tendency to accept caudillos rather than 
practice democratic self-expression, from the 
disinterest of ruling class in the collective 
welfare of the nation, and from the extreme 
disparity in opportunity between the urban 
rich and the rural poor. 
During his years of 
study and teaching, Arévalo had developed a 
clear and comprehensive.ideology of his own 
which stressed the need for a “spiritual unity” 
of all the inhabitants of a country, based on 
equality of opportunity and education, on 
freedom of self-expression, and on the uni- 
versal recognition of the dignity of the indi- 
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vidual, whatever his social status. 
The prob- 
lem of “spiritual unification” he saw as a po- 
litical, economic, and cultural problem which 
could be solved only gradually—not during 
the course of a single administration or gen- 
eration. 
Although he was primarily inter- 
ested in education as a means of bringing 
about this popular unity, he was well aware 
that political and economic obstacles had to 
be overcome. 
He wrote, in 1939: 
Closely associated with the racial heterogeneity 
of the contemporary American societies is the prob- 
lem of social heterogeneity, 
or the problem 
of 
“classes”, wherein some of the people attempt to 
retain fictitious or usurped privileges. 
Whatever 
the educational undertaking, it will not be effective 
for the goals of nationalism in a republican country 
if the laws and governments do not join in doing 
away with the disparities which 
are preserved, 
through economic exploitation and spiritual empti- 
ness, as caricatures and survivals of a bygone social 
structure. 
Arévalo’s opposition to military dictator- 
ships, his refusal (or unwillingness) to concen- 
trate political power in his own hands, the 
relative freedom he has permitted his cabinet 
ministers, and the bureaucratic expansion of 
the Guatemalan Government are not neces- 
sarily indications of a weak executive, nor of a 
democratic administration, since they coincide 
with Arévalo’s personal ideas concerning the 
well-organized state, as expressed in an essay 
of 1935 entitled Istmania; tierras del Istmo: 
In all modern, well-organized states, each of these 
structures (i.e., the economic organization, the so- 
cial organization, the cultural organization, the 
government, and the army) live an independent ex- 
istence with ends and means which are their own, 
yet which do not, because of this, endanger the 
general unity of the nation. ... 
The potentialities 
of a nation depend upon the completeness with 
which each structure maintains its independence of 
the others and on the greater degree of efficiency 
and productiveness achieved by each. 
The foregoing passage describes, briefly, the 
desirable “polystructural” state of Arévalo, 
which he contrasts with the “monostructural” 
states then existing in the isthmus (i.e., the 
Guatemala of Ubico, the Honduras of Carias, 
the El Salvador of Martinez, and the Nicara- 
gua of Somoza). 
Arévalo’s own philosophy of “spiritual SO- 
cialism” appears to owe 
little to Marxist 
thought. 
Its immediate goals, however, are 
somewhat parallel to those of the Commu- 
nists, and persons more or less influenced by 
the Communist ideology supported his candi- 
dacy and became members of his administra- 
tion. 
Some of these were Guatemalan re- 
formers who had been exiled by President 
Ubico and who had congregated in Mexico, 
where the principles of the Mexican Consti- 
tution of 1917—the first Latin American con- 
stitution to stress economic nationalism, the 
social obligation of private property owners, 
and the rights of organized labor—were being 
implemented under Presidents Cardenas and 
Avila Camacho. 
Among the most influential 
of these Guatemalans was Jorge Garcia Gran- | 
ados, a brilliant lawyer who was exiled in 1934 
for 
his 
pro-Communist 
sympathies, 
who 
worked with the Spanish Republican Commit- 
tee in Mexico and with the Mexican Depart- 
ment of Labor, and who taught at the Na- 
tional University for three years, after which 
he returned to Guatemala and became Presi- 
dent of the Constituent Assembly, which re- 
wrote 
the Guatemalan 
Constitution. 
The 
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sympathies of the Mexican Government were 
of 1944, and were clearly demonstrated when 
these students were given sanctuary in the 
Mexican Embassy during the revolution. 
In 
other Latin American countries, such as Cuba 
and Argentina (where Arévalo was an exile) 
and in Europe and the United States, Guate- 
malan liberals saw, and were influenced by, 
political movements that involved national- 
ism, the extension of governmental 
social 
services, the regulation of private enterprise, 
and the recognition of organized labor—ideas 
which were denied expression under Ubico, 
_who still represented the economic individual- 
ism of the nineteenth century. 
In a general 
sense, therefore, the revolution of 1944 repre- 
sents, for Guatemala, the end of an era which 
had already ended in Mexico and many of the 
larger 
countries 
throughout 
the 
western 
world. 
It is clear that many Guatemalans 
themselves regard this “October Revolution” 
as the beginning of a new era, and hope to 
place Guatemala on record as a champion of 
a new “democracy’—both in behalf of the 
small nations of the Western Hemisphere and 
the new nations which have emerged from 
subservient or colonial status since the end of 
the Second World War. 
This new democracy, 
which may be called “Arevalism,”’ has been 
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given concrete expression in: (1) the writings 
of Arévalo; (2) the Constitution of 1945; (3) 
the political platforms of the revolutionary 
parties; 
(4) the official acts of the govern- 
ment; and (5) the unofficial activities of per- 
sons and groups (including pro-Communists) 
that have been permitted freedom of expres- 
sion under the Arévalo administration. 
Apart from foreign influences, the Guate- 
malan revolution represents a response to an 
internal situation which presaged a funda- 
mental change. The most important factor 
in this situation was the gradual adoption of 
western culture by a large portion of the In- 
dian population which gave it a potential 
voice in domestic political policy. 
Even at the 
beginning of the Ubico regime, possibly two 
_ thirds of Guatemala’s inhabitants did not 
speak Spanish—the language necessary for 
minimal political understanding—and the po- 
litical dominance of the educated and wealthy 
_/upper class of European or part-European 
closely allied with the student revolutionists ( extraction continued. 
As the disparity in cul- 
tural background has decreased, however, the 
working class has gained political acumen and 
numerical strength. 
Because even more of 
the Indians (almost half of the population) 
had become, culturally, a part of the national 
community by 1944, it was almost inevitable 
that the concept of “popular” government 
should be revised to the detriment of the old 
established families and many of those who 
traditionally represented “popular” opinion. 
Because the Arévalo government recognized 
the political and economic aspirations of the 
emergent Indian class, it gained—and will 
probably continue to hold—the support of this 
class. 
Moreover, the Arévalo government has 
gained support from other quarters by attack- 
_ing foreign economic domination and provid- 
ing employment and a means of expression 
for many of the educated middle class. 
2. 
Present Government Structure. 
The present government, in structure and 
principle, is based on the revised constitution 
of 1945. 
The revisions were largely a reaction 
to the dictatorship of Ubico. 
They were de- 
signed to prevent the arbitrary extension of 
presidential tenure, to make the army a check 
on presidential power rather than an agency 
for its execution, to assure the individual (and 
particularly the working classes) of economic 
freedom and social security, and to prevent 
monopoly, by either domestic or foreign inter- 
ests, of the natural resources of the country. 
In theory, sovereignty 
is vested in the 
people, who delegate its exercise to executive, 
legislative, and judicial branches designed to 
operate as a system of checks and balances. 
The electorate includes all men over the age 
of 18 (who are legally obliged to vote) and all 
literate women over 18 (for whom voting is 
voluntary). 
For literate men and women, a 
secret ballot is prescribed; for illiterates (who 
probably number about two thirds of the elec- 
torate), voting is public. 
a. The Executive Branch. 
The Chief Executive, who holds the title of 
President of the Republic, must be a Guate- 
malan citizen over the age of 35, and is elected 
by direct popular vote. There are various safe- 
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guards designed to prevent the arbitrary as- 
sumption, perpetuation, or delegation of presi- 
dential power. 
Thus the elected President 
cannot have been a leader of a revolution 
against the state, or one who held high office 
in a government which altered the constitu- 
tional regime, or one in a position to control 
the elections. 
He cannot be a member of the 
armed forces in active service or who has been 
on active service within six months of election 
tion day. 
He cannot be a relative of the 
President, and, in most cases, cannot be a 
relative of those barred from the presidency. 
He cannot be a member of the clergy. 
The term of office of the President is six 
years, and the Constitution specifically for- 
_ 
bids extension of the term or re-election of an 
individual without an interval of twelve years 
between terms. 
No provision is made for the 
office of Vice-President. 
‘The President is suc- 
ceeded, in order, by the president of the Con- 
gress, the vice-president of the Congress, and 
the president of the Judieial Branch. 
In the 
event of death or prolonged absence of the 
President, his successor is required to call a 
presidential election within eight days after 
the office is vacated, such an election to be 
held in not less than two nor more than four 
months from the date of call. 
The President 
exercises wide appointive 
powers, in addition to the usual presidential 
powers of promulgating decrees, approving or 
vetoing legislation, and calling sessions of 
Congress. 
He appoints the governors of the 
twenty-two Departments into which the coun- 
try is divided, the Ministers of his Cabinet, 
the diplomatic 
representatives 
to foreign 
countries, and numerous miscellaneous offi- 
cials. 
He is also Commander-in-Chief of the 
Armed Forces and is required to issue his or- 
ders through the Minister of National De- 
fense and the Chief of the Armed Forces. 
His 
control over the army is minimized, however, 
by the fact that the Chief of the Armed Forces 
is designated by Congress from a panel of 
three names recommended by the Superior 
Council of National Defense, which consists 
of not less than fifteen army officers. 
Executive power is exercised through the 
_ 
Cabinet, which includes the following minis- 
tries: Government; Foreign Affairs; National 
Defense; Agriculture; Economy and Labor; 
Public Education; Finance; Public Health; 
and Communications and Public Works. 
The 
ministers are all appointed by the President 
. 
and may be removed by him as well as by a 
vote of Congress. 
Unless strongly opposed by his own political 
party, the President is able to dominate the 
conduct of the government and its policies. 
He is able to suppress opposition through a 
state of siege (suspension of constitutional 
provisions concerning 
individual 
liberties). 
Barring interference from the army, which is 
in theory bound to a non-political role, his 
control over the National Police is sufficient 
to assure control over public demonstrations 
and minor plots against the government. 
Through his appointment of provincial gov- 
ernors and other officials he can greatly influ- 
ence, if not dictate, the results of congres- 
sional as well as local elections. 
Control of 
the electorate 
insures 
that the President 
usually has at his command the two-thirds 
vote of the Congress necessary to suspend or 
amend the Constitution, and by suspending 
the civil guarantees or by pushing amend- 
ments through Congress, the President may 
legitimately further his personal policies. 
b. The Legislative Branch. 
The Guatemalan Congress is unicameral 
and consists of one member, a Deputy, elected 
© 
for each 50,000 inhabitants or fraction of 25,- 
000 or more, provided that each of the twenty- 
two Departments, regardless of population, 
elects at least one Deputy. 
To be elected 
Deputy, it is necessary to have the status of a 
native-born Guatemalan, to be in exercise of 
the rights of citizenship, to be of secular sta- 
tus, and more than 21 years of age. 
Those 
who may not be elected include relatives of 
the President and of the Chief of the Armed 
Forces, persons who represent companies or 
who operate public services, members of the 
armed forces, and employees of the other 
branches of the government. 
The term of a 
Deputy is four years, congressional elections 
being held every two years, at which time half 
the membership 
of Congress 
is replaced. 
Deputies can no longer be reelected for the 
following term—a provision of the 1945 con- 
stitution designed to minimize the consolida- 
wa TRUMAN 
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tion and perpetuation of political power which 
has, in fact, slightly weakened partisan con- 
trol of Congress and increased the significance 
of congressional 
elections. 
This 
provision 
could, however, serve to decrease the influence 
of Congress and increase the personal domi- 
nance of the President in political affairs, 
since neither his supporters nor his opponents 
in Congress have prolonged opportunity to 
gain recognition, skill, and leadership as par- 
liamentarians. 
Now, as heretofore, the party 
or parties that elect the President easily domi- 
nate and control Congress, and though differ- 
ences of opinion may lead to heated and acri- 
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monious debate on the floor, the final vote 
generally supports the President. 
Congressional powers include the power to 
appoint and remove the Magistrates of the 
Supreme Court and the members of various 
other tribunals; 
to depose, obligatorily, 
a 
President who attempts to perpetuate himself 
in office; to grant or refuse the President per- 
mission to leave the country or temporarily 
vacate his office; to declare the physical or 
mental incapacity of the President to exercise 
his office; to enact, interpret, amend, and re- 
peal laws; to modify or approve the budget bill 
presented by the Executive; to contract, con- 
vert, and consolidate the public debt; to ap- 
prove or disapprove treaties and conventions; 
to approve or disapprove concessions or con- 
tracts granted by the Executive to those who 
would establish new industries within the 
country, and to declare war and approve or 
disapprove of treaties of peace. 
c. The Judicial Branch. 
In the organization of its judiciary, Guate- 
mala follows the practice, derived from the 
French, of establishing courts of ordinary 
jurisdiction and a court of administrative 
jurisdiction. The ordinary courts, which have 
jurisdiction over cases between private per- 
sons, include the Supreme Court, the Courts 
of Appeals, the Courts of First Instance, and 
minor 
courts. 
The 
administrative 
court, 
which decides cases involving the acts of gov- 
ernment officials and agencies, is known as 
the Court of Administrative Litigation. Other 
courts include the Court of Amparo (dealing 
with violations of constitutional guarantees), 
the Court of Conflicts of Jurisdiction, and spe- 
cial courts created by law (such as the au- 
tonomous system of Labor Courts established 
under the new Labor Code). 
All the judicial 
functionaries in the higher and intermediate 
courts, with few exceptions, are appointed by 
Congress or by the Supreme Court, serve for 
four years, and may be reappointed. 
All 
judges must be native-born Guatemalan citi- 
zens of secular status. 
Those of the interme- 
diate and higher courts must be attorneys, 
and those of the Supreme Court and the 
Court of Appeals must have had previous ex- 
perience as judges of lower courts. 
Although their appointments are directly 
controlled by Congress or by congressional 
appointees, magistrates are generally in sym- 
pathy with the policies of the government in 
power. 
This has been particularly noticeable 
in the Labor Courts, which are organized un- 
der a judge appointed by the Supreme Court. 
Even if this were not so, the courts do not 
have the effective power to oppose the pro- 
gram of the administration. 
They may de- 
clare laws unconstitutional, but the laws may 
easily be changed or rephrased by the Presi- 
dent or Congress in order to obtain the desired 
effect. 
d. State and Local Government. 
The twenty-two departmental governors are 
appointed by the President for a term of three 
years, and have responsibility as the local 
_ Tepresentatives of the President and each of 
his cabinet ministers. 
They are instrumental 
in carrying out the policies of the Ministries 
of Agriculture, Communications and Public 
Works, Economy and Labor, Education, Gov- 
ernment, Finance and Public Credit, Foreign 
Relations (with respect to passports and regis- 
trations), and Public Health and Social Wel- 
fare. 
Each department is divided into municipali- 
ties (equivalent to counties) which are gov- 
erned by autonomous municipal corporations, 
elected by popular vote and presided over by 
one 
or more 
magistrates, 
also popularly 
elected. 
These municipalities have the power 
to establish taxes and collect revenues, and 
to organize local police forces which are ex- 
clusively responsible to the magistrate who is, 
in theory, responsible to the departmental 
governor. 
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Although the municipal governments are 
autonomous within the department, they are 
not necessarily democratic in nature. 
Except 
in the purely Indian areas, the municipal gov- 
ernments represent, and are controlied by, the 
ladino element 
(ie., the small upper and 
middle class) of the larger towns, rather than 
the Indian population which, in some cases, 
looks to a separate and unofficial hierarchy 
of Indian leaders in matters affecting the 
community. 
The most important local governmental of- 
fice in Guatemala is that of the mayor of 
Guatemala City, where the wealth and influ- 
ence in the country are centralized. 
The 
mayor has often been a representative of the 
wealthy conservative class rather than a mem- 
ber of the dominant 
liberal party. His power 
rests only upon his position as spokesman for 
this class and his control of privilege, however, 
for he has no armed force under his com- 
mand. 
3. 
Political Parties. 
Guatemalan political .parties, in general, 
are short-lived organizations designed to fur- 
ther the interests of a particular group or 
. 
leader. 
There is traditionally one party, or 
bloc of parties, which supports the President 
during his term in office, and a number of 
small, ephemeral, opposition parties which 
rise and fall with the personal fortunes of 
their leaders. 
Since opposition activities can 
be, and usually are, suppressed when they be- 
come a threat to the party in power, and since 
opposition leaders can easily be exiled or re- 
moved to positions of minor importance where 
they can exert little influence, there is little 
opportunity for dissident elements to achieve 
a strong organization or influence the course 
of government. 
There is a tendency, there- 
fore, among men who exert considerable per- 
sonal influence, to avoid throwing their sup- 
port to any specific party until they are sure 
that they will be able to control political 
power. 
This makes for last-minute political 
compromises and expedient realignments as 
elections approach, and in case of a change 
in administration. 
After the resignation of President Ubico in 
1944, a renascence of political activity resulted 
in the formation of a large number of political 
parties, all rejecting restrictions on individual 
liberties, but ranging from conservative to 
radical in political and economic outlook. 
A 
number of these parties accepted Juan José 
Arévalo as their candidate, and he was elected 
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President by an overwhelming majority. 
a. Administration Parties. 
After the election of President Arévalo in 
December 1944, the two most powerful of his 
supporting parties, the Frente Popular Liber- 
tador and the Partido Renovacién Nacional 
formed a coalition known as the Partido Ac- 
cién Revolucionaria (PAR) which from Octo- 
ber 1945 until May 1947 remained as a single, 
united government party. 
When the major- 
ity of FPL and the PRN membership withdrew 
from the coalition and re-established the ori- 
ginal parties, the name of the PAR was re- 
tained by the remaining group. 
Arévalo’s 
support is now divided among these three par- 
ties, and although they still tend to vote to- 
gether in the face of conservative opposition, 
they differ greatly in their interpretation of 
the principles of the 1944 revolution. 
The Frente Popular Libertador has always 
been the largest and most moderate of the 
administration parties, has held the greatest 
number of Congressional seats, and has op- 
posed the radical and ultranationalistic doc- 
trines of the other Arevalista parties. 
It is 
strongest among the professional class and 
students, and has some support among the 
workers, though this backing seems to come 
from the white-collar workers rather than 
from the industrial and manual workers. 
Its 
followers are the least loyal of those support- 
ing President Arévalo, and it is not unlikely 
that, as the election of December 1950 ap- 
proaches, the party will undergo division or 
even combine, as a group, with moderate con- 
servative elements. 
It has chosen Dr. Victor 
M. Giordani as its candidate in the 1950 presi- 
dential elections, having declined to follow 
the lead of the more leftist administration 
parties who support Lt. Col. Arbenz. 
Dr. 
Giordani has resigned his post as Minister of 
Public Health to participate in the campaign. 
The Partido Accién Revolucionaria is com- 
posed of the extreme leftist elements backing 
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President Arévalo, and includes many persons 
of Communist sympathies. 
Its policies in- 
volve implementation of revolutionary prin- 
ciples with a minimum of delay: land reform 
beneficial to the Indians; support and develop- 
ment of labor movements; extension and de- 
velopment of social security; nationalization 
of land that is standing idle; and the “libera- 
tion” of Guatemala from foreign economic 
domination. 
Among its leaders are radicals 
such as José Manuel Fortuny, Carlos Manuel 
Pellecer, Manuel Pinto Usaga, Agusto Char- 
naud MacDonald, and Ernesto Marroquin 
Wyss. 
It has nominated Lt. Col. Jacobo Ar- 
benz as its candidate for President in the 1950 
elections. 
The Partido Renovacién Nacional, weakest 
of the three administration parties, includes 
intellectuals and students who were among 
the first to support Arévalo as a presidential 
candidate. 
Its history and composition indi- 
cate that it is ideologically to the left of the 
FPL, but adverse to the militant implementa- 
tion of policy advocated by the PAR. 
In re- 
cent elections, it has cooperated with the PAR, 
and has also chosen Lt. Col. Arbenz as its 
presidential candidate. 
The Partido del Pueblo is a party of leftist 
character formed in December 1949 to support 
the presidential candidacy of Jorge Garcia 
Granados, who was rejected as a possible co- 
alition candidate by the three major revolu- 
tionary parties. 
Garcia Granados was influ- 
ential in drafting the Constitution of 1945, 
and in the past has identified himself as an 
advocate of the leftist policy favored by the 
PAR. 
The Partido de Integridad Nacional is a 
small party formed early in 1950 to support 
the presidential candidacy of Lt. Col. 
Jacobo 
Arbenz, who was subsequently nominated by 
the established PAR and PRN. 
The PIN 
strength is largely concentrated in Quetzalte- 
nango, the home of Arbenz. 
b. Anti-administration Parties. 
Conservatives, relatively inactive under the 
Ubico regime, established a Partido Social 
Democratico after the dictator’s resignation. 
Its leaders were predominantly professional 
men, such as Ernesto Vitteri, 
Julio Bianchi, 
Eugenio Silva Pena, José and Frederico Rolz 
Bennett, Francisco Villagran, Colonel Guill- 
_ermo Flores, Carlos Zachrisson, Nicolas Reyes, 
and the Toriello brothers. 
This group did not 
support Arévalo in the 1944 election, though 
both Jorge and Guillermo Toriello obtained 
appointments in the government, and for one 
year exerted a conservative influence on the 
administration. 
With the removal of Jorge 
Toriello in January 1946, however, the liberal 
elements in the government established their 
undisputed supremacy. 
Conservatives 
boy- 
cotted the 1946 elections and generally re- 
mained politically itiactive until 1948. 
— 
~The Unidén Nacional Electoral was formed 
in June 1948 by a number of civic and political 
groups in an effort to consolidate the con- 
servative opposition. 
Its support comes from 
the conservative, pro-clerical elements, and its 
membership includes men prominent in busi- 
ness and agriculture, some of whom were in 
politics during the Ubico regime. 
Among the 
important opposition groups to which it looks 
for support are the Partido de Trabajadores 
Republicano-Democratico, 
the Partido Uni- 
ficacién Anti-Communista, the Guatemalan 
Agricultural 
Association 
and 
its affiliated 
_ Frente de Trabajadores Agricolas, and the 
Union Patriotica. 
The Unidn Nacional Elec- 
toral was successful in winning a few seats in 
Congress 
in the 1943 
elections, and 
also 
elected its candidate as mayor of Guatemala 
City. 
As the presidential election of 1950 ap- 
proaches, this party (or a new coalition of 
essentially the same elements plus splinter 
groups from the Frente Popular Libertador) 
should become increasingly active and power- 
ful. 
The Partido Reconciliacién 
Democratica 
Nacional is a party formed early in 1950 to 
support the presidential candidacy of General 
Miguel Ydigoras Fuentes. 
General Ydigoras 
Fuentes played a rather ambiguous, middle- 
of-the-road role in the 1944 revolution and was 
later appointed Minister to Great Britain, a 
post which he retained until 1950. 
His sym- 
pathies appear to lie largely with the present 
anti-administration elements. 
4. 
Other Influential Groups. 
The continuation in power of any dictator, 
political party or coalition of political parties 
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Papers of 
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PRESIDENT. 's SECRETARY FILE 
-$ 
in Guatemala is dependent, in the last analy- 
sis, upon the support of the leaders of the 
armed forces—or, at least, upon their non- 
intervention 
on behalf 
of the opposition. 
Though relegated to a non-political role un- 
der the Constitution, the traditional role of 
the army as the most powerful potential po- 
litical force in the country is still generally 
recognized. 
During the Arévalo regime, its 
leaders have, in general, shown sympathy for 
the moderate and conservative poryaons fac- 
tors. 
Other organizations representing physical 
force and the threat of violence are influential 
in proportion to their strength and composi- 
tion. 
The national police force (the Guardia 
Civil) has confined itself to a “non-political” 
role since the overthrow of Ubico in 1944. 
Al- 
though it could not effectively oppose the 
army, it is more responsive to the President, 
comprises a rather select group oriented in 
favor of the PAR, and could be used as a 
threat in political maneuvering or to enforce 
minor partisan policies. 
It is currently under 
the direction of Colonel Victor M. Sandoval, 
brother-in-law of President Arévalo. 
In addition to the army and the police, the 
Indian laborers also represent an element of 
force in Guatemalan politics traditionally used 
to support partisan policies. 
Since 1944, they 
have been consolidated and organized into 
labor unions which, in general, support the 
radical policies of the PAR. 
The most impor- 
tant of these unions are the CTG (Confedera- 
cién de Trabajadores de Guatemala) which 
includes the agricultural unions, and the FSG 
(Federacién Sindical de Guatemala) which 
includes ind 
and railway unions. These 
two federations support a political action 
committee, the CPNT (Comité Politico Na- 
cional de los Trabajadores). 
There is evi- 
dence that the PAR, with the knowledge and 
possible support of Minister of Defense Ar- 
benz, distributed arms to the unions, and the 
15,000 laborers who take part in the annual 
May Day demonstration represent the poten- 
tial force which the PAR has at its disposal. 
If the army remains united, it might be able 
to dictate the result of the coming presiden- 
tial election. 
And even if the army were di- 
vided, if any candidate (such as Lieutenant 
Colonel Arbenz) could obtain the support of 
an effective group within the army in combi- 
nation with the support of labor and the po- 
lice, his chances of success would be greatly 
enhanced. 
Although the Catholic Church in Guate- 
mala, as in all Latin American countries, ex- 
erts a strong moral force in the community, 
its influence in politics has been weak and in- 
direct since the anti-clerical reforms of Bar- 
rios, who came to power in 1873. 
The sym- 
pathies of the church tend to coincide with 
those of the conservative, propertied classes 
and are opposed to those of liberals who ad- 
vocate social reforms. 
In consequence, under 
the present regime, the church has been 
rather effectively prevented from expressing 
its political sympathies through public media. 
The pro-Catholic radio station, PAX, was ar- 
bitrarily closed in 1948 for broadcasting “Fa- 
langist” propaganda. 
From the pulpit, the 
clergy has been able to denounce Communism 
and to encourage voting for anti-Communist 
political candidates belonging to the conserva- 
tive 
opposition 
parties. 
Church 
approval 
possibly aided, in the election of a conserva- 
tive as mayor of Guatemala City in 1948, but 
Church influence in political affairs has, in 
general, been slight. 
Should the Arévalo re- 
gime be followed by a more conservative one, 
the political influence of the church may be 
expected to increase, though it is probable 
that the church would continue. to avoid di- 
rect involvement in politics or a close alliance 
with any single political party. 
5. 
Current Issues. 
The current issues of Guatemalan politics 
have arisen largely as the result of an at- 
tempt, by the Arévalo government, to put into 
practice certain revolutionary ideals that in- 
evitably conflict with the interests and tradi- 
tions of the wealthy, conservative elements in 
the society, particularly those engaged in 
business and large-scale agriculture. 
The ad- 
ministration program has been favored, and 
conflict somewhat minimized, however, by a 
period of postwar prosperity and additional 
revenue obtained from government operation 
of the expropriated German coffee fincas— 
factors which have helped to support the ex- 
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tension of educational and public service ac- 
tivities as well as a large bureaucratic govern- 
mental organization which concerns 
itself 
with almost all phases of Guatemalan eco- 
nomic life. 
Economic difficulties became apparent for 
the first time in the 1948 budget deficit and 
the apparently adverse trade balance. 
Al- 
though unlikely to become serious, these con- 
ditions will undoubtedly increase opposition 
to the Arévalo policies, which have involved 
the following controversial issues: 
Encouragement and protection of an organ- 
ized labor movement and the development of 
a social security program. 
These measures, 
beneficial to the hitherto unorganized and 
powerless laborers of Indian descent, are dis- 
tasteful to employers in agriculture and in- 
dustry. 
Employers, while often voicing ac- 
ceptance of social legislation as inevitable and 
just, object to the manner in which it is ad- 
ministered and to the tolerance shown by the 
government for violent labor agitation among 
the working class. 
Nationalization of private property for the 
collective 
interest. 
Propertied 
classes 
fear 
the possibility that their land and other prop- 
erty may be expropriated or placed under 
government management in the name of the 
“collective interest.” 
This would be possible 
under the Constitution, and the Expropriation 
Bill No. 529, which became law on 9 Septem- 
ber 1948. 
Radical PAR leaders have agitated 
for redistribution of lands among the Indian 
laborers, but as yet the government has no 
thorough agrarian reform program. A policy 
of redistributing national lands to collectives 
or families has been initiated, and though not 
likely to be extended to private lands or even 
the intervened coffee plantations held by the 
government, such developments are feared by 
some. 
Management and eventual disposition of 
the intervened 
plantations. 
Income 
from 
these properties defrays some 15 percent of 
the national budget, and their management 
offers numerous opportunities for personal 
profit. 
Under government management, pro- 
duction has fallen off and expenses have in- 
creased—partly as a consequence of observ- 
ance of laws benefiting the workers. 
Large 
landholders object to the inefficient manage- 
ment and fear the policy of permitting labor- 
ers to organize and agitate, which has been 
encouraged on the government-held planta- 
tions. 
Nationalist policies objectionable to foreign 
investors. 
The Arévalo administration has 
consistently 
defended 
its labor code and 
backed labor in the latter’s disputes with for- 
eign-owned companies. 
It has limited the 
employment of non-Guatemalans and limited 
the pay of those who are employed. 
It has 
reasserted national ownership of natural re- 
sources, and has demanded favorable conces- 
sions from foreign firms which operate in 
Guatemala. 
Conservatives, who sympathize 
with foreign employers and who desire in- 
creased investment in Guatemala, are opposed 
to these policies. 
Pattern of government spending. 
The gov- 
ernment is criticised for its support of certain 
projects, such as the construction of a Na- 
tional Stadium, and for its neglect of other 
Causes, such as road construction and repair. 
It has greatly increased its expenditure for 
education, but has not increased funds spent 
on the armed services. 
Opposition elements 
find certain expenditures unnecessary, others 
inefficiently managed, and ask for a more 
cautious and conservative spending policy. 
Government tax policy. 
The administra- 
tion hopes to replace the present business 
profits tax with a personal income tax supple- 
‘mented by an excess profits tax. 
The com- 
bined rates of the new taxes would be consid- 
erably higher than the 43 percent rate pos-. 
sible on business profits only. 
Propertied in- 
terests are therefore strongly opposed to the 
tax program. 
Communism in government. 
The Commu- 
nist Party is outlawed in Guatemala. 
How- 
ever, the Arévalo government has tolerated 
— 
extreme leftist (including pro-Communist) in- 
fluence in the PAR and the labor unions, and 
has befriended and employed persons of Com- 
munist sympathies who have exercised some 
influence in the government. 
The opposition, 
to which the whole Arévalo program is an 
anathema, sees the Communist infiltration, 
real or imagined, as a serious threat, and is 
certain to use it as an election issue and as a 
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TRUMAN 
PRESIDENT'S SECRETARY FILP 
device to gain international sympathy for its 
cause. 
6. 
Stability of the Present Regime. 
, 
The administration of President Arévalo is 
to be considered weak and unstable, particu- 
larly if measured in terms of the Guatemalan 
dictatorships established by Ubico, Estrada 
Cabrera, 
Barrios, 
and 
Carrera. 
Arévalo, 
elected in an unusually democratic election, 
has shown himself to be neither a strong nor 
universally popular President. 
Conservatives, 
although largely withdrawn from active poli- 
tics, have opposed his administration almost 
since its formation. 
The liberals who support 
it are divided into three political parties which 
have, at times, engaged in violent disputes 
and open conflict. 
Within the politically ac- 
tive middle class (the chief source of support 
for the FPL, the strongest party in Congress) 
there has been a general trend away from the 
liberal social reform program and open criti- 
cism of the administration’s tolerance for 
Communists, its antagonistic attitude toward 
US business interests, and its sympathy for 
the labor movement. 
Arévalo, either from in- 
ability or lack of desire to establish himself as 
a dictator, has allowed his cabinet ministers 
unusual freedom in-formulating and execut- 
ing government policies, has countenanced 
congressional opposition to some of his per- 
sonal policies, and has, at times, reorganized 
his cabinet in response to immediate political 
pressures. 
His failure to define clearly, and 
to force adherence to, purely personal policies 
has indirectly encouraged the growth of rival 
cliques within the administration. 
It is possible that a desire to complete his 
legal term without incident, and to remain 
aloof from the political campaign will cause 
Arévalo to follow a more moderate and cau- 
tious policy during his last year in office. 
In 
view of a popular desire to maintain the ap- 
pearance of democratic, rather than coercive, 
political procedure, and in view of Arévalo’s 
demonstrated willingness to respond to popu- 
lar pressure, it is improbable that he will be 
overthrown or forced to resign prior to the ex- 
piration of his term in March 1951. 
_ HARRY S, TRUMAN 
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ae 
RETARY FILE 
CHAPTER Il 
THE PRESENCE OF SABOTEURS AND SUBVERSIVE ELEMENTS 
1. 
Sabotage. 
Potential saboteurs can be assumed to exist 
in Guatemala among sincere native Commu- 
nists, among foreign Communists who have 
been allowed entry by the present govern- 
ment, and among maliciously inclined per- 
sons who, for pay or personal satisfaction, 
might desire to destroy property useful to the 
United States. 
However, the importance of 
possible sabotage activities in case of a war 
between the US and the USSR is restricted by 
the limited strategic significance of the coun- 
try. 
At the present time, Guatemala pro- 
duces no strategic materials 
of sufficient 
rarity, or in sufficient quantity, to make their 
loss a severe handicap to military prepared- 
ness or military operations. 
Sabotage to air- 
fields and military installations would be of 
importance only in relation to the degree to 
which these are built up and used by US forces 
in event of war. 
The most effective sabotage activities might 
be directed against the IRCA railway line and 
the port facilities at Puerto Barrios, as such 
action would virtually stifle Guatemala’s im- 
port and export trade. 
Damage to United 
Fruit Company property, which might be of 
some use to military operations, might be ex- 
pected. 
However, such sabotage 
activities 
would injure the Guatemalan economy far out 
' of proportion to their adverse effect on the 
US war potential. 
Because of its dependence 
upon the US as a market and a source of im- 
ports, and a widespread aversion to Commu- 
nism among the propertied class, Guatemala 
can be expected to adopt a policy of sympathy 
and cooperation with the US after the out- 
break of war—assuming 
that the United 
States were willing and able to compensate 
Guatemala for economic and other losses in- 
curred as a result of such cooperation. If the 
United States were unable to guarantee Gua- 
temala its economic security, however, Guate- 
mala might hesitate to enter the war on the 
side of the United States, or might even re- 
main neutral throughout a war. 
The Guate- 
malan Army should be able and willing to con- 
trol sabotage to military installations within 
the country, except for initial and minor 
damage. 
2. 
Subversive Activity. 
The facilities of Guatemalan governmental 
agencies, notably the foreign service, have pos- 
sibly been used by Communists whose activi- 
ties benefit the Soviet Union. 
This, rather 
than sabotage, constitutes the most immedi- 
ate threat to US security. 
President Arévalo, 
with apparent personal satisfaction, regards 
his country as a citadel of democracy where 
~ 
exiled liberals and intellectuals from dictator- 
controlled countries are free to gather. 
It 
has been the policy of his government to aid, 
covertly or overtly, leftist expatriates from 
Spain, Nicaragua, the Dominican Republic, 
Venezuela, and other countries. 
Some of 
these (such as José Leon Depetre and Dr. Ra- 
fael de Buen, both Spanish republicans, and 
Manuel Edwardo Hubner, a Chilean) have 
been awarded minor positions in the govern- 
ment, where, in conjunction with extreme 
leftist Guatemalans, they could serve effec- 
tively as Communist agents devoted to the ex- 
tension of Soviet propaganda and influence. 
No official Communist Party exists in Gua- 
temala, because the 1945 Constitution under 
which the present government operates for- 
bids international political parties. 
Unsuc- 
cessful efforts were made to establish a dis- 
guised Communist Party within the Escuela 
Claridad in 1945, and under the name of the 
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HARRY S, TRUMAN 
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PRESIDENT'S SECRETARY FILE 
Partido Socialista in 1945, and the Partido 
The Guatemalan labor. movement, which 
‘Vanguardia Popular in 1947. 
The most ef- 
fective Communist activity has taken place 
through the established Arevalista parties, 
through labor unions and through 
front 
groups. 
Although the existence of a clandes- 
tine Communist Party, with a small member- 
ship of 200-300 persons, has been reported, 
convincing evidence of a closely knit organiza- 
tion with effective centralized direction is not 
available. 
The clandestine party is said to be 
organized into cells, but members of one cell 
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are said to be unaware of either the existence 
of the other cells or their affiliation with them. 
The party organization, therefore, appears to 
be weak, and there is no reason to believe that 
it is not also subjected to the same forces that 
weaken all Guatemalan political parties—con- 
flicts of personal or family loyalties, over-rid- 
ing economic considerations, wane individual 
political opportunism. 
Within the reported ‘aii Commu- 
nist Party, and within the various Commu- 
nist-front groups, there are very probably in- 
dividuals whose primary loyalty is to certain 
international Communist organizations that 
act as agents for, and supporters of, the USSR 
in opposition to the US and US-supported or- 
ganizations. 
No accurate estimate has been 
made of the number of such party-line Com- 
munists in Guatemala. 
However, in the event 
of a war between the US and the USSR it is 
improbable that many of those popularly 
styled as “Communists” would actively sup- 
port the Soviet Union or would be permitted, 
by the government, to engage in anti-US 
activities. 
At the present time, Communist influence 
and ideology are significant factors in Guate- 
malan national affairs. 
Of the established 
Arevalista parties, the PAR (Partido Accién 
Revolucionaria) has been most strongly influ- 
enced by Communist thinking, and Marxian 
objectives are apparent in its social, economic, 
and labor platforms. 
It has adopted and used 
classic Communist techniques and slogans, 
and its followers denounce US “economic im- 
perialism.”’ 
Several of its leaders or sympa- 
thizers, such as Agusto Charnaud MacDonald, 
José Manuel Fortuny, and Carlos Manuel 
Pellecer, are possibly pro-Communist. 
has been encouraged by the government, de- 
veloped with the aid and advice of foreign la- 
bor leaders of Communist affiliation, notably 
Lombardo Toledano of Mexico and Blas Roca 
of Cuba. 
Leaders of the Guatemalan labor 
movement, such as Victor Manuel Gutiérrez, 
Manuel Pinto Usaga, Professor Humberto Or- 
tiz, and others, are imbued with the same 
ideals and display the same revolutionary fer- 
vor as do Communist labor leaders in other 
countries. 
The progress of organized labor 
in Guatemala has therefore been associated 
with anti-imperialist, 
anti-capitalist propa- 
ganda, class violence, malicious destruction of 
property, demands for worker benefits, and 
land reform. 
There is no convincing evidence 
that Guatemalan labor has been directly or 
Significantly subsidized by the Soviet Union, 
although it has received leadership and intel- 
lectual stimulation through contacts with for- 
eign Communists. 
Both 
the major labor 
federations, the CTG and the FSG (the Con- 
federacién de Trabajadores de Guatemala and 
the Federacién Sindical de Guatemala) are 
affiliates of the Communist-dominated inter- 
national labor organization, the CTAL (Con- 
federacién 
de 
Trabajadores 
de 
América 
Latina) and the WFTU (World Federation of 
Trade Unions). 
The CTG and the FSG sup- 
port a political action committee, the CPNT 
(Comité Politico Nacional de los Trabaja- 
dores), whose members tend to be pro-Com- 
munist. 
Of Communist front groups, the most sig- 
nificant are the Committee for Peace and De- 
mocracy, formed in 1948 through the efforts 
of the CTAL, the Alliance of Guatemalan 
Democratic Youth, the Syndicate of Educa- 
tional Workers (teachers), the SAKER-TI (As- 
sociation of Writers and Intellectuals), and 
the STIAR (Syndicate of Artists and Intellec- — 
tuals). 
In event of war between the US and the 
USSR, it is estimated that Guatemala’s west- 
ern cultural orientation and recognition of its 
fundamental political and economic ties with 
the US would bring about the suppression of 
© 
these Communist front groups. 
In event of 
continued peace, and the election of a leftist 
TRUMAN’ 
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to the presidency, they might be allowed to 
continue to flourish and even to expand their 
activities, though it is improbable that they 
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would become of international importance. 
In event of the election of a candidate backed 
by the army, these organizations might be 
suppressed and certainly would not be allowed 
to expand their activities, 
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GARRY S. TRUMAN” 
LIBRARY 
HARRY S, TRUMAN 
SECRETARY FILE 
CHAPTER Iil 
ECONOMIC SITUATION 
1. 
Genesis of the Present Economic Situation. 
a. Introduction. 
Throughout the colonial period and the 
early years of independence, the economy of 
Guatemala was self-sufficient. 
The only sig- 
nificant exports were forest products from the 
east coast and small amounts of cochineal, in- 
digo, and cacao from the Pacific coast. 
Com- 
merce was small; intercourse with the out- 
side world was limited;.the country offered 
little to attract colonists, and, despite efforts 
by the government to encourage immigration, 
the 
European 
population 
increased 
very 
slowly. 
The economic isolation that characterized 
Guatemala during colonial times has per- 
sisted insofar as a large number (possibly 50 
percent) 
of Guatemala’s 
inhabitants—the 
rural Indians—is concerned. 
Indian agricul- 
ture is still carried on by primitive methods 
at a near-subsistence level; Indian trade is 
limited almost entirely to the exchange of 
local produce and the purchase of simple 
goods locally manufactured; and the Indians 
themselves remain a distinctive racial and 
cultural group. 
However, those who have be- 
come workers on the coffee and banana plan- 
tations, in industry, and in various urban oc- 
cupations demanding unskilled labor have 
been drawn into the modern economic system. 
Many of these have abandoned their Indian 
language and customs and, as an expanding, 
Spanish-speaking, lower class are now taking 
an active part in Guatemalan national life. 
At the present time, Guatemala’s monetary 
economy, its international trade, and its de- 
velopment as a modern nation all rest largely 
upon the large scale production of two plan- 
tation crops—bananas and 
coffee. 
Chicle, 
other forest products, and minor plantation 
crops are next in importance as exports, but 
contribute little to the country’s international 
trade. 
There are no other effective sources of 
wealth: mineral production is insignificant; 
industrialization is negligible; and trade is 
limited by the low buying power of the ma- 
jority of inhabitants. 
The coffee and banana industries are com- 
paratively modern, large-scale, developments 
representing heavy foreign capital invest- 
ment. 
The organization of production, how- 
ever, particularly in the coffee industry, is 
superimposed upon a pattern of land and la- 
bor relationships typical of the hacienda econ- 
omy of colonial times. This is a pattern 
de- 
fended by the conservatives but attacked, 
along with foreign capitalism, by the support- 
ers of the socialistically inclined Arévalo gov- 
ernment that came into power in 1945. 
The 
most important factors entering into the gen- 
esis of the current economic situation will 
therefore be discussed in terms of capital, la- 
bor, land, and economic ideology. 
b. Capital. 
Because no effective sources of great wealth 
existed in nineteenth century Guatemala, the 
capital with which Guatemala’s plantation 
agriculture was originally established came 
. 
largely from abroad. 
Coffee had been intro- ~ 
duced in Guatemala in the late eighteenth 
century, but production remained very lim- 
ited until after 1873, when President Barrios 
took steps to encourage its cultivation. 
The 
opportunities of the new industry attracted 
emigrants from Europe. 
Many of the largest 
coffee plantations were established by Ger- 
mans, who came to control (in 1940, before 
German-owned properties were expropriated) 
a large proportion of the total coffee acreage. 
Other large coffee plantations were founded 
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HARRY S, TRUMAN” 
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HARRY 
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by English and US interests, and by native 
Guatemalans. 
Guatemalans, however, 
pro- 
duced less than half the total coffee crop, and 
their plantations were, in general, smaller 
than those of the foreigners. 
Moreover, trade 
in coffee fell almost entirely into the hands of 
foreign firms. 
Before the war, Germans han- 
dled 64 percent of the coffee exported, Ameri- 
cans 
18 percent, and native Guatemalans 
only 5 percent. 
Guatemalans—even those of 
the relatively small upper class—did: not, 
in general, 
profit 
directly 
from 
the 
ex- 
panding coffee industry. 
In contrast to the 
wealthy foreign entrepreneurs 
(and a few 
Guatemalans) many of the capable and edu- 
cated Guatemalans sought opportunity and 
prestige in the learned professions, politics, 
and the army. 
Guatemala’s entry into World 
War II, the confiscation of German coffee 
plantations, and the subsequent trend toward 
economic nationalism can all, to a degree, be 
regarded as reactions to the earlier non-par- 
ticipation of Guatemalans in their country’s 
economic wealth. 
Toa degree even greater than that of the 
coffee industry, the banana industry was de- 
veloped by foreign capital—in this case US. 
The United Fruit Company, largely after the 
turn of the century, established plantations 
around Bananera, on the Atlantic Coast in the 
Department of Izabal. 
Until 1936, banana 
production was concentrated in this vicinity, 
but the sigatoka and Panama diseases led to. 
the establishment of new plantations near tli¢ 
Pacific Coast, at Tiquisate, Suchitepeque De- 
partment, which are operated by a United 
Fruit subsidiary. 
Although there are some small ietanendent 
Guatemalan producers of bananas, ownership 
and control of the industry is concentrated in 
the United Fruit Company. 
It owns 
the 
steamships, the docks, and the railroads nec- 
essary for the transport of bananas; it also 
possesses the capital necessary to relocate 
plantations, and the technical knowledge nec- 
essary for combatting diseases affecting pro- 
duction. 
Native producers can expect only to 
supplement UF production, have no control 
over prices, shipment, or marketing, and can- 
not compete with UF in terms of the wages 
and social services offered to the workers. 
The United Fruit monopoly of shipping, 
railroad, and communications services also 
affects the whole of Guatemalan economic 
life. 
Few goods can be imported or exported 
(except by air), or moved from one part of the 
country to another, without the use of UF- 
controlled International Railways of Central 
America (IRCA). 
The owners of the United 
Fruit Company, unlike the owners of the cof- 
fee plantations (who have close social ties in 
Guatemala) are sometimes viewed as unsym- 
pathetic foreign profiteers. 
Therefore, the 
nationalistic policies of the Arévalo adminis- 
tration receive considerable approval among 
Guatemalans. 
c. Land. 
The control of land in Guatemala’s agried- 
tural economy has always involved two basic 
problems: control of suitably productive land 
on which to raise the cash crop, and control 
of subsistence land as a device for assuring 
control of the laborers resident upon it. Be- 
fore the advent of commercial coffee culture, 
there was no shortage of productive land; the 
cash crops of the haciendas were food crops 
for a limited domestic market. With the great 
initial expansion of coffee culture during the 
regime of President Barrios (1873—1885), how- 
ever, a need for a particular type of land de- 
veloped, and was met, in part, when the 
Church properties were confiscated by the 
state and offered to those who would develop 
them as coffee plantations. 
New land laws 
were also passed under Barrios which per- 
mitted the extension of large properties and 
the development of new estates. 
These de- 
creed the abolition of the traditional com- 
munal land tenure system, under which the 
Indians held their land, and its replacement 
by a system of individual holdings. 
Many In- 
dians, not cognizant of the law, failed to regis- 
ter their land as private property, and such 
land was considered unclaimed, to be sold by 
the government to large plantation owners. 
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The inhabitants of such newly established es- 
tatés therefore became resident laborers, obli- 
gated to the landowner by virtue of a law that 
could have acted to their benefit. 
Not until the Second World War was the 
private ownership of the large landholdings in 
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any way threatened. 
In 1941, however, the 
funds of the German owners of coffee planta- 
tions were frozen, and following Guatemala’s 
entry into the war, the plantations themselves 
were placed under government management. 
After the 1944 revolution, the government also 
seized the fincas of the high odicials in Ubico’s 
government, thereby raising the total num- 
ber of intervened plantations to around 110. 
These plantations comprise 30 percent of the 
commercially productive agricultural land of 
the country, and supply some 20 percent of 
the total coffee crop. 
Although the final legal expropriation of the 
intervened plantations has not yet been ef- 
fected, there is little doubt that they will be 
placed under full government ownership, in 
the name of the “national interest” or “social 
necessity.” 
These 
concepts 
symbolize 
the 
Arévalo period, and are used as justification 
for political action even as the concept of the 
good of the individual soul was used in the 
days of the Conquest, or.~the concept of free 
enterprise and private property was used by 
Barrios. 
It is true that Arévalo’s original defi- 
nition of “spiritual socialism” is hardly mate- 
rialistic, for in his own words, it is opposed to 
_ 
materialistic socialism and concerns “psycho- 
logical liberation and spiritual integrity—the 
satisfaction of the mind and will rather than 
the stomach.” 
Nevertheless, it is clear that 
Arévalo’s supporters, and his opposition are 
concerned with material matters. 
Article 91 
of the Constitution, for example, provides that 
steps be taken to eliminate from private own- 
ership large areas of land that are standing 
idle, and the Expropriation Law of 9 Septem- 
ber 1948 provides that any type of property, in 
order to satisfy a collective necessity, may be 
expropriated. 
Large landowners, therefore, now feel that 
their holdings are in jeopardy—not particu- 
larly because of the letter of the law, but be- 
cause the framers of the laws hold to the phi- 
losophy that ‘the Indian (whether tribal or 
not) deserves to be a member of the collectiv-. 
ity, to be considered when matters of the “‘col- 
lective necessity” are involved. 
Moreover, the 
government has actively furthered organiza- 
tion of Indian workers into articulate groups, 
and has countenanced agitation among In- 
dian farm laborers by irresponsible leaders 
who have promised seizure and redistribution 
of land. 
These 
promises may 
effectively 
arouse the Indians to class violence such as 
occurred in 1948 at the town of El Tumbador, 
in the rich San Marcos coffee region, where 
rural Indian agricultural workers killed, with 
their machetes, the mayor of the town—a 
well-to-do landowner. 
This incident is of se- 
rious significance in Guatemala, for one of the 
greatest influences on the political and eco- 
nomic attitudes of the property-owning upper 
and middle classes is the persistent nightmare 
of Indian violence. 
Labor. 
The Indian population has always provided, 
and will continue to provide, the population 
pool from which workers are drawn according 
to the needs of agriculture and industry. The 
control of Indian labor has always been of pri- 
mary interest to the Guatemalan entrepre- 
neur, particularly since the development of 
the coffee industry. Throughout Guatemalan 
history, various legal systems have been de- 
veloped whereby the landowning aristocrat 
was assured control over an adequate supply 
of cheap (or unpaid) Indian labor. 
Although 
the Indian has usually been granted, 
in 
_theory, certain compensatory rights or privi- 
leges in keeping with the ideas of quid pro quo 
held by the ruling class, he has, in practice, 
always been subject to forced labor, despite 
periodic revision or liberalization of labor laws. 
Under the encomienda system of Colonial 
times, the labor force was composed of resi- 
dent Indians, many of whom had been settled 
in more compact communities to simplify the 
administrative problem for the conquerors. 
Their labor was an obligation owed the land- 
lord in return for his protection, the privilege 
of living upon his land, and the benefit of spir- 
itual guidance by the Church. 
Additional 
labor required for harvesting and other work 
was later obtained through a system of com- 
pulsory labor by mandamientos or reparta- 
mientos (theoretically involving remunera- 
tion) which continued until the end of the 
nineteenth century. 
However, the manda- 
miento system, by which laborers were forcibly 
recruited by the governmental authorities and 
sent wherever their services were needed (in 
response to a payment by the landowner) was 
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TRUMAN 
PRESIDENT'S SECRETARY FILE
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inadequate for the greatly increased needs of 
the expanding coffee industry. 
Thus, new la- 
bor laws were promulgated in 1894 which, in 
effect, permitted employers to hold resident 
workers through control of the fields on which 
the latter were accustomed to raise their sub- 
sistence crops, and also to hold contract la- 
borers through a system of debt slavery. 
Under Ubico, debt slavery was outlawed, but 
an equally effective system of obtaining forced 
labor was established in terms of anti-va- 
grancy laws. 
Even after the overthrow of 
Ubico and his successor, Ponce, by the revo- 
lutionists of 1944, an attempt was made to 
continue the system: the Guatemalan Va- 
grancy Decree of 10 March 1945 (passed by 
the revolutionary junta of Arana, Arbenz, and 
Toriello) was an example of the means by 
which labor was traditionally obtained. 
Un- 
der this law, any man between 18 and 60 who 
cultivated less than nine acres of his own land 
(which would include all subsistence farmers) 
was obliged to work for an employer at least 
150 days annually, or be punishable for va- 
grancy, and even a man who could prove he 
worked at least nine acres was still obliged to 
work for an employer at least 100 days a year. 
In practice, the employer was obliged to pay a 
wage to the worker, yet the latter was free to 
work for himself only a portion of the year— 
in effect, when his labor was not needed. 
Under the Arévalo administration the Va- 
grancy Decree was rewritten and greatly liber- 
alized, effectively limiting the concept of va- 
grancy to landless Indians. 
Although it has 
been possible for some employers to ignore or 
circumvent the new law, it nevertheless has 
been effective in creating a labor shortage in 
certain important coffee areas. 
Moreover, re- 
cent amendments to the Guatemalan Labor 
Code (itself a product of the Arévalo adminis- 
tration) permit the organization of rural agri- 
cultural laborers into unions on the same 
liberal basis as granted the workers in indus- 
try, though, as yet, organization has been ef- 
fective 
only on government-managed 
ha- 
ciendas. 
Strong domestic opposition to Arévalo’s lib- 
eralism has therefore come from the coffee- 
plantation owners, who constitute the wealth- 
iest group of Guatemalan employers and those 
with the largest labor requirements. 
Some 
500,000 full or part-time workers are employed. 
on the 1,500 coffee plantations throughout the 
country at wages averaging possibly 30 to 35 
cents a day and supplemented, in some cases, 
by rations of corn and various privileges. 
Planters consider these low wages vital to cof- 
fee production, and although they have diffi- 
culty in holding transient labor throughout 
the harvest season, they oppose wage increases 
on the basis that workers prefer to work less 
rather than earn more—that they return to 
their homes as soon as they have accumulated 
a small amount of capital, regardless of the 
stage of the harvest. 
Since the liberalization 
of the Vagrancy Law and the passage of the 
Labor Code, therefore, serious conflicts have 
arisen between the landowners (who seek to 
continue 
the forced recruitment 
of labor 
through subterfuge and control of local au- 
thorities) and labor organizers and agitators 
(who seek to unionize the employees or turn 
them against their employers). 
By way of 
putting its liberal theories into practice, the 
government has encouraged the activities of 
unionists, particularly on the expropriated 
plantations which it operates. 
In some cases, 
more satisfactory working conditions have re- 
sulted. 
This has not always been the case, 
| 
however, and because employers, and many of 
the workers themselves, are satisfied with the 
paternalistic pattern of labor relations still in 
existence on the majority of Guatemalan 
farms, the organization of rural workers has 
become one of the most disruptive and divisive 
problems of current Guatemalan social and 
economic life. 
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The revolutionary Guatemalan labor legis- 
lation has been even more disruptive to labor 
relations on the banana plantations and in 
industry. 
Workers on the United Fruit plan- 
tations were enabled to organize earlier and 
more effectively than others because of a 
clause in the Labor Code which classifies agri- 
cultural enterprises employing over 500 per- 
sons as “industries.” The monopolistic posi- 
_ tion and the foreign ownership of the United 
Fruit Company—factors which weaken 
its 
support among native Guatemalans—have 
encouraged the government to support the la- 
bor unions in their demands, which have often 
been upheld by the special labor courts set up 
in accordance with the Labor Code. 
Workers 
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| PRESIDENT'S SECRETARY FILE 
on the IRCA railway (also controlled by the 
United Fruit Company) have also been en- 
abled to form strong, aggressive unions whose 
demands have been sympathetically viewed 
by the government. 
Other foreign-owned en- 
terprises have similarly felt the effect of the 
Labor Code, and to a lesser degree Guatemalan 
employers have been faced with the need of 
granting their employees numerous conces- 
sions in the form of higher wages, paid vaca- 
tions, job security provisions, and various priv- 
ileges. 
e. Economic Ideology. 
The widespread appeal of President Aré- 
valo’s philosophy of “spiritual socialism” is in 
itself an important factor in the current eco- 
nomic situation. 
This philosophy is the Gua- 
temalan version of the twentieth century eco- 
nomic liberalism with which exiled Guate- 
malan 
intellectuals became acquainted 
in 
Mexico, Cuba, Argentina, and other countries 
during the 1930’s. 
Its development coincides 
with the gradual assimilation of the large In- 
dian working class, which in the past has been 
isolated, inarticulate, culturally diversified, 
and without voice in national affairs. 
It is 
an ideology which not only affirms the status 
of the Indian as a free citizen-worker in a dem- 
ocratic society, but which seeks to provide 
him with the education and organizational 
strength necessary to oppose private employ- 
ers and employers’ associations, and seeks to 
assure him that the wealth of the country will 
not be monopolized by private interests but 
will be controlled by the state for his benefit. 
. 
It is an ideology, therefore, directly antago- 
nistic to the interests of the propertied class, 
whose economic position has been largely de- 
pendent upon cheap labor, the undisputed 
ownership of large landholdings, and the abil- 
ity to dominate the political scene. 
The economic policies of Arévalo appeal not 
only to the Indian working class, but also to a 
large segment of the educated middle class. 
‘Because the wealth of the country has been 
concentrated in the hands of aliens, and be- 
cause former President Ubico’s political or- 
ganization was small, efficient, personalized, 
and non-intellectual, members of the growing, 
educated, 
Guatemalan 
middle 
class 
were 
faced with but limited opportunities in agri- 
culture, trade, politics, and the army. 
The 
new ideology, however, requires, a vast exten- 
sion of governmental activities which provide 
employment for teachers, engineers, econo- 
mists, and others of the professional and in- 
tellectual 
group. 
The 
large, 
nationalistic, 
bureaucratic government that characterizes 
the Arévalo 
administration—supported in 
part by the profits derived from the expropri- 
ated German coffee plantations—is therefore 
an instrument through which native Guate- 
malans have been enabled, indirectly, to par- 
ticipate in the wealth of the country. 
Although the revolutionary ideology has a 
wide appeal, there is also widespread opposi- 
tion to the implementation of its social re- 
forms, particularly in connection with the 
rights and privileges accorded the Indians and 
working class. 
This opposition is not limited 
to large landowners and employers, but is 
found throughout the society. 
A popular 
basis for the opposition movement is found 
in the so-called “ladino” class, which, in con- 
trast to the rural Indians, forms the dominant 
population group in the towns throughout the 
country. 
The “ladinos” are the merchants, 
storekeepers, artisans, and small businessmen. 
They hold all the municipal offices, control 
local credit, and own the best small properties 
and those nearest the towns, in contrast to the 
poorer and more distant plots owned by the 
Indians. 
Asa group, the “ladinos” are fearful 
of losing their dominant position (tradition- 
ally associated with Spanish or part-Spanish 
ancestry, Spanish language and culture) as 
a result of the education and advancement of 
the lower-class Indians. 
The “ladinos’—of 
whom the murdered mayor of El Tumbador 
is a symbol—are in most direct contact with 
the Indian working class and have the least 
opportunity to avoid the personal dangers of 
class 
violence. 
Their 
opposition 
to Are- 
valismo is therefore correspondingly great. 
f. Conclusion. 
The ideology of the Arévalo administration 
has proved popular and disruptive. 
The “Oc- 
tober Revolution” 
of 1944 represents 
not 
merely a political revolution, but a challenge 
to the traditional social and economic privi- 
leges of a very small upper class and a good 
portion of the “ladino”’ middle class. 
It has 
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HARRY
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\ PRESIDENT'S SECRETARY FILE 
not materially affected the total production 
of coffee and bananas—the mainstay of Gua- 
temala’s modern economy—but by attacking 
existing foreign enterprises and reducing their 
profits it has discouraged potential foreign in- 
vestors and has thereby hampered the more 
rapid development of Guatemalan resources 
and industries. 
2. 
Description of the Present Economic System. 
a. Summary. 
The economy of Guatemala is based almost 
entirely upon agriculture, yet the country is 
barely 
self-sufficient 
in basic 
food 
crops. 
About 70 percent of the people live by working 
the soil, and domestic industries are based 
largely upon the utilization of farm and for- 
est products. 
Approximately 98 percent of 
Guatemalan exports (of which over 90 per- 
cent are consigned to the United States) are 
agricultural or sylvan in origin. ~ 
Only a small portion of the land is economi- 
cally productive. 
Out of a total of approxi- 
mately 27,431,000 acres, an estimated 2,000,- 
000 acres (7 percent) are under cultivation in 
field and tree crops; 500,000 acres (2 percent) 
are dedicated to improved pasture; and some 
18,000,000 acres (67 percent) are covered by 
forest. 
The approximate areas (in acres) de- 
voted to various crops in 1948 include: corn, 
1,200,000; coffee, 350,000; beans, 200,000; ba- 
nanas, 100,000; wheat, 50,000; sugar cane, 
40,000; grain sorghums, 25,000; rice, 16,500; 
essential oils, 8,000; cotton, 7,500; tobacco, 
7,200; other fibers for cordage, 6,000. 
Farm 
animals in the Republic in the year 1948 num- 
bered approximately as follows: cattle, 900,- 
974 head; horses and mules, 216,422 head; 
sheep, 617,611 head; goats, 63,545 head; pigs, 
374,367 head. 
Of forest products, chicle and 
lumber are the most important to the econ- 
omy. 
Production of textiles, although small, is 
the major industry, followed by the manufac- 
ture of leather goods (principally boots and 
shoes). 
Other small factories produce, for 
local consumption, furniture, soap, candles, 
wooden toys, matches, vegetable fats, ciga- 
rettes, 
and 
miscellaneous 
rubber’ 
goods. 
There are also breweries, flour mills, sugar 
mills, a sugar refinery, a cement plant, and 
plants for generating electricity. 
Production of minerals is practically con- 
fined to minor exploitation of chrome, silver, 
lead, and zinc, and a few other minerals. 
Po- 
tentially rich deposits of petroleum are be- 
lieved to exist in the Petén region, and Guate- 
mala can expect to become an important pro- 
ducing region when, and if, these deposits are 
exploited. 
b. Agriculture. 
(Note: The percentage of total exports con- 
tributed by each specific product (as given in 
this section) 
is based upon a total export 
evaluation which (in its use of customhouse 
figures) greatly underestimates the value of 
banana exports (see g. International Trade). 
If the true value of banana exports be con- 
sidered, bananas will be seen to contribute at 
least 39 percent of the total exports (by value) 
and coffee 47 percent or less.) 
Coffee. 
Guatemala ranks fourth among 
Latin American countries in coffee production, 
and fifth among countries 
of the world. 
This one crop supplied over 61 percent, by 
value, of Guatemala’s total exports in the year 
1948 (1,054,959 quintals valued at $31,718,- 
788). 
Guatemalan coffee is of a mild variety 
and is used in the United States chiefly for 
blending. 
It commands a high market price 
and does not compete directly with Brazilian 
coffee. 
The principal coffee districts are found on 
the highland slopes near the Pacific coast 
(particularly the Departments of San Marcos 
and Quetzaltenango) and in the area around 
Coban, in central Guatemala on the Carib- 
bean side of the highlands. 
Approximately 
75 percent of the crop is grown at eleva- 
tions between 2,000 and 4,500 feet. 
About 
13 percent is grown below this belt, and 
about 12 percent above it. 
Altogether there 
are some 
1,500 coffee plantations in Gua- 
temala, ranging up to 35,000 acres in extent, 
_ 
employing (during the crop year 1942/3) an 
estimated 425,544 workers (men, women, and 
children). 
About two-thirds of these work- 
© 
ers were resident on the plantations, the oth- 
ers being mainly migrant laborers from high- 
land Indian villages. 
About 20 percent of the 
total coffee crop is produced on about 110 gov- 
ernment-operated farms. Because such coffee 
is sold at auction rather than on contract, the
HARRY 
, Papers 
of 
LIBRARY 
HARRY Se TRUMAN 
_ PRESIDENT 'S SECRETARY FILE 
government has been an immediate benefi- 
ciary of the rapid rise in coffee prices of Octo- 
ber—-November 1949. 
Most private producers, 
however, had already sold their 1949-50 crop 
at relatively low contract prices at the time 
the rise occurred, 
Bananas. 
Guatemala ranks first or second 
in Latin America and the world as an exporter 
of 
bananas. 
Bananas 
supplied 
approxi- 
mately 20 percent, by value, of Guatemala’s 
total exports in the year 1948 
(12,267,244 
stems valued at $10,318,934). 
In the year 1948, the United Fruit Com- 
pany and its Guatemalan 
subsidiary, 
the 
Compania Agricola de Guatemala, produced 
about 61 percent, and exported about 80 per- 
cent of the country’s total production. 
Pro- 
duction is centered inland from the Caribbean 
coast, near Bananera (where the United Fruit 
Company has some 15,250 acres under culti- 
vation) and near the Pacific coast, at Tiqui- 
sate (where the Compania Agricola has about 
18,250 acres in cultivation). 
These companies 
are the largest private employers in Guate- 
mala, with a combined labor force of approxi- 
mately 15,450 (6,250 at Bananera, and 9,200 
at Tiquisate). 
Abacd. 
All abaca plantations in Guate- 
mala are operated by the United Fruit Com- 
pany under a contract with the Reconstruc- 
tion Finance Corporation. 
Plantations were 
developed during the recent war, and abaca 
production has increased rapidly as plantings 
have matured until, in 1948, abaca was fourth 
(after chicle) in value of Guatemala’s exports, 
representing 4 percent of the total (107,354 
quintals valued at $2,184,500). 
Production 
may be expected to increase in future years, 
assuming continued US financial aid and 
technological assistance in combatting the 
root-borer disease which threatens all Central 
American abaca production. 
Essential 
Oils. 
Essential 
oils 
(predomi- 
nantly citronella and lemongrass oils) ranked 
fifth in value among Guatemala’s exports in 
1948, and provided, by value, about 1.5 per- 
cent of Guatemala’s total exports (8,643 quin- 
tals valued at $850,465). 
- 
Honey. Honey ranked sixth in value among 
Guatemiala’s exports in 1948, representing 1.2 
percent of the total value of all exports (31,033 
quintals valued at $295,219). 
Cinchona. 
Arevival of interest in cinchona 
production during the 1930’s led to the de- 
velopment of new plantations. 
However, vir- 
tually all cinchona exports still come from the 
established plantation at El Porvenir in the 
Pacific highlands, which from 1943 to 1948 
operated under contract with the Reconstruc- 
tion Finance Corporation. 
This plantation, 
17,000 acres in extent, is the largest single 
concentrated source of cinchona bark known 
in the Western Hemisphere. 
In terms of 
value, cinchona provides less than 0.2 percent 
of Guatemala’s total exports. 
Minor Export Crops. 
Minor crops which 
contribute to the export trade include Zaca- 
ton root, cacao, vegetables and fruits, hene- 
quen and maguey, and oil-producing plants 
such as castor beans, peanuts, sesame, flax, 
tung nuts, and soybeans. 
Other 
plants, 
and plant products, being produced for do- 
mestic industrial use and export include euca- 
lyptol, citral, mint, balsam, liquidambar, in- 
cense, pitch, turpentine, myrtle, anatto, gin- 
ger and cardamon seeds. 
Subsistence Crops. 
Although Guatemala is 
an agricultural country and one in which the 
majority of inhabitants subsist on a very low 
dietary standard, production of the major food 
crops (corn, beans, and rice) is barely suffi- 
cient for domestic needs. 
Food shortages, ac- 
companied by extreme price increases, led the 
Ministry of Economy to authorize the impor- 
tation of 1,000 short tons of these food crops 
during the crop year 1948—49. 
Corn and beans are grown throughout the 
country and form the basis of the Guatemalan 
diet. 
These crops are raised principally by 
small farmers who grow only enough for their 
own use and sale in the local village market. 
Yields are low and the crops are generally 
hand cultivated in small plots where the use 
of modern methods would be difficult. 
| 
Rice, another important subsistence crop, is 
less widely grown. 
Production is greatest in 
the Departments of Santa Rosa and Jutiapa. 
A portion of the crop is exported to neighbor- 
ing countries. 
Wheat is grown to a limited extent in Guate- 
mala, but production is not sufficient to ful- 
fill the domestic demand, and wheat flour 
ranks first among the country’s agricultural
Papers of 
HARRY S. TRUMAN 
PRESIDENT'® S SECRETARY FILE 
imports. 
Sugar production is barely suffi- 
cient to satisfy domestic demand. 
c. Forest Products. 
Chicle. 
Chicle ranks first in importance 
among the country’s forest products and in 
1947 provided about 8 percent, by value, of the 
fotal 
exports 
(36,695 
quintals 
valued 
at 
$2,740,197). 
The producing area comprises 
the great forested 
regions 
of the Petén, 
throughout which the chicle-yielding trees are 
scattered. 
All chicle shipments from Guate- 
- 
mala were made to the United States by the 
Chicle Development 
Corporation 
and 
the 
Wrigley Export Company, until June 1949, 
when these companies ceased operations in 
Guatemala. 
A Guatemalan company, organ- 
ized with government aid, has now taken over 
chicle buying and selling. 
Lumber. 
Combined, 
cabinet 
and 
other 
“woods represented about 1 percent, by value, 
of Guatemala’s total exports in 1948 (3,666,000 
board ft. valued at $516,972).- Most impor- 
tant are mahogany, Spanish .cedar, lignum 
vitae, primavera, balsa, and pine. 
Most of 
Guatemala’s mahogany, from the Department 
of El Petén, is normally exported through 
Belize. 
Rubber. 
Rubber is of no consequence as an 
export, and production is negligible. 
Castilloa 
plantations, which once supplied 100 to 200 
metric tons annually, were virtually aban- 
doned after the development of Far Eastern 
hevea plantations. 
During the recent war, 
Guatemala’s estimated 250,000 castilloa trees 
supplied about 360,000 pounds of rubber an- 
nually. 
Under United States direction, about 
1,500 acres (on 39 properties) were planted 
with some 300,000 hevea trees. 
It is estimated 
that these will produce about 1,800,000 pounds 
of rubber annually, thereby raising the total 
to about 2,160,000 pounds. 
Minor Forest Products. 
Guatemala’s for- 
ests also produce dyewoods, tannin woods, va- 
nilla, sarsaparilla, camphor, cinnamon, spices, 
palm oil, and other minor products. 
d. Animal Husbandry. 
Livestock 
are raised throughout Guate- 
mala, and most domestic requirements for 
animal products are met by domestic produc- 
tion. 
Animal products, mainly cattle hides 
and fresh beef, constitute about 1 percent, by 
value, of Guatemala’s total exports, but their 
value is greatly exceeded by the value of im- 
ports of the same category. 
There are few large cattle herds, and pure- 
bred stock raising is limited to a few dairy 
herds in the vicinity of the capital. 
Farmers 
in many sections raise cattle and other stock 
for meat, and meat cattle are also occasionally 
imported from Honduras and El Salvador. 
_ 
Sheep raising is a fairly important industry 
in the western highland section of Guatemala, 
particularly in the Departments of Hueheu- 
tenango, San Marcos, Quetzaltenango, Toto- 
nicapan, and Quiche. 
The better grades of 
wool are used mainly 
by two factories making 
woolen suitings; most of the remainder is 
used by local weavers, on whose hand looms 
are produced most of the country’s woolen 
goods. 
These 
products 
(mainly 
blankets, 
— 
shawls, and rugs) are manufactured chiefly 
for the immediate local market. 
Fishing is of local importance only, and 
contributes little to the national economy. 
e. Mining. 
Although a large variety of minerals are 
known to exist in Guatemala, the only miner- 
als mined commercially are chromite and 
small amounts of gold, lead, iron, silver, zinc, 
limestone, salt, and sulphur. 
Other known 
minerals 
include mica, 
marble, 
gypsum, 
graphite, coal, copper, titanium, mercury, an- 
timony, and molybdenum. 
Most Guatemalan 
mineral resources have not been developed be- 
cause of inaccessibility, inadequate transpor- 
tation facilities or excessive transportation 
costs, and also, in the case of petroleum (the 
existence of which is not yet proved defini- 
tively), the inability of foreign companies and 
the Guatemalan Government to reach satis- 
factory agreements concerning exploitation of 
the deposits. 
The lead and zinc shortages resulting from 
the war have served to stimulate the produc- 
tion of these minerals, which have been ex- 
ploited on a small scale in Guatemala for 
many years. 
The most important mining 
operation at present is that being undertaken 
by the US-backed Compania Minera de Gua- 
temala, in the Coban region of Alta Verapaz. 
Two other US-owned companies are planning 
lead or lead-zinc mining operations: the Com- 
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ik 
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/ Papers of 
HARRY 
HARRY S « TRUMAN 
\ PRESIDENT'S SECRETARY FILE 
| 
pania Centro-Americana de Minas and the 
Compania Minera de Hueheutenango. A Gua- 
_ temalan company, Mineras Nacionales, is cur- 
rently exploiting ores containing lead, copper, 
zinc, barium, and silver; in 1948, 6,453 metric 
tons of ore were processed and exported to the 
US. 
| 
Guatemala is believed to be rich in chrome 
ores, but only the richest deposits have been 
worked, and these only on a small scale. 
Chromite deposits in the Departments of Ja- 
lapa and Zacapa are exploited by two Guate- 
malan companies. 
In 1948, about 1,200 gross 
tons of chromite ore (CR,O; content 55 per- 
cent) were exported. 
| 
The production of gold is very small, and 
gold exports are negligible. 
Sulfur and salt 
deposits are exploited commercially on a small 
scale. 
Mica deposits, worked during and after 
the First World War, have not been utilized 
for many years, because the mica will not 
meet present industry_ specifications. 
Iron 
deposits exist in the vicinity of Chiquimula, 
near the border of El Salvador, but lack ex- 
tensive volume and continuity. 
A very small 
amount (150 tons a month) of iron ore is 
mined near Zacapa for use by the Guatemala 
City cement plant. 
Limestone deposits are 
utilized locally for the production of lime for 
domestic consumption and for the cement 
plant. in Guatemala City. 
Radioactive min- 
erals exist in certain areas of Guatemala, but 
to our present knowledge not in sufficient 
quantity to be recovered commercially. 
The existence of petroleum deposits in the 
Petén and Alva Verapaz regions 
is very 
strongly indicated by surveys made by major 
oil companies since 1925, but no drilling oper- 
ations have yet been undertaken. 
Following 
surveys made in 1936-7, Shell Oil Company 
negotiated for concessions with the Guate- 
malan Government, but withdrew in 1938 
when unable to reach a satisfactory agree- 
ment. 
Since the recent war, several large 
companies (Standard Oil of Ohio, the Ohio 
Oil Company, and the Atlantic Refining-Tide- 
water group) have carried out active explora- 
tion and have negotiated for exploitation con- 
tracts. 
Negotiations have been prolonged, 
and the granting of contracts delayed, by dis- 
agreement over certain provisions of the Pe- 
troleum Law. 
The law reflects the extreme 
nationalism of the present administration, 
which repudiates exploitation of the country’s 
resources by foreign enterprises except on 
terms extremely favorable to Guatemala. 
Al- 
though agreement seemed to be near in early 
1949, the drafting of a revised law with pro- 
visions still less favorable to the contracting 
companies has again delayed matters. 
Oil 
company Officials have become openly pessi- 
mistic about the possibility of reaching an 
agreement and speak of withdrawing entirely. 
It seems possible, however, that if the objec- 
tionable provisions of the Petroleum Law are 
not modified during the next year, they will 
be so modified under Arévalo’s successor. 
f. Manufacturing. 
There is no heavy industry in Guatemala, 
and almost all machinery, equipment, and fuel 
must be imported. 
The limited and poorly 
developed hydroelectric resources, the lack of 
many raw materials, the high transportation 
costs, and the limited markets have operated 
to discourage large-scale development of in- 
dustry. 
As a consequence, most of the manu- 
facturing establishments in Guatemala remain 
household industries or small shops, employ- 
ing from two to ten persons and producing 
solely for a local market. 
Indian handicrafts 
constitute an unusual, and characteristically 
Guatemalan, item of export, and attract some 
tourist trade. 
In terms of value, however, 
they are of little importance. 
— 
Most industrial enterprise is centralized in 
Guatemala City, where are located 463 of the 
776 “industrial establishments” (non-agricul- 
tural and non-commercial enterprises employ- 
ing five or more persons) listed in the 1946 
Industrial Census. 
These 776 establishments 
employed 23,014 persons, manufactured prod- 
ucts worth $43,802,784, and utilized raw ma- 
terials worth $19,455,103 during 1946. 
Of 
the raw materials, 59 percent were domestic 
in origin, and 41 percent were imported. 
In 
85 percent of the establishments, 
electric 
motors were the source of power; other power 
sources include steam, internal combustion 
engines, and direct hydraulic power. 
_ The various classes of industries are listed 
below in order of the dollar value of their 
product: 
LISRARY | 
| 
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HARRY S. TRU 
Papers of 
| HARRY S. TRUMAN 
| 
LIBRARY 
. 
\ PRESIDENT'!S SECRETARY FILE 
Class 
No 
6. 
Non-metallic minerals ....... 
10. 
Printing and binding ......... 
12. 
Metal working and foundry.... 
13. 
Machinery manufacturing 
19. 
Metallic and non-metallic~- 
mineral extraction ......... 
TOTALS 
776 
The Guatemalan Government has long at- 
tempted to encourage industrial production 
within the country. 
The current Law of In- 
dustrial Development of 21 November 1947 
provides for free importation of construction 
materials, machinery, and of some raw mate- 
rials for periods up to ten years. 
It also estab- 
lishes the proportion of domestic and foreign 
capital to be required in the formation of new 
— 
industries or the future expansion of existing 
industries. 
Thus, industries producing prin- 
cipally for the domestic market must be con- 
stituted of predominantly Guatemalan capi- 
tal; those producing principally for the domes- 
tic market, but which demand high technical 
competence, must have a minimum participa- 
tion of 33 percent Guatemalan capital (or 30 
percent as the extreme minimum); those pro- 
ducing principally for foreign markets may be 
constituted 100 percent of foreign capital; and 
those producing alcoholic and fermented bev- 
erages must have a minimum of 70 percent 
Guatemalan capital. 
Mining and petroleum 
industries are subject to special laws. 
Percentage 
Product Value 
of Total Value 
$10,254,491.00 
23.3 
9,647,834.00 
22.0 
5,427,409.00 
12.3 
3,732,847.00 
8.4 
3,620,091.00 
8.2 
1,910,625.00 
1,759,900.00 
1,716,777.00 
1,642,409.00 
1,111,147.00 
752,496.00 
513,912.00 
454,869.00 } 
25.8 
376,594.00 
201,758.00 
193,670.00 
99,203.00 
14,212.00 
13,660.00 
358,880.00. 
$43 ,802,784.00 
100.0% 
g. International Trade. 
Guatemala’s foreign trade is dominated by 
the United States, which normally takes about 
90 percent of its exports and supplies from 65 
to 75 percent of its imports. 
Canada ranks 
second as a customer, and various European 
countries follow. 
Mexico is generally second 
in importance as a supplier of imports. 
Ex- 
ports are almost entirely agricultural products 
and raw materials 
(coffee, bananas, chicle, 
abaca); imports are almost entirely manufac- 
tured articles but include some raw materials 
and foodstuffs 
(petroleum, 
ginned cotton, 
processed foods). 
Guatemalan foreign trade, 
both in imports and exports, has increased 
tremendously in volume and value during re- 
cent years. 
During and immediately after the 
war, favorable trade balances were consistent- 
ly recorded and foreign exchange holdings 
reached a peak of $55,522,000 in April 1947. 
Between. 31 December 1947 and 1 December 
1948, foreign exchange holdings fell from $53,- 
005,000 to $49,156,000 and by 30 November 
1949 had decreased to about $39,912,000. 
In 
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HARRY 
S, 
LIBRARY 
Papers of 
HARRY S. TRUMAN 
PRESIDENT'S SECRETARY FILE 
1948, for the first time since the war, imports 
exceeded exports: imports were valued at $68,- 
349,860 and exports at $50,165,489.56, produc- 
ing an apparent deficit in the balance of trade 
of $18,184,370.44. 
However, 
the Bank 
of 
Guatemala makes a moderate upward adjust- 
ment in the export figures of at least $14,110,- 
000 in view of the extremely low customhouse 
evaluation of bananas, which is figured on 
purely nominal and invariable prices, and 
shows no correlation with the actual sales price 
on foreign markets. 
This figure represents, 
in effect, that portion of the sales price of 
| 
bananas that is returned to Guatemala in the 
course of United Fruit Company operations. 
An adjustment of this sort, and of this amount, 
is entirely reasonable, and serves to cancel out 
a relatively large proportion of the apparent 
deficit in the international trade for 1948. The 
deficit has, however, stimulated interest in im- 
port control measures which may eventually 
be applied to conserve dollar exchange. 
The dollar value (customs statistics) of 
Guatemala’s foreign trade, by countries, was 
as follows in the year 1948: 
Country of Origin 
or Destination 
Imports 
Exports. 
United States 
$52,106,808 
$44,616,917 
Mexico 
2,864,683 
42,638 
Curacao 
1,635,560 
El Salvador 
1,562,250 
139,995 
England 
1,512,005 
702,688 
Canada 
1,470,161 
1,970,130 
Aruba 
1,289,747 
3,952 
Switzerland 
662,224 
251,823 
Belgium 
580,831 
653,662 
Peru 
576,354 
2,301 
Holland 
124,665 
261,403 
Sweden 
379,463 
289.480 
Venezuela 
3,808 
408.706 
Italy 
554,300 
362,607 
All Other 
3,027,301 
459,188 
Total 
$68,349,860 
$50,165,490 
As in other Central American countries, the 
Guatemalan tariff is largely for revenue, but 
protection is afforded certain industries, nota- 
bly, textiles, cattle, sugar, and matches. 
Im- 
port duties averaged about 14 percent of the 
total value of imports during 1948. 
h. Transportation. 
Air Transport. 
Guatemala 
is linked 
to 
other countries by two scheduled airlines and 
two non-scheduled carriers. 
Pan American 
World Airways, a United States company, and 
TACA 
(Transportes Aereos Centro Ameri- 
canos), a Salvadoran company, were the only 
international carriers operating on a sched- 
uled basis during the year 1948, and during 
this year their combined traffic amounted to 
54,749 passengers entering and 54,996 leaving 
Guatemala. ‘AVIATECA (Compania Guate- 
malteco de Aviacién) is a government-owned 
airline (formerly Aerovias de Guatemala, a 
Pan American 
subsidiary 
expropriated 
in 
1945). Aviateca has a monopoly on all inter- 
nal passenger and freight traffic, and has ex- 
panded its operations until it now serves more 
than 27 communities in Guatemala on regular 
schedules. 
During 1948, the gross income of 
this company amounted to more than $1,000,- 
000, a large portion of which was derived from 
the transport of chicle from the Petén area to 
Puerto Barrios. 
It carried 74,706 passengers 
and over 13,000,000 pounds of freight. 
Maritime 
Transport. 
Almost 
all 
water 
freight and passenger service to and from 
Guatemala is provided by ships belonging to 
the United Fruit Company, which also owns 
the port facilities at Puerto Barrios and con- 
trols the railroad that links the port with the 
interior. 
Puerto Barrios, the country’s most 
important seaport, is located on the Caribbean, 
and is the only port where ships can come 
alongside and unload cargo directly onto the 
pier or into railroad cars. 
Regular service to 
New York, New Orleans, and other US ports 
is maintained by the United Fruit Company 
ships. 
Livingston, at the mouth of the Rio Dulce 
near Puerto Barrios, is the terminus of a ship 
and lighterage service used mainly for the 
transport of coffee from the Verapaz region. 
On the Pacific coast, the principal ports are 
Champerico and San José, both termini of the 
International Railways of Central America 
and both open roadsteads demanding offshore 
anchorage. 
San José derives its importance 
from its proximity (72 miles by rail) to Guate- 
mala City, and the possibility of constructing 
port facilities here (a breakwater, channels, 
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and piers) has attracted the attention of at 
least one group of US investors. 
The Pacific 
_ ports function chiefly for the export of coffee. 
Rail Transport. 
There are four railroads in 
Guatemala, having a total track mileage of 
850. 
All are single track, narrow gauge (36”) 
lines. 
The IRCA (International Railways of 
Central America) operates 590 miles, provid- 
ing the only Atlantic and Pacific outlets for 
Guatemala City. 
Virtually all imports and 
exports pass over its tracks. 
It meets the 
standard gauge National Railways of Mexico 
at Ayutla, and extends 
into El Salvador. 
Forty percent of the railroad stock is owned 
by the United Fruit Company, whose banana 
shipments provide a sustaining cargo. 
Two 
industrial railroads are operated directly by 
the United Fruit Company and its subsidiary, 
the Compania Agricola, but may be regarded 
as extensions of the IRCA line. 
The Verapaz 
Railway, approximately 30 miles 
in length and 
serving the Coban coffee area, is government 
owned and does not connect with the IRCA. 
The government is presently making plans to 
extend the Verapaz railroad northward into 
-Petén and eastward to El Estor, on Lake Izabal. 
Road 
Transport. 
A limited 
and inade- 
quately maintained road system is a major 
handicap to Guatemala’s economy. 
The vast 
area of the Petén, as well as large portions of 
other departments, are without roads and are 
virtually inaccessible. 
Altogether, there are 
about 2,400 miles of unpaved, though largely 
all-weather, roads, linking Guatemala City 
with the towns of central and western Guate- 
mala and extending to the Mexican, Salva- 
doran, and Honduran frontiers. 
There are 
also about 2,400 miles of local roads, for the 
most part usable only in the dry season. 
Two 
international highways cross the country: the 
Pan American 
(or Franklin D. Roosevelt) 
Highway, extending from Mexico to El Salva- 
dor, and the Pacific Highway, which parallels 
the Pan American nearer the coast. 
Some 
portions of the Pan American Highway and 
the road connecting Guatemala City with the 
Pacific port of San José have now been paved. 
In general, however, the abolition of forced 
labor, increased traffic, and incompetence or 
negligence on the part of local officials have 
all contributed to the deterioration of Guate- 
malan roads in recent years. Road mainte- 
nance, as well as road construction, is one of 
the more important problems facing the gov- 
ernment. 
Truck and bus lines connect Guatemala City 
with Quetzaltenango and other important in- 
terior towns, with San Salvador in El Salvador 
and Tapachula in Mexico. 
Coban is linked by 
truck service to the Verapaz Railway which in 
turn connects with river boat service terminat- 
ing at the Caribbean port of Livingston. 
There is no road connection to the Caribbean 
coast, but construction of such a highway has 
long been a Guatemalan dream, and is being 
considered by the present administration. 
i. Public Utilities. 
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Communications. 
All forms of communi 
cation—postal 
radio, 
telegraph, 
and 
tele- 
phone—are under the control of the Ministry 
of Communications and Public Works. 
The 
Guatemalan Government owns and operates 
domestic telephone and telegraph lines, which 
reach all important points in the republic and 
have connections with other lines in Central 
America and Mexico.. The Tropical Radio 
Telegraph Company, a US firm controlled by 
the United Fruit Company, operates an inter- 
national radiogram and radiotelegram service 
to Mexico, the United States, and to thirty 
principal centers in Guatemala, and the All 
America Cable Company operates a cable serv- 
ice with world-wide connections. 
The government operates eight radio broad- 
casting stations in Guatemala City and two 
in Quetzaltenango. 
Private stations are op- 
erated in Guatemala City, Quetzaltenango, 
Zacapa, 
Mazaltenango, 
and 
 Retalhuleu. 
There are over 40,000 radio receivers in the 
country. 
Electrical Power. 
About 90 percent of the 
population of Guatemala is without electrical 
current. 
Within the country there are only 
three important 
electrical 
power 
develop- 
ments: Empresa 
Eléctrica 
de Guatemala, 
S. A., a US concern which produced 38,539,100 
kwh in 1944; the state-owned Empresa Hidro- 
electrica del Estado, which produced 5,898,000 
kwh in 1944; and the privately owned Empresa 
Eléctrica de Chimaltenango. 
There are a 
number of small municipal and private elec- 
tric plants. 
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j. Money and Finance. 
For many years, Guatemala has enjoyed a 
sound financial position. 
Its balance of trade 
has generally been favorable, and government 
income has generally exceeded expenditures. 
However, in recent years there has been a sig- 
nificant increase in the internal debt, which 
rose from $3,045,983 at the close of 1947 to 
$8,246,700 at the end of 1948, and which was 
probably increased to over $13,000,000 during 
1949. 
There has been no increase in the ex- 
ternal debt, which amounted to $739,100 at the 
end of 1948. 
The banking 
of 1946 provides 
for three types 
of banks: 
(1) commercial banks, receiving 
short-term deposits and transacting in active 
and short-term investments; 
(2) mortgage 
banks, authorized 
to issue mortgages 
on 
chattel bonds and transactions in medium 
and long-term operations; (3) capitalization 
banks, authorized to issue bonds, receive sav- 
ings, premiums, etc. 
All banks are required 
to maintain reserves of 5 percent of their in- 
vestments in state or state guaranteed securi- 
ties; 10 percent in other securities or in cred- 
its, and 50 percent movables, real estate, and 
other fixed assets. 
Banking functions are carried out by the na- 
tional Banco de Guatemala (which is the sole 
bank of issue and the fiscal agent of the gov- 
ernment) 
the government-controlled Banco 
Hipotecario Nacional, and various private 
banks, including the Banco Agricola y Mer-. 
cantil (formerly the Banco Central, which was, 
until 1947, the central government bank), the 
Bank of London and South America, Ltd., and 
the Banco de Occidente. 
In addition, the Pro- 
duction Development Institute (INFOP) in- 
‘31 
year until they exceed those of the year past. 
However, higher coffee prices may increase 
government revenues during 1950. 
Sources of government revenue and expend- 
itures, as published in the official 1949-50 
budget, are given below. 
It should be men- 
tioned that the income and expenditures of the 
expropriated coffee plantations—about $8,- 
. 
000,000—are not included in the budget, since 
the National Fincas are now set up as an 
autonomous agency, comparable to the Social 
Security Institute, the Bank of Guatemala, the 
San Carlos University, the Accounting Office, 
and the National Production Development 
Institute. 
INCOME, 1949-50 
Patrimonial 
Public services 
Sale 
of 
Products 
from 
State 
Properties and Monopolies 
386,600 
Taxes and Contributions, 
30,807,600 
“Group 
A” 
(customs, 
invoice 
fees, road tax, beer tax, cigarette 
tax, real estate tax, stamps, le- 
galized paper and tax) 
Taxes and Contributions, 
“Group B” (amusement taxes, 
business profits tax, bank profits 
tax, 
airplane 
landing 
tax, 
Guardia Civil licenses) 
Taxes and Contributions, 
102,200 
“Group C” 
Miscellaneous (incl. National 
Lottery) 
1,005,305 
Total income 
$41,496,265 
EXPENDITURES, 1949-50 
$1,192,800 
1,648,000 
6,353,700 
: 
Group I, Legislative 
$ 344,280 
cludes several departments authorized to per- 
Group II, Executive 
582,276 
form banking or semi-banking functions. 
Group III, Judiciary 
856,464 
Government expenditures have increased 
Group IV, Ministries 
greatly in recent years: prewar budgets were 
(1) Agriculture 
1,178,749 
about 10 million dollars, but the 1948-1949 
(2) Communications and Public 
budget, the largest in history, totalled over 51 
Works 
4,505,802 
million dollars. 
Actual governmental revenue 
(3) National Defense 
4,631,645 
during the year amounted to only 39.5 million 
(4) Economy and Labor 
536,180 
dollars and the budgetary deficit was liqui- 
(5) Education 
6,256,445 
dated through use of surpluses accumulated in 
(6) Government 
3,794,269 
former years. 
The 1949-50 budget expendi- 
(7) Finance 
- 
2,945,289 
tures total about 41 million, but can be ex- 
(8) Public Affairs 
30,060 
pected to be amplified during the course of the 
(9) Accounting Office 
404,439 
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1,162,891 
(10) Foreign Affairs 
(11) Public Health 
3,892,396 
Group V, Public Debt 
1,654,380 
Group VI, Pensions 
1,130,000 
Group 
VII, 
Extraordinary 
(in- 
7,590,700 
cludes special appropriations for 
school construction, hospital con- 
struction, the Poptun agricul- 
tural colony, the 1950 census, 
etc.) 
$41,496,265 
k. Foreign Investments. 
Recent estimates indicate that all foreign 
investments in Guatemala aggregate approxi- 
mately $152,000,000, of which about 70 percent 
can be assumed to be US capital. 
The value 
of US-owned assets in Guatemala in the year 
1943 were estimated (US Treasury Census) at 
$93,000,000. 
These interests were distributed 
as follows: 
Value of American-Owned Assets 
in Guatemala 
Interest in Controlled Enterprises 
Manufacturing 
400,000 
Mining and Smelt- 
‘ing 
400,000 
Petroleum 
' 
1,100,000 
Public Utility and 
Transportation 
62,800,000 
Agriculture 
19,300,000 
Trade 
1,400,000 
Finance 
100,000 
Miscellaneous 
1,400,000 
Non-profit 
Organizations 
400,000 
87,300,000 
Securities (not included above) 
1,400,000 
Bullion, currency, and deposits 
300,000 
Real Property 
1,600,000 
Miscellaneous 
2,400,000 
Total 
$93,000,000 
The United Fruit Company. The total capi- 
tal investment in agriculture of the United 
Fruit Company had increased, by 1947, to 
$37,000,000. 
Including its interest in the In- 
ternational Railways, its total capital invest- 
ment may now exceed $95,000,000. 
Its impor- 
tance in the economic and political life of the 
country is paramount because: (1) it is the 
largest single enterprise in the Republic; (2) it 
provides almost all water and freight service to 
and from the country and controls railroad 
transportation within the country: 
(3) its 
operations are responsible, in part, for the 
favorable trade balance generally maintained 
by Guatemala, and its tax payments contribute 
directly and importantly to the governmental 
income; (4) it has profitably exploited sections 
of the vast, unused, tropical lowlands, which 
have defied Guatemalan colonization schemes 
for over a century, and has thereby proved the 
basic need for huge capital outlays and large- 
scale operations; moreover, its operations have 
proved that high wages, housing, medical and 
hospital services, and other benefits to the 
workers are not incompatible with profits. 
In 1947, the United Fruit Company owned 
some 578,000 acres of land (of which 32,448 
acres were in cultivation) and employed about 
15,000 Guatemalans and 700 foreigners (main- 
ly Americans). 
Operating expenses of the 
company amounted to $19,337,743, including 
$7,747,242.26 paid in salaries to Guatemalan 
employees, $932,025 paid to foreign employees, 
and $1,015,388 paid to the government in the 
form of taxes of various kinds, customs duties, 
and rentals. 
It sold $2,829,043 worth of goods 
through its commissaries, maintained 2 hos- 
pitals and 18 dispensaries totalling 538 beds, 
maintained 55 schools for 2,581 students, and 
contributed $412,690 to charity and to other 
public causes. 
The foreign ownership of the United*Fruit 
Company, the fact.that there are no similar 
Guatemalan owned enterprises of importance, 
the vast scale of its operations and the propor- 
tionate profits, its monopoly of certain public 
services, and its isolation—both physical and 
social—from Guatemalan life are all contribut- 
ing factors in the attacks levelled against it 
within Guatemala. 
Other US Companies. 
In addition to the 
United 
Fruit Company 
(including IRCA), 
other important US companies operating in 
Guatemala 
include 
Empresa 
Eléctrica 
de 
Guatemala, S. A. (a subsidiary of the American 
and Foreign Power Corporation), the Esso 
Standard Oil Company of Central America, 
S. A. and the Compania Minera de Guate- 
mala. 
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Papers of 
HARRY S. TRUMAN 
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3. 
Economic Stability. 
The national economy of Guatemala is, an 
should remain stable, despite an apparent def- 
icit in the balance of trade and a slow decline 
in gold and foreign exchange levels. 
Import 
controls, if imposed, should check the trend 
of deficits in the international trade situation, 
governmental economies should ameliorate the 
budgetary difficulties, and the world coffee 
deficit should assure the sale, at advantageous 
prices, of Guatemala’s primary export. 
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HARRY_S. 
Papers of TRUMAN 
HARRY 
SECRETARY FILE 
CHAPTER IV 
FOREIGN AFFAIRS 
1. Genesis of Guatemalan Foreign Policy. 
Guatemala’s foreign policy, though adapted 
to the exigencies of political and economic de- 
velopments, 
has consistently 
reflected 
the 
former status of the country when, as the dom- 
inant member of the Central American Feder- 
ation, it was the seat of the colonial Captaincy- 
General of Guatemala and the center of the 
Central American independence movement. 
The generally recognized limits of the colo- 
nial Captaincy-General have provided a basis 
for Guatemalan boundary claims. 
A major 
international issue—insofar as Guatemala is 
concerned—is the question of Guatemalan 
rights over Belize (British Honduras), a por- 
tion of which was included in the Captaincy- 
General. 
Guatemala’s political heritage has 
also been a factor in the persistent belief, 
among Guatemalan liberals, that the coun- 
try should promote a reconstituted Central 
American 
Federation. 
For the immediate 
purpose of insuring their continuation in of- 
fice, however, 
partisan 
governments 
have 
usually endeavored to aid sympathetic politi- 
cal elements in neighboring countries, regard- 
less of the attitude of those elements toward 
federation. 
Political 
independence, 
threat- 
ened neither by powerful neighbors nor ag- 
gressive powers, is no longer a popular issue, 
but emphasis has shifted to economic inde- 
pendence... This change, partly a reaction 
against the development of Guatemala’s mod- 
ern export economy by foreign capital operat- 
ing under domestic dictators, has become man- 
ifest since the overthrow of Ubico in 1944. 
It 
has been marked by violent nationalistic at- 
tacks on foreign enterprise (particularly US), 
notwithstanding the fact that Guatemala’s 
basic security and political independence rest 
upon maintenance of international guarantees 
. 
underwritten by the United States. 
Support 
of the United States in event of a war between 
major powers is, however, implicit in Guate- 
_* 
malan foreign policy, although it has not al- 
ways been openly stated and although oppo- 
sition to the United States on minor issues 
has occurred. 
2. 
Present Foreign Policy and International 
Issues. 
The foreign policy of the Arévalo adminis- 
tration is concerned with: (1) obtaining recog- 
nition of the Guatemalan claim to Belize; (2) 
encouraging the development of sympathetic 
liberal, democratic governments in neighbor- 
ing countries and opposition to the military 
dictatorships; 
and 
(3) maintaining 
suffi- 
ciently friendly relations with the United 
States to insure the benefits of US protection 
and aid in matters of national and hemispheric 
security. 
a. Belize 
In claiming 
Belize 
(British Honduras), 
Guatemala is not only defending what it con- 
siders a just and legal claim, but is endeavor- 
ing to secure a territory of some geographic 
and economic importance. 
Belize is the nat- 
ural Caribbean outlet for the southeastern 
Yucatan hinterland, important as a lumber 
ing region and suitable, in part, for agricul- 
ture and cattle raising. 
Most of the mahog- 
any cut in the Guatemalan department of El 
Petén must be exported through Belize, and 
Guatemalans feel that their ownership would 
aid in the further development of this isolated 
department. 
Moreover, although no surveys 
have been made, it is possible that petroleum 
deposits exist in Belize which would be more 
accessible and easier to develop than those be- 
lieved to exist in Guatemala. 
In contrast to 
the prestige and economic value involved in 
ownership of Belize, however, would be the dis- 
— 
advantage of high administrative costs and 
the necessity of administering a largely Eng- 
lish-speaking, partly Negro population which 
desires to remain under British control. 
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Guatemala’s claim has an historic basis. 
During the Colonial Period, the territory now 
known as British Honduras, or Belize, was 
recognized by Britain as the property of Spain. 
Under the Spanish, the area north of the 
Sibun River was regarded as part of the Cap- 
taincy-General of Yucatan, and the area south 
of the Sibun was generally recognized as part 
of the Captaincy-General of Guatemala, al- 
though actual administration by the Spanish 
never existed. 
The British, whose first settle- 
ment was established in 1638, were granted 
usufructory rights only. 
By various treaties 
between Spain and Britain—the terms of 
which were revalidated in the Treaty of Madrid 
in 1814—the British settlers were denied the 
right to establish any form of government, to 
maintain troops, or to engage in economic ac- 
tivities other than logging. 
Upon gaining its independence of Spain in 
1821, Guatemala claimed title to the terri- 
tory formerly recognized as part of the Cap- 
taincy-General of Guatemala... The contro- 
versy that subsequently developed between 
Britain and Guatemala over the ownership of 
Belize was temporarily settled by a treaty in 
1859, Article I and II of which defined, and 
provided for the demarcation of, a boundary 
(the present boundary) that was generally 
recognized to be already in existence. 
In 
Article VII of this treaty, both countries 
agreed to cooperate in the construction of a 
road from Guatemala City to a point on the 
Atlantic Coast “near Belize.” 
Shortly there- 
after, a supplementary convention was signed 
by representatives of both countries by which 
Britain agreed to pay £50,000 in lieu of assist- 
ance 
in constructing the road, but when 
Guatemala failed to ratify this agreement 
within the specified time, Britain refused to 
recognize any obligation under the supple- 
mentary convention, and made no payment. 
A few years later, in 1871, British Honduras 
was constituted as a Crown Colony. 
In subsequent years, Guatemala continued 
to seek fulfillment 
(with certain modifica- 
tions) of the 1859 treaty and the supple- 
mentary convention, claiming that recogni- 
_tion of the boundary and provision for its 
- 
demarcation constituted “cession” of Belize 
by Guatemala, and that such “cession” was 
contingent upon fulfillment of Article VIZ. 
Britain continued to view the supplementary 
convention as having lapsed and eventually 
came to regard the terms of Article VII of 
the 1859 treaty as no longer applicable to 
changed conditions. 
However, in 1934, Brit- 
ain offered to construct a road from Belize to 
the Guatemalan frontier, and, in 1936, of- 
fered to pay Guatemala £50,000 to settle the 
dispute, although not admitting any liability. 
Guatemala, in turn, suggested that Britain 
“return” Belize in exchange for £400,000, or 
that Britain pay Guatemala the same amount 
for the title and cede the southern tip of the 
colony (south of the Rio Grande), or that 
Britain cede this strip and also pay £50,000 
plus 4 percent interest as from 1859. 
The re- 
fusal of Britain to agree to the Guatemalan 
proposals, or to submit the dispute to arbitra- 
tion by the President of the United States, 
has caused Guatemala, since 1938, to regard 
the 1859 treaty as void, with Belize returning 
to the status quo ante. 
Since 1945, the Arévalo administration has 
continued to press the Guatemalan claim. 
A 
statement of Guatemalan sovereignty was in- 
cluded as a basic provision of the 1945 con- 
stitution. 
All natives of Belize have been de- 
clared Guatemalan citizens; objections have 
been raised to all British plans involving 
Belize (such as the proposed inclusion of the 
colony in a Caribbean federation and plans 
for colonization by West Indians) ; anti-British 
demonstrations have been held, and Guate- 
malan propaganda has been disseminated in 
Belize. 
In the UN meetings, at the Rio Con- 
ference, the Bogota Conference, and wherever 
possible, Guatemala has reasserted its claim. 
Yet although Britain offered, in 1946, to sub- 
mit the dispute to the International Court of 
Justice, Guatemala has refused to do so un- 
less Britain agrees to allow the court to de- 
cide the case er aequo et bono,* rather than 
by the strict application of legal principles. 
* Ex aequo et bono may be defined as a basis of 
judicial procedure by which a dispute is settled ac- 
cording to “principles of objective justice.” 
A de- 
cision reached in this manner would not necessarily 
coincide with one based on rules of positive law. 
Cf. Max Habicht, The Power of the International 
Judge to Give a Decision “Ex Aequo Et Bona” Lon- 
don, Constable and Co. Ltd. 1935, especially Chapter 
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Guatemala’s demand that the case be de- 
cided ex aequo et bono betrays an anxiety that 
the court might find little legal basis for a 
claim based upon the principle of territorial 
succession, or that it might find (in the treaty 
of 1859 and elsewhere) clear recognition by 
the signatories of a pre-existing British sov- 
ereignty, or that it might even declare the 
1859 treaty still valid and render a judgment 
whereby Britain might be able to retain pos- 
session of Belize. 
Guatemala sees a possi- 
bility of arguing that Guatemala, as a small 
and weak country, was forced into alienating 
a portion of its territory against its will, and 
that Britain, as a strong and powerful coun- 
try, was able to ignore Guatemalan protests 
while continuing its occupation of Belize.. In 
_ brief, Guatemala hopes to show that the legal 
language, and the terms of the early treaties 
were concessions necessary for the existence 
and recognition of a small nation in the nine- 
teenth century, but are incompatible with the 
rights of small nations as recognized in the 
world today. 
Britain, on the contrary, con- 
tends that the case is not an appropriate one 
for ex aequo et bono determination, since 
Guatemala’s claim is one of legal title which 
should, therefore, be resolved in accordance 
with legal principles. 
Incidental to the Anglo-Guatemalan dispute 
over Belize is the problem of Mexican claims 
which might be advanced if and when Britain 
makes any concessions in this matter. 
On the 
same basis as Guatemala, Mexico could also 
claim a portion of British Honduras—that 
portion north of the Sibun River which was 
theoretically administered by the Captaincy- 
General of Yucatan. 
Such aclaim would con- 
flict with the boundary between Mexico and 
Guatemala established in 1882, which was de- 
fined as extending “indefinitely toward the 
east” along parallel 17°49’. 
However, by the 
Treaty of 1893, Mexico clearly recognized 
British sovereignty over Belize as well as the 
present boundary of the colony, and has 
evinced no desire to side with Guatemala in 
the latter’s disputes. 
On the contrary, Guate- 
malan pretensions of title to the northern por- 
tion of Belize have aroused much resentment 
in Mexico and have constituted a continual 
source of friction between the two countries. 
The single-objective of regaining Belize ac- 
counts, in large part, for Guatemala’s sym- 
pathy with 
anti-British, 
“anti-imperialist” 
countries. 
To gain international 
support, 
Guatemala has attempted to consolidate an 
anti-imperialist bloc composed of nations with 
anti-British 
territorial 
claims 
(Argentina, 
Chile, and Venezuela) and to gain hemispheric 
support for a policy of eliminating “colonial- 
ism” from America. 
A Guatemalan resolu- 
tion to this effect was adopted at the Bogota 
Conference over the opposition of only the 
United States, Brazil, and the Dominican Re- 
public, and led to the formation of an Ameri- 
can Committee on Dependent Territories. The 
unwillingness of the United States to partici- 
pate in the meetings of this committee, which 
Guatemala regards as a blow to Hemisphere 
cooperation, emphasizes the conflict of inter- 
ests between the two countries. 
This con- 
flict has led Guatemala to attempt embar- 
rassment of the United States, with the pos- 
sible object of bargaining for US support. For 
example, Guatemala has insisted that the 
concept of “colonialism,” as defined at Bogota, 
be extended beyond its stated meaning to 
cover US rule in Puerto Rico, thereby hoping 
to make the status of this territory subject to 
international review in accordance with the 
Bogota resolution. 
Such a major test of the 
- 
inter-American system would challenge US 
leadership and sincerity in the system which 
' 
it has consistently advocated. 
b. Encouragement of Sympathetic Govern- 
ments. 
Current Guatemalan foreign policy involves 
the support of liberal “democratic” elements 
in neighboring countries and opposition to 
“dictatorships” such as those of Somoza in 
Nicaragua and Trujillo in the Dominican Re- 
public. 
Apart from political expediency, this 
policy is founded upon the belief of President 
Arévalo and other liberal Guatemalans that 
Guatemala, since the revolution of 1944, is a 
symbol of <lemocracy in Central America, and 
has a moral obligation to assume the leader- 
ship in an international struggle for social, 
economic, 2nd intellectual freedom. 
It is a 
policy which complements the general provi- 
sion of the 1945 constitution that Guatemala 
“will endeavor to reestablish Central Ameri- 
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TRUMAN 
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can union, partially or completely, in a popu- 
lar and democratic form.” 
In implementing its policy, Guatemala has 
broken off diplomatic relations with the mili- 
tary dictator governments of Spain, the Do- 
minican Republic, Nicaragua, Peru, and Vene- 
zuela, and has given refuge and employment 
to political exiles from these countries. 
It 
materially aided the movement, led by Figue- 
res, which prevented Rafael Calderon Guardia 
(defeated candidate in the 1948 presidential 
elections and political ally of Somoza) from 
seizing the presidency of Costa Rica by force. 
It has given encouragement, refuge, and some 
material assistance to the members of the 
Caribbean Legion, who aided the Figueres 
movement and who are dedicated to the over- 
throw of Somoza and Trujillo. 
It has also 
encouraged other Nicaraguan revolutionary 
factions led by General Chamorro and Edel- 
»berto Torres, and during the presidency of 
Castaneda Castro in El Salvador, gave sanc- 
tuary to various liberals who became involved 
in the revolt of December 1948. 
Since 1948, 
it has given sanctuary to others (including 
Communists) who have been exiled by the 
present Salvadoran regime. 
Indirectly, the 
Guatemalan Government appears to have 
aided the leftist labor movement in El Salva- 
dor and, to a lesser extent, in Honduras. 
In contrast to the severance of relations 
with the “dictator” countries, Guatemala has 
maintained close relations with “democratic” 
Cuba, and has persisted in its recognition of 
the Spanish Republican government-in-exile. 
c. US Relations. 
It has long been a fundamental, but unwrit- 
ten, tenet of Guatemala’s foreign policy that 
cordial relations be maintained with the 
United States Government. 
Anti-US senti- 
ments, which may exist within the administra- 
tion, are generally expressed unofficially, for 
most Guatemalans recognize that their coun- 
try is almost totally dependent upon trade 
with the United States and is the beneficiary, 
actual or potential, of the United States’ de- 
sire to defend the peoples and institutions of 
the Western Hemisphere. 
In this connection, 
President Arévalo has specifically stated that 
Guatemala is bound to the US in event of a 
war between this country and Soviet Russia, 
and has also indicated that Guatemala’s re- 
sources will be made available to the US in 
such event. 
_ 
In general, the Guatemalan Government 
and the Guatemalan people have looked to the 
US for technical and financial assistance, and 
will probably continue to do so. 
At the end 
of 1949, there were active in Guatemala twelve 
official and semi-official groups representing 
US agencies or international organizations to 
which the US contributes. 
These included: 
the US Air Force Mission; the US Army Mis- 
sion; the Foreign Agricultural Relations group 
active in the cooperative agricultural station; 
the Department of Agriculture group active 
in rubber investigations; the US Public Roads 
Administration group involved in the Pan 
American Highway project; the health and 
sanitation group from the Institute of Inter- 
American Affairs; the education group from 
the Institute of Inter-American Affairs; the 
cultural relations group active in the Instituto 
Guatemalteco-Americano; 
the group repre- 
senting the Pan American Sanitary Bureau; 
the group representing the Inter-American 
Geodetic 
Survey; 
“The American 
School” 
group of the Inter-American School Service; 
and the consultant to the Guatemalan Na- 
tional Office of Vital Statistics provided by the 
US Public Health Service through the Inter- 
national Vital Statistics Cooperative Program. 
In general, US-Guatemalan relations (both of- 
ficial and unofficial) in connection with these 
projects have been satisfactory, although an 
anti-US, Communist-influenced, minority has 
in some cases 
(e.g., the ITAA educational 
program) sought to obstruct the cooperative 
effort. 
Despite the evidence of fundamental good 
will between Guatemala and the US, the Aré- 
valo government’s tolerance of strongly na- 
tionalistic and anti-imperialistic propaganda 
(often derived from Communist sources) and 
its discriminatory legislation and arbitrary 
judgments against US firms operating in 
Guatemala have been injurious to good rela- 
tions between the two countries. 
In interna- 
tional affairs—particularly where the Belize 
issue or the principles thereof are involved— 
Guatemala has also opposed the US at times. 
However, this does not imply that Guatemala 
is generally opposed to US foreign policy. 
Papers 
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CHAPTER V 
MILITARY SITUATION 
1. Genesis of the Present Military Policies. 
The military organization of Guatemala is 
maintained in accordance with the needs of a 
small 
underdeveloped 
country with weak 
neighbors. 
Its military capabilities are suf- 
ficient for the maintenance of internal order 
(generally as the agent for a certain political 
faction), for defense against attack by the 
armed forces of a neighboring Central Ameri- 
can country, and for limited offensive opera- 
tions against these same nations. 
Apart from 
its strictly military function, it is important 
as a respected agency through which an in- 
dividual may achieve social, economic, and 
political advancement. 
The army does, in 
fact, offer opportunity to all classes. 
The 
Escuela Politécnica offers a classical educa- 
tion in military science to members of the cul- 
tured upper class of largely European descent; 
advancement within the ranks is a traditional 
opportunity for capable soldiers of middle- 
class mestizo background; and men from the 
illiterate Indian lower classes, drafted under 
the universal military service law, may achieve 
some limited advantages as a result of the ex- 
perience in the army. 
| 
Guatemalan history substantiates the im- 
portance of the army as an agency for per- 
sonal advancement: military Dictator-Presi- 
dents have ranged from Carrera, an illiterate 
provincial leader of predominantly Indian 
descent, to Ubico, a cultured upper class 
Guatemalan of Castillian ancestry. 
Under 
Arévalo, the two most influential leaders were 
the late Colonel Arana, a competent and per- 
severing mestizo officer who had risen from 
the ranks, and Lieutenant Colonel Arbenz, a 
brilliant, cultured, graduate of the Military 
Academy of upper-class European ancestry. 
Guatemalans have never seen combat serv- 
ice except against domestic revolutionaries or 
the forces of neighboring Central American 
countries. 
During the early years of inde- 
pendence, hastily recruited armies represent- 
ing either conservatives or liberals took part 
in the factional strife existing within the Cen- 
tral American Federation. 
During the nine- 
teenth century, under the dictators Carrera 
and Barrios, Guatemalan armies actively in- 
tervened in the affairs of other Central Amer- 
ican states. 
In the twentieth century, Guate- 
mala has not been actively involved in an in- 
ternational war, but has, at times, aided revo- 
lutionists plotting the overthrow of govern- 
ments in neighboring countries. 
Although it 
must be prepared, in theory, to defend Guate- 
mala from invasion and to take possible ag- 
gressive or retaliatory action, its actual role 
remains limited largely to the maintenance 
of internal order and the support of individu- 
als or factions seeking political advancement. 
2. The Current Military Situation. 
The Armed Forces of Guatemala consist of 
the army, which includes the air force. There 
are no naval forces. 
The National Police, or 
Guardia Civil, is a separate quasi-military or- 
ganization whose officers have often had army 
training, but whose duties are normally lim- 
ited to police functions, whose funds are pro- 
vided by the Ministry of Government and 
whose Director is in no way responsible to the 
Ministry of Defense or the Chief of the Armed 
Forces. 
Although poor by most standards, the 
Guatemalan Army is superior to that of any 
other Central American republic. 
As organ- 
ized and equipped at the present time, it is 
adequate to defend the republic against Hon- 
duras or El Salvador and to maintain internal 
stability. 
However, it would be unable to . 
withstand an attack from Mexico or contribute 
to Hemisphere defense at home or abroad. 
The army would be incapable of sustained 
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operations because all arms, ammunition, and 
mechanized equipment have to be imported 
and because Guatemala does not possess the 
industrial potentialities that would permit de- 
velopment of an arms industry. 
Weapons 
are generally old, of various manufacture, and 
in only fair condition. 
The Guatemalan Army is in the process of 
reorganization. 
To date the lst Infantry Reg- 
iment (Guard of Honor) and the 2d Infantry 
Regiment (Military Base), in the immediate 
vicinity of the capital, have been reorganized. 
These units represent the greatest concentra- 
tion of men and equipment in the Guatemalan 
Army and their continued loyalty is neces- 
sary for a stable government. 
Each of these 
regiments has approximately 800 officers and 
men and includes a Headquarters, Headquar- 
ters and Service Battery, a Rifle Battalion, a 
Tank Company, a Howitzer Battery, an Anti- 
tank Platoon, and an Antiaircraft Automatic 
Weapons Battery., It is planned to organize 
similar regiments in each of the six military 
zones outside the capital with the exception 
of the fourth zone which will have a rein- 
forced cavalry squadron. 
At the present time 
the troops outside the capital are widely dis- 
persed in small detachments in accordance 
with the army’s function of internal policing. 
This dispersal, however, coupled with poor 
180, and 35,000 on M plus 365. 
At present, 
only part of these men could be equipped with 
serviceable small arms. 
Officers are either graduates of the Military 
Academy or have worked their way up from 
the 
ranks. 
The 
Military 
Academy 
(the 
Escuela Politécnica), which is under the su- 
pervision of the Army General Staff, subjects 
the officer candidates to rigid physical, mental, 
and moral requirements. 
The. student body 
consists of about 110 cadets and the curricu- 
lum approximates that of the last two years 
of high school and the first year of college. 
The School of Application, for advanced train- 
ing, conducts two yearly classes for about 50 
officers and is under the supervision of the 
Chief of the United States Army Mission. 
The Guatemalan Air Force is part of the 
army, its main purpose being the support of 
ground 
operations 
through 
transport 
of 
troops and supplies. The present government 
has not attempted to build up a particularly 
strong or modern air force, and has concen- 
trated on pilot training 
(particularly 
for 
transport work), routine duty and mainte- 
nance operations, and (in the last year) on 
paratroop training. 
In number of personnel, 
the Guatemalan Air Force exceeds those of 
other Central American countries, buf in mod- 
ern equipment it is inferior to neighboring 
Honduras. 
Its offensive power is currently 
very limited because the potential of the strik- 
ing force (as of 30 March 1950) is limited to 
the capabilities of the following aircraft: 
transportation, prevents the unification of 
Fighters 
troops under any one individual for revolu- 
4 P-26 
tionary purposes. 
For these reasons 
it is 
Transports 
doubted that reorganization of units in zones 
3 C-47 
outside the capital will conform in great de- 
1 ve-n| 
tail to the lst and 2d regiments. 
1 C45 
: 
The present strength of the Guatemalan 
Army is estimated at 5,980 men, of which ap- 
proximately 4,200 are conscripts. 
There is no 
2 BI-15° 
organized reserve system, though in theory 
7 T-6 
records are kept of those eligible for military 
4 T-11 
service and those who have served, who could 
8 T-19 
+ 
be called in time of war. 
No mobilization 
> T-14 
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plans exist, with the exception of the theoreti- 
2 T-17 
cal system of records just mentioned, but the 
6 T-23 ] 
mobilization capacity of the army is estimated 
i 
at 14,000 on M plus 90, and 25,000 on M plus 
Total 
Moreover, with the exception of the train- 
ing received by seven of the pilots in the United 
States, there has been no effective training in 
bombing or gunnery of any kind. 
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a 
In an attempt to remove the army from the 
personal control of the President, as was the 
case under Ubico, and make it non-political in 
character, the Constitution of 1945 established 
| 
a system of checks and balances for the selec- 
tion of military leaders. 
The President of the 
Republic remains Commander in Chief of the 
Armed Forces. 
However, the Chief of the 
Armed Forces, who exercises the actual tacti- 
cal and administrative control, is appointed by 
the National Congress from three names sub- 
mitted by the Supreme War Council for a 
period of six years and can be removed only 
by Congress. 
His direct control of the army 
ground units through the seven zone com- 
manders and the air force through the Chief of 
the Air Force, all his appointees, makes him 
the most powerful figure in the military estab- 
lishment. 
The Minister of National Defense 
is appointed by the President, and, except for 
his control of army finances, is relegated to a 
position secondary to that of the Chief of the 
Armed Forces, although his is not specifically 
designated as subordinate. 
The Chief of the 
General Staff performs administrative func- 
tions for the Chief of the Armed Forces and 
the Minister of National Defense, but does not 
have control over troops. 
Compared to certain other Central American 
countries, notably Nicaragua and the Domini- 
can Republic, Guatemala has devoted a rela- 
tively small portion of the national budget to 
military expenditures. 
The 1948-49 appro- 
priation for the Ministry of National Defense 
approximated $5,000,000, or 10 percent of the 
total budget. 
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CHAPTER 
VI 
STRATEGIC CONSIDERATIONS AFFECTING US SECURITY 
In terms of its own resources and manpower, 
the positive contribution that Guatemala can 
rake toward US security is slight. 
Hardwood 
timber (largely mahogany) is the only strate- 
gic material produced in quantity. 
Abaca, 
also of strategic importance, is now produced 
ir: small but commercially important quanti- 
ties as the result of the development program 
irestituted during the last war, but without 
continued US financial and technological as- 
sistance, production is unlikely to be increased. 
Mineral resources (including oil, lead, and 
creromite) are possibly extensive, but have yet 
to be developed. 
In the-event of war, Guate- 
ala, as in the last conflict, could provide the 
United States with the site for a major air 
base at Guatemala City. 
It could not provide 
a site for a naval base, however, owing to the 
adsence of good harbor facilities (although 
Puerto Barrios with its dock, its United Fruit 
Company installations, and its railway shops 
would have some strategic significance as a 
port where minor repairs might be effected 
and supplies obtained). 
The International 
Railway, though of possible value as a trans- 
isthmian route in event of the destruction of 
tre Panama Canal, is a narrow gauge (36”) 
line of limited capacity, easily sabotaged, and 
has only open roadsteads as Pacific termini. 
Guatemala could contribute some of the food 
required by major army installations in Pan- 
ama or elsewhere as it did during the last war, 
but could not, on its own resources, support a 
strong occupation force. 
Guatemala’s army, 
numbering about 6,000 officers and men, is 
poorly trained and badly equipped. Even with 
the aid of US equipment and instruction it 
could be converted into a modern fighting 
force only with great difficulty and after a con- 
siderable period of training. 
Guatemala’s re- 
serve military manpower, though numerically 
. 
great by Central American standards, is of ex- 
tremely low quality. 
It could not be used to 
supplement US manpower requirements, and 
is of questionable value even to Guatemala for 
defense agajnst the forces of a neighboring 
country. 
Guatemala could endanger US security, 
_ 
however, were it to give refuge or aid to enemy 
saboteurs and propagandists, or were it to al- 
low use of its airfields, ports, and other facili- 
ties and resources by an enemy power. 
At the 
present time, under the liberal Arévalo ad- 
ministration, enemy propagandists and poten- 
tial saboteurs may exist in Guatemala, though 
in event of war it is believed that these would 
be effectively controlled 
(see Chapter IJ). 
However, since Guatemala would be incapable 
of defending itself or denying use of its mili- 
tary facilities in event of a strong attack by a 
strong enemy, it is conceivable that, in the 
absence of effective US protection, it could be- 
come a base for enemy attacks on the Panama 
Canal or other strategic objectives in the area. 
This is unlikely since there are no existing 
military facilities of consequence and because 
there are other more suitable (or more easily 
obtainable) sites for bases. 
Nevertheless, de- 
nial of Guatemalan facilities and resources 
to an enemy power is primarily a responsibility 
of the 
US. 
Moreover, 
the 
existence 
of 
a friendly and stable government in Guate- 
mala—one willing and capable of limiting 
anti-US propaganda, 
sabotage, and espio- 
nage—is largely dependent upon a sound na- 
tional economy, and US economic 
aid to 
Guatemala in event of a general war would 
contribute materially to the existence of a 
stable and friendly government. 
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CHAPTER Vil 
PROBABLE FUTURE DEVELOPMENTS 
1. 
Political. 
Although it is more probable than not that 
President Arévalo will complete his term in 
office, which expires in March 1951, the presi- 
dential elections scheduled for late 1950 may 
be accompanied by bitter factional disputes 
which may involve violence of unprecedented 
severity. 
The possibility of violence has been 
greatly increased as the result of the assas- 
sination of Colonel Francisco J. Arana on 18 
July 1949, since this deprived the more moder- 
| 
ate supporters of the present administration 
of a potential candidate who might also have 
been acceptable to a certain portion of the con- 
servative opposition. Because Arana had cor- 
sistently refused to lead a conservative revolt 
against Arévalo and staunchly defended the 
principal of legal election to office, his murder 
will be used by the conservative opposition as 
an argument that truly democratic processes 
are impossible in Guatemala as long as the 
present administration 
is in power. 
Con- 
vinced that they will be denied fair elections, 
the conservative opposition, aided by adminis- 
tration moderates, will possibly concentrate 
their efforts upon perfecting an organization 
capable of seizing the government through a 
coup 
d’état, 
or 
controlling 
the elections 
through force. 
Moreover, President Arévalo, 
Lieutenant Colonel Arbenz, and other political 
leaders will be in danger of assassination by 
persons desirous of avenging the murder of 
Colonel Arana. 
The possibility that violence, if it occurs, 
will be of unprecedented severity is a result 
of the development, during the Arévalo ad- 
ministration, of a strong, organized, and po- 
tentially 
militant 
labor 
movement. 
This 
movement has been fostered and armed by ad- 
ministration leftists and opportunists, and 
has been infiltrated by Communists or Com- 
munist sympathizers. 
It provides, for the first 
time, a force which can be used in opposition 
to the traditionally conservative army, whose 
leaders are largely drawn from the upper 
strata of Guatemalan society. 
Although it is 
unlikely that the armed proletariat, even with 
the aid of the National Police, could effectively 
prevent a coup d’état backed by the army (un- 
less the army were divided within itself), it is 
capable of strong opposition to the army and 
(particularly in rural areas) a good deal of 
violent, indiscriminate aggression and ter- 
rorism. 
| 
President Arévalo is probably desirous of 
completing his legal term of office without inci- 
dent, and he undoubtedly would prefer to re- 
main aloof from the current presidential cam- 
paign. 
This should lead him to pursue a rela- 
tively moderate course, to delay or circumvent 
decisions on controversial matters, and to 
avoid giving offense or support to competing 
factions. 
Such a trend has been noticeable 
since the Arana assassination, and may be 
expected to continue during the coming year. 
The character of the next administration 
will depend upon the personal policies and 
objectives of the next President, even as the 
character of the present administration has 
reflected Arévalo’s personal philosophy of the 
“polystructural state” in which a balance is 
sought between various semi-autonomous so- 
cial institutions (see p. 5). 
At the present time, Lt. Col. Jacobo Arbenz 
Guzman, candidate of the PAR (Partido Ac- 
cion Revolucionaria), the PRN (Partido Reno- 
vacién Nacional), and the newly formed PIN 
(Partido de Integridad Nacional), is in a far 
stronger position than any of the other candi- 
dates (Dr. Victor M. Giordani, Lic. 
Jorge Gar- 
cia Granados, Gen. Miguel Ydigoras Fuentes). 
Arbenz is a ruthless opportunistic, ambitious 
army Officer. 
While Minister of Defense. he 
helped to arm and strengthen the militant 
leftist labor organizations, possibly as a means 
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of strengthening his own hand vis-a-vis the 
popular Colonel Arana, who enjoyed wide army 
support. 
Moreover, since Arana’s assassina- 
tion, he has gained effective army support by 
arranging the removal of some officers and the 
financial rewarding of others. 
If elected, it is 
likely that Arbenz will establish an adminis- 
tration (more conventional by Central Ameri- 
can standards) in which graft, privilege, and 
arbitrary repressive measures are used to a 
greater degree than at present. 
In view of 
his background and his private remarks (both 
official and otherwise), Arbenz appears to be 
willing to grant favorable terms to business at 
the expense of labor. 
He has indicated that 
he is favorably disposed toward US interests in 
Guatemala, and, despite the anti-imperialism 
of his present campaign supporters, it is be- 
lieved that personal characteristics and possi- 
ble governmental financial difficulties would 
lead him, as President, to welcome foreign in- 
vestments. and 
possibly 
foreign 
loans. 
If 
elected, he will probably distribute favors for 
personal profit, will seek to subvert army and 
labor leaders who oppose him, and will take 
rigorous action against those whom he cannot 
control. 
In contrast to Arévalo, Arbenz ap- 
pears to place a higher value on material than 
on social progress, and there is evidence that 
he plans, if elected, to initiate various con- 
struction projects. 
It is likely that he will 
permit the labor organizations, established un- 
der the Arévalo administration, to continue 
their activities, and that he will seek to use 
labor as a personal political weapon, thereby 
establishing himself as an indispensable arbi- 
ter between labor, business, the army, and 
other factions. 
In general, an Arbenz administration would 
probably be more conventional and more con- 
servative in actual practice than the present 
administration. 
Should he be assassinated, it 
is likely that the leftist labor forces now sup- 
porting him would be opposed by the army as 
| 
well as the popular majority and could neither 
_ seize nor maintain control of the government. 
Of Arbenz’ opponents, Dr. Victor M. Giordani, 
candidate of the moderate leftist FPL (Frente 
Popular Libertador) is the strongest competi- 
tor for the presidency. 
The strength of the 
FPL in Congress slightly surpasses the com- 
bined strength of the pro-Arbenz PAR and 
PRN, and should conservative anti-administra- 
tion elements add their support to Giordani, 
he might be able to win over Arbenz in a fair 
election. 
However, pro-Arbenz groups should 
be in a position to control the electoral ma- 
chinery. and this control, coupled with the 
aggressiveness of the leftists, will go far to 
assure an Arbenz victory. 
2. 
Subversive. 
It is believed that the tolerant policies of the 
Arévalo administration, which have permitted 
Communists and Communist sympathizers to 
operate within and without the government, 
will be continued as long as Arévalo remains 
President. 
The activities of such persons rep- 
resent a continuing threat to US security. 
It 
is probable, however, that Communist influ- 
ence on Guatemalan government policies, par- 
ticularly domestic policies, will diminish in the 
future. 
This estimate is based on the follow- 
ing considerations: (1) Since about 1948, there 
has been a slight trend away from the left. 
Oppositionists have emerged and have won 
seats in Congress; the FPL (largest of the 
Arevalista parties) has moved away from the 
leftist parties; the agrarian reform program 
has not advanced, agitation by union organ- 
izers among coffee plantation workers has 
diminished, the nationalized plantations have 
been put under a more business-minded ad- 
ministration which has opposed the labor — 
unions and the Ministry of Labor; the Produc- 
tion Development Institute (INFOP) has done 
much to promote and finance private agricul- 
tural projects; labor problems have been more 
easily solved since mid-1949. 
(2) It is felt 
that the moderate and anti-Communist ele- 
ment in Guatemala, including the army, is 
more adequately led and has greater repre- 
sentation and influence in government than 
the extreme leftist element associated with the 
PAR and the labor unions. 
(3) The Guate- 
malan labor movement is young and poten- 
tially weakened by an absence of capable labor 
leaders. 
The 
effectiveness 
of the present 
leadership, which is strongly influenced by 
Communism, is not so much a measure of 
labor’s coercive power as it is a measure of the 
administration’s desire to establish a labor 
movement. 
Should 
a relatively few labor 
leaders be removed, their replacement would 
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be difficult and the influence of labor (and 
Communism) would be considerably dimin- 
ished. 
‘There would, of course, continue to be 
a large number of the working class who would 
be receptive to Communist propaganda, but if 
not adequately led and not favored by a tol- 
erant government, they could exert little in- 
fluence. 
(4) The increasing indebtedness of 
the government will favor adoption of a pro- 
US policy. 
The United States has offered 
financial and technical assistance to Guate- 
mala, and leading Guatemalan officials and 
presidential candidates are aware of the ad- 
vantages of a pro-US policy. 
No evidence is 
available to indicate that the USSR has offered 
comparable benefits to Guatemala, or that the 
country, the government, or high officials of 
the government would benefit materially from 
a pro-Communist, 
pro-USSR 
policy. 
(5) 
Whereas Arévalo’s political idealism has led 
him to establish an administration that per- 
mits the freedom of expression enjoyed by the 
Communists, there is no evidence to suggest 
that his successor is imbued with a similar 
idealism. 
It is likely that all the presidential 
candidates are less idealistic and more mate- 
rialistic (or “practical”) than Arévalo. 
3. 
Economic. 
In view of prospects for a continued world 
coffee shortage, which would assure the sale, 
at 
advantageous prices, of Guatemala’s pri- 
mary export, and in view of a continued de- 
mand for Guatemalan bananas, Guatemala’s 
economic situation should remain favorable. 
The development of Guatemalan oil resources 
in the near future is not indicated. 
4. 
Foreign Affairs. 
In event of a third world war, Guatemala 
may be expected to support the US, provided 
its economic security would not be endangered. 
In the immediate future, a slightly more con- 
ciliatory attitude toward the US may be ex- 
pected to result from the replacement of the 
leftist Munoz Meany by moderate Gonzalez 
Arévalo as Foreign Minister. 
There is no in- 
dication, however, that the government’s an- 
tagonistic attitude toward US business inter- 
ests will be abandoned, although it may be 
modified somewhat. 
Concentration on the 
presidential campaign may cause Guatemalan 
aid 
to foregn 
“democratic” 
revolutionary 
groups to diminish, but expressions of sym- 
pathy with “democratic” governments and 
political factions will continue. 
Guatemala’s 
claim to Belize, supported by conservatives and 
liberals alike, will continue to be advanced. 
5. 
Military. 
The growth of a militant labor movement in 
Guatemala will, it is estimated, force the army 
to assume a more active role in political af- 
fairs—to the advantage of the conservative 
factions. 
Although some efforts may be made 
under Major Paz Tejada to improve army 
equipment and training, no great change is to 
be expected in the capabilities or functions of 
the armed forces. 
6. 
Strategic Considerations Affecting US Se- 
eurity. 
Pending the development of possible oil re- 
serves at some time in the unforseeable future, 
the positive contribution which Guatemala can 
make toward US security will continue to be 
slight. 
Its location within the US defense 
sphere, however, will continue to make it a 
possible location for US or enemy military and 
propaganda operations. 
Because Guatemala 
is incapable of defending itself against a strong 
enemy, the denial of its facilities and resources 
(admittedly limited) to such an enemy is = 
marily a US responsibility.
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| HARRY 5S 
UMAN 
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APPENDIX. A 
nin 
IMPORTANT PERSONALITIES 
Dr. Juan José Arévalo Bermejo, President of 
the Republic 1945—Born 1904. 
Educator 
and writer, liberal and nationalistic; non- 
party. 
Lt. Col. Jacobo Arbenz Guzman, Minister of 
Defense 1945-50—Born 1913. 
Career mili- 
tary officer; member of the revolutionary 
triumvirate of 1944; ambitious, opportunis- 
tic; has tended to favor PAR. 
Lic. Mario Monteforte Toledo, President of 
Congress 1949—Born 1911. Writer and pol- 
itician; liberal, nationalistic, anti-military; 
member of FPL. 
Maj. Carlos A. Paz Tejada, Chief of the Armed 
Forces 1949—Born 1917. 
Career military 
officer; engineer; somewhat conservative; 
non-party. 
Col. Victor M. Sandoval, Chief of the Civil 
Guard. 
Brother-in-law of President Arév- 
alo; non-party, but favors leftists. 
Col. Carlos Aldana Sandoval, Minister of Com- 
munications and Public Works 1948—Born 
1912. 
Former Chief of Staff of Guatemalan 
Army 1944-48; personal friend of Col. Ar- 
benz; a presidential possibility. 
Victor Manuel Gutiérrez, Secretary General, 
Confederacion de Trabajadores de Guate- 
mala. 
Labor leader; delegate to interna- 
tional leftist labor conferences; radical and 
pro-Communist; favors the PAR. 
Manuel Pinto Usaga, Deputy, National Con- 
gress 1947—Born 1906. Labor leader; mem- 
ber Executive Council of the Sindicato de 
Accion Y Mejoramiento Ferrocarrilero (rail- 
way workers) and of the Comite Politico 
Nacional de los Trabajadores. 
Radical left- 
ist; member of PAR. 
Jorge 
Toriello, 
political exile—Born 
1908. 
Member revolutionary triumvirate of 1944; 
Minister of Finance 1945; conservative busi- 
nessman (import-export) ; oppositionist. 
TRUMAN LIBRARY
APPENDIX B 
TERRAIN AND CLIMATE 
Guatemala, with an area of 42,364 square 
miles, is the third largest of the Central Ameri- 
can 
republics although 
its population 
of 
3,500,000 is greater than that of any other 
Central American state. 
The topography of 
Guatemala is determined largely by east-west 
geologic formations which continue in south- 
ern Mexico, British Honduras, El Salvador, 
Honduras, and northern Nicaragua, and which 
emerge from the Caribbean in Cuba, Jamaica, 
Hispaniola, and Puerto Rico. 
Within Guate- 
mala, these formations ™serve to divide the 
country into four distinct topographic regions: 
the Northern Lowlands; the Caribbean Low- 
lands; the Highlands; and the Pacific Low- 
lands. 
Altitude is the most important factor 
determining climate. 
The lowlands are hot, 
with very heavy rainfall (80-100 in. or more) 
and are characterized by tropical forest or 
savanna-type vegetation. 
The highlands are 
temperate or cool with somewhat lesser rain- 
fall (40-80 in.) and temperate forest or grass- 
land vegetation. 
Throughout the country, 
rainfall 
is concentrated 
in 
the 
summer 
months. 
Between the lowlands and high- 
lands are regions of transitional climate and 
vegetation, and in many parts of the country 
local differences in topography cause extreme 
local climatic variations. 
1. The Northern Lowlands. 
The Northern Lowlands lie in the Depart- 
ment of Petén, and largely belong to the low 
limestone plateau of Yucatan. 
The greater 
part of Petén is less than 800 feet above sea 
level. 
However, in the southeast, the Poctun 
Plateau rises to an altitude of over 1500 feet. 
»~ithough there are low east-west ranges of hills 
Mporth of Petén, surface drainage in this 
i 
$ 
Poor and is provided chiefly by inter- 
weystreams that flow only during the 
hes rainy season. 
In many places, lakes and 
Swamps occupy the shallow troughs between 
the hills. 
Except for a few stretches of savan- 
na, and areas of pines around Poctun, almost 
the 
entire 
area 
is covered 
by a dense 
tropical forest, which provides the basis for 
the chief economic activities—chicle gather- 
ing and mahogany lumbering—although scat- 
tered patches of shifting agriculture are to be 
found within the forest area. 
The Northern 
Lowlands are virtually inaccessible due to ab- 
sence of roads and navigable rivers. 
Mahog- 
any logs must be floated down rivers at flood 
time and exported through British Honduras, 
and chicle is taken out mainly by air, from 
Flores on Lake Petén. 
2. 
The Caribbean Lowlands. 
The Northern Lowlands of Petén merge, to 
the southeast, with the Caribbean Lowlands of 
the Departments of Alta Verapaz and Izabal. 
These are coastal lowlands, easily accessible 
from the sea, and extend inland along the 
structural 
valleys between 
low mountain 
ranges that form eastward extensions of the 
Highlands. 
The most important navigable 
waterway of Guatemala, and the only one 
which gives access to the interior of the coun- 
try, is formed by the Rio Dulce, Lake Izabal, 
and the Rio Polochic, all of which lie within 
one of these valleys. 
The lowlands also ex- 
tend up the valley of the Sarstun River (which 
fortis the southern boundary of British Hon- 
duras) 
and that of the Montagua River 
(which, at its mouth, marks the Guatemalan- 
Honduran 
boundary). 
Climatically, 
the 
Caribbean Lowland is similar to the Northern 
Lowland, but is far more accessible for eco- 
nomic exploitation. Mahogany lumbering and 
chicle gathering are the chief forest industries, 
and the extensive Atlantic coast banana plan- 
tations of the United Fruit Company are found 
in the lower Montagua valley. 
Both the 
Northern and Caribbean Lowlands are sparsely 
populated, and although they represent some 
46 percent of the total area of Guatemala, they 
support only 3 percent of the total population.. 
| 
‘Papers of 
| HARRY Se TRUMAN 
LE 
SECRETARY FI 
\ PRESIDENT. S 
| 
v 
|
3. 
The Highlands. 
The Highlands comprise about 48 percent 
of the total area of Guatemala, support about 
90 percent of the total population, and include 
most of the southern and western portions of 
thecountry. 
Elevations of over 10,000 feet are 
found in the southern highlands near the Pa- 
cific, where a series of volcanic peaks dominate 
the landscape, and in the high Cuchumatanes 
Mountains of the northwest. 
In the southern 
highlands, the underlying east-west structural 
characteristics of the mountains tend to be 
buried beneath deep layers of volcanic ash and 
lava, which 
form 
irregular 
intermontane 
basins between the volcanic cones, some of 
which are still active. 
It is in these basins, 
which are from 5,000 to 8,000 feet in altitude, 
that the greatest concentrations of population 
exist. 
North and east of the volcanic region, 
the covering layer of lava and ash thins out, 
revealing more rugged and less habitable high- 
land areas. 
Further east, toward the Carib- 
bean, the highlands extend as a series of ranges 
diminishing from 5,000 to 1,500 feet in alti- 
tude. 
These include the Coban Hills, the Si- 
erra de Santa Cruz, the Sierra de las Minas, 
and the Montana del Mico. 
Across the isth- 
mus, on the Pacific side, the highlands drop 
off sharply to the Pacific coastal lowlands. 
In general, areas of productive land within 
the highlands are small and scattered, but 
where they exist they support a large popula- 
tion. The most extensive areas of good land 
are located near the departmental capitals of 
San 
Marcos, 
Huehuetenango, 
Solola, 
and 
Quiché, in the Samala and tributary valleys 
near Quetzaltenango, and in the Chimalte- 
nango-Tecpan-Patzun triangle between Gua- 
temala City and Lake Atitlan. 
Agriculture in 
the highlands between 5,000 and 10,000 feet is 
carried on, for the most part, by small farmers 
who raise maize, beans, wheat, and other food 
crops for the domestic market. 
Much of the 
poorer and fallow land is given over to grazing, 
and in the high cold regions above 10,000 feet 
(the paramo) the land is used for little else, 
though some subsistence agriculture is possi- 
ble. 
Below 5,000 feet and down to about 1,500. 
feet there are temperate areas with a monsoon 
climate particularly suited for the cultivation 
of coffee, cacao, sugar cane, rice, citrus fruits, 
and other crops. 
Most of Guatemala’s coffee 
crop is produced in the piedmont that parallels 
the Pacific coast, where the volcanic soils are 
highly productive, but a portion is grown on 
the eastern side of the highlands, in the Coban 
Hill region. 
In general, the highlands of Guatemala re- 
ceive plenty of rain and are covered with for- 
ests, except in the densely populated areas 
where the land has been cleared. 
Broadleaf 
forests in which oaks are predominant occur 
generally throughout the highlands, except in 
the highest altitudes where pines are the chief 
species. 
In some areas, low rainfall and rapid 
drainage 
make 
forest 
growth 
impossible. 
Such areas are commonly occupied by savan- 
nas, but the middle part of the Montagua Val- 
ley, northeast of Guatemala City, is so dry 
that only xerophytic plants can survive. 
4. 
The Pacific Lowlands. 
The Pacific Lowlands occupy 
a narrow 
coastal plain, 320 feet or less above sea level 
and 10 to 25 miles wide, between the southern 
‘ border of the highlands and the Pacific Ocean. 
This plain constitutes about 7 percent of the 
total area of the country, and supports about 
7 percent of the total population. 
Except for 
the extensive banana plantations near Tequi- 
sate, it is relatively underdeveloped agricul- 
turally, and tropical forests occupy large areas 
of fertile soil suitable for agriculture. 
The in- 
land part of the region adjoining the piedmont 
is potentially one of the most productive areas 
of the entire country, but land near the coast 
is swampy and poor in forest and bush cover. 
Grassland areas within. the plain provide pas- 
turage for range cattle. 
The Pacific Lowlands have a tropical climate 
with an average rainfall averaging over 80 
inches except at the northwestern and south- 
eastern extremities of the plain and imme- 
diately adjacent to the coast. 
Here the 40 
inches of rain that fall annually are inade- 
quate for the production of bananas and sugar 
cane, but will support quick-maturing sub- 
sistence crops. 
SARRY Se 
LIBRARY 
Papers of 
TARRY Se TRUMAN 
>RESIDENT'S SECRETARY FILE 
x 
| 
| 
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Subjects 
af Yolen 
Carles 
Report No; 
; } 
Tovolt Aralirat th Govorment ( 
rate of Information: 
‘ 
Evaluation: 
Date of Report: . 
1, 
Colorol Carlos CAITIV.O 
ototes tint bo Ino 
work'n: quictly 
for 
months perfocttny hits 
for an arcol revolt 
weld o7. 
troy ths ATIVALO 
stntas that at th procert tim ho me co 
of tin military 
in tho wostorn 
of th country 
to k'n, 
Te 
that tho Lrrortant garrison at 
wa 
in 
In tly earital ho 
hm vould be ablo to 
on tro 
Civil, on tho 
Port 
tatacras ani on port of tha 
sali thas ta hit 
on his 
in th 
ant tis 
co 
the espltal's 
tio 
military 
did not count on 
tro units 
thensolves boirg on hin of'o, hut tint he wo 
hin son within tho:o 
Unite to comit 
As to tio Port of 
tins 
tiem Low 
ron tat that 1t 
haw a geel curply of amos, 
Fo 
world 
alo to 
havs theoo 
at hit discal, 
2. Colom Carlos 
TIO tons 
that tho prerer 
he 
ty firct having clyilion 
anoth:y aries of 
Paimite of sllonco” domersimticns, 
hia plane dope? 
extent 
On tho olemir of ourpr iso aol 
in 
ral 
ace: thn, 
Yo plenc to 
trrediataly, 
H'a finst big obfective ward 
bo to 
tho 
In 
tint 
rovolt wo 1d en] 
ina 
heen, 
ho states 
prom bits 
always 
tint 
do forcr ar! tio 
Taso wlll reecvor fro: ths Sivst cur) 
for cartering the “Jentors of theta 
at tin 
of 
the utising, a 
Wsovient the 
to evel en ester’ 
they 
not 
able to react quicdy. 
3. 
In caso t!n wevolt dors rot succes! Lradintely, he 
my bo 
wy for tro yu'stls to with raw 
tin 
lv 
tht 
moct, of tle wsatorn mrt of tho curn'ry 
fn ths. mek 
vers 
orca af 
orala) 
bs dn rovelt onl that the mtols wort) 
Chis 
|
night sord plaros 
var mtoriol, 
we 
fo as yot 
to cay 
sarious Colorel 
Arman! plans aro, 
a cutot, noft-srown of flies who dove net 
to bo givon to 
has rite resect hed ouch 
Plotiors ar Colom) 
an! Jorgs 
The 
of 
Most plotters in 
bron that, the: 
Lhe 
| 
. 
intellisuncy servicer, 
alle to Jearn of th 
plo's 
they eculd bo trourht to the point of ovccutlon, 
It would eve that tid: 
da the proatest dancer to CASTILILO Arcas! plans, 
If te should 
alo to 
this, 1% is holieved that his plins my havo nora chnnco of 
than any of the 
tried? provio. sly. 
| 
| 
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| 
‘Be
—_s 
Subjet 
Col, Clea CA 
Nor 
Sy 
Date of Inforgration® 
31 Cetomer 195) 
Date of Report: 
3 Vue 
195) 
Place Acquired: 
Evaluation: 
\ 
1, 2, ani 3 onittod, 
Le 
No tol". 
mowr om 
uron 
vheo ho vill rely 
ruvolt ix tho directo of tho Civil “werd, Col, 
Joso 
do Tecn, 
Po otatol that 
IM thins that 
do 
Lo with 
hin 
that ho, CATIL'O 
tas 
ent 
bie 
ho vlll volt anl lea? tre wel Cly!l 
with CA TIN. trees, 
this, CACTI. frvan pall be ean 
uren otm cers ce 
ar] 
factions of tho larcor nliltery unis, 
5. 
Who ho wis in Jatl in 
an? Sorter*er of 
» bo 
tho 
ef Joso 
LIVATM, who ws tio head of thy Security Potion 
Frodeccascr of thy Judicint 
DCO, 
CASTILLO 
otites tint 
wns a very officlernt mn an) 
kvl run his domrt 
vith 
Inwdiatoly folloving tio rovolution of 20 Octotmr 1924 LUNAR ws carp hired 
ho 
moleasod, ho ns 
fin socret touch 
On om 
12 Octolor 1950" ho told 
Arno tiat bho hed teen contacted hy tha 
Cuntemelan Amy 
on] offered the position at [500 ‘por wenth ang 
of 
timticrs of trat organization, 
CATIA fares iat Fo 
Shout] do, 
Ib stated tint his 
f-: 
to 
tiv offnr 
ho 
worlsIng for tio AN WALD 
CATIU.O 
told LT ARH 
tat ho 
to's tie joo ant tat 
tita 
effor hLa tio 
Orne: 
do 
wor": te 
cid the 
of tha AT 
oF 
pogin 
wall poorly 
hin, 
ecpord tint bo 
world prevaily tats tio 
esce 
CV 
states that Io 
activities, 
tho font that t'o 
wa 
its 
am! aetivitios, 
| 
Feracrar’: 6 onttto., 
= 
calf 
ar 
¢* 
; 
. 
fy 
| 
| 
|
> 
l. 
2. 
Subject: Co} 
CASTILNO Arias, 
Report “No: 
Date of Information: 
Place 
| 
Date Acquired: { 
Evatuation: { 
Date of Repo: 
2 AY =33% 
Source: 
folonel Carlos CASTILLO Arias ars’ved 
in Colo-c:ia 
some 
aso 
Tunte 
Se ced 
a: sylum in tne Colo-tian 
having es: 
prison. 
The followine irt 
Sion is ta: 
interview 
Colorel CASiiLLO s' lated tat. 
| 
he had becun his intervention in Zuateralen polities because 
indi rration 
e essissin Lion of Colonel 
8, Ee attriluted the eacsassin atien of APATA 
o ti.c connivance of. for-er 
"ATC as: 
TITLE at thrt tame was Chie? of th e tilitar: 
of 
ver tue 
ne and another 
alie-pted an uorisins 
wnien fail-d because of the cnditu 
of tine prectdential “utr: 
PAS" 
3°LO was recoved from his post S<cuuse he haji criticizes the fpoveratent and 
was esuccially critical of tic conperstion of the Sovernmeont 
with the Caritt-aa 
Lericn. 
£. few Cavs after giving up his coriand, he vas visited by various militar: 
fricnds, 
sove in active service and others in ret 
tire:en 
It turned out that he 
was beings surveilled by the secret police and he was beken priso:scr and falsely 
condemned. 
After four months in Jail, ne was literatied at Crriet 
2s tire, after 
which he was once asain arrested and out in jail, but for a ver: chert ti-*. 
Cr 
gevting out of 
he went ed 
Salveacen £0 join 
grouv who were plottirs 
the over*tirow of the APLVALO resine. 
Cn a given day rot specific! in; 
;repert, CASTILLO at the head of a gr 
of revolutionarics 
the 
of a cuartol, but the treason of a licutenan 
caused the plans fer 
tie 
to fat}. 
everal offievrs as? ctyilic: 
were killed. 
Sore escape? bub CASTINLG was 
Shose 
prisone 
his companions were assacsiratet, 
CASTILLO wes wounded and 
was 
out of jail alons with the bolies of nis co:sentons. 
Tnereunon, 
it vas 
found he was still alive and he was 
to a hospital, 
Pur ins 
wos intorrojated repeatedly ant finally 
up in a peak 
Sy wee re he sient 
several months, certein that scener or later @eath sentence woul? be pressed en 
him. 
He and a few companions finally ranized to 
CASTITLO sourht 
rere 
. 
at the Colowsbian Lesition, 
| 
accart:) ak the Gunte: alan 
wero reat: to reselt ec 
the 
| 
; 
9 @ 
| 
% 
£ 
— 
| 
t 
t 
| 
| 
| 
A 
A
— 
— 
fe 
co 
_Jreport Goes not touch on the f 
| 
[“Feastion to Colcrel CAS 
conversa tion. 
| 
| 
be rore of a Torunist than his protec? 
and 
of the 
princtnoal posts of 
tie adrinistration are oceupie: 
Co.cnunist leaters., 
TAS ILLO believes trot 
is doninated by tie Corsuntats ae that he is uneble to 
eny other 
A="VALO ard 
fear one ancii.r beeanise they are both irvelved in 
te 'isstons for 
Thus 
ATIVALO will’ 
the poss of Insoec'or of ‘Dinlo- 
able to travel @TI~over the he 
eaicphore With complete ciploratte irnantty. 
he Arsy is disillustoned enc 
tney fecl 
have teen 
deceived and sooner or ‘ater Sey will react. 
CASTIILG predicted 
tefore the 
end of the yrar, the 
forces and tie antielc. munist civilin= fevers will 
keve overthrown the governnent. 
Ke stated 
the antiecc-munist forces recs 
help fro: abroad in war 
and orgarization. 
CASTILLC urg 
CASTILLO claicied that 
ments to comiat Com-unien and to b.gin by aidgins the 
forces in 
Guatemala. 
he said the United States goverwrent would not rateriaily aid such a 
sovezent, but it wes certain tat tie United States would do 
nothing to interfere 
ith 
vi 
the 
*. 
f 
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Sudject: Carics. 
Ar. age, 
riled, 
Report No: 
Guatesaten Amiy Orficcr _ 
Date of Infornition: 
| 
le 
Subfect inforzed 
that? 
| 
resides et San Antonio, 
_Texss, $8 interested in sellin: 
tho enect4s ef the 
of 
| 
CASTILIN hoped would te re. 
for him to soto can sntoato 
and deal porscnlly with® 
Se steted that he had @ card of Antreductica 
him. 
2. 
CASPILID stated that he heped to be able to store arra:.erts in El Salvador 
| 
asainst ths day when they would te 
by the peve: ent ageinsS 
Fe 
furtrer said trast the 
Arbeceador (Sex cr SinonNIAZ Cecteljancs bed 
celled him on the phone end that sutsegq.ently he haa had eadditforel interviexs 
with the DOcminieen Antescedor who had transaitted CASTILLO's propesals to his 
| 
proposals are that the Tominican Coverrnent aid the 
mevezente 
CASTILIO said the Deniniean Antassador had suggested 
thet ii might be 
rood idea for CASTILIO to go to Ciucad Trufillo 
self. 
| 
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f 
“eres
serie 
tente que Uc. ne nv ists 
Lincess,0¢ 
{ 
El ecntenido esene tel dco ‘{ emtericr,ere 
Ge Lacerle une 
corc.iel invitecionp 
que se vinierm 
pesgier 
estag ticrrss, 
ten pronto coms le sen 
fin Ce 
esicres scerca 
« 
For Cemec 
cecirle que yo, Cote gerente y spccérsco 6c rues 
tros esociedos tencrie mucho gusto eM Teconocer a Ua. les jestos 
que sz vieje le 
lo importente,cesi fuprescincitle, 
es nuestro intercersdio personal 
itpresiones, ue no 
pesitie he 
cer lleg-r por mecio de tercercs,en 
clese Je 
ocios en 
es positie que Sete nen 
otras 
mi series mucho gusto ser yo 
ve slli,pues me guste 
“™y, Que unas vecaciones en t# 
era 
ae ceerfan 
Fero ‘Cede le nercte Ge muesties ecoresas por ecé ne 
| 
80 utemente 
imposible covermeé...,por *tllo es que me he visto preci- 
} 
EClést«rlo,y espero no haya irconventertes 
su perte.», 
Fero,si 
suerte Uc. tiene 
que no le peral . selir 
ehore,telver puciern envier 
un repregentente,ccco el scigo 
Guier. Uc. Gerla todes sas instrucciones 6€1 ceso 
los 
Cetes concretcs *cerce Ce lesposibiliceces 
Fora cuelcuiers 6. los dos, 
me _permito euceririe 
¢ 
regreso por le mirce rut*,o bien _vis 
| 
Er eereres Ge £3 RES 
efir: tives re es 
eto por.er 
be 
. 
in 
é 
| 
~ 
a 
> 
> 
Me 
» 
~, 
a
‘stiangée that no. 
“one coat] 
It might 
}. 
The 
‘of my 
‘previous letter: was to ‘extend an’ 
‘davitation’ to. you to’ come’ to “hy country/so we “ean exchange 
our business as’ 
‘as ‘possible 
I 
‘need ‘to tell ‘you that, the’ travel expenses vil 
bre 
| be faxx taken care of, 
The important thing for’ us is to 
‘type of. “endeavor it is. best not’ to’ rely on third 
= 
“For née “Le 
be a ‘pleasure to” go to 
I 
| 
use the. vacation with such good ‘Gompany 
duc 
bufSness’ matters, at the. moment ‘te ‘is 
for ne, that 
I feel oblighé, to bother ‘you and hope. this is net 
If. for some reason you cannot ‘make it perhaps. you 
‘eould 
e 
a 
give “ali ‘the’ necégsary’ instructions” on ‘the case. ‘and, concrete, 
I the first’ 
could [ 
jand. in the
View 
5 I ta at yosr ecrvice is Thais 
O130 
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corres Spra- 
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you ray Serd your 
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