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810.796/6

The Minister in Ecuador (Bading) to the Secretary of State No. 1042

Quito, February 8, 1928.

[Received March 10.] Sir: With reference to the Department's cable No. 3 of January 19th, three P. M., in which the Legation was informed that "certain American aeronautical interests are planning with the encouragement and approval of the Government of the United States to interest themselves in the transportation of passengers and mail along the western coast of South America", and in which the Minister was instructed to discuss this question with Doctor Ayora, Provisional President of Ecuador, in a confidential manner, intimating to him that the government of the United States would be pleased to see Ecuador and the aeronautical interests of the United States eventually joined in the development of aviation on the west coast of South America, and for that reason the United States Government would be happy to see the field kept open until these projects have been matured and completed, I have the honor to report that I have discussed this question in detail with Doctor Ayora, who informed me that he was exceedingly interested in the matter and gave me the assurance that the Government of Ecuador would cooperate to the fullest extent with plans to develop such air service. He further informed the American Minister that up to the present time no requests of any kind to grant concessions for air rights in Ecuador had been presented by foreign concerns, and that he did not believe any such requests would be presented in the near future. The Minister requested that Doctor Ayora, in case any requests for air concessions were presented to the Government of Ecuador, discuss them with the American Minister prior to the Government's taking any action, to which Doctor Ayora agreed. I have [etc.]

G. A. BADING

810.796/12

The Chargé in Peru (Hanna) to the Secretary of State

[Extracts)

No. 932

LIMA, April 16, 1928.

[Received May 2.) SIR: I have the honor to refer to the Department's telegraphic instructions Nos. 4 of January 19, 3 p. m. and 6 of January 25, 7 p. m., regarding the desire of the Huff Daland Dusters and the Keystone

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Airplane Corporation to obtain concessions from Peru and other West Coast countries for the operation of an airplane line along the West Coast to Panama.

Mr. Woolman, the representative of the companies above mentioned, has been here since the first of the year submitting a draft of a concession to the Peruvian Government and attempting to obtain its approval. As soon as Mr. Woolman's concession was submitted to the Government, German interests, notably the Dornier Wal Company through its agent, Mr. Beeck, submitted a proposal for the carrying of air mail and passengers from Mollendo to Paita and asking in addition for authority for a line from Sechura or Paita to Iquitos. This proposal originally contemplated an annual subsidy by the Government amounting to Lp. 30,000. for two years, eventually to be reimbursed from the earnings of the line. A local company was to be organized, and some of the stock was to be subscribed by the Government. A careful study of the prospects of this company was presented, showing a prospect for yearly dividends of 8% or 9% on the basis of the carrying of 1,200 passengers a year along the coast and 512 to Iquitos. The latter figure, at least, is optimistic for the time being. 6 Merkur-Wals are proposed as the coastal equipment and 6 Dorniers as the equipment on the Iquitos line. The terms of the project of Mr. Woolman were apparently communicated to the Dornier agent by General Faupel, and the Dornier agent has since submitted a project which is understood to be considerably more favorable to the Government than his original project. The German proposal has the support of General Faupel and the other officers of the Military Mission of Germans at present directing the staff operations of the Peruvian Army.

As has been outlined in the Embassy's despatch No. 854, dated November 1, 1927,80 the object of the German aeronautical interest obviously is to link up with their present air lines operating in Bolivia and Colombia, possibly as part eventually of a system dominated by the European Air companies extending from Panama or Northern Colombia down the West Coast to Ecuador, Peru and Chile and also across Northern Peru to Iquitos, Para and Pernambuco, across from Valparaiso and Santiago, Chile to Buenos Aires, north from Buenos Aires to Rio de Janeiro and Pernambuco and across the South Atlantic to Dakar, Spain, France, Germany and England. It may be noted that according to the press the French-controlled air mail line from Santiago to Paris is already in operation as are the Bolivian and Colombian German-controlled lines. It is reported that a company under French influence is also applying for a concession in Chile to carry the mail and passengers from Santiago to Arica.

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Mr. Woolman's activities in addition to being hampered by the opposition of the German officers has met with the opposition of an American, Mr. Fawcett, who has done very creditable flying in Peru for the past eight years. Until recently Mr. Fawcett flew a Curtiss Oreole plane, but that was put out of commission a short time ago by an accident and he is now contemplating the possibility of buying several planes and operating a local line in Peru from Lima to Paita. He feels that Mr. Woolman's project would prejudice his interests and accordingly went to the President in January to protest against it.

A strong supporter of the Keystone Company's efforts has been Captain Grow, formerly of the United States Navy, who is now Inspector General of Aviation for Peru, and directs the Army Air Service as well as the Naval Air Service besides having supervision over commercial and civilian flying. This enlargement of his previous authority as head of the Naval Air Service was effected about two weeks ago by Presidential decree and is of considerable significance in the interest of the United States in that it removes a German officer from control of the Army Air Service and replaces him by an American.

The matter is now in the hands of the Minister of Gobierno, Sr. Rubio, who is friendly to the United States. Both President Leguia and Sr. Rubio seem anxious to grant this concession (which, in its latest draft, is in the form of a contract) to Mr. Woolman's company provided the project can be considered as being as favorable as the German proposal. Sr. Rubio yesterday expressed himself as satisfied with the terms of the contract and stated that he would present it to the President for signature today. ...

It was not until a day or so ago that Mr. Woolman furnished the Embassy with a copy of his proposed contract and I have not yet had an opportunity to translate it or to study it carefully. Moreover, it does not contain the latest modifications made to it to meet the objections of the Peruvian authorities. The Embassy has been following his negotiations closely and giving him all appropriate assistance, and will continue to do so. Captain Grow's exceptionally favorable relations with Peruvian officials concerned in the matter, including President Leguia, have made him very useful and his cooperation has been effective. I have [etc.]

MATTHEW E. HANNA

810.796/10: Telegram
The Chargé in Peru (Hanna) to the Secretary of State

LIMA, April 19, 1928–6 p. m.

[Received April 21–11 p. m.] 29. Department's telegram 6, January 25, 7 p. m. President Leguia assures me that the persistent reports that the Peruvian Government has signed contract with German aeronautical interests to operate in Peru are not true and says that the present intention is to enter into contracts with both American and German interests and let them compete. ...

Detailed report concerning Woolman's negotiations are contained in despatch mailed April 18th.8

HANNA

81

Proposed Air Mail Service Between the United States and Chile

825.796/17: Telegram

The Secretary of State to the Ambassador in Chile (Collier)

[Paraphrase)

WASHINGTON, April 13, 1928—1 p. m. 27. The Department has been informed that the Compagnie Latécoère 82 has requested the Government of Chile to grant it an air monopoly service from east to west between Chile and Brazil.

The United States Government, through the Post Office Department, contemplates launching a project for supplying an air mail service directly from this country to the southernmost populous city of Chile. Persons who are interested in performing such a service have been conferred with. The Bureau of the Budget will transmit to Congress a request for an appropriation of $2,000,000 to be used by the Post Office Department for the purpose described above.

These plans would be very seriously interfered with if Chile were to grant such an exclusive right to any company, wherever domiciled, because the United States Post Office Department contemplates the delivery of the mails transmitted to Chile by American airships to the east coast of South America by means of other air companies yet to be consulted. American interests might be prevented from establishing these lines if any exclusive concessions to operate air lines in Chile were granted. As you know the United States has always felt very strongly that an "open door" policy in such matters is best calculated to benefit all concerned.

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$1 Presumably despatch No. 932, Apr. 16, supra.
Compañía General de Empresas Aeronauticas, Lineas Latécoère.

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Discuss this matter with President Ibanez immediately, informally and confidentially, and intimate that the Government of the United States would be pleased to see Chilean and American aeronautical interests eventually joined in the development of aviation, and that this Government would appreciate it if the field were kept open pending the presentation and maturing of these projects.

KELLOGG

825.796/19 : Telegram

The Ambassador in Chile (Collier) to the Secretary of State

[Paraphrase]

SANTIAGO, April 19, 1928–11 a. m.

[Received April 20—10:13 p. m.] 54. President of Chile was much gratified by the information contained in your telegram No. 27, April 13, 7 p. m. He says that the nationalistic policy of the Government will cause it to grant no more exclusive concessions, that the concessions now held by Testart will be canceled, and that all his proposals for service between Santiago, Valparaiso, and the north will be refused.

The President did not think that the existing Latécoère contract was exclusive, but the Director General of Posts has supplied me with copies of the two contracts with the Government of Chile, one for carrying its mails between Chile and Argentina, and one for mails to Uruguay, Brazil, Africa and Europe. The first contract provides that until this company is given 35 percent of the correspondence destined to Argentina, the Chilean Postal Administration cannot concede to other companies the air transport of mails for Argentina. Similar stipulations in the contract for service between Chile, Uruguay, Brazil, Africa and Europe state “35 percent of the total for these countries.” The last-mentioned contract runs for a period of 18 months from February 1, 1928, and is renewable for successive equal periods, if not denounced 6 months prior to expiration. The contract for service between Chile and Argentina becomes effective 18 months after February 1, 1928, and runs for a period of 18 months thereafter, unless denounced 6 months prior to expiration. If within the first 18 month period of the contract the company maintains service of one round trip weekly, the contract will continue in effect for 10 years.

The Director General believes that the contract does not affect the mail transit for Argentina and other countries brought from the United States or countries north of Chile and not originally deposited in the Chilean Government offices, but such an interpretation is very doubtful. The contracts contain clauses authorizing cancelation for interruptions and undue delays, but the provisions seem to be liberal

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