Our Men in Honduras

...It was then pointed out that the confiscation which was tolerated in Cuba in all probability would lead to confiscation of property in Brazil...

...Wayne Morse of Oregon began by angrily referring to the State Department's treating of Section 620 (e) with too great indifference: . . . The State Department knew that that was a part of the law...

...He said in part: . . . Events today indicate the situation in Honduras is getting more serious with the passage of time...

...that we will not repeat the errors that "lost" Cuba...

...We urgently need action by the State Department through American Ambassador to get copy of this proposed law before it is too late to take action to protect American interests...

...is upset over the unfavorable investment climate developing in Latin America...

...We had understood from the State Department that the President was to issue statement pointing out that it would be necessary to amend the law to make it consistent with Alliance for Progress program and international law...

...6 All Senators who spoke seemed to share the viewpoint of the United Fruit executives Sunderland and Folsom that the State Department was not being persistent enough in its pressure on Honduras and Brazil under Section 620 (e...

...Grace, it turns out, is chairman of a twenty-six man Commerce Committee for the Alliance for Progress (COMAP) appointed by Commerce Secretary Hodges, to make a "business-like" assessment of the Alliance...

...We must make clear to American investors that if there is a seizure of their property they will get fair compensation...

...5 Ibid...

...Obviously a government which nationalizes the land in the context of a long range program of crop diversification and rural redevelopment through cooperatives, cannot pay cash immediately...

...8 Ibid: page 204609 Ibid...

...6 Ibid...

...Our representatives also were told that the U.S...

...Mr...

...To believers in a "revolutionary" Alliance the errors consisted in our failure to extend sympathetic aid to Castro in the spring of 1959, which might have steered the revolution toward democratic and pluralistic socialism...

...This is theoretically where a revolutionary Alliance could step in with a reserve fund to compensate United Fruit while in return the country in question would issue bonds to the fund predicated on future development...

...Intense anger was generated there in regard to the affrontery of Honduras and the supposed supineness of the State Department...

...private economic stake in Latin America and to make these investments secure against revolutionary change in Honduras and elsewhere...

...As chairman of the Subcommittee on Latin American Affairs, I am keenly disappointed that the State Department has not taken a more adamant and persistent attitude in regard to what they knew was the plan of Honduras to enact the kind of law that was referred to by both the Senator from Iowa and the Senator from Massachusetts...

...8 One might have hoped that at least a liberal of Morse's caliber would understand that to require immediate compensation in the form of "hard, cold American dollars," was probably the quickest way to stall and perhaps cripple a program of social change and land reform...

...Grace urges the United States to encourage the Latin American countries with grants and loans to enact laws more hospitable to private investment...

...For advocates of the "realistic Alliance," however, Cuba was already "lost" in the spring of 1959...

...In practice, as in Honduras, it has become something very different, so different that we may speak of two Alliances for Progress...

...and it has openly announced that its purpose is to seize American property in Honduras...

...Now 2 Ibid: page 20459...

...that the sufferance of what happened in Cuba brought on what happened in Brazil and, following what happened in Brazil, what happened in Ceylon...

...Since corporation ideology is entrenched in the very heart of the Alliance for Progress by Section 620 (e) the chances are that these business values will exert a final veto on the social change this country will be willing to underwrite in Latin America...

...If they do not get fair compensation, we do not propose to take American tax dollars and pour them into any country by way of foreign aid, so that they will in effect get a double take—the property of American investors and the taxpayer's money...

...Grace fears that "we are in great danger of suffering a major defeat to our strategic interests in this hemisphere...

...On October 1, 1962, Victor C. Folsom, United Fruit Vice President, sent an irate note to Senator Hickenlooper: Yesterday the President of Honduras signed so called agrarian reform law but did not repeat or issue statement regarding modifications of law but on the contrary made speech praising the law...

...The officials have stated that sometime it will get around to issuing some sort of bonds, payable at some distant time in the future, but that in the meantime Americans or American companies will lose their property...

...By the middle of September the situation had worsened from Sunderland's point of view and on September 18, 1962 he telegraphed to Martin: Supplementing my telegram of yesterday and today, our representatives have been informed by the Embassy in Honduras that the U.S...

...He apparently went so far as to claim that it was in the spirit of the Alianza...

...3" that law adopted and held up as being praiseworthy and in accordance with the Alliance for Progress program it will be very difficult to secure its modification...

...Under this program the United States is to prod existing elites into an awareness that a modicum of reform is necessary to stave off revolution...

...The State Department had opposed this Section in hearings and apparently United Fruit wanted to be sure that the Honduran Government was "reminded" 1 Congressional Record, 87th Congress, Second Session: page 2045& of its existence...

...Our sovereignty and our honor are being insulted by this confiscation of property throughout the world...

...The United States, according to the Rockefeller group: should concentrate its economic aid program in countries that show the greatest inclination to adopt measures to improve the investment climate, and withhold aid from others until satisfactory performance has been demonstrated...

...Embassy and mentioned nothing about "necessary" changes in the law...

...According to Hickenlooper...

...Embassy had received instructions not to make representations to the Government of Honduras based upon the Hickenlooper amendment, because it would be premature...

...3 Ibid: page 20457...

...Cannot understand your statement that no defensible analogy can be made between this program and Communist agrarian reform particularly since you state that you have not read the "exposcibn de motivos" or statement of purposes attached to the law...

...Bolivia was then discussing confiscation...

...Despite assurances by the President in the presence of the American Ambassador that copy of the proposed law would be shown us today, Government officials have now declined to show us the proposed law...

...What kind of prestige and respect does that build up for the United States in Latin American countries or anywhere else in the world...

...If American investment in Latin America is supposed to increase as an element of the "realistic Alliance"—rather than being cooperatively phased out as under a "revolutionary Alliance"—the conflict will be intensified...

...But what in fact were those errors...

...The first envisions the United States leading the hemisphere in a program of deep social change...

...As you know, matter is most urgent as bill may become law unless the misimpression that the U.S...

...9 7 Ibid: page 20457...

...Responsible officials of ours now in Honduras continue to have the impression that Honduran officials believe this so-called agrarian reform law either has the tacit approval of the United States or that in any event the United States does not object strenuously to its passage...

...In practice, however, the Alliance is a second or realistic Alliance...

...Imperative that you correct this misimpression on the part of the officials of Honduras, otherwise American property apparently will be subject to expropriation without normal judicial and constitutional protection and without any prompt, adequate and effective compensation...

...Pazos adds that "as a matter of fact, the Cuban people still don't know the type of social revolution, if any, with which Washington would be willing to negotiate...

...The President of Honduras signed the law yesterday without making any statement whatsoever regarding its future amendment to eliminate the conflict of its provision with the Constitution of Honduras and international law...

...1 The Hickenlooper amendment referred to by Sunderland is actually Section 620 (e) of the Foreign Assistance Act of 1962...

...When the day of signing came, however, emotions ran high...

...investment as part of economic and social transformation in Latin America is envisioned here...

...We have attempted to point out the provisions of the Hickenlooper amendment but our representatives in Honduras have been unable to find that the Honduran Government has been advised as to the seriousness of this portion of our law...

...The law enacted by the Honduras Parliament and signed by the President in recent days becomes meaningless so far as concerns giving any assurance to American property owners that they will receive just compensation for property seized .. The Senator from Iowa pointed out that it is contemplated that some script or bond or paper may be offered in payment for this property...

...In short, the commission could do as it pleased, and could fix such payment, or even a specious payment, as it might wish to fix...

...Scmetime ago I learned that a bill before the Honduras Legislature provided for the establishment of an agency or commission which would have the right to seize and take over foreign property in Honduras, but with no specified method of payment, except as the commission might determine, and that there would be no appeal to the courts from the 4 Ibid: page 20459...

...economic investments in pre-revolutionary Cuba...

...Sunderland was upset about a piece of radical land reform legislation then pending in the Honduran Legislature...

...Nor is it envisioned by other sectors of the American Government dealing with hemisphere matters...

...Appreciate the difficulties under which you are working and know of your desire to protect American investment abroad...

...Time also tells us that Grace's views are seconded by David Rockefeller, president of the Chase Manhattan Bank, who along with two other COMAP members filed their own report...

...Therefore State Department solutions appears highly improbable .4 With even greater annoyance Folsom wrote on the same day to Assistant Secretary Martin...

...11 Javier Pazos, "Cuba—Was a Deal Possible in '59?," New Republic, January 12, 1963...

...action taken by the commission, or no appeal from the commission's decision...

...It is often said that the Alliance is a program developed so 10 "Alliance in Danger," Time Magazine, February 15, 1963...

...We will work out programs for basic structural reforms and for the cooperative phasing out of private U.S...

...We have been pushed around in Laos and in Vietnam, and by the building of the wall in Berlin...

...It was further pointed out...

...5 On October 2, the Honduras issue reached the floor of the U.S...

...11 Liberals like to regard the Alliance for Progress as a bold, even revolutionary conception...

...The hallmark of the "realistic Alliance" is order—maintained by American-supported military force if necessary...

...If Assistant Secretary Martin was a little slow in relating events in Honduras to the global machinations of international Communism, Senator Lausche of Ohio was not...

...Time (February 15, 1963) reports that J. Peter Grace, "internationalminded president of W. R. Grace & Co...

...Now Honduras is doing so...

...According to Senator Hickenlooper: On last Sunday, day before yesterday, with a great deal of ceremony in Honduras, the bill was signed . .. by the President, and there was a great deal of speechmaking to the effect that they are going to take this property now and it will belong to the Hondurans...

...According to United Fruit officials (see below) the State Department reached an agreement with the President of Honduras that certain changes would be necessary in the law to make it accord with the Alliance for Progress (with 620 (e) ). The President was to make this clear before signing the law...

...Senate...

...private investment...

...As Cuban exile Javier Pazos suggests, America's response to Castro was not the hand of fellowship extended but a cool willingness to "negotiate" in the interests of the vast U.S...

...Government approves the proposed law is corrected.2 Apparently, in late September the State Department did in fact let it be known to the Honduran Government that the Alliance for Progress we were running was not of the revolutionary variety...

...In a statement fusing American nationalism and corporation ideology Lausche reminded his colleagues that: In the Committee on Foreign Relations the subject of Cuba came up for discussion...

...We had understood that the President would make such a statement at the time the law was signed...

...This conflict between the needs for structural change in Latin America and the needs of American business as a system of power may be irreconcilable...

...No cooperative phasing out of U.S...

...encouragement of private enterprise, local and foreign, must become the main thrust of the Alliance.10 Time states that in addition to large amounts of U.S...

...We have been pushed around in the Congo...

...This section instructs the President to cut off all foreign aid to any country which either nationalizes or places excessive tax burdens upon corporations operating on its territory over 50 per cent of whose stock is owned by Americans, unless either "equitable and speedy" compensation is given or rescinding of the taxes takes place within six months...

...Apparently one of the major speechmakers at that time had just recently returned from Castro's Cuba and he spoke of the great day on which the land of Honduras is being returned to the Hondurans .3 Somehow in the excitement of the moment, or perhaps because of a sudden urge of nationalism, the Honduran President forgot his deal with the U.S...

...aid the Alliance planners also counted on at least $300 million a year in direct U.S...

...investment in Latin America...

...Morse clearly does not conceive of the Alianza in any such terms...

...President there is only one compensation that means anything, and that is hard, cold American dollars...

...On September 7, 1962, Thomas E. Sunderland, the President of the United Fruit Co., wrote an anxious letter to Edwin M. Martin, Assistant Secretary of State...

...Embassy there has not even called to the attention of the Government of Honduras the existence of the Hickenlooper amendment to the 1962 Aid Act and the fact that the proposed agrarian law would be inconsistent with said amendment...

...Beyond order the second Alliance involves a program to expand the already large U.S...