Front Cover
 Half Title
 Title Page
 Table of Contents
 Early relations
 The good neighbor policy and Colombian...
 Defense and related matters
 Loans old and new
 Coffee, bananas, oil
 Wartime relations
 Back Cover
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 Material Information
Title: Eduardo Santos and the good neighbor, 1938-1942
Series Title: Latin American monographs
Physical Description: 128 p. : ; 23 cm.
Language: English
Creator: Bushnell, David, 1923-
Publisher: University of Florida Press
Place of Publication: Gainesville
Subjects / Keywords: Foreign relations -- United States -- Colombia   ( lcsh )
Foreign relations -- Colombia -- United States   ( lcsh )
Relations extérieures -- États-Unis -- Colombie   ( rvm )
Relations extérieures -- Colombie -- États-Unis   ( rvm )
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non-fiction   ( marcgt )
individual biography   ( marcgt )
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Table of Contents
    Front Cover
        Front Cover 1
        Front Cover 2
        Front Cover 3
    Half Title
        Half Title 1
        Half Title 2
    Title Page
        Title Page
        Preface 1
        Preface 2
    Table of Contents
        Table of Contents 1
        Table of Contents 2
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
    Early relations
        Page 6
        Page 7
        Page 8
        Page 9
        Page 10
        Page 11
        Page 12
        Page 13
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        Page 17
        Page 18
        Page 19
        Page 20
        Page 21
        Page 22
        Page 23
    The good neighbor policy and Colombian politics
        Page 24
        Page 25
        Page 26
        Page 27
        Page 28
        Page 29
        Page 30
        Page 31
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        Page 43
        Page 44
        Page 45
        Page 46
        Page 47
        Page 48
        Page 49
    Defense and related matters
        Page 50
        Page 51
        Page 52
        Page 53
        Page 54
        Page 55
        Page 56
        Page 57
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        Page 60
        Page 61
        Page 62
        Page 63
        Page 64
        Page 65
        Page 66
    Loans old and new
        Page 67
        Page 68
        Page 69
        Page 70
        Page 71
        Page 72
        Page 73
        Page 74
        Page 75
        Page 76
        Page 77
        Page 78
        Page 79
        Page 80
        Page 81
    Coffee, bananas, oil
        Page 82
        Page 83
        Page 84
        Page 85
        Page 86
        Page 87
        Page 88
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        Page 100
        Page 101
        Page 102
    Wartime relations
        Page 103
        Page 104
        Page 105
        Page 106
        Page 107
        Page 108
        Page 109
        Page 110
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    Back Cover
        Back Cover 1
        Back Cover 2
        Back Cover 3
Full Text
Il il I il

i II

Second Series


Eduardo Santos
and the Good Neighbor


" i i i -

Eduardo Santos and the
Good Neighbor, 1938-1942
by David Bushnell
THE A.UGUST 7. 1938, inauguration of Eduardo
Santos as President of Colombia marked another
shift in the political realities of that South Ameri-
can republic. While Santos was essentially a
moderate on economic and social issues, his
predecessor, Alfonso L6pez, was a Liberal with
an ambitious domestic reform program-the
"Colombian New Deal" or La Revolucion en
Marcha, as L6pez called it. Furthermore, Santos
believed in conciliation, rather than in the parti-
san militancy used by L6pez to reach his politi-
cal goals. By his pledge of full political guaran-
tees to the opposition, he secured the good will
of the Conservatives. Because of his lack of
political malice toward the L6pez wing of Liber-
als, this group decided that a wait-and-see atti-
tude was the best for them. Thus. Santos opened
his presidential years in an atmosphere of rela-
tive good feeling which later he was able to use
in pursuing his objectives in the area of foreign
Because of his commitment to his domestic
reforms, L6pez had relegated foreign affairs to a
lesser position in the preferences of his admin-
istration. He had lost the close personal relation-
ship which had existed between the United
States Legation and the Presidential Palace dur-
ing the Enrique Olaya Herrera presidential
years, 1930 to 1934, although he had done little
to seriously hamper United States trade and
investment. But Santos soon determined that it




d I

~ I- --- __ r _~__

Eduardo Santos and the Good Neighbor

NUMBER 1 (1965): Fidel Castro's Political Programs
from Reformism to "Marxism-Leninism"
by Loree Wilkerson
NUMBER 2 (1966): Highways into the Upper
Amazon Basin
by Edmund Eduard Hegen
NUMBER 3 (1967): The Government Executive
of Modern Peru
by Jack W. Hopkins
NUMBER 4 (1967): Eduardo Santos
and the Good Neighbor, 1938-1942
by David Bushnell

Eduardo Santos

and the Good Neighbor




THIS MIONOGRAPH is intended only as one small contribution
to the study of recent Colombian-United States relations. It
deals with a single brief period-the four-year term of a
Colombian administration that was, however, a particularly
significant one for this topic. Furthermore, it is largely a discussion
of political, military, and economic relations at the governmental
level, ignoring such factors as the structural relationship between
United States trade and investment and the Colombian economy,
and examining basic Colombian attitudes toward the United States
only insofar as they were overtly expressed in press comments and
political debate. Such an approach to the study of international
relations is admittedly old-fashioned and incomplete. On the other
hand, a good supply of published and unpublished documentation
was readily available on the specific problems that I have examined.
It had been largely untouched by either United States or Colombian
scholars and contained, I felt, much significant data; I therefore
resolved to make use of it without further delay, in the hope that
the resulting product would be of direct service to any other
historian or social scientist who might seek to present a broader
view either of the relationship between Colombia and the United
States or of Colombian internal developments.

The United States sources used consist almost wholly of diplo-
matic correspondence, both that which has appeared in print in
Foreign Relations of the United States and the far more extensive
unpublished records preserved in the National Archives in Wash-
ington. The Colombian sources are principally newspapers and
whatever official documents were published during or immediately
following the period under study (e.g., the ministerial Memorias).
Thus the United States documentation and the Colombian are not
exactly comparable. In particular, the reasoning behind Colombian
official decisions, and the personal views of Colombian decision
makers, can in many cases only be inferred, whereas the thinking
of United States representatives in Bogota and of higher officials
in Washington is expressly stated, by and large, in the diplomatic
correspondence. This discrepancy is regrettable, but it is probably
less serious than might appear to be the case, since in Colombia,
unlike the United States, the relations between the two countries
were the subject of frank and intense political discussion which
was duly recorded in the press. Not only this, but the political
climate per se in Colombia was a key factor in determining policy
toward the United States, whereas the United States public and
politicians were usually content to let the diplomats take care of
Colombian relations.
Different portions of the research on which this study is based
have been supported by the Social Science Research Council and
by the Penrose Fund of the American Philosophical Society. I wish
to express sincere appreciation for the assistance received from
both of them.

Abbreviations Used in Footnote Citations
DS Department of State records, National Archives.
E. El Espectador, Bogota.
FR Foreign Relations of the United States.
L. El Liberal, Bogoti.
Leyes Leyes expedidas por el Congreso Nacional. Sesiones ..
MemEcNac Ministerio de la Economia Nacional, Memoria.
MemHda Ministerio de Hacienda y Credito Puiblico, Memoria.
MemMinas Ministerio de Minas y Petr6leos, Memoria.
MemRels Ministerio de Relaciones Exteriores, Memoria.
N.Y.T. The New York Times.
R. La Raz6n, Bogota.
S. El Siglo, Bogota.
T. El Tiempo, BogotA.


Introduction / 1
Early Relations / 6
The Good Neighbor Policy
and Colombian Politics / 24
Defense and Related Matters / 50
Loans Old and New / 67
Coffee, Bananas, Oil / 82
Wartime Relations / 103
Appendix / 121
Index / 123


N THE PERIOD since World War II, relations between Colombia
and the United States have been always close and almost
always cordial. During the late forties and the early and middle
fifties, friction arose over the status of Protestants, including
United States Protestant missionaries, within Colombia. More re-
cently, the declining coffee price has become a sore point. Yet on
the broader world scene Colombia has been a resolute ally of the
United States against the Communist bloc (or blocs). She was the
one Latin American nation to send a contingent to fight with the
United Nations in Korea and was the first Latin American nation to
receive Peace Corps volunteers. The greatest portion of her foreign
trade has consistently been conducted with the United States, and
the atmosphere has on the whole been favorable for American
private investment. Nor have generally good relations existed only
at the level of government policy. Although popular anti-Ameri-
canism could always be found, it has been less strident than in
many Latin American countries.
Things have not, of course, invariably been so. In the immediate
aftermath of the loss of Panama, relations at both official and un-
official levels between Colombia and the United States were the
very opposite of cordial, and Colombia's strict neutrality-with pro-

German overtones-at the time of World War I was a sign that
hostility had only partly abated. The country's own experience,
furthermore, inevitably inclined many Colombians to view other
instances of United States interventionism around the shores of
the Caribbean in the worst possible light. However, the Thomson-
Urrutia Treaty of 1922, whereby the United States offered
$25,000,000 to Colombia in tacit atonement for its part in the
Panama affair, did much to clear the air even if it did not erase
all lingering resentments. At the same time, a steadily mounting
volume of trade and investment was strengthening the economic
ties between Colombia and the United States that not even Panama
had seriously weakened. The decade of the twenties, in particular,
brought a flood of United States private investment in Colombian
government bonds and economic enterprises, all over and above the
official indemnity payment. Petroleum investment, which began
on a large scale just after World War I, was subject to intermittent
legal harassment, and the banana interests of the United Fruit
Company, which dated back to the turn of the century, were
afflicted with violent labor unrest at the end of the decade. None-
theless, the process of capital penetration had come to stay, and
on balance it was considered beneficial both by the Colombian
government and by the upper-class elite which in effect dominated
political and economic life.1
One Colombian who took a strong stand in favor of rapproche-
ment with the United States was the Conservative Marco Fidel
Suarez, who as far back as 1914 had proclaimed his doctrine of
the "Polar Star"-that Colombia should always look to the North,
to the United States as both an example and a natural ally.2 Not
only was Suarez a sincere admirer of the United States but he felt
that for economic and geopolitical reasons the destinies of the two
countries were inextricably linked: therefore, he concluded, Colom-
bians might as well make the best of the situation, and he himself

1. E. Taylor Parks, Colombia and the United States, 1765-1934 (Durham,
N.C., 1935), pp. 395-473; J. Fred Rippy, The Capitalists and Colombia
(New York, 1931), pp. 103-98.
2. "El norte de nuestra political exterior debe estar alli, en esa poderosa
naci6n, que mas que ninguna otra ejerce decisive atracci6n respect de los
pueblos de America. Si nuestra conduct hubiera de tener un lema que
condensase esa aspiraci6n y esa vigilancia, 61 podria ser Respice polum,
es decir, no perdamos de vista nuestras relaciones con la gran Confederaci6n
del Norte." Quoted by Manuel Barrera Parra, in the introduction to Marco
Fidel Suarez, El derecho international en los "Sueiios de Luciano Pulgar"
(Bogota, 1955), p. 10.

Introduction 3

was entirely happy to do so. As President of Colombia from 1918
to 1921, he worked fervently for the acceptance of the Thomson-
Urrutia Treaty, and one motive behind his ultimate resignation
from the presidency was his desire to facilitate its ratification.3 In
the ranks of the opposition Liberal Party there were men who also
believed in following the "Polar Star." The most important of these
was Enrique Olaya Herrera, who as Foreign Minister had helped
obtain final ratification of the Thomson-Urrutia Treaty, later served
as Colombian Minister to the United States, and in 1930 became
Colombia's first Liberal president in nearly fifty years.
Olaya's presidency from 1930 to 1934 produced the closest politi-
cal relationship that had ever existed between the two countries.
To begin with, he personally liked the United States. In addition,
he took office as the world economic depression was deepening,
with a firm faith that a policy of scrupulously respecting United
States interests would assure him whatever aid Colombia needed in
overcoming the economic crisis.4 He delayed his final decision as
to the appointment of a Minister of Industries until he had word
through the United States Legation that his choice was acceptable
to the United Fruit Company.5 He insisted on maintaining service
on the Colombian national foreign debt after many other Latin
American governments had already defaulted,6 and longer than
Colombia could really afford. He obtained from Congress new
petroleum legislation specifically designed to meet the complaints
of United States companies regarding their operating conditions in
Colombia.7 And in spite of all this and much besides, he received
mostly praise, not aid, from the United States. Olaya obtained one
substantial short-term loan at the very start of his administration,8
and that was all. The day of governmental economic aid programs
had not yet arrived, and though the State Department could urge
private bankers to look with favor on Colombian requests, it could
not legally compel them.
Not all Colombians had entirely shared Olaya's blind faith in the
benefits of American friendship, and one who had not was his
3. Jesuis Maria Henao and Gerardo Arrubla, Historia de Colombia (6th ed.,
Bogota, 1936), p. 813.
4. Minister to Colombia Jefferson Caffery to Secretary of State, March 11,
1931, DS 821.00/781.
5. Caffery to Secretary of State, Aug. 4, 1930, DS 821.6156/81.
6. John T. Madden, Marcus Nadler, and Harry C. Sauvain, America's
Experience as a Creditor Nation (New York, 1937), pp. 111-15.
7. Parks, p. 475.
8. Below, pp. 68-69.

successor Alfonso L6pez, who served as president from 1934 to
1938. Himself an experienced banker, though a moderate leftist
within the Liberal Party spectrum, L6pez most likely would not
have expected such generosity from the financial community to
begin with, as did Olaya. To be sure, L6pez was not in any true
sense anti-American-he was merely a realist-and though he often
talked the language of an economic nationalist,9 he did little seri-
ously to hamper United States trade and investment. On the con-
trary, he signed a reciprocal trade treaty with the United States
which was strongly attacked by Colombian protectionists on the
ground that it made appreciable reductions in Colombian tariffs in
return for little more than a needless pledge that coffee could
continue to enter the United States duty-free.10 Even more notable
in this respect was his try at oil legislation. The legislation spon-
sored by Olaya, though approved article by article by a United
States petroleum expert before passage through the Colombian
Congress,11 turned out to have serious technical defects from the
standpoint of the petroleum companies. These were greatly amelio-
rated by the petroleum law of 1936 even though the L6pez
administration, in drafting it, had carried out only cursory consul-
tation with the companies; and an immediate result was a sharp
increase in the activities of United States petroleum companies in
One major American enterprise that sorely missed Olaya was
the United Fruit Company. L6pez did not clear any appointments
with it and in fact engaged in a running feud with it. For the rest,
the main concrete difference between the Olaya and L6pez ad-
ministrations, from the standpoint of United States relations, was
the loss of the peculiarly close personal relationship which had
existed between the Presidential Palace and the United States
Legation.13 L6pez just did not cultivate foreign diplomats, not even
those from Washington, and in any event he was deeply engaged
in an ambitious domestic program of social and economic reform-
9. E.g., in his nomination acceptance address (T., Nov. 6, 1933).
10. S., Feb. 7, 8, 9, 12, and 13, 1936; Reciprocal Trade Agreement Be-
tween the United States of America and Colombia (Executive Agreement
Series No. 89, Washington, 1936).
11. Caffery to Secretary of State, Oct. 31 and Dec. 13, 1930, Jan. 2
and 28, Feb. 27, and March 4, 1931, FR (1931), II, 7, 10-11, 14-15.
12. Minister to Colombia William Dawson to Secretary of State, Feb. 21,
1936, Jan. 18 and Oct. 19, 1937, and Charg6 Winthrop S. Greene to
Secretary of State, Sept. 14, 1936, DS 821.6363/1244, 1246, 1253, 1261.
13. Dawson to Secretary of State, June 17, 1935, DS 711.21/924.

Introduction 5
his "Colombian New Deal," or La Revoluci6n en Marcha as he
liked to call it-which took clear precedence over foreign relations.
Certainly he did not look to the American State Department to
underwrite his reform program in the way Olaya had looked to
the State Department and Wall Street together to save Colombian
credit in the depression.
The pendulum swung back in the opposite direction when L6-
pez, in turn, handed over the presidential office to Eduardo Santos
on August 7, 1938. Santos did not restore quite the same intimacy
between Palace and Legation that existed under Olaya, but he
cultivated closer relations than did Lopez, and he entered upon
programs of active cooperation that were to set lasting precedents.
The rapprochement between Colombia and the United States which
received its doctrinal justification from Marco Fidel Suarez and
had its extreme expression under Enrique Olaya Herrera took final
shape under Eduardo Santos.

Early Relations

DESPITE the long-term importance of the Santos adminis-
tration in the field of foreign policy, the short-run sig-
nificance of Eduardo Santos's inauguration as President
in August, 1938, was almost wholly domestic. Basically
a moderate on economic and social issues, Santos represented a
qualified shift to the right after the active reformism of Alfonso
L6pez's Revoluci6n en Marcha. Furthermore, Santos lacked the
partisan militancy of L6pez. He sought to conciliate, and when he
pledged full political guarantees to the opposition, most Conserva-
tive leaders were initially disposed to give him the benefit of the
doubt. The L6pez wing of Liberals had not wanted Santos in the
first place, but was nevertheless prepared to bide its time. Thus
Santos began his period of office in an atmosphere of relative good
feeling, which in turn was to prove of obvious advantage to him in
pursuing his chosen policy of close friendship and collaboration
with the United States.1
Before Santos left office in 1942, not only did the heat of do-

1. For a general discussion of the Colombian political background of the
period, see Vernon L. Fluharty, The Dance of the Millions: Military Rule and
the Social Revolution in Colombia, 1930-1956 (Pittsburgh, 1957), pp. 43-65.
Though somewhat tendentious in interpretation and at times inaccurate in
detail, Fluharty's book is still the best treatment available of Colombian
history during approximately the second quarter of the twentieth century.

Early Relations 7
mestic political conflict rise again to dangerous levels, but the
President's international policy became the subject of angry parti-
san debate. In due course, Santos was to be vilified as a mere
lackey of the United States-as an entreguista in the worst tradition
of Olaya Herrera. It is therefore worth noting at the outset that
there had been a time when both Santos and his newspaper El
Tiempo enjoyed the reputation of being not pro- but anti-United
States. When the Liberal Party returned to power in 1930, United
States representatives in Colombia still harbored definite reserva-
tions concerning him: Santos was "very anti-American," according
to one intelligence report drawn up just a few weeks before
Olaya's inauguration.2 However, it was confidently expected by the
same United States observers that his personal and party loyalty
to Olaya would assure his support, or at least his acquiescence, for
the latter's strongly pro-American policies. On the whole, this expec-
tation proved to be well founded. El Tiempo continued critical of the
United Fruit Company, proclaimed "South America for the South
Americans," and favored suspension of service on the nation's for-
eign debt;3 but fundamentally the newspaper did not betray any
systematic anti-Americanism, only a reasonable regard for Colom-
bian interests. In its main lines, certainly, the foreign policy of Olaya
Herrera had the political backing of Santos.
Like most educated Colombians, furthermore, Santos responded
positively to the Good Neighbor Policy as preached by Franklin
D. Roosevelt, taking it as evidence of a sincere intention on the
part of the United States government to mend its ways in hemi-
spheric affairs. Nor was there ever the slightest doubt, as tension
increased on the world scene between the European Axis dictator-
ships and the democratic powers, as to where Santos's sympathies
lay. If he had not been a longstanding ardent champion of the
United States, he was a notorious Colombian Francophile; and
though he might feel attracted more to French than to Anglo-Saxon
culture, he looked upon the United States as potentially the
strongest defender of democratic values, which to him included
both French and Colombian values, in the impending crisis.

The resolve of President Santos to work closely with the United
States found prompt expression in the field of military cooperation,

2. Report of U.S. military attache, BogotA, April 1, 1930, DS 821.00/704.
3. T., Sept. 12, 1930, Jan. 10 and 13, 1932, and passim.

and far from Santos merely doing the bidding of the United
States, the initiative in the matter came from the Colombian
side. Just two days after his inauguration, in talking to former
United States Minister to Colombia Jefferson Caffery-who had
been an official representative at the inaugural ceremony-Santos
informally mentioned his interest in obtaining a United States
naval mission for Colombia. He emphasized to Caffery that he
hoped such a mission would not try to promote the sale of arma-
ments and in this connection remarked bitterly on the success of
earlier communications and aviation missions from Switzerland in
unloading expensive equipment (much of it worthless, according
to Santos) on Colombia.4 Indeed Santos had not the slightest desire
to embark on an arms race. The objective he had in mind was
simply to assist the technical modernization and professionalization
of Colombia's traditionally small armed services. At the same time,
as he explained later, he intended the request for technical mili-
tary assistance to be a demonstration of Colombian confidence in
the United States.5
The State Department immediately expressed gratification over
Santos's proposal and relayed to him an assurance that it was a
fundamental policy of United States military missions not to en-
gage in sales promotion.6 There was a slight complication, to be
sure, in that Colombia already had a British naval mission. The
creation of the Colombian navy in its modern form really dates
from the arrival of the British mission in 1935, and the British not
only trained Colombian personnel but held actual command po-
sitions in the Colombian navy while Colombians were being pre-
pared to take full responsibility. Colombia appears to have had no
serious complaint over the British performance. Nevertheless, the
new administration decided to replace the British with a United
States mission, on the ground that United States technical ad-
vances and "greater facilities" made the change advisable. The
details were quickly arranged, and on November 23, 1938, the
necessary agreement was signed, to cover a four-year period. It
provided that the United States naval mission, unlike its British
predecessor, should function only in a technical advisory capacity,
since British-trained Colombian officers were now available to hold

4. Caffery to Secretary of State, Aug. 9, 1938, FR (1938), V, 462.
5. Ambassador to Colombia Spruille Braden to Secretary of State, March
3, 1939, DS 711.21/931.
6. Secretary of State to Greene, Aug. 12, 1938, FR (1938), V, 464.

Early Relations 9

all positions of command. The British mission then terminated its
services, and the United States mission began to function early in
Though Santos originally mentioned only a naval mission, the
negotiations were expanded to set up an aviation mission as well.
Some years earlier, as a result of the Leticia crisis between Colom-
bia and Peru, a number of United States pilots and aviation
mechanics had contracted individually to assist in the temporary
expansion of Colombia's military aviation and had served, in effect,
as an unofficial United States aviation mission.8 There had also been
European air missions at different times, including the Swiss mission
to which Santos referred in uncomplimentary terms; but there was
no aviation mission in existence at the time Santos took office. In
fact there really was not much of a Colombian air force. However,
a United States-Colombian aviation agreement was worked out on
much the same terms as the naval agreement (though for only a
three-year period) and was signed on the same day, providing for
a United States mission to help in the "development and function-
ing of the aviation of the Colombian Army.'"9 On the other hand,
Colombia did not at this time seek a United States technical mis-
sion for her land forces. Instead, Santos attempted early in 1939
to obtain a French army mission, primarily to offer instruction at
the Escuela Superior de Guerra and similar institutions. The Co-
lombians also hoped to send some of their own army officers to
France for advanced training and study, but the full program of
Franco-Colombian military cooperation never materialized, because
of the developing crisis in Europe and then the actual outbreak of

7. MfemGuerra (1939), pp. 1, 35-37: Xaval Mission. Agreement Between
the United States of America and Colombia (Executive Agreement Series
No. 140, Washington, 1939). The British mission was headed by a retired
Royal Navy captain, and its members went to Colombia in a technically
private rather than a British official capacity. See Basil O. Bell Salter,
"Presente v future de la marina colombiana," Recista del Ejercito, Oct., 1936,
pp. 42-47.
8. Newswceek, April 21, 1934, p. 14; MemGuerra (1935), p. 12; Mem-
Guerra (1936), p. 108.
9. Military Mission. Agreement Between the United States of America and
Colombia (Executive Agreement Series No. 141, Washington, 1939).
10. MciGnCuerra (1939), p. xvi; MemGuerra (1940), pp. xvi-xix; Mem-
Guerra (1941), pp. xxviii, 52. There had, of course, been earlier army
missions too, including the Chilean mission originally contracted by Rafael
Reyes which played a key role in the conversion of the Colombian army into a
modern professionalized force.

By a curious coincidence, on the very day after the signing of
the two mission agreements, Colombia revealed that her minister-
designate was being withdrawn from Berlin as the result of an
incident in which he and his party were temporarily detained by
the German authorities for taking photographs of Nazi atrocities
against the Jewish community.11 There was no direct connection
between the two developments, but their timing neatly symbolized
the convergence of two aspects of Colombian foreign policy: an
underlying disapproval and distrust of the Axis powers and a basic
alignment in world affairs alongside the United States, with the
one serving continually to reinforce the other. In the long run,
moreover, the November, 1938, agreements represented an ob-
viously important landmark in the history of United States-Colom-
bian relations. They laid the basis for close collaboration in one
of the most sensitive areas of national policy, and they not only set
a precedent in this respect but inaugurated an era, for they have
been extended repeatedly-and enlarged-from 1938 to the present.
News of the agreements was not officially announced until No-
vember 26. They were then greeted with uniform approval by the
Liberal press, with a commentator in the President's own El Tiempo
noting how appropriate it was to obtain military advice from a
country such as the United States where the armed forces, as in
Colombia, were traditionally subordinate to civil authority.12 El
Siglo, the principal organ of the Conservative opposition, took no
formal position editorially on the agreements, although in between
the signing and the announcement its editorials had been alluding
to an economically inspired campaign by the United States to sell
arms, while scoffing at the Axis peril to Latin America and adding
for good measure that there was no difference between the "lynch-
ing" of Jews in Germany and of Negroes in the United States.13
Only on November 28 did the Conservative organ carry a full-
length commentary on the subject, in the form of a special contri-
bution initialed by the ultra-rightist Guillermo Camacho Montoya.
It was, to say the least, an interesting performance, which started
out with a frank acceptance of the need to obtain foreign technical
help for the Colombian armed forces. But Camacho Montoya went
on to assert that the missions had been contracted in the wrong

11. T., Nov. 25, 1938.
12. T., Nov. 27, 1938, and Nov. 29, 1938, in which the opinions of other
Bogotai newspapers are reprinted.
13. S., Nov. 24 and 25, 1938.

Early Relations 11

place. With regard to the naval mission, he stated only that the
United States was not the world's leading naval power; he appar-
ently preferred not even to mention the country that was. With
regard to aviation he was less reticent, flatly acclaiming Italy as
the most advanced country and thus the one best able to assist
Colombia. "The Germans," he declared, "are also excellent aviators
and have had the opportunity to train themselves in the open field
of Spain." The Spaniards were excellent, too. Moreover, in case
anyone should consider the technical inferiority of the United
States an insufficient argument against the recent agreements, Ca-
macho Montoya had an even more potent argument on cultural
grounds: "The Saxo-American contribution to the cosmos of uni-
versal ideas is of an insufferable mediocrity. In their culture they
offer only Poe and Whitman, two poets whose appearance on that
scene was a miracle of nature. The United States will be exporters
of civilization but not of culture. They have taught the world to
shave, to take a daily bath, to use burnished toilets, to tar the
roads so that the autos which their factories produce can roll upon
them. .. ." After a discourse on the religious difference between
Protestant America and Catholic America, he then offered his con-
clusion that it "would have been better for the government to
contract these missions, which answer a need, in those countries
with which we have greater spiritual affinities."14
One other contributor to El Siglo mentioned an alarming rumor
to the effect that the mission agreements were somehow linked to
an actual military alliance-"an impossible alliance," he called it-
between Colombia and the United States. However, he accepted
the prompt denial which had been published on this score in
El Tiempo.15 There, for the present, the matter was allowed to rest,
since Camacho Montoya's outburst failed to set off any more wide-
spread or full-scale campaign against the mission agreements. Nor
did his personal preference for Fascist Italy as against the land of
the Good Neighbor represent an exact consensus of Colombian
Conservative opinion. It represented the attitude of an extremist
wing which in bitter frustration over the existing Liberal hegemony
in Colombia was increasingly attracted to anti-democratic doctrines
generally and to the cause of the Axis powers. But there was still

14. S., Nov. 28, 1938.
15. Francisco Plata Bermiudez, "Una alianza impossible S., Nov. 29, 1938.
This particular rumor seems to have been first published by the Conservative
La Patria of Manizales (cited in T., Nov. 28, 1938).


a strong pro-American current in Conservative ranks, ultimately
based on both the "Polar Star" tradition of Marco Fidel Suarez
and the personal interests that linked many leading Conservatives
with United States business firms in Colombia. This current found
perhaps its purest expression in the small Catholic-oriented weekly
La Defense Social, which, if it had fulsome praise even for the
United Fruit Company, could do no less than approve the United
States military missions.16 Somewhere in between was the most
important Conservative of the period, Dr. Laureano G6mez, pub-
lisher of El Siglo and the acknowledged-though not unquestioned
-leader of his party. G6mez, all things considered, was no admirer
of the United States, but in recent years he had saved his bitterest
denunciations for Nazis, Fascists, and Bolsheviks. He did not per-
sonally endorse every word that appeared in his newspaper; and
though he would certainly have been happier without the two
United States missions, it would scarcely have occurred to him to
propose bringing an Italian mission to Colombia instead.17
The first heads of the naval and aviation missions reached
Bogota early in January, 1939,18 and for a time they and their
staffs were largely occupied with getting things organized and
becoming oriented to the Colombian military scene. The orienta-
tion process had to be a mutual affair, and the naval mission, on
its part, felt that the previous British advisers had tried to prejudice
the Colombians in advance against their appointed successors.'9
But, on the whole, United States representatives were highly satis-
fied with the early progress of the two missions; and in practice
military cooperation was not limited strictly to naval and aviation
matters. The Santos administration does not seem to have shared
the lively interest shown by the L6pez regime in obtaining Ger-
man equipment on liberal Nazi credit terms, and United States
suppliers obviously stood to benefit.20 Likewise, the Colombian

16. La Defensa Social (Bogota), July 4, 1939. On the United Fruit Co.,
see, e.g., the issue of April 21, 1939. The fact that La Defensa Social was also
blatantly anti-Semitic did not seem to conflict with its pro-American leanings;
in fact anti-Semitism was a quite widespread Colombian phenomenon of the
period (cf. the tone of comments on immigration policy in the Memorias
of the Ministry of Foreign Relations, passim).
17. On the attitude of G6mez, see below, pp. 24-29.
18. R., Jan. 11, 1939.
19. Braden to Franklin D. Roosevelt, March 27, 1939, DS 711.21/933.
20. Greene to Secretary of State, May 23, 1938, and Jan. 26, 1939,
DS 821.24/104, 108.

Early Relations 13
government responded eagerly to an invitation to send a military
commission-naturally including officers of the land forces-to visit
Canal Zone defenses.21 The visit took place in April, 1939, for one
week, and was followed up by the return visit of a party headed
by Major General David L. Stone, Commander of the Panama Canal
Department, to Colombia in June.22 The presence of Stone and his
party inspired caustic comments from El Siglo's regular columnist
on international affairs, "Americo Latino" (Luis Alfredo Otero), who
cited Charles A. Lindbergh as authority in order to cast further
aspersions on United States aviation proficiency after the fashion
of Camacho Miontoya and suggested that the only step still remain-
ing would be for the United States to draw Colombia into an actual
"military alliance . against the totalitarian countries, which
would be a waste of time, since the dictators are more practical
and alert [acisados], so that they exercise an economic and cul-
tural penetration in America, more efficient than speeches about
good neighborliness, democracy. .."3 However, no such criticism
could halt what was to become a continual round of inspection
and consultation visits between Colombian and United States
military men of all services.
In due course, various moves for reorganization of the Colombian
armed forces were carried out on the recommendation of United
States advisers; military aircraft previously condemned as unsafe
were reconditioned, at substantial savings to Colombia; and while
trips to and from the Canal Zone continued, an increasing number
of Colombian military personnel were sent to the United States for
specialized training. Naval officers, pilots, and aviation mechanics
led the way, but infantry and artillery officers-and representatives
of still other branches-were to follow. The training programs
conducted by United States advisers in Colombia were also en-
larged as time went on, even to the extent of sending noncom-
missioned officers to serve, at Colombian request, as military
baking instructors.24

21. Braden to Secretary of State, March 3, 1939. DS 711.21/931.
22. N.Y.T., April 13, 1939, 8:4, and June 8, 1939, 12:4.
23. S., June 14, 1939. Although Fluharty, Dance of the Millions, p. 63,
identifies "Americo Latino" as Guillermo Camacho Montoya, he appears to be
in error. Cf. Ruben Perez Ortiz, Scudinimos colombianos (Bogota, 1961),
p. 11.
24. Braden to Secretary of State, March 7, 1940, DS 821.20/131; N.Y.T.,
Feb. 20, 1940, 8:5; MemGuerra (1939), pp. 38-39; MemGuerra (1940), p.
xix; MemGuerra (1941), pp. xxx, 57.


A further innovation that dated from Santos's first year of office
was the mutual raising of the diplomatic missions of Colombia
and the United States from legation to embassy status. The change
was recommended by Santos in his post-inaugural remarks to
Caffery, and this proposal, too, had a favorable reception in Wash-
ington.25 It became effective at the Washington end in October,
1938, when Miguel L6pez Pumarejo, who had been previously
serving as Minister, presented his credentials as first Colombian
Ambassador to the United States.26 The change in status of the
United States mission to Colombia became fully effective early the
following year.
The first United States Ambassador to Colombia was Spruille
Braden, the same who later won lasting renown for his crusade
against the Per6n regime in Argentina. Braden brought to his
new position a wide experience in Latin American affairs resulting
from his personal business and financial activities, notably in Chil-
ean copper mining, as well as from previous official assignments,
although he had not yet headed the permanent United States
mission to any Latin American country. He also brought a facile
command of Spanish, a Chilean wife, and a genuine sympathy for
Colombia, which he praised in a personal letter to President
Roosevelt as the most democratic nation in South America.27 His
background in the field of business made him an eager promoter
of United States trade and investment, but he knew the weaknesses
as well as strengths of his fellow businessmen and was to prove a
harsh critic of those who in his opinion were behaving improperly
toward their host country.28 The arrival of the first United States
Ambassador was thus a positive factor in its own right-and in
more ways than one-for United States-Colombian relations.
The favorable condition of relations between the two countries
was underscored by the formal message of President Santos to
Congress at its opening for a new session on July 20, 1939. Santos
dwelt at length on the subject of inter-American cooperation and

25. Caffery to Secretary of State, Aug. 9, 1938, and Secretary of State to
Greene, Aug. 12, 1938, FR (1938), V, 463-64.
26. T., Oct. 29, 1938.
27. Current Biography; Who's News and Why 1945 (New York, 1946),
pp. 71-75; Braden to Roosevelt, March 27, 1939, DS 711.21/933.
28. Cf. below, pp. 97-98.

Early Relations 15
specifically emphasized Colombia's desire for United States tech-
nical aid in military and other matters.29 He lauded the final aban-
donment of "imperialist ambitions" on the part of the United States
and "the frank acceptance of a policy of sincere mutual respect, of
explicit recognition of the sovereignty of others, of collaboration
which excludes tutelage, which proscribes imposition and which
does not protect undue exploitation ... "30 He was careful to point
out that Colombian friendship for the United States did not rest
on any secret pact or understanding, but he also declared, in one
of his most important foreign-policy pronouncements, that in the
event of another world conflict Colombia could not remain indiffer-
ent to the security of the Panama Canal: "The Canal is one of the
supreme routes of communication of the Continent; with its inter-
ruption our economy and all our standard of living would suffer
a tremendous blow. We cannot say, because of a sense of propor-
tion and because of the desire to maintain as far as possible a
certain neutrality compatible with our interests . that we would
come to its defense in case it was in danger of being attacked.
What we do say, because it corresponds to our essential interests,
our obligations as a sure and loyal neighbor, and the policy of
American solidarity, is that no one will be allowed to menace the
security of the Canal from Colombian territory, directly or indirectly,
in any form; that our soil will not be a fit place to carry on or to
suggest maneuvers that are even suspicious in that sense. If the
case should arise, the Government of Colombia will know how to
prevent it, without the necessity of being asked by anyone, with
all the firmness and efficacy that are required."31
Santos's comments on solidarity with the United States and on
the Panama Canal in particular were favorably received, by and
large, in both countries. When Secretary of State Cordell Hull
replied to press questioning that he did not recall any official
consultations with Colombia on the subject of canal defense,32 he
merely confirmed, indirectly, the Colombian president's flat denial
of the existence of a secret alliance-a denial that proved particu-
larly gratifying to Conservative opinion. Moreover, the general ap-
proval which greeted Santos's statement in Colombia was made
evident the following month when the Chamber of Representatives
29. Declaraciones presidenciales. Julio de 1939 a abril de 1941 (Bogota,
1941), pp. 10-21.
30. Ibid., pp. 19-20.
31. Ibid., p. 20.
32. N.Y.T., July 22, 1939, 3:3.


with only one dissenting vote recorded its confidence in his inter-
American policy.
The vote came on August 19 after some days of debate that
featured strong denunciations of the United States by Representa-
tive Silvio Villegas, a right-wing Conservative who had recently
broken with the leadership of Laureano G6mez in order to at-
tempt the formation of an independent nationalist movement.
Villegas was especially bitter in his attack on the naval and avi-
ation missions, which he pictured as a form of imperialistic pene-
tration carried out on the "pretext" of defending democratic in-
stitutions: "We handed over the petroleum and the bananas, and
now we hand over our aviation."33 Villegas strongly implied that
he, like Camacho Montoya the previous November, would have
preferred to obtain any needed technical services from the Axis
powers. However, the fact to note is that Villegas fought a lone
battle. For the Liberal majority, a group headed by the future
left-wing martyr-and old enemy of United Fruit-Jorge Eliecer
Gaitain presented a motion strongly backing the administration in
its cordial response to the Good Neighbor Policy of Franklin D.
Roosevelt. The Conservative minority offered a resolution of its
own which differed little in substance although carefully stressing
the fact that Colombia supported Santos's policy toward the United
States "on the basis of juridical equality." In the end, a resolution
was adopted that incorporated elements of both Liberal and Con-
servative drafts and satisfied everyone but Silvio Villegas: "The
Chamber of Representatives declares its conformity with the inter-
national orientation followed by the government, of close under-
standing with the American nations and harmony and collaboration
with the good neighbor policy proclaimed by the current president
of the United States, founded in international juridical equality
and unity of action for the defense of democracy and of the
Just four days later, Camacho Montoya again had free rein in the
columns of El Siglo to laud Adolf Hitler as "the first political
figure of his epoch" and providential restorer of Germany's great-
ness-all apropos the negotiation of the Hitler-Stalin pact.35 But the
overwhelming vote of the Chamber of Representatives for the
defense of continental democracy was a better indicator of the
state of political opinion at that moment. In the Congressional
33. S., Aug. 19, 1939. See also S., Aug. 12, 1939, and passim.
34. T. and S., Aug. 23, 1939. 35. S., Aug. 23, 1939.

Early Relations 17

debate, Conservatives had been more sparing than Liberals in
praise of the United States. but they felt at the very least that
hardheaded realism required Colombia to seek good relations with
her wealthy and powerful neighbor.36 and they were satisfied that
Santos was doing so on terms compatible with Colombian interests
and dignity. Moreover, the net effect of the Hitler-Stalin pact was
certainly even more damaging to the Nazi image among Conserva-
tives than among the Liberals.17
When war finally came. sentiment was predominantly pro-Allied
among members of both Colombian parties (though more vigorous-
ly so in the Liberal camp). \Minor anti-German incidents con-
firmed the uniform opinion of qualified observers to this effect;
positive expressions of support for the German cause could be
found in the Karibischer Bcobachter published at Barranquilla but
elsewhere were few and far between.35 Colombian sentiment was
even more overwhelming in favor of strict official neutrality, so that
when Santos proclaimed such a policy in a decree of September
6, 1939,"l he had with him the clear mandate of public opinion.
Neutrality, however, was logically compatible with continued close
collaboration with the United States. whose government formally
proclaimed the same policy. Indeed, effective neutrality was
thought to require such collaboration, precisely to ward off any
possible threat to the peace of the hemisphere. Thus Colombia
participated wholeheartedly when the United States promptly
called a meeting of foreign ministers of the American republics
at Panama. Her delegation readily approved the special neutrality
measures adopted there, of which the most important was the
proclamation of a neutrality zone-supposedly to be kept free from
all "commission of hostile acts" or "belligerent activities" by the
warring powers-that extended an average of 300 miles from the
shores of the Americas.40

36. See, e.g., the remarks of Rep. Uribe Cualla, S., Aug. 12, 1939.
37. See, e.g., the signed editorial by Aquilino Villegas, S., Aug. 24, 1939,
and the swastika combined with hammer and sickle illustrating p. 1, S.,
Aug. 25, 1939.
38. Braden to Secretary of State, Oct. 26, 1939, DS 821.00/1276; Braden
to Secretary of State, Feb. 27, 1940, attaching copy of Karib)i.schcr Beobachter,
DS 821.00N/50.
39. MemRels (1940), p. 3.
40. World Peace Foundation, Documents on American Foreign Relations:
July 1939-June 1940 (Boston, 1940), pp. 115-19; J. Lloyd Mecham, The
United States and Inter-American Security, 1889-1960 (Austin, Tex., 1961),
pp. 182-85.


For Colombia, joint action with the United States to cope with
the war emergency took many different forms. Of greatest im-
mediate concern to the Colombian government and people was the
search for ways to lessen the economic impact of the European
struggle,41 but there was also intensified consultation on political
and military aspects of national defense, including defense against
Axis subversion and espionage.
President Santos himself had expressed a resolve to keep close
watch over German, Italian, and Japanese activities from the very
time of his inauguration,42 but he did not originally assign much
urgency to the matter. In March, 1939, he assured Ambassador
Braden that the Germans and Italians in Colombia were behaving
quite properly, although he had some reservations about the Japa-
nese. He also attested to the genuineness of the anti-Nazi leanings
of Laureano G6mez, even while recognizing that the European
Axis powers might succeed in influencing Colombian Conservatives
through their common attachment to the cause of the Franco
regime.43 Other Colombians were more inclined to view with alarm,
including the Pasto city council, which in September, 1938, urged
citizens and local authorities throughout Colombia to make Nazi-
sympathizing German residents feel unwelcome-and voted to send
a copy of its resolution to Franklin D. Roosevelt, among others.44
The small Communist minority likewise made much of the danger
from Axis agents and sympathizers,45 particularly in the period be-
fore the Hitler-Stalin pact. But Santos's attitude was more typical.
Then, after the outbreak of war, this same threat began to attract
greater attention; and the first major impact of the changed atmos-
phere was felt by the Sociedad Colombo-Alemana de Transportes
A6reos (SCADTA).
Established in 1919 at Barranquilla by a Colombian-German-
Austrian group, SCADTA was the oldest and one of the most success-
ful commercial aviation companies in South America. It had filled
a critical need in a country such as Colombia where topography
was highly unfavorable to land transportation; and most Colom-

41. Below, pp. 72-73, 83-86.
42. Caffery to Secretary of State, Aug. 9, 1938, FR (1938), V, 463.
43. Braden to Secretary of State, March 3, 1939, DS 711.21/931.
44. Tierra (Bogota), Oct. 14, 1938.
45. Tierra, passim.

Early Relations 19
bians from President Santos down looked upon SCADTA with a
mixture of gratitude, affection, and even pride. The firm's official
title had been something of a misnomer since 1931, when Pan
American Airways acquired a majority financial interest. However,
Pan American was mainly interested in assuring operating rights in
Colombia for itself and in blocking the expansion of SCADTA out-
side the country in competition with its own routes; with these
objectives satisfied through its ultimate control over SCADTA, Pan
American was content to leave the previous management in charge
of the air line's operations.46 Thus a majority of key administrative
personnel, pilots, and technicians continued to be German or Aus-
trian, and though some were by now long-established residents of
Colombia, others came out from Germany to serve for shorter
periods. In such cases, they stayed long enough to familiarize
themselves adequately with Colombia and then returned home,
often to active service v.ith the Luftwaffe.47 At the same time,
through the aerial photographic service of which it had a virtual
monopoly in Colombia, SCADTA was building up an unexcelled
collection of aerial surveys. As journalistic alarmists were later to
point out with monotonous regularity, these surveys covered some
of the principal approaches to the Panama Canal. Indeed SCADTA
aircraft had in the past flown over the Canal itself. Finally, SCADTA'S
private radio network augmented still further its potential to serve
the interests of the Third Reich.48
It should be emphasized that it wvas SCADTA'S potential for dam-
age to Colombian and United States security, rather than any long
string of clearly proven illicit activities, that gave rise to concern.
However, for some time this concern existed almost solely on the
part of the United States, not Colombia. Even in the United States,
Pan American itself was long disinclined to interfere actively with
the management of its Colombian subsidiary, which, from a purely
operational standpoint, was creating no problems for the head
office. Meanwhile Pan American preferred not to publicize the

46. Herbert Boy, Una historic con alas (2nd ed., Bogota, 1963), pp.
62-63; William A. M. Burden, The Struggle for the Airways in Latin America
(New York, 1943), pp. 11, 14, 27; petition of Pedro P. v. Bauer Chlumecky,
Santiago, Chile, May 5, 1944, in Archivo de R. Botero Saldarriaga, Papeles
relatives a sus labores en la Comision Asesora del Ministerio de Relaciones
Exteriores (Vol. I), at the Academia Colombiana de Historia in Bogota.
47. Braden to Secretary of State, March 30, 1939, DS 821.976 SCA
48. Burden, Struggle for the Airways, p. 68; N.Y.T., Aug. 15, 1940, 6:3.


precise extent of its financial control, which had been reported to
the United States and Colombian governments at the time it was
acquired but still was not generally known in either country. There
was considerable confusion as to the Pan American interest even
among responsible Colombian officials. This confusion was encour-
aged, if anything, by the SCADTA management, and it was the
United States Embassy under Spruille Braden-not Pan American
Airways-that ultimately cleared the matter up.49
SCADTA was committed, in principle, to a policy of steadily up-
grading Colombian personnel within the organization, but in prac-
tice the progress toward this objective was exceedingly slow. The
first real move toward Colombianization of the air line came only
in the closing weeks of the L6pez administration, in the form of
Law 89 of 1938, passed by the Colombian Congress, which re-
quired aviation companies operating within the country to employ
a certain percentage of Colombians and also to be controlled at
least 51 per cent by official or private Colombian interests.50 The
law allowed four years for the latter provision to go into effect,
and a number of different proposals were put forward for the
reorganization of Colombian civil aviation along the lines it laid
down. The proposal that finally won official support-and was en-
dorsed by President Santos in his message to the opening of
Congress in July, 1939-called for the absorption of both SCADTA and
the small Colombian-owned Servicio Aereo Colombiano (SACO) into
a new national aviation company with Colombian government
participation.51 This solution was perfectly satisfactory in principle
to the German-Austrian group that had been running SCADTA.
Indeed the passage of the law itself had been encouraged by the
SCADTA management, some of whose members were already natu-
ralized Colombian citizens while others were prepared to take the
same step at any time. They apparently saw in the legislation a
means of winning greater independence vis-a-vis Pan American
and at the same time of protecting themselves against any undue
interference with their affairs from Germany. Their confidence in
their own position seemed fully justified when Santos himself
helped expedite the naturalization of Dr. Peter Paul von Bauer,
49. Braden to Secretary of State, June 13, 1939, DS 821.79622/4, June
26, 1939, DS 821.796 SCA 2/417, Oct. 27, 1939, DS 821.796 Avianca/4,
Dec. 20, 1939, and March 20, 1940, DS 821.00N/35, 55.
50. Leyes (Feb.-May, 1938), pp. 114-28 and especially 116, 125.
51. Braden to Secretary of State, June 13, 1939, DS 821.796 SCA 2/416,
and July 26, 1939, DS 821.796/108; T., July 21, 1939.

Early Relations 21

SCADTA'S president and leading individual stockholder, which be-
came effective in March, 1939.52
As far as Colombia was concerned, in any event, the law of 1938
was inspired by motives of economic nationalism, not fear that in
its present form SCADTA posed a threat to security. Even after
the law was passed, and even after Pan American finally gave
instructions to the contrary, SCADTA continued recruiting pilots in
Germany-and negotiating with the Nazi government to get them
clearance to leave the countryv3-but Colombian opinion still re-
acted unfavorably to discussions in the United States about the
SCADTA peril.54 Reports of official United States pressure on Colom-
bia to nationalize (i.e., de-Germanize) the firm produced a similar
reaction. Such reports were flatly denied by the Colombian gov-
ernment in April, 1939,55 and in a narrow sense the denial was no
doubt accurate. But pressure was definitely being brought to bear
on Pan American to do something about the SCADTA situation, as
when Generals H. H. Arnold and George C. Marshall both made a
point of urging the air line to replace German with American
personnel.56 Pan American never refused to cooperate. It was merely
a bit too casual about the matter to satisfy United States officials.
The outbreak of war finally brought things to a head. United
States official pressure was redoubled on Pan American, which at
long last sent one of its top executives to Colombia to expedite the
process of de-Germanization and to take part concurrently in nego-
tiations for the establishment of a new national aviation company.
With regard to the first of these objectives, the air line was clearly

52. Braden to Secretary of State, March 30, 1939, DS 821.796 SCA
2/408; Consul Nelson R. Park, Barranquilla, to Secretary of State, July 26,
1939, DS 821.796 SCA 2/419; Braden to Secretary of State, March 20,
1940, DS 821.00N/55. At first glance, it is hard to see why SCADTA officials
should have feared interference from Germany when they could always
successfully resist it, if they so desired, by appealing to Pan American. How-
ever, they were not all aware of the extent of Pan American's control; nor,
apparently, was the German government. Von Bauer naturally was aware, but
preferred to maintain the impression that he himself owned a controlling
interest. On this aspect of the question, especially, see Boy, Una historic
con alas, pp. 238-41.
53. Braden to Secretary of State, Oct. 27, 1939, DS 821.796 Avianca/4;
von Bauer petition, May 5, 1944.
54. See, e.g., T., Feb. 24, 1939, and Braden to Secretary of State, March
3, 1939, DS 821.796 SCA 2/405.
55. Braden to Secretary of State, April 25, 1939, DS 821.796 SCA
2/412; N.Y.T., April 23, 1939, 27:2.
56. Memo by Laurence Duggan, March 17, 1939, DS 810.79611 Pan
American Airways/1691.


unhappy, not only over the amount of effort required but also over
the financial cost, including the liberal discharge payments owed
to purged German personnel under the terms of Colombian law
and company regulations. The cost was particularly high since the
United States was determined that Pan American should make a
clean sweep of naturalized German or Austrian personnel as well
as non-naturalized staff members-so that von Bauer's new citizen-
ship, for example, was not enough to keep his job for him. From
the standpoint of Ambassador Braden, Pan American was still
overly complacent, not to mention lacking in frankness. He charged
that just as the firm had long refrained from spelling out the ex-
tent of its control of SCADTA, it now greatly exaggerated the diffi-
culty of getting American pilots to take the place of Germans.
Nevertheless, during the last months of 1939 and the beginning of
1940, more and more Germans were in fact let go and were re-
placed by either Colombians or Americans. All the top German
(or ex-German) administrators were eased out in February, 1940,
at which time SCADTA also installed special direction-finding
equipment to keep careful track of the movements of aircraft
piloted by still-to-be-purged German fliers.57
Although there was still much good will, official as well as private,
toward SCADTA in Colombia, the Colombian government cooper-
ated fully with the precautionary campaign that was under way.
As early as September, 1939, it did its part by stationing military
guards at civil airports and requiring Colombian military copilots
on commercial aircraft flights.58 Santos himself expressed solicitude
to Braden for the longer established SCADTA Germans;59 but he does
not appear to have intervened more forcefully on their behalf.
Headway was also being made toward the establishment of a
new aviation company that would replace both SCADTA and SACO,
57. Secretary of State to Sumner Welles, Oct. 6, 1939, FR (1939), V,
73-74; Braden to Secretary of State, Feb. 6, 1940, FR (1940), V, 729-30,
and March 20, 1940, DS 821.00N/55; N.Y.T., Aug. 15, 1940, 6:3. Pan
American did ultimately receive compensation, from U.S. Army funds, for its
special expenditures in the de-Germanization of SCADTA. See Stetson Conn
and Byron Fairchild, The Framework of Hemisphere Defense (Washington,
1960), pp. 241-42.
58. N.Y.T., Sept. 22, 1939, 4:2.
59. Braden to Secretary of State, Feb. 14 and 22, 1940, FR (1940),
V, 731-32. Naturally, there were other Colombians, especially on the far
right of the political spectrum, who expressed solicitude also for Colombian
national sovereignty, which they felt was being sacrificed in the SCADTA affair
to the pressures of Yankee imperialism (e.g., Veritas [Chiquinquira], Feb.
14, 1940).

Early Relations 23

in line with Santos's proposal to Congress in July, 1939. The Colom-
bian government was determined to have the dominant voice in
such a firm but was not in a position to put in at once a correspond-
ing share of its capital. The formula that finally was adopted called
for the government to hold an option to acquire 40 per cent of
the stock, with another 20 per cent ultimately reserved to private
citizens who were native Colombians. In the meantime, Pan Ameri-
can Airways would remain the principal stockholder, and technical
direction, at least for the present, would be exercised by Pan
American personnel; but the Colombian government was to have
from the outset a considerably larger representation on the board
of directors than its stockholdings alone would warrant. The so-
lution was not satisfactory in all respects to Pan American, but its
freedom to bargain was limited both by the existence of the nation-
alization law of 1938 and by pressure from the State Department.
Accordingly, on June 8, 1940, SCADTA was formally absorbed into
the new Aerovias Nacionales de Colombia (Avianca), which was
organized along the lines indicated.60 By that time, moreover, the
original German staff had been eliminated from all sensitive posi-
tions. Some German clerical employees remained, but they too were
gradually removed over the following months, with the United
States discreetly encouraging the exodus through continuing dis-
cussions with both Pan American and Avianca officials.61
60. Braden to Secretary of State, Oct. 27, 1939, DS 821.796 Avianca/4,
Feb. 14 and 22, 1940, FR (1940), V, 730-33; Secretary of State to Braden,
Feb. 2 and 6, 1940, FR (1940), V, 723-26, 728-29: Oliver J. Lissitzvn,
International Air Transport and National Policy (New York, 1942), p. 332;
T., June 9, 1940.
61. FR (1940), V, :34n. Not quite one year later, the process was rounded
out by Avianca's purchase of the small Aerovias Ramales Colombianas, which
had been founded by a former SCADTA chief pilot (FR [1940], V, 733n, 735n).

The Good Neighbor Policy
and Colombian Politics

D ESPITE some Conservative sniping at the military mission
agreements and more general Colombian skepticism con-
cerning United States assessments of the SCADTA peril,
United States-Colombian relations inspired rather little
controversy in either country during the period from the inaugura-
tion of Santos until shortly after the Panama Conference. But once
the Colombian Senate began full-dress debate on the results of
the Conference, a definite change could be seen. Colombian foreign
policy, and Colombian-United States relations in particular, became
one of the main arenas of combat between the Santos administra-
tion and the Conservative opposition, and later developments only
intensified the argument.
The principal architect of the change was the Conservative
leader Laureano G6mez, who took the initiative in making policy
toward the United States a partisan political issue. Up to a point
this merely reflected a gradual deterioration in inter-party relations
on the domestic scene, which encouraged G6mez to seize upon
foreign policy, when a proper occasion presented itself, as one
more weapon of attack against the Liberal regime. But there was

The Good Neighbor Policy and Colombian Politics 25
more to it than that. As already suggested in the previous chapter,
G6mez's underlying attitude toward the United States was more
unfavorable than favorable; and it did not take much to bring him
into open antagonism on a given issue.
To be sure, G6mez never had been-and never would be-
primarily interested in foreign relations. At the moment his one
abiding passion was to maintain the strength and morale of the
Conservative Party in its temporary adversity and thus be prepared
to seize on any Liberal weakness or misstep that might pave the
way for the Conservatives' return to power. And though he might
take a dim view of the United States, he also took a dim view of
the European totalitarian dictatorships, both Nazi-Fascist and (es-
pecially) Communist. He had even written a book, El cuadrild-
tero,1 in which he assailed Hitler, Stalin, and Mussolini and held
up Gandhi (of all people) as an example to emulate. That work
appeared in 1935, and by 1939 he could have changed his opinions
to some extent; for one thing, he undoubtedly felt some gratitude
toward Hitler and Mussolini for their participation in the Spanish
Civil War on behalf of General Franco, whose regime had the
wholehearted support of Gomez as of virtually all Colombian Con-
servatives. Nevertheless, G6mez was still more anti- than pro-Nazi-
Fascist. He regarded the German and Italian dictatorships as un-
scrupulous, inherently aggressive-at least on their side of the
Atlantic-and blasphemously addicted to what his newspaper El
Siglo termed "statolatry" (estatolatria).2
With regard to the United States, Gomez was not primarily
concerned with the threat of Yankee economic exploitation. He

1. Bogota, 1935.
2. S., Feb. 24, 1939. In the declarations of Laureano G6mez it is possible
to find support both for the view that he was a sincere friend of democracy
and the United States and for the view that he was a hardened totalitarian
and pro-Nazi. It is particularly easy to do so if one holds G6mez personally
responsible for everything that ever appeared in El Siglo. In the following
discussion of G6mez's thought, therefore, I have been guided by my own
impression of the persistent themes. That impression, in turn, is based princi-
pally on G6mez's own statements made in Colombian Senate debates
during the period under consideration, i.e., 1939-1940; since these were most
fully reported in his own newspaper, the reference (unless otherwise specified)
is S., passim. If it should appear that in this study disproportionate attention
is given to analyzing the attitudes of G6mez-to the neglect of the viewpoint
of the Santos administration and other shades of both Liberal and Conservative
opinion-the explanation is that it was G6mez who took the offensive, and
also that his position on foreign affairs has been repeatedly subject to distor-


shared with many Liberals the view that Olaya Herrera had been
guilty of entreguismo in economic and financial matters, and El
Siglo was generally hostile to United States petroleum companies in
Colombia (although an organ of the ultra-nationalist lunatic fringe
still described it as a "Conservative daily at the service of the
great Yankee oil interests").3 On the other hand, G6mez con-
spicuously refrained from harassing the United Fruit Company.4
He, El Siglo, and Conservatives in general were resolutely on the
side of capitalism against socialism; and they insisted with appar-
ent sincerity that they favored any form of foreign private invest-
ment that did not seek special privileges in Colombia. Neither did
he have any long list of concrete abuses to point out in the recent
Latin American policy of the Roosevelt administration, though his
admiration for the second Roosevelt was restrained at best. Look-
ing farther back, he had not yet forgiven the first Roosevelt's
"taking" of Panama, and he had bitterly opposed the Thomson-
Urrutia Treaty.5 But he accepted the fact that Panama, officially
at least, was now a closed issue.
Nor, finally, was G6mez much given to rehashing the sorry
record of United States military intervention elsewhere around the
shores of the Caribbean. Indeed the one instance of United States
intervention that, after Panama, most aroused G6mez's ire was
one that left-wing anti-Americanists never mentioned at all: name-
ly, the alleged intervention of the United States in Mexico in
favor of the Mexican revolutionary government. Since the days of
Dwight Morrow, he felt, the United States had been openly giving
comfort to an anti-Christian and socialistic regime that was cruelly
suppressing the real Mexico-the Catholic and traditional Mexico.
Moreover, G6mez considered this to be just one aspect of a
longstanding tendency on the part of the United States to oppose
and undermine the forces of Hispanic, Catholic tradition in Latin
Thus, in the final analysis, G6mez's distrust and dislike of the
United States derived from what he felt was an unbridgeable
difference in cultural values between Latin America on the one

3. Colombia Nacionalista (Medellin), May 26, 1939.
4. See below, pp. 88, 89-90, 96-97, 98-99 for further discussion of the
attitude of G6mez and others toward both the banana and petroleum industries.
5. Felipe Antonio Molina, Laureano Gomez, historic de una rebeldia
(Bogota, 1940), pp. 216-20.
6. Braden to Secretary of State, April 27, 1939, DS 821.00/1272.

The Good Neighbor Policy and Colombian Politics 27
hand and "Saxo-America," as he often called it, on the other.
"Saxo-America" was not only Protestant but wholeheartedly ma-
terialistic; Latin America was Catholic and was more responsive to
things of the spirit. This analysis, scarcely original with G6mez,
was also expressed by other Colombians of different political lean-
ings, such as the right-wing Liberal Juan Lozano y Lozano (direc-
tor of La Razon),7 whose unswervingly pro-democratic and anti-
totalitarian convictions were never seriously called into question.
Ne vertleless, Gomez proclaimed the thesis of United States ma-
terialism versus Latin American spirituality on repeated occasions
and with obvious conviction. He insisted, with somewhat less con-
viction no doubt, that it did not make him anti-American, that he
still found much to admire in the United States. He merely felt that
cooperation between Latin America and the United States could
only be in areas of concrete mutual interest, on a basis of mutual
respect, with nothing to be gained by pretending that there was a
general affinity of values and aspirations which in fact did not exist.
For, culturally, Colombia's true ties were with Europe, not with
the United States-and especially with southern Europe. Gomez
saw in Germany the land of Martin Luther as well as of Adolf
Hitler, and he asserted that England still had accounts to settle
arising from Henry VIII's break with Rome and Elizabeth I's
vendetta against the Spain of Philip II. As for the French, the
France that he admired, like the Mexico he admired, was the one
currently eclipsed by a revolutionary tradition he deplored.
In his approach to world affairs, then, Laureano G6mez was
influenced more bv dislikes than by likes. This trait led him as
often as not to balance any criticism of the Axis dictatorships with
a matching criticism of the western European powers or of the
United States, and the result was to reinforce the isolationist ten-
dency naturally stemming from his primary absorption in Colom-
bian domestic politics. At the same time, he was prepared to
tolerate a considerable diversity of outlook on international affairs
within Conservative ranks, and certainly there was in this respect
no dull uniformity to be found in the pages of El Siglo. The latter
used the German Transocean news service (alongside the United
Press), and its own foreign news commentator. "Americo Latino"
was both persistently critical of the United States and generally
understanding of the Axis viewpoint. El Siglo's women's page

7. Juan Lozano y Lozano, "Explicaci6n de Colombia," R., Oct. 3, 1939.


could gushingly proclaim, "Adolf Hitler Also Has Good Taste,"
apropos the design and furnishings of his Berchtesgaden retreat.8
The paper characteristically minimized the incident leading to the
withdrawal of the Colombian minister-designate from Berlin by
suggesting that it was due at least in part to the natural resent-
ment kindled in Germany by Colombia's undiplomatic official hos-
tility. Yet on that same occasion even "Americo Latino" had to
agree that Colombia's protest against the arbitrary detention of a
foreign diplomat was technically justified,9 and on still other occa-
sions-though certainly not day in and day out-the editorial col-
umns of El Siglo took a vigorous anti-Nazi line. An example of
the latter was the editorial which appeared early in 1939 under
the odd title "The Limitless Field of Senselessness" ("El campo
ilimite de la insensatez"), and which undoubtedly reflected the
thinking at that point of Gomez himself. It flatly denied that the
basic conflict on the world scene was between Nazi-Fascism and
Communism; it was between Christianity, with Catholicism in the
forefront, and the "pagan and materialist" outlook on life which
was a common bond of both Nazism and Communism. "If Russia
has been the principal field of battle and of defeat of the Chris-
tian idea by the Communist enemy, Germany is the same [with
respect to] the other enemy, paganism." The editorial then went
on to list reasons for the irreconcilable opposition of Nazism to
Catholicism and to give horrible examples of anti-Christian propa-
ganda by Nazi spokesmen.10
With a few minor changes, an editorial such as that could just as
well have appeared in a moderate or right-wing Liberal newspaper.
Even so, one important difference between El Siglo's style of anti-
Nazism and Liberal anti-Nazism was that the Conservative organ
and its publisher Laureano G6mez did not necessarily like the
United States any more simply because they disliked Nazism.
Thus Ambassador Braden, after reaching Bogota, expressed con-
cern over El Siglo's general attitude, and as soon as possible he
sought the opportunity to meet G6mez personally and see what, if
anything, could be done to improve the situation. He arranged an
interview with the prior knowledge and approval of President
Santos, and in the course of it made reference to the unfriendliness
of the newspaper, and especially of "Americo Latino." To this

8. S., Feb. 23, 1939.
9. S., Nov. 26, 1938.
10. S., Feb. 24, 1939.

The Good Neighbor Policy and Colombian Politics 29
G6mez predictably replied that neither he nor El Siglo were
anti-American. He assured the Ambassador that Conservatives ad-
mired the United States as "the one perfect democracy," but that
they felt the Latin and Anglo-Saxon cultures should develop along
parallel paths rather than sharing the same path. He also made
clear to Braden his resentment of United States policy toward
Mexico. But the meeting ended on a friendly note, and it set a
precedent for further direct attempts of the United States Embassy
to influence G6mez.11
Though Gomez's newspaper continued to show certain hostile
overtones and undertones, the harshest comments it contained
about the United States were not as bad as the worst it had to
say (on rare special occasions) about Nazi Germany. In the last
months before the outbreak of war, the common denominator of
opinions expressed in El Siglo about the world crisis was simply
that it was no direct concern of Colombia. El Siglo held that Latin
America was not really threatened-nor, in fact, was the United
States, whose government agitated against the Axis to bolster its
political standing at home and to advance its material interests in
Latin America, camouflaging economic rivalry with ideological ar-
guments. El Siglo observed that this same rivalry could prove only
beneficial to Latin Americans, the implication being that they
should play off one antagonist against the other in order to extract
better terms for themselves.12 Conservative representatives did, of
course, give solid backing to the August, 1939, vote of confidence
in President Santos's inter-American policy,13 and this degree of
party unity could only have been achieved with the concurrence
of Laureano Gomez; but it is worth noting that the Conser\ati\es
in general, and El Siglo in particular, tended to place a strict
interpretation on that vote. They related it above all to the Presi-
dent's self-evident proposition that Colombia could not permit her
territory to be used for hostile acts against the Panama Canal, and
insofar as they embraced inter-American solidarity, they chose to
equate it at the present juncture with a common intention to
preserve neutrality vis-a-vis European struggles.14

11. Braden to Secretary of State, April 27, 1939, DS 821.00/1272.
12. See, e.g., Nemesio Garcia Naranjo, "La agitaci6n belica en los
EE.UU.," S., June 11, 1939, and editorial, S., Aug. 17, 1939. An interpretation
of U.S. motives in economic terms was also offered by Lozano (R., Oct. 3,
13. Above, p. 16.
14. See, e.g., "Cosas del regimen," S., Aug. 30, 1939.

The fragile structure of bipartisanship in foreign policy was
broken when Laureano G6mez proceeded to denounce the Dec-
laration of Panama as incompatible with the very principle of
strict neutrality that it was supposed to maintain. Using the Colom-
bian Senate, of which he was a member, as his primary forum, he
charged that the neutrality zone established at Panama was a
wholly unwarranted expansion of the concept of territorial waters
which seemingly made it inevitable for Colombia to fall into the
maelstrom of the European war. The war itself, he explained in
rather muddled fashion, was just one more episode in the long
conflict between northern and southern Europe; it was also one
more expression of a prevailing modern-day materialism which
would not be cured simply with the removal of a Hitler or a Stalin;
and it was sure to be a long war, engulfing more and more peoples
of the world as time went on. Colombia's only safe course under
such circumstances was to "remain in a neutrality without quali-
fications." Yet under the Panama Declaration the presence of bellig-
erent warships "hundreds of miles out at sea" could drag Colombia
into the struggle. Worse than that, Colombia, though committed by
the Declaration either to prevent or to punish an infraction of the
neutrality zone, did not have the military resources to do so. Thus
what the Declaration really meant, he claimed, was that Colombia
placed her own territory at the disposition of the United States for
use in enforcing its terms: "The day in which a German ship or a
Japanese ship, or a ship of any nationality, decides to do anything,
at a certain distance from the Canal of Panama, which we lost, it
offends us! And we have to come to the defense of that which we
lost, which is no longer ours, and as we have no means of doing so,
we shall hand over our ports, we must hand over our air so that
the Americans may . do us the favor of defending what is
theirs ... ."15
G6mez was not content with assailing the terms of the Declara-
tion. He also accused the Colombian administration of assuming
commitments for which it lacked constitutional authority, behind
the back of Congress. Having given to understand that it was going
to Panama to adopt measures for the assurance of neutrality, it
had, he said, purely on its own initiative bound Colombia to a
far-reaching and basically unneutral agreement which amounted

15. S., Dec. 6, 1939.

The Good Neighbor Policy and Colombian Politics 31
to a "real treaty of alliance"-something that. under the Colombian
constitution, required Congressional approval. All this, G6mez
concluded, formed part of an effort to "destroy the Congress";
it meant the "abolition of democracy."'16
The official rebuttal to G6mez's charges, delivered in the Senate
chamber by Foreign Minister Luis L6pez de Mesa, correctly
pointed out that G6mez grossly exaggerated the scope of what
had been done at Panama. Colombia was not committed to any
specific military action in case a German or Japanese warship en-
gaged in "belligerent activities" within a certain distance of her
coasts, much less to turn over Colombian bases to the United States
for use in the defense of the Canal; by the Panama Declaration,
Colombia was at most committed to "consult" with other American
republics on violations of the neutrality zone, and L6pez de NMesa
held that this pledge was not unreasonable in itself nor was it in
the nature of a treaty obligation.17 He did not, however, convince
Laureano Gomez. On the contrary, the statements of the Con-
servative leader in the Panama debate foreshadowed some even
harsher criticism of Santos's inter-American policy that he was to
offer later.
Even while Congress debated the Panama Conference, it was
also considering a request from the Executive for extraordinary
faculties in economic and financial matters to cope with the effects
of the European war. The faculties were voted as requested on
December 15, 1939, to expire on July 20 of the following year.18
They were supported by a number of moderate Conservatives such
as Senator Francisco de Paula Perez," an antioqueio of the "Polar
Star" tradition and a lawyer for the Tropical Oil Company.2' They
were bitterly opposed by G6mez,"2 who thus expressed his lack of
confidence in the administration in a field which had important
foreign-policy ramifications. One such ramification was brought out
by G6mez himself when he asserted that the same ally which might
require Colombian collaboration in implementing the Declaration
of Panama-i.e., the United States--was pressing Colombia to
"accept money on conditions which we do not know and which the
government does not want us to know, because it demands that we

16. Ibid.
17. lemRels (1940), pp. x-xxix.
18. Leyes (July-Dec., 1939), pp. 125-27.
19. S., Dec. 14, 1939.
20. Colombia acionali.sta, March 10, 1939.
21. S., Dec. 14, 1939.


delegate to it all the powers to negotiate. . "22 Though he did not
make the point explicitly, his remarks could easily be interpreted
to mean that the surrender of Colombian sovereignty, as at Pana-
ma, was being purchased by the offer of new United States credits.

During the first months of 1940 no new issues of real importance
arose to trouble relations between Colombia and the United States.
Financial negotiations already in progress between the two coun-
tries continued without interruption despite G6mez's recent in-
sinuations on this score, and finally began to yield concrete results
in the form of specific arrangements both for the resumption of
service on old debts and for the granting of new credits.23 Mili-
tary cooperation also proceeded for the most part uneventfully,
although a minor controversy arose over the granting by Colombia
of permission for the United States naval tender Sandpiper to be
based at Tumaco while supporting two hydroplanes that were
engaged-at the invitation of Ecuador-in an aerial survey of the
Ecuadoran coastline.24 El Siglo tried to portray this small courtesy
in sinister terms.25 However, by the time the Sandpiper issue came
to the fore, in May, 1940, anything happening at Tumaco was
easily overshadowed by news of the German spring offensive in
western Europe.
None other than "Americo Latino" saw fit to express his personal
preference, as of May 25, 1940, for the cause of the embattled
western allies, "which is the defense of Christian civilization."26
Presumably Laureano G6mez felt the same way, if he really had
to make a choice. But when the initial German successes aroused
new fears in the United States for the security of the hemisphere,
and these fears in turn caused Washington lawmakers to expedite
a measure for the supplying of defense equipment by the United
States to Latin American countries, G6mez's newspaper was in-
stinctively suspicious. Denying that there was any real danger of
European aggression against Latin America, El Siglo stated in one
of its blunter editorials: "The danger is elsewhere. The danger is in

22. S., Dec. 6, 1939.
23. Below, pp. 73-74.
24. L., May 29, 1940.
25. Braden to Secretary of State, May 31, 1940, DS 821.00N/63.
26. S., May 25, 1940.

The Good Ncilghbor Policy and Colombian Politics 33
initiatives like that of the American Senate, behind whose project
an interventionist design pregnant with menace for our sovereignty
raises its head."27
Such an outburst could be called neutralist or anti-American,
but not in itself pro-Nazi. And Colombian sentiment generally,
even in the face of the continued German triumphs that culminated
in the fall of France, remained pro-Allied. Nevertheless, Ambassa-
dor Braden believed by mid-June. 1940, that he could detect a
certain change in Colombian opinions. On the one hand, there
had been a "surprising" increase in pro-Nazi feeling; on the other,
friends of the democracies were sorely disheartened and would,
he feared, be increasingly reluctant to take a strong stand.28
Undoubtedly some Colombians did decide on the basis of Ger-
man military successes that there must be merit after all in Nazi
ideology, but in other cases the upsurge in pro-Nazism consisted
only of heightened efforts by the hard core of German propagan-
dists and sympathizers already active in the field. One example of
the latter was a flurry of clandestine flysheets urging Colombia to
climb aboard the Axis bandwagon and thereby get back long-lost
Panama.29 In still other cases, xwhat occurred was not so much an
increase in positive sympathy for the Axis cause as mere accep-
tance of the likelihood of a final Axis victory joined with a measure
of gloating over the present discomfiture of anti-clerical France
and arrogant Britain. The weekly Veritas, published under the
auspices of the Dominican fathers at Chiquinquira, for two issues
in a row depicted Hitler as a necessary instrument used by divine
providence for the punishment of the ungodly. It aptly compared
him in this connection, and with no apparent thought of flattery,
to Nebuchadnezzar.30
Colombia's foremost Francophile, President Santos himself, put a
somewhat different interpretation on recent events, but he was
nevertheless badly shaken; he spoke privately to Braden of the
"end of the British empire and France beaten to her knees."
Foreign Minister L6pez de Mesa, on his part, informed the Am-
bassador that Colombia despite her democratic sympathies would
have to adjust herself to the material consequences of an eventual

27. S., May 31, 1940. On the "Senate project" to which reference is made,
cf. N.Y.T., Mlay 29, 1940, 14:4.
28. Braden to Secretary of State, June 11, 1940, FR (1940), V, 60-61.
29. N.Y.T., June 16, 1940, 28:2.
30. Veritas, June 19 and 26, 1940.

German victory.31 Growing official circumspection was clearly re-
flected in a decree-issued immediately on the heels of an anti-
Italian riot in Bogota-flatly prohibiting demonstrations for or
against any of the belligerents.32 Even so, the official mood was
hardly one of panic. The Santos administration did not seriously
expect that even a victorious Nazi regime would unleash its armed
forces on Latin America; it would concentrate instead on economic
penetration and propaganda.33 Nor did Santos waver in his basic
commitment to collaboration with the United States. Thus mili-
tary cooperation continued and was actually intensified;34 and
Colombia's delegation to the Second Consultative Meeting of
American Foreign Ministers, which convened at Havana in July,
1940, duly gave its approval to the resulting agreements, including
both the Act of Havana Concerning the Provisional Administration
of European Colonies or Possessions in the Americas and the
Declaration of Reciprocal Assistance and Cooperation for the De-
fense of the Nations of the Americas. The first of these provided
for occupation of the territories in question if there was danger
that they might change hands as a result of the European struggle.
The second made clear that aggression by a non-American power
against any one of the American nations would be regarded as an
aggression against all. It was the first agreement of its kind to be
directed specifically against aggression from outside the hemi-
sphere, although it did not impose any binding obligation for mili-
tary response but only for consultation.35

The Havana agreements, unlike the Declaration of Panama,
were submitted to the Colombian Congress for approval, but that
was not enough to satisfy Senator Laureano G6mez. It merely
spared him the necessity of rising to the defense of Congressional
prerogative and allowed him to concentrate his energy on sub-
stantive questions. The problem of the European possessions treated

31. Braden to Secretary of State, June 11, 1940, FR (1940), V, 61. The
quotation from Santos is Braden's paraphrase.
32. N.Y.T., June 11, 1940, 2:6, and June 12, 1940, 8:3.
33. Braden to Secretary of State, June 21, 1940, FR (1940), V, 67-70.
34. Below, pp. 50-56.
35. World Peace Foundation, Documents on American Foreign Relations,
July 1939-June 1940, pp. 93-95, and Documents on American Foreign Re-
lations, July 1940-June 1941 (Boston, 1941), p. 76.

The Good Ncighbor Policy and Colombian Politics 35
in the Act of Havana he considered none of Colombia's business:
those possessions had been piratically stolen from Spain back in the
colonial era, and if some other power (which G6mez did not
bother to specify) should now forcibly take away the loot from
the original thieves-"if they pass from one exploiter to another
exploiter"-the basic situation would not have changed. The pro-
vision that such territories, if occupied by the American nations,
should be held only until they could be returned to their present
owners or else given their independence did not sway his opinion
in the slightest. Preventive occupation could be justified only with
a view to returning them to the original owner or to that owner's
successor states. Gomez thus had warm praise for Argentina's
official reservation to the Act of Havana specifying her claim to the
Falkland Islands, and he suggested that Curacao, Aruba, and Trini-
dad should all have been earmarked for return to Venezuela.
G6mez was equally antagonistic toward the Declaration of
Reciprocal Assistance and, more generally, the whole concept of
mutual defense against extra-continental aggression. He did not
renege on the Conservatives' earlier assent to the principle that
Colombian territory must not be used as a staging area for an
attack on the Panama Canal, but he flatly denied that Colombia
had either a legal or a moral commitment to go beyond this in
helping to repel an attack on the Canal or on other American
territory from outside the hemisphere. Whereas he had previously
ascribed a more sweeping character to the Declaration of Panama
than it actually possessed, he now placed a very strict interpreta-
tion on all existing treaties that had to do with the peace of the
hemisphere, and he was thoroughly unimpressed with the argu-
ment of L6pez de Mlesa, who informed the Senate that even
before the Havana meeting Colombia already had a "spiritual"
obligation, on the basis of both formal agreements and much else
besides, to defend the hemisphere in general and the Panama
Canal in particular against external aggression. The Foreign Minis-
ter did not greatly help matters when he sought to elaborate his
remark by suggesting that Colombia was required, in effect, to
offer only "spiritual defense," meaning evidently some kind of moral
support or collaboration that stopped short of military action. In-
deed L6pez de Mesa's contribution to the debate on the Havana
agreements was pounced on by G6mez and other Conservatives
as proof of the dangerous fuzziness of the administration's thinking


and thus adequate reason for lack of confidence in its foreign
In any case, G6mez insisted that the Declaration of Reciprocal
Assistance adopted at Havana was framed for the benefit of just
one American republic, the United States. None of the other
republics was in any danger of extra-continental attack, and if the
United States was in such danger-as he admitted to be the case-
it was because of that nation's willfully unneutral posture since the
start of the European conflict. As evidence of the latter he cited,
among other things, the special relationship existing between the
United States and Canada, a full-scale belligerent. And he posed
the question: "Must we feel automatically aggressed against and
suffer the consequences of what the United States did without
consulting us or advising us? Why that? What logic has that?"37
G6mez did have some logic on his side, especially if one ac-
cepted his underlying assumption that an absolute neutrality was
both desirable and possible. In this connection, his solution to the
defense of the Panama Canal was to internationalize and neutralize
it. He was perhaps less logical, or at least a good bit less lucid, in
the long tirade against the concept of inter-American solidarity
which accompanied his analysis of the Havana agreements on the
floor of the Senate. Here he rehearsed the familiar theme of Anglo-
Saxon materialism versus Latin American spirituality and asserted
that in the realm of culture the United States had as yet produced
no one to equal Colombia's own Miguel Antonio Caro and Rufino
Jose Cuervo. To demonstrate the basic antagonism between the
United States and Latin America, he gave a confused and in
places fanciful account of United States efforts to undermine the
moral fiber of Mexico from the time she became independent to
the present, culminating in the encouragement given by Yankee am-
bassadors to the campaign of religious persecution (not to mention
sexual education in the public schools) of the modern Mexican
Revolution.38 He had, however, struck a number of responsive
chords among rank-and-file Conservatives. A veritable torrent of
congratulatory telegrams poured into the offices of El Siglo, includ-
ing one that read, "Si Cristo senial6 camino salvaci6n almas,
usted sus discursos senado sefial6 camino salvaci6n patria . ."39
36. '., Aug. 13 and 14, 1940; S., Aug. 13, 14, 20, and 21, 1940; Anales
del Senado, Aug. 26, 1940.
37. S., Aug. 21, 1940.
38. S., Aug. 20 and 21, 1940.
39. S., Sept. 9, 1940.

The Good Neighbor Policy and Colombian Politics 37
All this, moreover, formed part of a protracted Senate debate
on foreign policy in which some other Conservatives outdid Gomez
in the tone of their remarks. One of the most extreme expressions
of anti-Americanism came from Senator (and later President)
Guillermo Leon Valencia, who offered his own views on United
States materialism, giving vent in the process to the common pre-
occupation of Conservative polemicists with Yankee "sanitary serv-
ices," and ended by declaring: "We do not come to maintain that
it is time to surrender to triumphant Nazism, but I would still
say . that we have more points of contact with a political
organization that wants at a given moment to organize the world
so that all may have the same opportunities than with another
which has considered that the world should be divided into ex-
ploiters and exploited; from this point of view we have more hope
with triumphant Germany, that she may carry out a revolution of
justice, than in the United States, that they may continue seeing
in the 'dollar' the symbol [cifra] and the highest compendium of
their civilization and their law'."40
Administration supporters, meanwhile, dutifully defended the
conduct of Colombian foreign policy, including the official commit-
ment to inter-American solidarity. But the administration's chosen
strategy was apparently to let the Conservatives talk themselves
out,41 so that the opposition was allowed, in effect, to keep the
initiative in the debate. At the same time, discussion of the Havana
agreements became thoroughly entangled with the debate that
raged concurrently on a request that Santos had presented to
Congress to authorize the borrowing of 30 million pesos for de-
fense.42 The primary object was to permit the acquisition of mili-
tary equipment on credit in the United States, and Conservatives
were not slow to ask whether that much money was really needed
for a policy of "spiritual defense." The proposal seemed a virtual
admission that Colombia had in practice become committed to
more than "spiritual" cooperation, or else it was nothing but a
senseless extravagance. Either way, it was bitterly assailed by
minority spokesmen both in Congress and in the press. To El
Siglo it was part and parcel of a contemptible "policy of docility
40. S., Aug. 20, 1940. For a slightly different version, see Anales del
Senado, Aug. 26, 1940.
41. Braden to Secretary of State, Sept. 15, 1940, FR (1940), V, 80.
42. Anales de la Camara de Representantes, July 31, 1940. The Colombian
peso, throughout the period covered by this study, was worth approximately
57 U.S. cents.


and servitude" whose logical outcome was to bind Colombia un-
restrictedly to the defense of the Panama Canal, which in turn
meant the defense of the United States, the very "power that
mutilated her territory."43 Or in the words of Representative Silvio
Villegas-who by now had again found common ground with G6-
mez and the bulk of the Conservative Party-there was "no danger,
no prospect of a German invasion against America. I believe that
is a fable which is being exploited with expansionist ends on the
part of the United States, and with mercantile and economic
ends."44 As explained by still another Conservative Congressman,
the "economic ends" naturally involved the desire of the United
States to unload a quantity of "scrap iron" in the form of obsolete
arms on Colombia.45
One further complication at this point was the fact that the
Liberal Party itself was becoming bogged down in dissension be-
tween the followers of Santos and those of former President L6pez,
who were already maneuvering to obtain L6pez's re-election to
the presidency in 1942. L6pez and his chief supporters were not
opposed to hemispheric solidarity and cooperation with the United
States, although they were critical of the defense-loan measure
because they felt that Colombia's own resources and any financial
assistance from the United States should be devoted primarily to
internal economic development. Mainly, the lopistas were moved
to harass the administration for reasons of domestic policy and
for purely tactical considerations; but still their attitude was one
more obstacle to forceful executive leadership. In spite of this, the
loan measure-which at least had the eager backing of the Colom-
bian military-did become law before Congress adjourned. In its
final form it even provided that the amount of indebtedness
incurred could go as high as 50 million pesos.46 One lopista Senator

43. S., Sept. 7, 1940, and passim.
44. S., Sept. 7, 1940.
45. S., Sept. 5, 1940, containing the remarks of Rep. Rafael Azula
46. Revista Javeriana, XIV (Oct., 1940), "Suplemento," 178; Braden to
Secretary of State, Oct. 24, 1940, DS 821.00/1301, and Oct. 28, 1940, DS
821.51/2553; Leyes (July-Dec., 1940), p. 108. The reference made to the atti-
tude of the military should not be taken as necessarily explaining the passage
of the measure, since the influence of the military in Colombia was definitely
limited at this point; Santos's desire to keep the generals and colonels both
occupied and happy may, however, have induced him to work more vigorously
for the defense measure than for the Havana agreements. (For reasons that
will be noted in the next chapter, the measure was never actually used.)

The Good Neighbor Policy and Colombian Politics 39
had tried to insert an amendment earmarking part of the proceeds
for agricultural development, but his proposal did not prosper, and
in the end the Lopez bloc went along with the administration.47 The
Havana agreements were less fortunate. They were still pending
when Congress closed its sessions for the year and were formally
ratified only in 1941.48
One thing both bands of Liberals managed to agree upon was
that the Conservatives had turned obstructionist in the field of
international relations under the influence of news from Europe.
The Conservative vote of confidence in Santos's inter-American
policy in August, 1939, was contrasted with the Conservative per-
formance in Congress one year later, and it seemed obvious (to
Liberals) that Hitler's successes accounted for the difference.49
This interpretation conveniently overlooked G6mez's campaign
against the Declaration of Panama, waged several months before
the fall of France; but the United States Embassy, among others,
tended to share it.50 Ambassador Braden even began frankly at-
tributing pro-Nazi sympathies to Laureano Gomez-as many of
his harsher critics had been doing already-based not only on his
Senate remarks and the editorial policy of El Siglo but on his
observed association with the German and Spanish ministers and
other undesirable elements.51
The Conservative leader had not made any overt profession of
support for the Axis cause; such professions were still generally
lacking in Colombia. Indeed the United States still had numerous
friends in the Conservative camp, particularly among its elder
statesmen. As Braden expressed the matter, with perhaps some
slight exaggeration, "upper-class intelligent Conservatives differ
with Gomez but the party masses appear to be following him
enthusiastically."52 Those pro-American Conservative oligarchs sim-
ply preferred at the moment not to tangle with Laureano and
thus kept generally silent all through the middle and latter part of

47. S., Jan. 26, 1941, which comments sarcastically on the inconsistencies
of the L6pez faction.
48. Leyes (July-Dec., 1941), pp. 31-42.
49. This point was made, e.g., in a long manifesto of the "Liberal
majorities" of both houses of Congress at the beginning of the new session in
July, 1940 (L., July 24, 1940). What happened later in the session merely
strengthened the Liberals' conviction.
50. Braden to Secretary of State, March 26, 1941, DS 821.00/1319.
51. See, e.g., dispatches cited in notes 46 and 50 above, and Braden to
Welles, Oct. 9, 1941, DS 821.00/1369.
52. Braden to Secretary of State, Sept. 15, 1940, FR (1940), V, 81.


1940 as anti-British and anti-American outbursts became monoto-
nously frequent both in El Siglo and in such departmental Con-
servative organs as El Deber of Bucaramanga and El Figaro of
Cartagena. As the year drew to a close, the air was even filled
with rumors of a possible Conservative coup to be carried out with
the backing of the European dictatorships,53 and whether G6mez
had really turned Nazi or not, there is no reason to doubt that he
would have felt justified in thus following the example of Franco.
He was prepared to deal with either side in the world struggle, or
with both simultaneously, if he could thereby advance his domestic
political objectives. But conditions were not quite as favorable as
in Spain, no revolt was attempted, and the precise measure of
truth behind the rumors has not been established.
To be sure, the mere fact that such reports were circulating, and
could be taken seriously, was one more indication of the continuing
impact on Colombia of the German conquest of western Europe.
There were likewise assorted hints and suggestions floating about
to the effect that the Third Reich would soon be active again as a
market for Colombian coffee and a source of needed imports. One
rumor of the latter type, duly picked up in the Conservative press,
had it that Germany was offering to buy up all Colombia's coffee
stocks in return for payment in gold, military equipment, and other
merchandise. Supposedly German goods would either be shipped
directly across the Atlantic in huge transport planes or else sent by
way of Spain or Russia.54 The moral to be drawn from this sort of
thing, obviously, was that Germany was very much a force to be
reckoned with-and that Colombia would therefore do well not to
tie herself exclusively and irrevocably to the United States.

As already indicated, Laureano Gomez and his Conservative
legions were not alone in creating difficulties for the Santos ad-
ministration in the field of foreign policy. Alfonso L6pez was also
a problem. L6pez was not fundamentally anti-American, much
less pro-Nazi, but he and his adherents were anti-Santos, and they
did not treat the conduct of foreign affairs as any kind of privileged
sanctuary. Their criticism concerned details of execution more than
53. James H. Wright, Charge ad interim, to Secretary of State, Oct. 3,
1940, DS 821.00/1297; Braden to Secretary of State, Dec. 19, 1940, DS
54. Braden to Secretary of State, June 21, 1940, FR (1940), V, 67;
N.Y.T., Aug. 16, 1940, 5:3; El Deber (Bucaramanga), Oct. 3, 1940.

The Good Neighbor Policy and Colombian Politics 41
guiding objectives of policy and therefore differed qualitatively
(as well as quantitatively) from that of G6mez. Nevertheless, it
seriously troubled the administration, especially as it formed an
integral part of a broader struggle for control of the ruling Liberal
For some time lopista opposition to Santos's foreign policy was
little more than an undercurrent, easily overshadowed by all-out
Conservative attacks. It was clearly formulated, and became a
central topic of political discussion, only in January, 1941, after
L6pez himself returned to Colombia from an extended visit to
the United States. The former president then explained his own
position in a number of both major and minor addresses, of which
the most significant was delivered to a political gathering at the
Hotel Granada in Bogota on January 24. The Hotel Granada
speech was not concerned exclusively with foreign policy, but
L6pez's remarks on that score attracted a good share of the result-
ing attention.
In it L6pez sought to claim for himself a sensible middle ground
between two extreme positions which he rejected and which he
obviously meant to attribute to the Santos administration and the
Conservative opposition respectively: "to hand over the fate of
Colombia tied to the fate of the United States . or to practice
a morning gymnastics of suspicion, of rancor, of distrust, of hate."55
There was no necessary contradiction, he said, between Colombian
and United States interests. However. he complained that Colom-
bia, and the Latin American countries generally, had been leaving
the initiative to the United States in their mutual relations, with
the result that their own needs and viewpoints did not receive
adequate consideration. Not only this, but the desirable goal of
continental solidarity was being pursued by "eminently dangerous
procedures." L6pez explained that by this he meant the Latin
American nations were "acquiring very serious and imprecise obli-
gations" on the basis of ad hoc decisions hastily arrived at in the
face of each new crisis, and in response to each new fait accompli
of United States policy which was presented to the sister republics
for their endorsement.
The latter analysis was remarkably similar to that of Laureano
G6mez, but L6pez offered a different solution. Since he rejected
a retreat into isolation, he proposed the substitution of a "perma-
55. L., Jan. 25, 1941. Subsequent quotations from, and references to, the
Hotel Granada speech are based on this same source.

nent" for an "ad hoc jurisprudence" in the field of inter-American
security. Ideally this could be done in the form of his own pet
idea of an American League of Nations. But one way or another
it was necessary to have unambiguous agreements drawn up in
advance for dealing, say, with the problem of extra-continental
aggression. What constituted such aggression should be unmistak-
ably defined, and the applicable sanctions clearly specified-
whether they were to be enforced "jointly or by an explicit dele-
gation." At the same time, L6pez complained that existing ad hoc
arrangements were heavily weighted on the side of "political soli-
darity," which was of interest to the United States, as against the
"economic cooperation" which would primarily benefit Latin Amer-
ica. Though the United States had promised as far back as the
Panama conference that the two would be inseparable and of equal
importance, the Latin Americans had not seen to it that the
promise was kept.
Turning to the specific case of Colombia, L6pez expressed
strong reservations about the recently approved defense-loan pro-
ject that "does not guarantee defense against the type of attack
which is contemplated and which is declared possible as an argu-
ment to support its necessity." In effect, it would be quite inade-
quate to cope with a major threat of aggression; and no such
measure should have been adopted without first determining realis-
tically what Colombia's capabilities were and whether there might
be other means of defense, "in addition to the purely military," for
which external assistance could also be obtained. In this con-
nection, it was the understanding of the United States Embassy
that L6pez personally felt Colombia should grant military bases
to the United States, instead of pretending to shoulder the main
burden of her own defense, and in return get financial compensa-
tion that could be used for strengthening the national economy.56
For political reasons such a course could not be advocated publicly,
but L6pez still made clear his belief that the Santos administra-
tion was wasting a golden opportunity to bargain for economic aid
in its political-military dealings with the United States. He made
no reference to the one economic loan already granted to Colom-
bia the previous year by the Export-Import Bank, though he ob-
viously considered it inadequate. He did mention the coffee agree-
ment adopted in November, 1940, by the Latin American producing
nations in cooperation with the United States for the purpose of
56. Braden to Secretary of State, Feb. 3, 1941, DS 821.00/1309.

The Good Neighbor Policy and Colombian Politics 43
restricting exports and thus supporting the price (which had fallen
drastically during the first year of the European war).57 However,
he used it to illustrate the basic inadequacy of Colombian policy,
for it was designed only to deal with a passing emergency, whereas
Colombia should be vigorously seeking every means to promote
diversification and industrial development as long-range solutions to
the nation's condition of economic dependence and impoverish-
The Hotel Granada speech of Alfonso L6pez provoked an im-
mediate counterattack by the administration, whose principal
spokesman for the occasion was Finance Minister Carlos Lleras
Restrepo. He was the minister who had borne the brunt of L6pez's
criticisms, for he was the principal economic and financial adviser
to President Santos and had been directly involved in some of the
most important Colombian negotiations with the United States.
Without going into a detailed defense of political and military
cooperation per se, Lleras Restrepo sought to demonstrate that
Colombia had in fact obtained an adequate economic quid pro
quo, citing not only the coffee agreement and the Export-Import
Bank loan but also the moral support given by the United States
government, over the protest of the Foreign Bondholders Protec-
tive Council, to the recent settlement of Colombia's defaulted
dollar loans of 1927 and 1928. He also pointed out, reasonably
enough, that there was a practical limit to the amount of economic
assistance that Colombia could efficiently use at a given moment,
or conveniently pay back later.58
The L6pez faction, in its turn, sought to demonstrate that the
accomplishments listed by Lleras Restrepo were as much-if not
more-to the benefit of the United States as to that of Colombia.
Coffee stabilization served to restrict the upward as well as down-
ward fluctuation of the market price; the new credits simply went
to pay for United States goods; etc., etc.59 Particularly among the
more left-leaning L6pez adherents, there was a discernible anti-
American tone to the debate, while the lopista attack in general
tended to make Santos more fearful than ever of appearing sub-
servient to the United States and thus contributed to the air of
indecisiveness often displayed by his administration.60 However,
57. Below, pp. 83-86.
58. L., Jan. 30, 1941; below, pp. 76-77.
59. See especially L., March 9, 1941, for an analysis by Jorge Zalamea,
formerly private secretary to L6pez.
60. Braden to Secretary of State, March 10, 1941, DS 821.00/1317.


the Santos-L6pez argument did not long occupy the center of
the stage. Santos could not legally be a candidate to succeed him-
self for the next presidential term, and no other potential Liberal
candidate came close to equaling the popular and political
strength of L6pez, which was demonstrated once again by a
strong lopista showing in the Congressional elections of March,
1941.61 Once the logic of this situation became sufficiently clear,
there was an increasing tendency for Liberals to close ranks at least
temporarily in preparation for the coming battle against the Con-
servative foe-in which Alfonso L6pez was to sally forth as
champion of the foreign policy of Eduardo Santos.62

Needless to say, the Conservative foe had been an enthusiastic
observer of the Liberals' intra-party quarrel. Conservative spokes-
men happily pointed out that L6pez was merely repeating criti-
cisms that they had been making all along. They did not, however,
welcome him into the fold of right-thinking patriots, because they
refused to accept his sincerity. L6pez-"Simbolo de la Antipatria"
as he was called in the title of one Siglo editorial63-was the same
man who as president had signed a reciprocal trade treaty with
the United States that was inimical to Colombian producers, who
had been a friend of oil promoters and Wall Street financiers, whose
whole past record, in short, made it impossible to take him seriously
in his present role as defender of Colombian interests. Conserva-
tives also read into certain statements of Lopez (not primarily
those contained in the Hotel Granada speech) a willingness to
bargain away what was left of Colombia's neutrality policy, and
this was further reason to doubt that he was a true ally in the
struggle against United States imperialism.64 Last but not least,
G6mez and other Conservatives had no desire to abet L6pez's
drive for re-election. From their standpoint, regardless of whether
one took foreign policy into consideration, the Santos brand of
Liberalism was a lesser evil.
Nevertheless, the task of commenting on the Liberals' foreign-
policy debate provided Conservative spokesmen with many fine
opportunities to aim insults of their own in the direction of Wash-
61. T., March 17 and 18, 1941.
62. Below, pp. 114-15, 116.
63. S., March 4, 1941.
64. La Patria (Manizales), Jan. 20, 1941; S., Jan. 25 and 26, Feb. 12, and
March 13, 1941.

The Good Neilghbor Policy and Colombian Politics 45
ington. They said little or nothing of substance that they had not
said before, but there were still some eyebrow-raising details. For
example, there was the interview given by Laureano G6mez to
La Patria of Nlanizales, which was also printed in his own news-
paper just two days after Lopez's Hotel Granada speech. The
headline read: "Lopez Returns to the Country Saturated with the
Jewish Propaganda of U.S." The interview actually was not very
interesting for what it said about Ldpez, but in it Gdmez de-
scribed the United States as now openly a belligerent in the Euro-
pean war and bluntly stated. "In Great Britain, as in the United
States, the government is virtually controlled by Semitic elements,
which nourish the conflict." Gomez observed that Hitler's work was
nothing less than "gigantic" and that his greatest contribution had
been the substitution of the "labor standard" for the gold standard,
"which constituted the arm of Semitic oppression in the world."
The Conservative leader added that there was no point in express-
ing opinions about the systems of government of the Axis powers-
each nation picks the system that suits it best, and democracy
would survive even an Axis victory. Indeed there was no danger
of Germany establishing world hegemony, no matter what happen-
ed in Europe, for Japan and America would both prevent it."6
This curious interview revealed Gomez at his worst, as a com-
mentator on world affairs, the general level of discussion in El
Siglo was not quite as bad. It was still possible to find occasional
criticisms of the Axis-or kind words for the United States-in the
newspaper. But these were heavily outweighed by the current
trend of negative thinking, and one can thus imagine the surprise
of habitual readers when they opened the issue of March 2:3, 1941,
and found the lead editorial brimming with Good Neighborliness.
Entitled "The Speech of the American Ambassador," it was a
laudatory comment on a speech just delivered by Braden on the
occasion of an economic fact-finding visit to Colombia by repre-
sentatives of the National Research Council. The "Americo Latino"
column on the same day showed a similar spirit, with friendly
treatment even of the latest in the continuing series of high-level
military visits exchanged between Colombia and the Canal Zone.66
The following day "Americo Latino" was almost rhapsodic: "The

65. S., Jan. 26, 1941.
66. S., March 23, 1941. However, this issue still contained an attack on
"the imperialism of Saxoamerica" in another article by Francisco Jose Fandifio

cause of united America must not perish. On the contrary, today
more than ever, such unity is necessary, because on the great clock
of human destinies the hour of the supremacy of the new continent
has sounded. . [It] is the duty of our hemisphere [to follow]
the white crest of the great republic of the North and [support] it
morally so that it may follow the paths of peace . ."67
There was an interesting story behind this sudden about-face.
For some weeks El Siglo had been feeling the financial pinch of a
steady withdrawal of advertising for such United States products
as Camel cigarettes and Vicks Vapo-Rub. El Siglo also learned
from the Bogota agent of its newsprint supplier-which was an-
other American firm-that the agent's New York office had made
inquiry about the newspaper's supposed pro-Nazi leanings. At the
same time Gomez was aware that there were suspicions held
concerning him at the United States Embassy; and apparently
he and some of his associates decided it was necessary to take
preventive action before a total Yankee quarantine was imposed.
The upshot was a meeting on March 20 between G6mez and his
close collaborator Jose de la Vega (co-founder of El Siglo) and
Braden and one other Embassy official, at the home of a friendly
third party. G6mez took the opportunity to offer some complaints
about Alfonso Lopez and to remind the Ambassador of Lopez's
unfriendly treatment of the United Fruit Company, but the meet-
ing was principally devoted to complaints and denials of allega-
tions in the United States press and elsewhere that he and El Siglo
were pro-Nazi. He expressed surprise that anyone could consider
his Senate speeches anti-American, and he denied having had
dealings with the German and Spanish ministers (which was con-
trary to the observations of the Embassy staff). Braden, on his
part, did not try to conceal the fact that he had his doubts about the
sincerity of G6mez's friendship, but he did deny that El Siglo
had been blacklisted by the United States government. He sug-
gested that the loss of advertising was a natural result of patriotic
American businessmen reading El Siglo and drawing their own
The latter explanation was, of course, somewhat disingenuous,
since probably few responsible officials of American businesses ad-
vertising in El Siglo had ever read a copy of it. As a matter of fact,
Braden himself had submitted a dispatch to the State Department
67. S., March 24, 1941.
68. Braden to Secretary of State, March 26, 1941, DS 821.00/1319.


The Good Ncighbor Policy and Colombian Politics 47
the previous August, commenting on the amount of advertising
revenue derived by El Siglo from United States business sources
either through American advertising agencies (which normally
liked to have Conservative as well as Liberal press coverage) or
through Colombian sales representatives (especially if the latter
happened to be Conservatives themselves). He observed that the
lopista daily El Liberal and the weekly Estampa, by contrast,
seemed to be getting less than their share, despite a friendlier
attitude toward the United States. Braden said he was passing this
information along just in case United States firms might wish to do
something about it;69 and it would be difficult to document a causal
relationship between a dispatch such as this and the cancellations
that ultimately occurred. However, it would be most surprising if
the Ambassador's views on the matter had no effect at all, especially
when he also had excellent personal contacts with the business
community. Nor was El Siglo the only Conservative organ to suffer
loss of American advertising. La Patria of NManizales, whose edi-
torial policy was closely similar, had the same difficulty. To some
extent, at least, so did even El Colombiano of Medellin, the prin-
cipal mouthpiece of the antioqueno Conser\ative establishment,
which had occasionally published anti-American items but could not
in any sense be generally classed as anti-American or pro-Nazi.7
El Colombiano, in fact, was one of the few Conservative organs
to express misgivings about the Franco regime in Spain, precisely
because of the way in which official Hispanism was being allowed
to serve as a vehicle for Nazi-Fascist ideological penetration of
Latin America.71
In any event, the economic pressure of Yankee imperialism was
too much for El Siglo to withstand. Gomez promised Braden that
he would make clear his friendship by changes in editorial policy
and, as already indicated, he was as good as his word. Braden was
not overly impressed, labeling G6mez a "rice convert," but he
felt that good behavior should be rewarded regardless of its moti-
vation and that for the present advertisers might well be en-
couraged to resume patronage of El Siglo. He also found in the
episode confirmation of his view that the Conservatives, if they
should return to power while international conditions were favor-
able to the United States, would offer substantially the same co-

69. Braden to Secretary of State, Aug. 16, 1940, DS 821.00N/137.
70. Keith to Secretary of State, March 29, 1941, DS 821.00/1322.
71. El Colombiano (Medellin), Jan. 10 and 23, 1941.


operation that was being received from the Liberals: plain self-
interest, presumably personal as well as national, would see to it.72
The effect of the Gomez-Braden discussion, and of El Siglo's
difficulties preceding it, did ultimately wear thin and had to be
reinforced by new hints or applications of pressure.73 Moreover,
El Siglo's change in attitude was never one hundred per cent. But
it was appreciable enough to attract widespread notice, and for-
tunately it was still in evidence at the time of the German invasion
of the Soviet Union in June, 1941. Almost on the eve of the in-
vasion, "Americo Latino" was writing that if war should come to the
Western Hemisphere, Latin America would necessarily be on the
side of the United States. "Outside of inter-American solidarity and
even cooperation," he proclaimed, "there is no salvation."74 When
the attack did occur, there was a strong tendency even for stout
anti-Nazis to view the struggle in the East in a very different light
from that in the West. President Santos's brother Enrique, who,
under the pen name "Caliban" in El Tiempo, was the country's
leading political columnist, was among the many Colombians who
regarded the Soviet Union as, if anything, worse than Nazi Germany
and who now expressed a hope that Germany and Russia would
conveniently annihilate each other.75 El Liberal, speaking for the
L6pez faction, indulged the wishful thought that a victory over
Hitler would produce a sharp liberalizing trend within the Soviet
Union, but it still noted editorially that "free men of the world"
would have difficulty accepting the fact that Russia was now their
ally.76 On balance, it was obvious that Hitler's anti-Soviet crusade

72. Braden to Secretary of State, March 26, 1941, DS 821.00/1319. It was
widely understood that El Siglo had received some financial assistance from
German sources (Fluharty, Dance of the Millions, p. 62), but even if
G6mez had wished to rely on regular Nazi handouts to make up for the
loss of American advertising, this was not really a satisfactory solution. As
Braden pointed out, the reputation of being a mere paid propagandist for
the Axis would damage his political influence in Colombia; and Hitler could
hardly have supplied newsprint if that were also cut off.
73. The extreme case, perhaps, was the temporary rejection of an export
permit for newsprint in June, 1942. At just that point, however, the system
for controlling newsprint allocations was still being worked out. After Septem-
ber, 1942, specific allocations within Colombia were made by the Colombian
government, without United States participation. See E., Dec. 15, 1943, for a
copy of El Siglo's rejected application on p. 1, and also Ambassador to Colom-
bia Arthur Bliss Lane to Secretary of State, Dec. 16, 1943, DS 821.00/1640.
74. S., June 16, 1941.
75. T., June 25, 1941. An editorial in the Liberal El Espectador expressed
essentially the same wish (E., June 23, 1941).
76. L., June 22 and 27, 1941.

The Good Neighbor Policy and Colombian Politics 49
had improved his standing even in the Liberal camp,77 and the
same had to be true to a much greater degree among Conserva-
Under these circumstances the reaction of G6mez and his as-
sociates was surprisingly restrained. The first real comment in El
Siglo came from "Americo Latino," who observed that Hitler's
primary motive in attacking Russia was to assure the safety of his
rear while later attacking the British Isles and that talk of "liberat-
ing Europe and the world from Bolshevism is mere propaganda. .. ."
At the same time, he lamented that Communism would derive new
respectability from its status as an ally against Hitler, and in later
columns he gave his opinion that Communism was ultimately a
greater danger than Nazism and that no matter how tawdry
Hitler's motives might be, his fight against the Soviets could not
help but inspire some degree of support.78 Nevertheless, El Siglo's
qualified backing for Hitler in the East (of which "Americo La-
tino's" comments were representative) did not automatically bring
with it a return to the earlier variety of ranting against Anglo-
Saxons. For this result it is probable that the vigilance of Ambas-
sador Braden and the patriotism of Vicks Vapo-Rub executives
both deserve some credit.
77. Braden to Secretary of State, July 2, 1941, FR (1941), VII, 13-14.
78. S., June 26, 27, and 30, 1941.

Defense and Related Matters

THE ASSORTED CONTROVERSIES that raged on the subject of
Colombian foreign policy, as discussed in the preceding
chapter, caused President Santos to weigh his actions care-
fully in dealing with the United States-often too carefully,
in the opinion of United States officials. Yet his excess of caution, in
so far as it did in fact exist, concerned methods and timing rather
than fundamental policy. In practice, even in the face of domestic
criticism, Colombian-United States cooperation proceeded on an
ever wider front.
In the military sphere the period following the fall of France
saw a concerted effort by the United States to multiply and in-
tensify its programs of cooperation with Latin America. In fact
even before the final debacle on the western front in Europe, the
United States had taken the initiative in proposing special bilateral
defense talks with a majority of the Latin American republics,
Colombia included. The purpose of the talks would be to deter-
mine how far the different countries of the hemisphere were pre-
pared to go in common defense efforts in the light of the changed
world situation. A proposal to this effect was presented to the
Colombian Foreign Ministry on May 23, 1940; it was formally

Defense and Related Matters 51
accepted by President Santos the next day.1 United States military
staff officers then came to Bogota in June for a preliminary round
of conversations with Colombian officers, and they found a cordial
reception, but in Colombia as in other Latin American countries
the first talks were mainly concerned with establishing principles
and identifying problem areas. More detailed provisions were left to
be worked out at a second round of staff conversations that took
place only after the conclusion of the Havana Conference-in Co-
lombia's case, in September, 1940.2
What Colombians of both political parties considered to be their
country's primary role in hemispheric defense was, of course, al-
ready on record in the pledge of President Santos that no hostile
power must be allowed to use Colombian soil in launching an
attack on the Panama Canal. And even when, as at Havana, Colom-
bia accepted the doctrine that an extra-continental attack on one
American republic was an attack on all, no responsible Colombian
official imagined that Colombian military forces would be used to
resist such an attack outside their own territory and immediately
surrounding waters. This much, at least, was clear from Foreign
Minister L6pez de Mesa's otherwise obscure references to "spiritual
defense," and certainly the United States had no intention of pro-
posing that Colombian forces serve anywhere away from home.
Nevertheless, there were different roles Colombia could play even
within her own boundaries, and different degrees of friendly par-
ticipation that might be allowed the United States. The range of
alternatives was great enough to worry Laureano G6mez, and in
effect it provided the agenda for the military staff conversations.
When the second round of talks began, on September 10, 1940,
the Colombian officers participating once again appeared highly
cooperative-so much so that the United States representatives
imprudently overlooked the warnings of Ambassador Braden about
political nuances and sensitivities. At the close of the first session,
they left with the Colombians a draft of a proposed staff agree-
ment containing features Braden had been sure would prove ob-
jectionable, and the result was a temporary interruption of the
talks. Or, to be more precise, the talks had to be raised temporarily
from staff-officer to president-and-ambassador level, with Santos

1. Conn and Fairchild, p. 176; Keith to Secretary of State, May 23 and 24,
1940, FR (1940), V, 57-58.
2. Braden to Secretary of State, June 11, 12, 21, and 25, 1940, FR (1940),
V, 62, 65-70; Conn and Fairchild, pp. 177-78.

objecting, for example, to a reference in the draft to the "recog-
nized" government of Colombia, on the ground that all Colombian
governments were recognized; to the mention of "fifth column"
activity, whose existence in Colombia he denied; and to a provision
that Colombia should officially mobilize public support and dis-
courage criticism in case the United States should send armed
forces to aid another American republic, on the ground that
Colombia could not agree to tamper with freedom of expression.3
When the staff talks resumed, they were under close surveillance
of both Braden and Colombia's civilian Minister of War, Jose
Joaquin Castro Martinez. They were completed on September 26,
without further incident, and produced a series of "Recommenda-
tions which the General Staffs . Make to their Respective
Governments." These were subsequently refined in the course of
further discussions between the two governments, and in the pro-
cess some detailed changes were made. However, everything con-
sidered really essential by the United States was agreed to. Colom-
bia emphasized once again that she would endeavor to prevent an
attack being made from her territory against that of the United
States (specifically including the Canal Zone). At Colombia's re-
quest, the United States would help her to resist extra-continental
attack; and if the United States should send help to another
American nation, as the result of an inter-American decision having
Colombia's approval, Colombia would provide facilities to the
forces advancing to its aid. Other points that were covered in-
cluded the lending of technical advisers, adoption of coastal patrol
measures, "establishment of adequate channels of communication,"
and the taking of aerial photographs of Colombian strategic areas,
with the unwritten understanding in the latter case that Colombia
would provide pilot and aircraft to fly a United States photographer
and equipment. In the end, direct mention of aerial photography
was deleted at Santos's request, lest the provision give rise to
politically inspired attacks. But the unwritten understanding re-
mained, since Santos felt the function itself could perfectly well be
carried out under the provision for the lending of technical ad-
visers.4 The handling of this detail was quite typical of Santos's
3. Braden to Secretary of State, Sept. 13, 1940, FR (1940), V, 77-79.
4. Braden to Secretary of State, Sept. 26, 1940, FR (1940), V, 82-83; Sec-
retary of State to Braden, Aug. 9, 1941, and Braden to Secretary of State,
Sept. 22, 1941, FR (1941), VII, 22-24, 27; James H. Wright, Second Secre-
tary of U.S. Embassy, to Secretary of State, Oct. 1, 1940, DS 810.20 Defense

Defense and Related Matters 53
tendency to treat defense matters on a personal and informal basis,
preferably without setting down on paper anything that might
later cause political embarrassment.5
It should be noted that some provisions of the staff recommen-
dations were already in effect under the terms of the military
mission agreements or other official or unofficial understandings,
while still others had to do only with possible action in contingencies
that had not yet arisen. It should be noted, too, that despite the
rumors of secret base arrangements that kept appearing with regu-
larity,6 no provision was ever made for the granting of bases on
Colombian soil to United States forces. From the start Santos had
made clear that as far as he was concerned the task of guarding
Colombian territory and waters must remain strictly in the hands
of the Colombians themselves (assisted, of course, by United States
technical advisers).7 And even Alfonso L6pez, who apparently
favored the granting of bases in return for financial compensations,8
was careful not to say so in public.
On the other hand, the possibility of the reciprocal use of each
other's bases by forces of both countries did come up in confiden-
tial discussions. It was casually touched on more than once by
Braden and Santos, with varying responses on the part of the
latter. It was also strongly favored by Roberto Urdaneta Arbelaez,
a Conservative member of the Foreign Ministry's Comisi6n Ase-
sora, who had served as Foreign Minister himself under Olaya
Herrera and was on friendly terms with both the United States
Embassy and the Santos administration. Urdaneta was not close to
Laureano G6mez-though he later was to serve as acting chief
executive under G6mez when the latter finally attained the presi-
dency-but his membership in the opposition party still gave his
views a certain strategic importance. Casting himself in the role of
a friendly and informal intermediary, Urdaneta proposed to both
Braden and Santos that the mutual use of military bases should
be worked out through the medium of a general inter-American
agreement. However, these rather indirect negotiations came to a
head about the time of the German invasion of the Soviet Union,
when Santos's fear of public sympathy for the Nazis' anti-Com-
munist crusade undoubtedly added to his normal mood of caution,
5. Braden to Secretary of State, March 28, 1941, FR (1941), VII, 3.
6. See, e.g., N.Y.T., March 6, 1940, 10:6, and L., July 24, 1940, citing
Veritas (Chiquinquira), for early examples of such rumors.
7. Braden to Secretary of State, June 21, 1940, FR (1940), V, 69.
8. Above, p. 42.

and in the end he told Braden that he felt an agreement such as
Urdaneta suggested would be politically impossible.9 Indeed, in
his speech to the opening of Congress on July 20, 1941, while as
usual dwelling on Colombia's close friendship with the United
States, Santos emphasized that the granting of bases had never
even been proposed nor did events appear to indicate the need
for such a step.10 The former statement was entirely accurate only
if one made a distinction between outright granting and reciprocal
use, but it did reflect the political sensitivity of anything that had
to do with bases. For the rest, the Santos administration would go
in the summer of 1941 only so far as to grant somewhat more
liberal flight privileges-informally, of course-to United States
military aircraft crossing Colombian territory.11

One special aspect of military cooperation that was treated in
the 1940 staff talks and in many other connections was the fur-
nishing of military equipment to Colombia by the United States.
No matter how modest the role Colombia might assume in hemi-
spheric defense, she lacked the equipment to perform it effec-
tively. Most of her war material dated from the mid-1930's or
earlier; the Colombian Pacific coast was being patrolled, as of mid-
1941, by just one gunboat and two antiquated aircraft; and at one
point a United States military adviser predicted that the Colombian
Army would run out of ammunition in less than an hour of actual
firing.12 However, the United States, then engaged in its own de-
fense build-up, was in no position to supply all that was thought to
be needed. Nor was Colombia in a position to pay for it if it were
Despite these practical difficulties, the United States regularly
promised to do at least something on Colombia's behalf. The sub-
ject of defense equipment received particular attention once the
United States set out to invigorate hemispheric defense efforts
following the German breakthrough in western Europe. At the
9. Braden to Secretary of State, March 28, May 17, June 25, and July 1,
1941, FR (1941), VII, 4-5, 8-9, 11-12. Though he must have heard of L6pez's
attitude on the subject of bases, Santos expressed particular concern over the
way his Liberal rival might politically exploit a base agreement.
10. T., July 21, 1941.
11. Conn and Fairchild, pp. 261-62.
12. Braden memo, May 27, 1940, FR (1940), V, 58-59; Braden to Secre-
tary of State, Jan. 21, 1941, DS 821.00/1308, and July 30, 1941, FR (1941),
VII, 17.

Defense and Related Matters 55
time of the first-round staff talks in June, 1940, it was discussed
directly by President Santos and Ambassador Braden, with the
former emphasizing Colombia's needs for aircraft, coast guard
cutters, and help in financing their acquisition-although he spec-
ified that Colombia would not accept an outright gift of military
equipment. A few weeks later, in mid-July, Santos informally sug-
gested that Colombia needed 10 cutters, 60 to 80 aircraft, 50,000
rifles, and still other equipment, whose total cost would come to
approximately $16 million. The State Department, in turn, offered
cautious encouragement as to the availability of both equipment
and financing and urged that Colombia submit a precise list of
requirements as quickly as possible.13
The list took an inordinately long time to prepare, but mean-
while the Santos administration coaxed through Congress the law of
1940 which authorized it to contract obligations of 30 to 50 million
pesos for defense expenditures.'4 Meanwhile, too, military require-
ments figured largely in the initial negotiations for what became
the second Export-Import Bank loan to Colombia, which was finally
awarded in July, 1941.15 Yet in the end that loan was designed to
fulfill only economic objectives, since long before Colombia was
ready with a proper accounting of military needs, the United
States had decided to bring Latin America under the scope of the
Lend-Lease Act.16 Economic and military aid negotiations were
henceforth conducted separately.
Early in July, 1941-still without a final statement of require-
ments from Colombia-the United States presented a draft lend-
lease agreement to the Colombian Ambassador in Washington.
It authorized the transfer to Colombia of $16.2 million worth of
equipment, including $5.5 million in the current fiscal year,17 but
Colombian officials proceeded to raise a number of objections to its
terms. Among other things, they disliked the "political flavor" of
certain statements contained in it-meaning, in effect, some gen-
eralities about hemisphere defense embedded in the preamble-
and complained that it was designed to provide only equipment,
whereas additional funds would be needed for Colombia to make
the best use of the equipment. In the latter case, Ambassador Bra-

13. Braden to Secretary of State, June 11 and 21, and July 10, 1940, and
Secretary of State to Braden, July 13, 1940, FR (1940), V, 63, 68, 71-74.
14. Above, pp. 37, 38-39.
15. Below, pp. 78-79.
16. Conn and Fairchild, pp. 215, 221-24.
17. Welles to Braden, July 9, 1941, FR (1941), VII, 15.

den saw some merit in the Colombian position, pointing to the
example of steel houses which the War Ministry had bought in the
United States two years earlier and which were still stored at
Barranquilla for lack of money to take them out and erect them
at strategic points. However, such "free" funds could not be sup-
plied under existing lend-lease legislation, and officials in Washing-
ton, having reluctantly acquiesced in a steady escalation of Colom-
bian demands for economic assistance during negotiations for the
latest Export-Import Bank loan, were unreceptive to the idea of a
new loan just now for defense purposes. At one point Santos pro-
posed to abandon the lend-lease procedure entirely in favor of a
straight loan of $6 million, which Colombia might use to cover her
immediate equipment needs through outright purchase and still
have funds left over for related expenditures, but an arrangement
of this sort was ruled out both by Washington's present disinclina-
tion to extend another monetary loan and by the fact that the
equipment itself could be sent more expeditiously under lend-
lease auspices.'8
The figure Santos cited of $6 million for the proposed loan was
another indication of the prevailing confusion as to the exact
amount of Colombian requirements for equipment and funds for
military purposes. The $16.2 million specified in the lend-lease
draft was roughly the figure informally mentioned by Santos for
equipment needs in July, 1940, but most later discussions revolved
about substantially lesser-though widely varying-sums. Ambassa-
dor Braden, on his part, had decided reservations as to how much
equipment Colombia could efficiently use and even remarked to
Colombian officials that perhaps they should be thinking in terms
of hundreds of thousands, not millions, of dollars for defense ex-
penditures.19 Nevertheless, he favored granting military aid in
one form or other not only for the minimal contribution Colombia
could make with it to the defense of the hemisphere but also for
the sake of Colombian domestic tranquillity. For one thing, he felt
that new equipment would help to keep the armed forces happy
and out of mischief. Much the same point was made by President
Santos in support of the need for "free" funds when he empha-
sized that the discontent of troops and noncommissioned officers
18. Braden to Secretary of State, July 30 and Sept. 19, 1941, and Secretary
of State to Braden, Aug. 5 and Sept. 25, 1941, FR (1941), VII, 17-18, 20-21,
26, 28-30.
19. Braden to Secretary of State, Oct. 28, 1940, DS 821.51/2553, Sept. 26,
Oct. 3, and Dec. 15, 1941, FR (1941), VII, 30-31, 34, 36-37.

Defense and Related Matters 57
with shabby uniforms and barracks was a factor played upon by
the organizers of a minor conspiracy suppressed in August, 1941.
Nor, finally, did it make sense for the United States to continue
training Colombian personnel in the use of modern equipment
which they either did not have or did not have enough of. At the
very least, such a course was bound to generate new frustrations.20
A final objection to the proposed lend-lease arrangements was
raised by Santos in October, 1941, when he informed Braden that
the law passed by Congress the year before to authorize borrowing
for defense would not cover a transaction of this sort and that new
legislation was needed. From that point until after Pearl Harbor,
lend-lease discussions appear to have languished, to be revived only
in the new situation created by the full-scale entry of the United
States into the war.21 A lend-lease agreement was actually signed
on March 17, 1942.22 Even before that, however, the United States
had been making efforts to provide military equipment to Colombia
on at least a limited scale. It was hampered in doing so, not merely
by the Colombians' difficulty in deciding what they wanted and on
what terms, but also, very definitely, by the lack of any large
exportable surplus at this stage in the United States. Training
planes, for example, were promised as a natural complement to the
work of the aviation mission; and their slowness in arriving was an
evident source of irritation to the Colombians.23

Closely related to military cooperation per se-particularly in the
view of United States observers-was cooperation for the preven-
tion of espionage and of "fifth column" activities generally. In this
broad area the two governments shared similar objectives and
were committed to the principle of collaboration, but United States
officials normally took a more serious view of the dangers present
in Colombia than did their Colombian counterparts. They were
sometimes unnecessarily alarmist, as when Ambassador Braden
made the offhand estimate that 60 per cent to 80 per cent of
Colombian army officers had Nazi sympathies.24 This was without

20. Braden to Secretary of State, Aug. 14 and Sept. 26, 1941, FR (1941),
VII, 25, 32; on the conspiracy referred to, see T., Aug. 5, 1941.
21. Braden to Secretary of State, Oct. 3 and Dec. 15, 1941, FR (1941),
VII, 33-35.
22. Below, pp. 108-9.
23. See Braden to Secretary of State, July 30, 1941, FR (1941), VII, 18.
24. Braden to Welles, Oct. 9, 1941, DS 821.00/1369.


any doubt an excessive figure, unless he was referring mainly to
their professional admiration for the prowess of the German army.
The United States did, however, have more and better information
on potential fifth columnists than did the Colombian government
itself, most notably some extensive files on members of the local
German colony25-which at the time of Pearl Harbor numbered
somewhat over 4,000 persons.26 From this information it was evi-
dent that in addition to, and really overlapping with, the German
diplomatic-consular and commercial organizations in Colombia
there was also a Nazi political organization whose "Fuehrer" was
the Barranquilla businessman Emil Pruefert.27 Backing up the Ger-
mans themselves was a fringe of Colombian sympathizers and
collaborators and related groups of Italians, Japanese, and, es-
pecially in the propaganda field, pro-Franco Spaniards.
Propaganda was far and away the most obvious output of this
network of Axis subjects and sympathizers. German firms such as
Bayer used advertising funds to promote Axis propaganda in the
Colombian press and airwaves, just as American firms used the
threat of loss of advertising to combat it. The United States, for-
tunately, had much the largest advertising budgets to work with,
but there were other ways of spreading the news of Nazi superi-
ority. In addition, Germans for one reason or another had done a
good bit of mapping, photographing of bridges, and so forth.28 They
were even alleged to have such refinements as a secret chemical
warfare unit in readiness on Colombian soil,29 while their Axis

25. Braden to Secretary of State, July 6, 1940, DS 821.00N/93.
26. L., Dec. 19, 1941.
27. Consul Nelson R. Park, Barranquilla, to Secretary of State, June 21,
1940, DS 821.00N/79; Braden to Secretary of State, July 6, 1940, DS 821.00N
/93, and Dec. 19, 1940, DS 821.00/1305; N.Y.T., Aug. 19, 1940, 34:1; Wil-
liam N. Simonson, "Nazi Infiltration in South America, 1933-1945" (doctoral
dissertation, Fletcher School of Law and Diplomacy, 1964), pp. 257-59, 269-
72, 299-300, 312, 408-9. Pruefert's official title was "Landesgruppenleiter
Kolumbien" (cf. Germany, Auswirtiges Amt, "Records of . Received by
the Department of State," roll 103, frame 110890). Only a random sample of
the captured German documents of Latin American interest that are available
on microfilm was consulted in the preparation of this study; however, the
author was struck by the relative scarcity of items from or references to
28. See, e.g., Vice-Consul Vernon L. Fluharty, "Memorandum of Sub-
versive Activities and the General Political Situation . ." Medellin, May 7,
1942, DS 821.00/1414.
29. N.Y.T., Aug. 18, 1940, 16:1. Simonson, in his discussion of the Nazis'
underground para-military apparatus-which he concluded to have been un-
usually well-developed in Colombia-reproduces an extremely elaborate table

Defense and Related Matters 59
associates had a "notorious Japanese bean field" near Call which
was guarded by an electrified fence and was thought to shelter
much suspicious equipment.30
Even if one granted that there was considerable truth as well as
some exaggeration in what was said about Axis activities in Colom-
bia, there was room for valid disagreement as to the significance of
it all. President Santos, who refused to become alarmed on this
score, generally denied that anything that could properly be called
a fifth column existed in Colombia; he admitted concern about
Axis propaganda, but the rest he apparently dismissed either as
imaginary or as constituting no real danger.31 War Minister Castro
Martinez was less confident,32 and the right-wing Liberal daily
La Razon (whose managing editor was an anti-Nazi Spaniard)
made almost a specialty of alerting Colombians to the peril with-
in.33 But most other newspapers, Liberal as well as Conservative,
either ridiculed the peril or were restrained in their treatment of
it, and they easily took offense at alarmist reports published in the
United States. "Frankly all that is not very serious pocoo serio]
and somewhat offensive," was the way El Tiempo referred to one
series of exposes on the fifth-column danger in Colombia that ap-
peared in the New York Times during August, 1940.34 El Liberal,
though less complacent than El Tiempo, referred to the same type
of reporting as one of the principal threats to good United States-
Colombian relations.35 Foreign Minister L6pez de Mesa was
still another who expressed displeasure: he once mentioned to
Ambassador Braden his fear that the United States might be misled
by press reports of Nazi penetration into relying less on Colombian
cooperation and even into taking hasty unilateral action. To which
Braden wisely replied that if the American people were con-
vinced there was no Nazi danger in Colombia it might be harder

of organization for Colombia in which the chemical warfare unit is shown
("Nazi Infiltration," pp. 269-72). Precisely what it consisted of in practice,
however, has not been established.
30. Braden to Secretary of State, Jan. 21, 1941, DS 821.00/1308, and
March 21, 1941, DS 821.001 L6pez/125.
31. Braden to Secretary of State, June 11, 1940, FR (1940), V, 62; cf.
above, p. 34.
32. Braden to Secretary of State, June 12, 1940, FR (1940), V, 65.
33. Keith to Secretary of State, June 7, 1940, DS 821.00N/71; cf. R., May
23-29 and 31, 1940.
34. T., Aug. 23, 1940; N.Y.T., Aug. 15, 1940, 6:3, Aug. 16, 1940, 5:3, Aug.
17, 1940, 7:6, Aug. 18, 1940, 16:1, Aug. 19, 1940, 34:1.
35. L., Nov. 21, 1941.

to obtain financial assistance for purposes of Colombian defense.36
Despite its more relaxed attitude, the Colombian government
was not unwilling to cooperate in heading off internal Axis threats:
its role in the SCADTA affair is a case in point. It also adopted a
number of measures for the general control of foreign residents,
which in practice were directed chiefly at the German colony
such as the decree of June 25, 1940, that among other things
firmly prohibited any form of propagandizing on behalf of "foreign
political organizations." This decree, which Braden praised as a
prompt and constructive response to the situation created by the
fall of France, was drafted by the Secretary General of the For-
eign Ministry immediately following a luncheon discussion of the
problem of subversive activities with a member of the Embassy
staff.37 From time to time a few Germans would be arrested by
the Colombian authorities on charges of illicit propaganda, sus-
pected espionage, or something comparable.38 And, finally, the
Colombian government made some efforts, with United States
assistance, to improve its intelligence services. These, however,
continued to lack sufficient money, manpower, and technical equip-
ment, and did not inspire complete confidence. Certainly the ex-
change of intelligence data with the United States was essentially
one way: as of December, 1940, the Embassy in Bogota estimated
that 85 per cent of the material in Colombian intelligence files
came from United States sources, 10 per cent from Colombian
sources, and 1 per cent from the British legation. The remainder
was regarded as worthless, with no indication of origin, though
it is quite possible that part of the 85 per cent was worthless too.39
Be that as it may, the problem of real or alleged fifth-column
activities came briefly to the very forefront of Colombian-United
States relations when President Roosevelt, in a radio broadcast on
September 11, 1941, casually referred to the existence of a secret
German airfield in Colombia.40 The resulting petty crisis nicely
illustrated both the ambiguities inherent in the problem and its
potential as an irritant. Roosevelt did not spell out all the details
in his speech, but it was soon apparent that the installation to

36. Braden to Secretary of State, Sept. 3, 1940, DS 711.21/950.
37. MemRels (1940), pp. 58-61; Braden to Secretary of State, June 26,
1940, DS 821.00N/85.
38. See, e.g., N.Y.T., Dec. 23, 1940, 11:2, and Jan. 3, 1941, 6:5.
39. Braden to Secretary of State, July 6, 1940, DS 821.00N/93, and Dec.
19, 1940, DS 821.00/1305.
40. N.Y.T., Sept. 12, 1941, 1:8, and Sept. 13, 1941, 6:6.

Defense and Related Matters 61
which he referred was one supposedly located on the country estate
of Dr. Hans Neumueller, a well-established German resident of
Cartagena. While there was certainly no full-scale aerodrome (se-
cret or otherwise) on Neumueller's property, it did include at
least one stretch where airplanes could in fact have landed.41 Not
much else is clear.
Inevitably Roosevelt's statement set off a wave of excitement in
Colombia. The VWar Ministry seemed to confirm the report when it
revealed that the government had received information of the
"probable" existence of secret airfields and reassured the public
that it was quite capable of controlling the situation. Adding to
the confusion, Foreign Minister L6pez de Mesa informed Con-
gress that such charges had been made for several years but that
the government on the basis of its own investigations had been
unable to confirm them. The Colombian Senate then proceeded,
by unanimous vote and even with some indignation, to proclaim its
own conviction that no secret airfields existed-that Roosevelt was
mistaken. This inspired El Liberal to ask editorially how, if the
airfields were secret, the Senate could be so sure none existed;
and just to play safe, the Liberal-dominated (though Communist-
infiltrated) Confederacion de Trabajadores de Colombia publicly
asked for the expulsion of Neumueller from Colombia.42
But Conservatives made the greatest use of the airfield incident.
The moderate and generally pro-American El Colombiano of Me-
dellin contented itself chiefly with criticizing Colombian official
spokesmen for the vague and contradictory nature of their state-
ments.41 On the other hand, La Patria of Mlanizales, whose reaction
essentially typified that of the hard-line rightist element, found an
excellent opportunity to attack both the Santos administration and
Franklin D. Roosevelt: "It is not true that the landing fields exist?
Well then, the President of the United States has slandered Colom-
bia. And one could argue: with what object? To the simplest the
answer occurs: in order to invade us. Thus it is that in Colombia
there exist secret Nazi landing fields, and that 'General' Castro
Martinez puts down a Nazi conspiracy every two weeks, for then

41. Braden to Secretary of State, Oct. 18, 1941, DS 740.00112A EW1939/
42. L., Sept. 12 and 13, 1941; N.Y.T., Sept. 16, 1941, 8:4.
43. El Colombiano, Sept. 14, 1941. The previous day it had offered a gen-
erally laudatory commentary on Roosevelt's speech, without making reference
to the airfield charge.


there is sufficient cause to occupy the dangerous territory."44 That
such fears were easily kindled was made evident later the same
month when a rumor suddenly spread in Bogota-even broadcast
over the radio, but immediately denied-that United States Ma-
rines had already landed at various points of the Colombian coast.45

One major aspect of the campaign against Axis propagandists
and potential fifth columnists was the use of economic pressure
either to diminish the resources at their disposal or otherwise to
deter certain types of activity. Two notable examples of such
pressure have already been examined: the use of Pan American's
controlling financial interest as a lever for the de-Germanization of
SCADTA and the use of American advertising funds to moderate the
opinions of El Siglo. These, of course, were somewhat special
cases, but the purging of SCADTA employees had a close parallel
in the decision of other United States business firms to fire em-
ployees or sales representatives in Colombia-above all if they were
Axis nationals-who might be tempted to use their positions to
advance objectives inimical to the United States. Firms that did
not do so rapidly enough were subject (as Pan American had
been) to official prodding, e.g., from the Embassy in Bogota.46
As the case of El Siglo demonstrated, even individuals and
enterprises not directly linked to American firms might be sub-
jected to United States pressure. If it appeared that to do business
with them would be contrary to United States and hemispheric
interests, American citizens could be informally advised to take
their business elsewhere. Such casual blacklisting was institutional-
ized in July, 1941, when the United States published its Proclaimed
List of suspected Axis agents or sympathizers with whom American
firms and private citizens were forbidden to do business.47 At that
time controls and shortages resulting from the defense build-up
in the United States meant that inclusion on the Proclaimed List
was a definite handicap, complicating the task of obtaining many
44. La Patria, Sept. 13, 1941.
45. El Colombiano, Sept. 28, 1941; N.Y.T., Sept. 29, 1941, 3:7.
46. Braden was particularly annoyed at the employment by the Associated
Press of a German national in Bogota who also worked for the Nazi Trans-
ocean agency; he was still employed even after the fall of France, and after
the Embassy had made a special effort to have him dismissed (Braden to
Secretary of State, July 29, 1940, DS 821.00N/118).
47. David L. Gordon and Royden Dangerfield, The Hidden Weapon: The
Story of Economic Warfare (New York, 1947), pp. 152-53.

Defense and Related Matters 63
scarce articles, and the fact that New York banks commonly served
as clearing centers even for financial transactions between Colom-
bia and other Latin American countries gave further scope to the
system's operation. Since it was designed ostensibly to control the
dealings of American citizens, not foreigners, the Proclaimed List
was administered in Washington, unilaterally; but it obviously af-
fected foreigners, and not just those who were formally blacklisted.
Firms not on the list were understandably wary of dealing with
those that were, for fear that they might also be included.
Firms operating in Colombia were included on the Proclaimed
List from the very beginning, and their number subsequently
grew48 despite the fact that some were deleted from time to time
either because of a change in their policies and practices or be-
cause adverse political repercussions of their inclusion outweighed
the possible benefits. In some cases the deletion of native Colom-
bian firms was sought by the Colombian government itself, which
also requested assurances that Colombian firms would be placed
on the list only on the basis of clear and effective danger and only
after careful coordination with it. But the United States, though
never averse to a reasonable amount of consultation, had no in-
tention of surrendering its own right of ultimate decision; and
neither did President Santos care to make a major issue of the
Proclaimed List.49
Nevertheless, there was widespread annoyance with the system
in Colombia, and El Siglo predictably was among those annoyed.
Yet it approached the issue with a degree of caution that no doubt
reflected among other things its own desire not to be placed on
the list. In one editorial dealing with the Proclaimed List, which
appeared under the title "Complex of Timidity," the Conservative
organ was almost effusive in its praise of the Good Neighbor
Policy-emphatically denying the existence in the United States of
the "imperialist tendency" that it had once talked so much about-
and took a generally understanding view of the United States posi-
tion on the question of blacklisting. It admitted to "kindred
48. See, e.g., L., Sept. 26, 1941. By mid-1942 over 400 firms and indi-
viduals operating in Colombia were on the U.S. Proclaimed List (MemHda
[1942], p. 24).
49. T., Oct. 10 and 11, 1941. The Foreign Ministry, and in particular
Foreign Minister L6pez de Mesa, was more inclined than Santos himself to
press for changes in Proclaimed List procedures. In this connection, L6pez de
Mesa gave at least tacit approval to the protest resolution of the Colombian
Senate discussed below (Braden to Secretary of State, .Nov. 13, 1941, DS
740.00112A EW1939/3365).


interests in danger, which demand an elemental solidarity for the
common defense." But the same editorial detected in the applica-
tion of the Proclaimed List a tendency to punish "innocent atti-
tudes or sympathies" of Colombian citizens who did not consti-
tute a real threat to anyone, and it took the Santos administration
severely to task for failing, as the title suggested, to stand up
boldly for the Colombians in question.50
That criticism of the Proclaimed List was not a strictly partisan
matter was made clear by the unanimous adoption by the Colom-
bian Senate of a resolution demanding that Latin American firms
or individuals be included on it only after due consultation with
their respective governments, "in accord with the spirit and the
letter of the acts and conventions of solidarity subscribed at
Lima, Panama, and Havana."51 This resolution, passed in Novem-
ber, 1941, had been presented to the Senate by a special com-
mittee named to study the problem, whose full report was even
more strongly worded and was also approved unanimously. The
committee membership was drawn from both parties and included
Jose de la Vega of El Siglo's official hierarchy, who was particularly
indignant over the blacklisting of Laboratorios Roman in his na-
tive Cartagena; though he felt the report was still too mild, he
went along with it, he said, to make a show of national unity.
According to the Senate committee, the "system of blacklists"
was contrary to both general international law and the concept
of inter-American reciprocity. In its "practical aspect," moreover, it
was "completely inadmissible. In effect, to form such lists the
diplomatic and consular agents of the belligerent State [i.e., the
United States] have to organize a true service of espionage, in-
compatible with their normal functions and contrary to the sov-
ereignty of the country where they reside . ." The committee then
explained the scope of the consultation which it felt necessary:
"Our fellow nationals, even those who for reasons of internal
politics are estranged from the present administration, would feel
secure in their rights if the subterranean denunciations-almost
always the work of mischievous passions or commercial competi-
tion-of having connections with foreign powers were submitted
to the judgment [dictamen] of the President of the Republic or of
his Minister of Foreign Relations, before receiving the sentence of
condemnation of a foreign power."52 The United States did not
50. S., Oct. 11, 1941. See also S., Nov. 2, 1941.
51. S., Nov. 8, 1941. 52. Ibid.

Defense and Related Matters 65
proceed to do what the Colombian Senate asked, and Santos him-
self refused to circulate the Senate resolution to the other Ameri-
can governments as called for by its terms.53 But it is perhaps
safe to assume that the strength and unanimity of feeling expressed
by the resolution were taken into account in administering the
Proclaimed List in relation to Colombian firms.

The Proclaimed List was only one of various regulatory mech-
anisms, adopted by the United States as it increasingly entered a
war economy, that had a direct impact upon the trade and eco-
nomic life of Colombia. Export controls in the United States, for
example, not only cut off scarce supplies entirely from blacklisted
firms but also limited the amounts available to Colombian business-
men whose political leanings were beyond suspicion. There was at
least an element of bilateralism in the operation of such controls,
since Colombia supplied both general information on national re-
quirements to guide planners in Washington and specific official
recommendations as required for the issuance of certain types of
permits. Colombia likewise cooperated to the extent of imposing
controls on the re-export, from her own territory, of articles subject
to export control in the United States.54
Still another aspect of economic collaboration was the marshaling
of Colombian material resources in support of the United States
defense effort. Colombia was not a major supplier of strategic
materials, but she did have a contribution to make and her po-
tential as a source of platinum-of which she was the principal
Latin American producer-gave rise to intensive negotiations with
the United States starting in the first half of 1941. The article was
of special importance not only because it was needed in the United
States but because it was equally desirable to keep it from falling
into the hands of the Axis powers. Japan, in particular, had been
an active buyer of Colombian platinum.
In May, 1941, accordingly, the State Department relayed to
Bogota an offer of the Metals Reserve Company, an agency of the
Reconstruction Finance Corporation, to buy up the entire Colom-
bian output of platinum less whatever was now being shipped
commercially to private buyers in the United States. President

53. Braden to Secretary of State, Nov. 14, 1941, FR (1941), VI, 305-6,
and Nov. 21, 1941, DS 740.00112A EW1939/3944.
54. MemEcNac (1942), p. 39; MemRels (1942), p. 165.

Santos promptly gave an enthusiastic response, but before the
transaction was finally closed certain complications had to be
overcome. There were legal technicalities in Colombia, although
none was insuperable. There was also a natural desire on Colom-
bia's part to use the platinum question for bargaining purposes in
extracting commitments for the delivery of needed imports. Above
all, Colombia wanted a guaranteed supply of silk, which was re-
quired for five small textile factories. She had been dependent on
Japan for the article in question, but the Japanese were not inter-
ested in continuing to sell silk unless they in turn could obtain
Colombian platinum. A United States offer to supply rayon instead
was not wholly satisfactory, since it would take time to convert
the local factories to handle it.
Finally, there was disagreement about the price. The Metals
Reserve Company first suggested $36 an ounce, which was more
than the American-owned South American Gold and Platinum
Company was charging for the Colombian platinum it sold in the
United States but less than Colombian producers had been re-
ceiving from other countries, and not enough to discourage con-
traband sales to Japan or elsewhere. Thus in the end a higher
figure was accepted, and Colombia also settled, in effect, for mere
assurances that the United States would do the best it could to
keep Colombian factories supplied with raw material. Final ar-
rangements were not signed until February, 1942, but long before
that the United States proposal had been accepted in principle;
and steps had been taken to halt Japanese purchases even before
Pearl Harbor.55
55. Select documents on the platinum negotiations are contained in FR
(1941), VII, 40-55. See also MemHda (1942), pp. 44-45, and Decretos de
cardcter extraordinario expedidos por el Organo Ejecutivo en desarrollo de las
facultades conferidas por las Leyes 128 y 152 de 1941 (Bogota, 1942), pp.

Loans Old and New

R UNNING THROUGH all discussions of Colombian-United States
political solidarity and military cooperation was an undercur-
rent-sometimes frankly acknowledged, at other times tacitly
understood-of financial considerations. No price in dollars
or pesos was set on the friendship of either country, but each had
certain financial interests for which it expected sympathetic treat-
ment from the other. This meant, in the case of Colombia, that if
the Santos administration loyally sided with the United States in
international affairs it naturally expected financial as well as mili-
tary assistance in return, to enable it to withstand the impact of the
world crisis. From the standpoint of the United States, moreover, it
went without saying that any full understanding between the two
countries ought to include some settlement of the Colombian dollar
loans which had been in default since the years of the great depres-
sion. Indeed the most important single item of unfinished business
in United States-Colombian relations at the start of the Santos ad-
ministration was the adjustment of Colombia's defaulted obligations.
President Santos had barely taken office in August, 1938, when he
received a telegram from President Francis White of the Foreign
Bondholders Protective Council (FBPC) in New York calling his at-
tention specifically to this matter; and though the official Colombian


reply was a mere promise to study the debt question, both Santos
and Minister of Finance Carlos Lleras Restrepo were genuinely
anxious to reach an agreement.1
The question was inherently complex, since several different
classes of obligations were involved, with a grand total (not count-
ing arrears of interest) of around $170 million.2 First and foremost
there was the unpaid balance of two 6 per cent bond issues
floated in the United States by the Colombian national government
in 1927 and 1928, for $25 million and $35 million respectively.
Full service had been maintained on these until 1932, when amorti-
zation of principal was suspended but the required interest was
still paid in cash. Then, in 1933, Colombia met the interest charges
by paying partly in cash and partly in non-interest-bearing scrip.
In 1934 interest was paid wholly in 4 per cent funding certificates;
and after January 1, 1935, default became complete on both loans.
However, the scrip issued in 1933 was redeemed at maturity in
1937, and service (including gradual retirement) was likewise
maintained on the certificates which had been issued the following
year. For that matter, the principal of the original loans had been
reduced to slightly over $51 million by the time regular amortiza-
tion was discontinued, and another $6 million worth of the bonds
had come into the hands of the Colombian government itself in
exchange for internal bonds, so that the actual amount of prin-
cipal still owed was now between $45 million and $46 million.3
Apart from this bonded indebtedness, Colombia owed a smaller
balance resulting from a loan made to the Olaya Herrera admin-
istration during its first year in office by a consortium of the National
City Bank of New York and other banking institutions. The loan
had been made, supposedly, on a short-term basis, to tide Colombia
over until more long-term credits could be obtained, but in practice
no such credits were ever forthcoming, and the loan had therefore
been repeatedly renewed-always for short periods-ever since.
Interest on this "banking group loan" had been maintained, but at
1. MemHda (1940), p. 139.
2. Institute of International Finance, Republic of Colombia (Bulletin no.
98, March 7, 1938), pp. 21-24. The figures given in this source are as of June
30, 1937, but the size of indebtedness had not changed significantly by the
start of the Santos administration. It should be noted that the approximate
total mentioned in the text does not take account of a miscellaneous assort-
ment of sterling loans, the oldest going back to 1906, or of dollar debts owed
to private business firms for construction activities and the like.
3. MemHda (1932), pp. 39-44; MemHda (1940), pp. 136-37; MemHda
(1941), p. 27; N.Y.T., Dec. 31, 1940, 26:1.

Loans Old and New 69
a reduced rate arranged by agreement with the lenders, and some
redemption of principal had also been carried out, though without
any fixed plan. By 1938 the balance stood in the neighborhood of
$15 million. In this case, Colombia was not exactly in default, but
the loan had obviously turned into something different from what
was originally intended, and the bankers were anxious to make
definite arrangements for its liquidation as soon as possible.4
Finally, there were still other obligations at stake that did not
involve the Colombian national government as immediate bor-
rower. During the 1920's Colombian departments and municipali-
ties had issued an even larger sum in dollar bonds, on which
payments were suspended in the depression, leaving approximately
$82 million in principal still outstanding.5 Additional dollar bonds
had been issued during the same period by various official and
private lending institutions in Colombia, of which the most im-
portant was the Banco Agricola Hipotecario (i.e., Agricultural
Mortgage Bank). The issues of the latter, which was an official
agency, had been expressly guaranteed by the Colombian treas-
ury, but they had been in complete default since 1935. The obli-
gations of the private institutions-Banco de Colombia, Banco Hipo-
tecario de Colombia, and Banco Hipotecario de Bogota-did not
have such a guarantee and had been in default since 1932. But
even in their case the credit of the Colombian government was
involved as a result of legislation enacted in the depression emer-
gency which transferred responsibility for their foreign obligations
to the Banco Agricola Hipotecario. The combined principal still
outstanding of both guaranteed and nonguaranteed issues was
something over $20 million, although a substantial part of this
amount was actually in the hands of the bank itself.6
In practice it was the national dollar loans of 1927 and 1928 that
chiefly engaged the attention of the Colombian government, the
United States financial community, and (as a benevolently in-
terested third party) the Department of State. Not only was the
default on those two issues the most damaging to Colombian for-

4. Colombia Yearbook, VII, 207 (New York, 1935); MemHda (1940), p.
155. On the circumstances surrounding the granting of the banking group loan,
see FR (1931), II, 28-37.
5. Institute of International Finance, Colombia (Bulletin no. 53, July 8,
1932), pp. 17-33, and Republic of Colombia (Bulletin no. 98), p. 24.
6. Institute of International Finance, Colombia (Bulletin no. 53), pp. 33-
35, and Republic of Colombia (Bulletin no. 98), p. 24; L., June 25, 1942;
Frederick Livesey, memo, March 6, 1942, FR (1942), VI, 213.

eign credit, but any settlement made concerning them could be
expected to set a pattern for the handling of other obligations.
During the preceding L6pez administration, Colombia had al-
ready negotiated somewhat fitfully with bondholders' representa-
tives for a resumption of interest and amortization, but the chief
Colombian offer had featured a reduction of interest to 2 per cent,
increasing annually by one quarter of one per cent until a maxi-
mum of 3 per cent was reached. Such a settlement was considered
wholly unacceptable by the FBPC. The Santos administration hoped
to revive the negotiations, but it moved slowly because it did not
wish to overcommit its resources and because any settlement that
appeared too generous to foreign creditors could easily become a
domestic political liability. There was in fact widespread senti-
ment in the Colombian Congress in favor of making a unilateral
offer to the bondholders, on Colombia's own terms and as a take-
it-or-leave-it proposition. Legislation to that effect was averted,
apparently thanks to administration pressure, but the first approach
taken by Finance Minister Lleras Restrepo was still simply to
gather additional data which might be used to convince the
FBPC that the rejected L6pez offer was the most Colombia could
In the end, probably the one factor that did most to induce
Colombia to improve her offer was the hope of obtaining new
credits from the United States once the old ones were settled to
mutual satisfaction. The two questions-old loans and new loans-
were deftly interwoven by Ambassador Braden in talks with both
Santos and Lleras Restrepo soon after he assumed his duties in
Bogota early in 1939. Citing instructions he had received from
President Roosevelt to discuss the problem of currency stabiliza-
tion, Braden mentioned to Santos during an interview on February
22 that if Colombia so desired the United States might be willing
to make a treasury-to-treasury loan of gold bullion for stabilization
purposes. Santos replied with a polite expression of interest and
with the observation that Colombia's problem, for the moment, was
to prevent an undue appreciation, not depreciation, of the peso.
However, once the possibility of new credits had been raised,
Braden on his part made clear that the settlement of defaulted
past obligations would have a direct bearing on a stabilization loan
or any other kind of economic cooperation. In this connection he
was careful to emphasize the political influence within the United
7. Braden to Secretary of State, May 15, 1939, FR (1939), V, 469-72.

Loans Old and New 71

States of the community of foreign bondholders, as he was to do
again on numerous similar occasions.8
A more detailed discussion of the loan question, in both aspects,
took place some weeks later between Braden and Lleras Restrepo,
who enjoyed unusual independence in his capacity as Finance
Minister both because of the implicit trust that Santos had in him
and because of Santos's recognition of his own lack of expert
knowledge in the field.9 With regard to past debts, Lleras pressed
the Ambassador to express an opinion on the specific terms that
should be offered, and Braden said frankly that he felt those put
forward by the L6pez administration were too low. He gave as his
personal opinion that Colombia easily could and should offer 3
per cent interest to begin with, to be scaled upward as national
revenues permitted. Lleras also dwelt at length on the need for
future credits, expressing somewhat more interest than Santos in the
possibility of a currency stabilization loan and specifying a num-
ber of other worthy objectives for which he hoped Colombia
might obtain financing through the Export-Import Bank. Among
those he mentioned were railway construction and acquisition of
rolling stock, machinery for roadbuilding and for Magdalena River
dredging, and addition to the capital of the Caja de Credito Agrario,
Industrial y Minero. And just as the United States Ambassador
held out the hope of new loans while urging the settlement of old,
the Colombian Finance Minister held out hope that with an infu-
sion of official credits from Washington Colombia might be in a
better position to dismantle her present exchange-control system,
which was highly distasteful on both practical and theoretical
grounds to the United States.10
Despite Braden's expressed opinion that the terms previously
offered were too low, the Colombian government made one more
effort to obtain their acceptance by the FBPC. Naturally the effort
failed. It may not even have been a serious attempt, for according
to the general view in Bogota, as reported by Braden, Colombia
was simply trying to elicit a counterproposal.11 However, when
8. Braden to Secretary of State, March 3, 1939, DS 711.21/931. Braden
appears to have been careful not to state categorically that a debt settlement
must precede the granting of new credits; as he indicated in the meeting with
Lleras Restrepo discussed in the following paragraph, a settlement would
simply have to be fairly well assured.
9. Braden to Secretary of State, July 18, 1939, FR (1939), V, 492.
10. Braden to Secretary of State, May 15, 1939, FR (1939), V, 472-81.
11. Secretary of State to Braden, July 1, 1939, FR (1939), V, 481; Braden
to Secretary of State, July 13, 1939, FR (1939), V, 487.


White of the FBPC proceeded to raise the possibility of a tempo-
rary one-year agreement to resume interest at 3 per cent, Lleras
was unenthusiastic; and when the FBPC suggested further that a
permanent settlement be worked out on the basis of 3.5 per cent
interest, gradually rising to 4.5 per cent, Colombia was again
unreceptive. By the end of July, 1939, negotiations appeared to
have broken down almost entirely.12
With the outbreak of war in Europe, the situation changed
again. Because well over half of her foreign trade was conducted
with the United States, Colombia enjoyed some degree of protec-
tion against immediate adverse effects of the European struggle on
her economy; but she could not escape its impact entirely. Above
all, the disruption of established European trade patterns led to a
sharp drop in the market price of coffee, which in Colombia's case
fell by more than one-third from September, 1939, to May, 1940.13
This blow, combined with such other factors as a great spurt in
imports ordered during 1939 in anticipation of the war's outbreak,
caused Colombia to end that year with a balance-of-payments
deficit of more than $8 million; for just the first half of 1940 the
figure was $11.6 million.14 To cope with the exchange situation,
Colombia tightened exchange control regulations,15 but there was a
corollary problem in that around 40 per cent of the national
government's revenue was derived from levies on foreign trade:16
thus, to the extent that imports were cut back in line with the
availability of foreign exchange, government income would be cut
back also. And though some money could be and was saved by
such measures as official salary cuts and a slowdown in public
works,17 from the Colombian standpoint a far more attractive so-
lution, to this problem and to others, was to borrow some more
millions from the United States.
It was some time, naturally, before the full effect of the war was
felt. Yet as early as September 2, 1939, Foreign Minister L6pez
de Mesa was already suggesting a standby credit of $50 million,
12. Secretary of State to Braden, July 15, 1939, and Braden to Secretary of
State, July 18, 1939, FR (1939), V, 488-89; Laurence Duggan, memo, July
28, 1939, FR (1939), V, 498-500; MemHda (1940), pp. 139-40.
13. MemHda (1940), pp. 24-25; below, p. 83.
14. MemHda (1940), pp. 35-38. 15. Ibid., pp. 46-48.
16. The percentage derived from the customs was 42.3 in 1937, 38.4 in
1938, and 46.0 in 1939 (Contraloria General de la Republica, Anuario general
de estadistica [1940], p. 147).
17. MemHda (1940), pp. 197-200; Memoria de Obras Piblicas (1940),
pp. v-vi and passim.

Loans Old and New 73

whose mere availability-whether or not it was actually used--
would sustain confidence in the peso.1" The Colombian delegation
to the Panama Conference importuned Undersecretary of State
Sumner Welles along somewhat similar lines.19 From the start,
moreover, the United States was generally sympathetic; but Braden
in Bogota and his superiors in Washington saw to it that the
Colombians did not forget the connection between the assistance
they desired and the settlement of past accounts. At the same time
the State Department now decided to take a more forceful role
in the negotiations between Colombia and her private creditors.
Heretofore its officials in Washington and Bogota had intermit-
tently reminded and encouraged and had even made some sug-
gestions as to possible terms on a personal, unofficial basis. Hence-
forth it would work actively and persistently to promote a meet-
ing of minds between the Colombian government and the FBPC.
If, for example, Colombia would agree to a settlement at 3 per
cent interest rising by stages to 4.25 per cent, the State Depart-
ment's Laurence Duggan assured the Colombian Ambassador in
Washington that the Department would use its influence to seek
acceptance of the same terms by the bondholder representatives.20
Colombia never did agree to go that high, but it is probably
safe to say that in the stepped-up negotiations that followed, the
State Department sided more often with Colombia than with the
FBPC.21 The first concrete result emerged in February, 1940, when
the Colombian government announced that it would pay interest
on the 1927 and 1928 loans for the current year at the rate of 3
per cent and would devote an additional $400 thousand during
the year to the open-market purchase of bonds for retirement.22
Because of the bonds' depressed market price, the latter sum
ultimately permitted Colombia to acquire bonds with a face value
of about $1.8 million,23 and the Ncie York Times reported that
American bond specialists considered this method somewhat un-
fair;24 but the FBPC did expressly approve the arrangements, even
if with no great enthusiasm.25
18. Braden to Secretary of State, Sept. 2, 1939, FR (1939), V, 501.
19. Welles to Secretary of State, Sept. 26, 1939, FR (1939), V, 504-5.
20. Duggan, memo, Sept. 19, 1939, FR (1939), V, 502-4.
21. Braden, it is worth noting, was always somewhat critical of the FBPC;
see, e.g., his letter to President Roosevelt, March 27, 1939, DS 711.21/933.
22. N.Y.T., Feb. 13, 1940, 35:4.
23. MemHda (1940), p. 146.
24. N.Y.T., Feb. 18, 1940, 1:2.
25. Braden to Secretary of State, Feb. 23, 1940, FR (1940), V, 697.


In any event, the February, 1940, temporary agreement was
the first real breakthrough in United States-Colombian financial
negotiations, and it obviously facilitated the granting of a $10
million Export-Import Bank loan to Colombia.26 The loan was for-
mally announced early in May and was made, not directly to the
Colombian government, but to the semi-official Banco de la Repuib-
lica. The result was the same because the bank immediately
loaned the government the equivalent of $10 million in Colombian
pesos-17.5 million, at the existing exchange rate. This money was
earmarked for a broad range of projects designed to strengthen
the Colombian economy in the war emergency and after, all along
the lines of Lleras's proposals a year before to Ambassador Bra-
den. To be exact, the loan amount (in pesos) was appropriated as
shown in the table.27
Additional capital for the Caja de Credito Agrario
Industrial y Minero 7,000,000
Creation of an Instituto de Fomento Industrial 2,000,000
Highway construction 3,000,000
Railway construction and related port works (comple-
tion of Buenaventura-Medellin railroad; Narifio rail-
road; Tumaco port works) 2,000,000
Payment of part of the debt owed by the nation to the
Consejo Administrativo de los Ferrocarriles Nacionales
and acquisition of equipment for public works (in-
cluding improvement of river navigation) 3,000,000
Establishment of a revolving fund for agricultural de-
velopment in the Ministerio de la Economia Nacional 500,000
Since new requirements for foreign exchange arising out of this
program would materialize only gradually, the Banco de la Repuib-
lica could meanwhile use the greater part of the dollar proceeds
of the loan to help liquidate a backlog of exchange arrears esti-
mated in the neighborhood of $8 million.28 Last but not least, the
loan was sure to redound to the political benefit of the Santos
administration, and this was another objective that the United
States was perfectly willing to assist.
Meanwhile talks continued concerning a permanent settlement
of the older debts. Some of the immediate pressure for a full
adjustment may have been relieved by the granting of the Export-
Import Bank loan, but Colombians still expected to come back for
more United States credits later on, and there were naturally other

26. N.Y.T., May 10, 1940, 41:5.
27. MemHda (1940), pp. 150-53.
28. Braden to Welles (memo), April 19, 1940, FR (1940), V, 699.

Loans Old and New 75

valid reasons to keep searching for an agreement. There was even a
special reason for haste, because on July 20, 1940, the extraordinary
economic powers voted to the Colombian Executive by Congress
the previous December to deal with problems of the war emer-
gency were due to expire. Santos and Lleras understandably wished
to effect a settlement under these broad powers rather than go to
Congress for the approval of specific terms, as otherwise they
would have to do.
By now it was clear that Colombia would not accept more than
a straight 3 per cent interest in any permanent settlement, and
United States government representatives appear to have accepted
this quite calmly, even though they had frequently expressed
support either for a higher figure or for a gradually increasing
rate. What was to become the definitive formula was advanced by
Secretary of Commerce Jesse Jones at a meeting held in Washington
on July 6, 1940, a meeting that was also attended by other United
States officials, Colombian Ambassador Gabriel Turbay, and a rep-
resentative of the FBPC. It entailed consolidation of the outstanding
principal of the 1927 and 1928 issues, plus one-half of the arrears
of interest, in a new debt bearing 3 per cent; Colombia was also to
make provision for regular amortization, beginning on a very mod-
est scale but later increasing.29 The Colombian government gave
approval to these terms but insisted on adding the provision that
service might be temporarily suspended again, if the condition of
Colombian finances made such a step absolutely necessary.30 The
FBPC, on its part, refused to approve the terms in question, feeling
that it had been let down by the State Department in the matter
of interest31 and objecting vigorously to the conditional suspension
feature. White insisted that rather than accept the latter he would
prefer a mere renewal of the 1940 short-term agreement.32 But as
Duggan, for one, later pointed out, the suspension provision merely
expressed overtly what was a sovereign prerogative of any govern-
ment; if anything, he observed, Colombia was "perhaps . a little
more honest in giving notice."33
Even without the concurrence of the FBPC, President Santos on
July 17 issued a decree under his soon-to-expire emergency powers
29. Welles, memo, July 6, 1940, FR (1940), V, 706.
30. Colombian Embassy to Department of State, July 1 and 10, 1940, FR
(1940), V, 705, 707.
31. See, e.g., Bonsal to Welles, Dec. 27, 1940, FR (1940), V, 718.
32. Duggan, memo, July 15, 1940, FR (1940), V, 708.
33. Duggan to Welles (memo), Dec. 13, 1940, FR (1940), V, 714.

setting forth certain "bases that the Government shall adopt for the
service of the national external loans of 1927 and 1928."34 These
"bases" followed the Jones formula, with the addition of the sus-
pension provision, and were naturally displeasing to bondholder
spokesmen; but once the July 20 deadline had passed, Colombian
officials insisted that they could not legally revise the terms on their
own authority, and Sumner Welles informed White that the State
Department saw no reason to question the Colombian interpreta-
tion.35 Thus the specific settlement terms which at long last were
formally announced in Washington on December 30 essentially
confirmed what was already decided. They called for the exchange
of outstanding 6 per cent bonds for new 3 per cent obligations of
25 to 30 years maturity, and capitalization on the same terms of
one-half the unpaid interest. The value of the new issue was to be
$50 million: i.e., approximately $43.7 million of the original princi-
pal that was still outstanding after the open-market purchases
Colombia had made in the course of 1940, plus $6.3 million in
interest arrears.36 The suspension provision was not mentioned in
the announcement-but it remained an understood condition of
the settlement, by virtue of the July 17 decree.
A joint statement released to the press by the State and Treas-
ury Departments and the Federal Loan Agency described the
Colombian terms as "a fair effort on [Colombia's] part to adjust
its obligations."37 The FBPC, on the other hand, continued to sulk,
assailing the terms as "entirely out of line with what Colombia can
do" and discriminatory "against the bondholders in providing only
50 per cent interest while serving internal bonds and short-term
credits in full." The FBPC statement called attention to the dis-
crepancy between the 3 per cent interest Colombia was offering
to private investors (with the United States' official blessing) and
the 4 per cent which the Export-Import Bank was charging on its
own recent loan to Colombia.38 In a similar vein, a financial com-
mentator in the New York Herald-Tribune accused the United
34. Ministerio de Hacienda y Credito Publico, Decretos de cardcter extra-
ordinario expedidos por el Ejecutivo en desarrollo de las autorizaciones con-
feridas al Presidente de la Republica por la Ley 54 de 1939 (Bogota, 1940),
pp. 12-13.
35. Welles to Francis White, Dec. 20, 1940, FR (1940), V, 716.
36. N.Y.T., Dec. 31, 1940, 26:1; MemHda (1941), pp. 30-31. Actually,
the refunding operation did not call for quite $50 million; there was a differ-
ence of $127.50 in Colombia's favor.
37. N.Y.T., Dec. 31, 1940, 26:1.
38. N.Y.T., Jan. 1, 1941, 35:4.

Loans Old and New 77

States government of "aiding and abetting Colombia in bilking
American citizens";39 and the Council flatly refused to advise in-
dividual holders of Colombian securities to accept the terms.
Nevertheless, Colombia now proceeded to complete the required
formalities of the transaction. One was to obtain the approval of
the Colombian Junta Nacional de Emprestitos, a chiefly advisory
body made up of Congressmen from both major parties. It gave
its approval without dissent,40 even though the Conservative mem-
bers-one of whom was Senator Luis Ignacio Andrade, manager of
El Siglo-later stipulated that they approved only the actual terms
of the arrangement, not the device of offering those terms under
the authority of extraordinary powers which had in fact expired
by the time the offer was announced.41 The Conservative opposition
had often raised a great hue and cry over smaller technicalities
than this, but in the present case no serious issue was made of the
alleged breach of legality. (A more fundamental Conservative
criticism was simply that the loan settlement should have been
made sooner than it was, since one of the countless sins attributed
to the Liberal regime had been precisely its destruction of Colom-
bia's favorable credit standing abroad.2) The sourest Colombian
reaction, as a matter of fact, is probably that which came from the
L6pez wing of the Liberal Party itself. One lopista spokesman
suggested in El Liberal that the Santos administration had been
taken in by a clever United States diplomatic maneuver aiming
to make new financial assistance appear dependent on the settle-
ment of old debts-xwhereas, in practice, the United States was
determined to force credits on Latin American countries no matter
what, so that their purchasing could take the place of European
markets lost since the outbreak of war. But the Lopez Liberals
did not make a special issue of the loan settlement either; in their
view, it was just one of various things that Colombia had recently
done for the United States without receiving adequate compen-

39. New York Herald-Tribune, Jan. 1, 1941, 31:4.
40. T., Feb. 23, 1941; N.Y.T., Feb. 24, 1941, 28:3.
41. S., May 11, 1941.
42. This last criticism was quite clearly expressed in an editorial of La
Patria (Manizales), Jan. 9, 1941. But from the Conservative standpoint the
blame for delay had to be shared by both the Liberals and the United States.
The latter was taken to task by El Siglo, for example, for its obstinate resist-
ance conductca rebelde") to the necessary scaling down of interest charges
(S., May 31, 1940).

station in the form of Export-Import Bank credits or otherwise.43
The very last details to be taken care of were the signing of
contracts with financial agents in the United States to handle the
conversion of the old issues into the new one and the payment of
future interest and amortization, and the making of a formal offer
of conversion directly to the bondholders. All this was finally ac-
complished in May and June, 1940, and despite the attitude of
the FBPC the rate of response from individual investors was quite
satisfactory. In just the first eight months 80 per cent of the United
States bondholders had indicated their acceptance.44
Even before the actual completion of these arrangements, the
State Department was calling on its Embassy in Bogota to see
what might be done on behalf of other groups of creditors, while
the Colombian government was broaching the subject of still
another Export-Import Bank loan.45 Once again discussion pro-
ceeded on both topics simultaneously; but the new loan proved
easier to arrange. The original Colombian request was for $10
million, to be used for both military and economic requirements.46
The question of military assistance was soon separated from that of
economic aid, to be handled instead through lend-lease channels,47
but as negotiations progressed the Colombian want-list grew longer,
until $13 million was being requested for economic aid alone. That
sum was quite apart from a possible currency-stabilization loan
which the Colombians now mentioned again, even though Braden
was unconvinced of the need. Neither did he approve of all the
other Colombian requests. He did not question the desirability of
credits for essential public works, some of which were being cur-
tailed because of the drop in Colombian customs revenues, and
for irrigation and drainage projects in the banana zone, whose
basic crop was currently hard hit by an epidemic of sigatoka
disease. But he was skeptical about some other proposed develop-
ment projects and noted that the Instituto de Fomento Industrial
set up largely with funds from the previous year's loan had so far

43. See article by Jorge Zalamea in L., March 9, 1941, and L6pez's own
charges that United States cooperation had been inadequate in L., Jan. 25 and
April 15, 1941.
44. MemHda (1941), pp. 39-62; Livesey, memo, March 6, 1942, FR
(1942), VI, 217; N.Y.T., June 5, 1941, 33:4 and June 7, 1941, 25:2.
45. Braden to Secretary of State, Feb. 3, 1941, and Welles to Braden,
March 27, 1941, FR (1941), VII, 55-56.
46. Braden, memo, April 16, 1941, FR (1941), VII, 57.
47. Above, pp. 55-57.

Loans Old and New 79

invested only one-fifth of its capital in new undertakings (none
of which, he claimed, were as yet known to be in operation). Final-
ly, there was no doubt that Santos was eager to borrow more
money in part simply to refute the insinuations of Alfonso L6pez
that he had not been sufficiently forceful in extracting aid from the
United States.48
Nevertheless, in the last analysis, neither Braden in Bogota nor
his superiors in Washington were much inclined to quibble. Santos
was a proven friend; a few million dollars would never be missed.
Not only this, but the Bogota press, apparently with official en-
couragement, was holding out the expectation that Colombia
would get essentially what she wanted, thus creating a situation
in which it would have been awkward to do much less.49 So, by a
contract signed July 23, 1941, Colombia was granted S12 million
from the Export-Import Bank, again at 4 per cent interest.50 Or,
as one writer put it this- time in El Siglo, "the future of the nation
has been burdened again and more heavily."'1 But the Conserva-
tives did not really seem to mind very much, and lopistas were
happy to note that the administration had apparently taken to
heart their own pronouncements on the previous insufficiency of
United States aid. El Liberal even suggested that the shift in policy
was due to Lleras Restrepo's departure from the ministry the pre-
vious March.52
The new loan was made directly to the Colombian government
rather than to the Banco de la Republica. The entire amount was
not immediately paid over to Colombia, nor was it all earmarked
in advance for specific objectives; even as late as 1943 there was
still a modest balance awaiting appropriation. But somewhat over
half was in fact destined for highway construction and improve-
ments. The next largest amount went for irrigation and drainage
works, and something was used after all, with United States ap-
proval, for defense expenditures-for air bases, military build-
ings, and equipment. General agricultural development, naviga-
48. Emilio G. Collado, memo, May 2, 1941, Duggan, memo, May 22, 1941,
and Braden to Secretary of State, May 29, 1941, FR (1941), VII, 61-63,
49. Collado, memo, May 2, 1941, and Keith to Secretary of State, May 10,
1941, FR (1941), VII, 61-65.
50. Welles to Braden, July 25, 1941, FR (1941), VII, 72. The loan negoti-
ations were not actually complete until the approval of the terms by the
Colombian Congress in October (N.Y.T., Oct. 5, 1941, 36:5).
51. S., June 15, 1941.
52. L., June 14, 1941.


tion and port works, and construction of other government build-
ings all received lesser shares.53
Once the Export-Import Bank loan of 1941 was granted, the
efforts of the Santos administration to obtain further credits from
the United States were mainly concerned with military require-
ments; the end result was the lend-lease agreement of March,
1942.54 At the same time, however, the Colombian government
continued to work for a settlement of its other outstanding dollar
obligations, and before Santos left office, agreement had been
reached on both Olaya's banking-group loan and the obligations
of the Banco Agricola Hipotecario. In the former case, Colombia
had been gradually whittling away at the principal, which during
1939, for example, was reduced by more than a quarter of a
million dollars. Gradually, too, the area of disagreement on terms
for a permanent settlement was being narrowed by discussions
between the Colombian government and the bankers, with occa-
sional discreet prodding from the State Department but with little
sense of real urgency on either side. The main issue at stake was
the length of time to be allowed for complete liquidation, since
Colombia wanted a fifteen-year period, and some but not all of the
banking firms insisted on ten. In the end, what was ostensibly a
compromise was adopted. By an agreement of May, 1942, provision
was made for regular quarterly payments over a ten-year period,
but with the last payment, due December 31, 1952, amounting
to $5,578,896. Colombia was not expected to satisfy that amount
in a lump sum; it would have to be renegotiated when the time
came, so that the date of final liquidation was still left undeter-
Really serious discussions concerning the mortgage-bank debts
began only in September, 1941, when the Banco Agricola Hipo-
tecario proposed that service be resumed on the guaranteed issues
at 2.5 per cent interest, with back interest to be forgiven. Some-
what comparable treatment was offered in the case of the non-
guaranteed issues for which it had assumed responsibility, though
details were not spelled out. The State Department, however, in-

53. Secretary of State to Embassy in Bogotat, Feb. 9, 1942, DS 821.24/195;
MemHda (1943), p. 46.
54. Below, pp. 108-9.
55. Braden to Secretary of State, Nov. 10, 1941, FR (1941), VII, 77-78;
Braden to Secretary of State, Feb. 13, 1942, and Collado, memos, Feb. 28 and
March 6, 1942, FR (1942), VI, 210-12; MemHda (1940), p. 155; MemHda
(1941), p. 281; MemHda (1943), p. 45.

Loans Old and New 81
formed the special negotiator sent to Washington by the bank that
the terms appeared too low-that the creditors should not obtain
less than the terms recently offered national bondholders. The
bank then came up with a revised proposal which was endorsed
in principle by State Department officials, and after further detailed
negotiations was embodied in a formal offer to the bondholders in
June, 1942. It called for the holders of guaranteed bonds to receive
new 3 per cent Colombian national bonds at the rate of 81,100
for each $1,000 of principal, the additional $100 representing
partial compensation for interest arrears. Nonguaranteed bonds
were to be exchanged at the rate of $750 in new bonds for each
$1,000 of the old. These final terms were expressly approved in
advance by the Department of State, and they affected a total of
slightly more than 810 million in bonds outstanding in the hands
of United States investors.56
Thus by the time Santos left office only the holders of municipal
and departmental bonds were still waiting for some form of settle-
ment, although the creditors of the Department of Cundinamarca
did at least obtain a judicial warrant of attachment in New York
against the paltry sum of 842,725 owed to the Department by its
United States fiscal agents.57 In any event, the Santos administra-
tion had redeemed its pledge to do something about the state of
Colombian foreign credit. It had worked out a series of refunding
operations on terms that were generally closer to the original
Colombian official position than to that of the foreign creditors.
And in so doing, the Santos administration had kept domestic
political criticism to a minimum, while it successfully met one of
the key conditions for receiving new loans from the United States
government. These new loans, moreover, set a pattern which has
continued to the present and which shows no sign of ending.
56. James H. Wright, memo, Oct. 31, 1941, FR (1941), VII, 75-77;
Livesey, memos, Jan. 15 and 27, 1942, and Department of State to Colombian
Embassy, March 19, 1942, FR (1942), VI, 205-9, 218-19; Commercial and
Financial Chronicle, June 25, 1942, p. 2387.
57. N.Y.T., March 12, 1941, 32:2.

Coffee, Bananas, Oil

LOAN NEGOTIATIONS were only one aspect of Colombian-United
States economic relations during the Santos administration,
and despite the amount of official attention they received they
were not necessarily the most important. Indeed, the key fact
of economic relations continued to be the overwhelming leadership
enjoyed by the United States as a source of Colombian imports and
as a market for Colombian exports. A similar position of leadership
existed in the field of direct private investments. Neither trade nor
direct investments, however, presented a static picture. In either
case the changing international situation had far-reaching repercus-
sions, and in the field of investments there were also continuing
problems of domestic economic policy that directly affected foreign-
owned enterprises.
In 1938, the last full prewar year, coffee had provided 54.4 per
cent of the value of Colombian export trade, and even this figure
does not do full justice to the pervasive importance of the inter-
national coffee market for Colombia. The second- and third-rank-
ing exports-crude petroleum and gold, which in 1938 contributed

Coffee, Baimnas, Oil 83
22.8 per cent and 11.5 per cent respectively1-employed a rela-
tively minor percentage of the national labor force. Coffee was
by contrast a labor-intensive crop, grown in virtually every major
section of the republic on large estates and small peasant proper-
ties alike. Coffee was of particular significance, furthermore, in
United States-Colombian relations, for despite the recent growth of
German purchases paid for in compensation marks, the United
States retained first place as a buyer of Colombian coffee by a
substantial margin. The United States 'in 1938 took 80 per cent of
Colombian coffee exports and Germany took 16 per cent, as against
84 per cent and 7 per cent just four years earlier.2
The pattern of the Colombian coffee trade, with its heavy
dependence on the United States market, gave a degree of built-
in protection against drastic loss of export volume following the
outbreak of World War II. It did not, however, give equal protec-
tion against a decline in export value, which was dependent on
conditions in the world coffee trade as a whole; and the virtual
closing of the German market at the beginning of the European
war, followed by the loss of still other continental markets as the
war progressed, had notably adverse effects on coffee prices.
From September 11, 1939, to September 4, 1940, the New York
price of the basic Colombian coffee type (Nlanizales) went from
12.75 cents per pound to 7.25 cents-nearly the lowest on record.3
This decline not only reduced the income of the coffee industry
but threatened a fiscal crisis for the Colombian government itself.
The relationship between coffee prices and sales and government
revenue was inevitably complex, but the source of greatest im-
mediate concern was the fact that any major loss of foreign-ex-
change earnings-such as the present coffee situation inevitably
entailed-would diminish Colombia's capacity to import. This in
turn threatened the yield of the customs, the most important single
source of tax revenue.
Even before the full impact of the declining coffee price was
felt, the Santos administration began adopting countermeasures.
Exchange-control regulations were tightened, starting in Decem-

1. W. H. Delaplane, "The War and an Agricultural Economy: The Case
of Colombia," The Southern Economic Journal, IX (July, 1942), 34.
2. Contraloria General de la Repuiblica, Anuario de comercio exterior
(1938), pp. 78-79. Percentages given in the text are based on value. (Much
of the coffee exported to Germany was actually resold in other countries of
3. Delaplane, "The War and an Agricultural Economy," p. 36.


ber, 1939, and special restrictions were placed on certain types of
imports. The government moved to increase the production and
export of gold; as mentioned in the preceding chapter, it speeded
up financial negotiations with the United States in order to obtain
new foreign credits; and in May, 1940, it established a bounty of
two pesos a bag on coffee exports.4 All these expedients appear to
have been of some help. But except for the export bounty they
did not directly assist the coffee industry, nor was there any
assurance that their combined effect would solve the foreign-ex-
change problem. Hence Colombia, in concert with other Latin
America producers, turned to the further expedient of cooperative
action to support the price of coffee.
The idea of an inter-American agreement to limit coffee produc-
tion and exports and thereby maintain the price at an acceptable
level was far from new, but it had not generally enjoyed much
favor in Colombia. Confident that the superior quality of their
own grades of coffee would guarantee the sale of all they pro-
duced-and at a price comfortably above that of the Brazilian
product-Colombians had normally preferred to go their own way
in the world coffee market. In 1936, to be sure, with strong sup-
port from the L6pez administration, the quasi-official Federaci6n
National de Cafeteros did enter into an agreement with Brazil for
joint restriction of exports. But the federation could not adequately
finance its share of the program, which is one reason-though
certainly not the only one-why the agreement quickly broke
down.5 The new situation brought on by World War II then created
sentiment in Colombia for another try at international regulation,
and when the Third Pan American Coffee Conference convened at
New York in June, 1940, to devise a plan of joint action, Colombia
was an active collaborator.
The United States, fearing especially the political consequences
of economic distress, was also prepared to collaborate, an even
more important augury of success. The main conditions imposed
by the State Department, as expressed in a message from Sec-
retary Cordell Hull to the president of the Coffee Conference,
were that the United States should be officially represented in the
formulation and administration of the program and that the in-

4. Ibid., pp. 38-40.
5. Mariano Ospina Perez, "La political cafeteria colombiana," Revista Colom-
biana, V (May 1, 1935), 69-76; MemHda (1941), p. 15; MemHda (1942),
pp. 75-76.

Coffee, Bananas, Oil 85
terests of consumers as well as producers must be taken into
account.6 However, the Latin Americans would apparently have
preferred, as at least a first step, not to impose limitations on
themselves but simply to have non-American coffee excluded from
the United States market. Only when it became clear that the
United States could not accept such a solution did the Conference
begin "serious discussion" of a general quota system,7 and even
then the actual fixing of quotas was an extremely complicated
and difficult matter. Indeed the Conference managed only to draw
up a tentative plan which was left to be perfected through
further negotiations among the Pan American Coffee Bureau, the
Inter-American Financial and Economic Advisory Committee in
Washington (which was headed by Sumner Welles), and the
interested governments themselves, including that of the United
Colombia, though she came to accept the quota system in
principle, created probably more than her share of difficulties. The
Colombian delegation at New York raised objections to the idea of
coffee import quotas to be enforced by the United States, pre-
ferring to rely on export quotas at the Latin American end, even
though United States participation in the enforcement process
was the best guarantee of effectiveness. In later negotiations over
the size of specific national quotas, the Colombian government
insisted on haggling over quite insignificant quantities-virtually
admitting, furthermore, that its reasons were political, not econom-
ic. Unfortunately, the quota discussions reached their climax during
September and October, 1940, precisely when the Santos adminis-
tration was facing major problems in Congress over the Havana
agreements, the proposed defense loan, and so forth; and it was
frankly afraid that a difference of a few thousand bags in a quota
slated to exceed three million would bring dangerous political
repercussions on the home front. Nevertheless, Colombia in the
end had little choice but to yield. An Inter-American Coffee Agree-
ment was formally signed both by Latin American exporting na-
tions and by the United States on November 28, 1940, assigning
Colombia a quota in the United States market of 3,150,000 bags
out of a total of 15,545,000 for all coffee exporters. This was
50,000 less than Colombia had sought, though not quite so far
from her last bargaining position. The final formula for the dis-
6. Hull to Manuel Mejia, June 24, 1940, FR (1940), V, 381-82.
7. Paul C. Daniels, memo, July 3, 1940, FR (1940), V, 383.


tribution of quotas was in considerable part the work of the United
States, which also agreed to share in the work of enforcing them.8
Despite its previous objections, the Colombian government
hailed the Coffee Agreement after it materialized as a major
economic achievement. It would be hard to find a more "brilliant"
operation, declared the 1941 Memoria of the Ministry of Finance,9
which gave due credit to the United States for helping to bring it
about. The basis for this satisfaction was the fact that the down-
ward trend of coffee prices had been successfully reversed in the
latter part of 1940. The recovery began even before the Agree-
ment was signed, but at least partly in anticipation of its effect;
and by mid-1941 the price of Manizales had more than doubled, to
a level of 16 to 17 cents per pound.10 This happy ending was not,
of course, due solely to the quota pact, because coffee consumption
was rising steadily in the United States under the influence of
defense employment and other factors. Thus by May, 1941, it was
already possible to assign the exporting nations, including Colom-
bia, a round of increases in their quotas, and other increases kept
coming at regular intervals without pushing the price of coffee
downward again; indeed one of the reasons for the larger quotas
was to keep the price from rising too sharply.1
Unofficial opinion in Colombia was less ecstatic about the quota
system. Many Conservatives, especially, felt that even if the Coffee
Agreement had been beneficial in the short run, Colombia would
be better off in the end if she continued to rely on quality produc-
tion rather than market manipulation.12 The L6pez faction of
Liberals offered no such criticism of the quota principle but mini-
mized the concrete benefit derived from the 1940 agreement and
insisted that it was at least as valuable to the United States as to
Colombia-for example, that increased coffee earnings went right

8. On these negotiations, see the collected memos, dispatches, etc., in FR
(1940), V, 382-405; MemHda (1940), pp. 27-31; MemHda (1941), pp. 117-
18; World Peace Foundation, Documents on American Foreign Relations,
July 1940-June 1941 (Boston, 1941), pp. 97-106 (for the text of the agree-
ment); Paul C. Daniels, "The Inter-American Coffee Agreement," Law and
Contemporary Problems, VIII (Autumn, 1941), 708-20.
9. MemHda (1941), p. 23.
10. Delaplane, "The War and an Agricultural Economy," p. 36. The price
then roughly stabilized and was still at the same level a year later (MemHda
[1942], p. 94).
11. MemHda (1941), p. 19; MemHda (1942), pp. 91-92; Daniels, "The
Inter-American Coffee Agreement," p. 718.
12. See, e.g., La Patria (Manizales), March 4, 1941.

Cofee, Bananas, Oil 87

back in payment for American exports.13 There was also some
grumbling over the structure of official controls and special taxes
that the government imposed, in collaboration with the Federacion
National de Cafeteros, to take coffee stocks in excess of the export
quota off the market and hold them in storage. But the federation
itself, whose top echelons included a strong representation of Con-
servatives, stood by the government and the agreement.14 Dis-
content was also lessened by the mere fact that the coffee industry,
for whatever reasons, was thriving. During the entire year 1940
the volume of coffee exports had risen while the value actually
fell, but in 1941 it was the other way around, and in 1942 both
rose sharply together (see the table15). In this fashion coffee con-
tinued playing the major role in Colombian export trade, and the
coffee recovery-combined with intensification of gold production
and exports-far more than offset the total collapse that soon over-
took the banana trade.16

Year Bags Pesos
1938 4,228,801 88,775,329
1939 3,702,163 87,124,693
1940 4,443,199 74,023,042
1941 2,911,518 83,293,779
1942 4,309,479 144,750,690

Banana exports from Colombia in 1938 amounted to 8,883,871
pesos, or 5 per cent of total exports. The United States took only
49 per cent of this amount, as against 80 per cent for coffee,17
but the industry was dominated by the United Fruit Company of
Boston, and the never-ending troubles of United Fruit caused
bananas to loom disproportionately large in United States-Colom-
bian relations. Though the company produced only about one-
fifth of all Colombian banana exports on its own lands,18 it pur-
chased virtually all the rest of the exportable crop from independ-
ent growers for shipment on its own account to Europe or North
13. L., March 9, 1941.
14. Delaplane, "The War and an Agricultural Economy," p. 41; MemHda
(1941), p. 22. The federation had, of course, played an important part in ne-
gotiating the Coffee Agreement for Colombia.
15. Based on Anuario de comercio exterior, 1938-42.
16. See Appendix.
17. Anuario de comercio exterior (1938), pp. 2, 3, 78-79, 206.
18. Greene to Secretary of State, Oct. 6, 1938, DS 821.6156/262.


America. It thus exercised, in effect, a marketing if not a producing
monopoly, and this had long been a source of irritation in Colom-
bia. It would lie outside the scope of this study to examine how
much truth (if any) there may have been in charges that United
Fruit consistently rigged prices and other conditions of the banana
business in its own favor, yet the mere existence of such charges
inevitably affected not just the company's public image but Co-
lombian official attitudes and regulatory decisions concerning it.19
Certainly no other foreign-owned enterprise had felt the dis-
pleasure of the L6pez administration to the same extent as had
United Fruit. Believing that the company had used its purchasing
contracts to reduce independent growers to an unhealthy state of
servitude, the Lopez regime sponsored Law 1 of 1937 which
among other things limited the standard contracts to a maximum
duration of two years. It also put through what was ostensibly a
much more sweeping measure, enacted later the same year, which
provided for an ill-defined government "intervention" in the ba-
nana industry and authorized the use of expropriation if neces-
sary to achieve its objectives.20 The practical effects of both meas-
ures had been slight,21 but they were not the only evidence of
official hostility. Indeed, the company was subjected to what it
considered a campaign of pure harassment, which led twice to the
arrest of its resident manager (on charges that were ultimately
dismissed).22 Whether the treatment it received was deserved or
not, it was natural enough for United Fruit to conceive doubts
as to its future in Colombia; and one result was an obvious hesi-
tation to expand its Colombian operations further or even to main-
19. The record of the United Fruit Company is examined fully but not
exhaustively-and most of the complaints usually made against it disproved
to the authors' satisfaction-in Stacy May and Galo Plaza, The United Fruit
Company in Latin America (Washington, 1958). The information specifically
relating to United Fruit operations in Colombia (pp. 12, 175-80, and passim)
is unfortunately rather limited. See also J. Fred Rippy, The Capitalists and
Colombia (New York, 1931), pp. 180-88.
20. Leyes (Jan.-June, 1937), p. 4; Leyes (July-Dec., 1937), pp. 95-96.
21. With respect to the contract feature of Law 1, there had been a rush
to make longer contracts just before the law was enacted, which lessened
its immediate impact since it was not retroactively applied (Dawson to Secre-
tary of State, Aug. 27, 1937, DS 821.6156/230). Ambassador Braden, however,
came to the conclusion that the length of contracts was greatly overrated in
importance by both the company and its critics and that it would make little
difference in practice if the company bought bananas with no contracts at all
(Braden to Secretary of State, May 8, 1939, DS 821.6156/264).
22. Greene to Secretary of State, Jan. 21, 1938, DS 821.6156/253; La De-
fensa Social (Bogotat), Nov. 29, 1939.

Coffee, Bananas, Oil 89

tain their current level. What made the situation particularly dis-
turbing for the company-and for Colombia-was the fact that
since late in 1937 there had been clear indications of the spread of
sigatoka disease in Colombian banana plantations.23 The disease
could be controlled, but only by complex and costly measures
which United Fruit did not wish to undertake unless it had greater
assurance of stability for its position in Colombia.
The chances for a successful rapprochement were seemingly
improved in 1938 both by the arrival of a new manager for
United Fruit and by the change in administration at Bogota.
Soon after taking office, President Santos had a cordial talk with
Reginald H. Hamer, the new head of the company's operations,
in which he emphasized that there was no longer any need to fear
hostile treatment. Santos's Mlinister of National Economy added
further specific assurance that the government intended no expro-
priation of banana lands, with the possible exception of a few
strips to be used for irrigation works or telephone right-of-way or
something equally innocuous. However, United Fruit was still hesi-
tant to undertake a massive anti-sigatoka campaign. Hamer in-
formed the United States Legation that the company would co-
operate with any measures the Colombian government saw fit to
take but that it would make no special effort on its own; and if
the industry should ultimately be ruined, he added, United Fruit
was prepared to leave Colombia without regrets.24
The persistence of public and political suspicion of United Fruit
was demonstrated early in the Santos administration by the formal
accusation, lodged by the Chamber of Representatives, against a
former Minister of Education, Pedro Maria Carrefio, for allegedly
having exerted improper influence on the fruit company's behalf
in adjusting terms for the rental of one of its ships as a troop
carrier during the Leticia crisis between Colombia and Peru. The
aggravating circumstance in this incident, which was by now rather
ancient, was that Carrefio had been receiving payments as a legal
adviser to United Fruit despite his position in the Colombian
cabinet.25 It thus served as handy confirmation of the stock charge
that the fruit company had been suborning Colombian politicians
23. Dawson to Secretary of State, Nov. 9, 1937, DS 821.6156/244.
24. Greene to Secretary of State, Oct. 6, 1938, DS 821.6156/262.
25. S., March 23, 1938; T., March 31, 1938, and passim. Carrefio insisted
that the payments in question (which were quite small) were intended for his
son, who was handling legal work for United Fruit while he was in the cabi-
net; but they were declared on his, not his son's, income tax.

to serve its nefarious ends, and the fact that Carrefio was a
Conservative member of Olaya Herrera's coalition regime when the
incident occurred gave added zest to the attacks of Colombian
Liberals, principally of the L6pez faction.
The move for a retroactive impeachment of Carrefio had actually
begun toward the end of the L6pez administration; it merely
came to a head after Santos took office. The Senate eventually
voted, in November, 1938, not to admit the accusation presented
by the lower house, but its decision specified that Carrefio's
conduct-and thus, by extension, that of the fruit company-was
deserving of censure.26 Nor did the Senate's decision immediately
end agitation on the matter, which dragged on for a while longer.27
However, Carrefio at least had the support of fellow Conservatives,
and not just Conservative lawyers for foreign companies, since he
was defended with vigor by Laureano G6mez's El Siglo.28 G6mez
and his immediate associates were chiefly concerned only with
clearing the name of Carrefio personally, but the latter was not,
strictly speaking, a fellow laureanista, and they were not always
tolerant of Conservatives who had served both foreign corporations
and Olaya. It just happened that the G6mez brand of anti-
Americanism generally spared that symbol of all Yankee economic
exploitation, the United Fruit Company. The feud between L6pez
and United Fruit was obviously one major reason for this phenome-
non; thereafter, Conservative leaders including G6mez were likely
to trace anything that went wrong in the banana zone back to the
"socialistic" antagonism of L6pez toward private enterprise, with
United Fruit (like any L6pez victim) enjoying an automatic
presumption of innocence. But the fact that Conservatives tended
to be "soft" on United Fruit did not solve its problems. It meant
that Santos could hold out the hand of friendship without fear of
Laureano G6mez, but he still had his own party to contend with.
He also had to contend with United Fruit, which was regret-
tably slow to forgive and forget. The company continued to nurse
its resentment over L6pez's banana legislation, which it expressed
directly in memoranda to the government and indirectly by having
its attorneys advise a group of Colombian growers who chose to
challenge the constitutionality of the intervention law in the courts.
Meanwhile, sigatoka continued to spread, and the government's

26. T., Nov. 10, 1938.
27. See, e.g., Tierra (Bogota), Nov. 18, 1938.
28. See especially S., March 23 and 25, 1938.