Category: History Why the Communists are Winning as of 1976... by William D. Pawley & Richard R. Tryon
William D. Pawley never expected to find a candid confession by the man suddenly thrust into the world's most important job- Harry S. Truman, as his introduction to the post FDR period. The rise of the 'One world' movement was in the Washington air when Pawley responded to the Truman call to be Ambassador to Peru. But, it was a time for Pawley to learn the ropes of dealing with the U.S. State Dept. and with a foreign government. His good sense and business experience made it possible for him to score an impressive victory with a key assignment in Peru where a massive debt restructuring was needed to correct a badly made loan configuration built years before in a way that Peru could never handle. As it turned out, a much larger problem surfaced and an imaginative solution was devisd by WDP to 'save-face' for the President of Peru regarding use of the air base at Talara that let him move on to a new assignment in Brazil.

Chapter Five

AMBASSADOR TO PERU

1

Harry S. Truman called me to the White House in the late spring of 1945, after he had been President for only a few weeks. As far as I could observe, he had not altered the appearance of the President’s office. He was talkative and in an expansive mood, often emphasizing a point by patting the sides of his chair vigorously with both hands. Despite a show of self-confidence, he still seemed awed by his new responsibilities.
“The man sitting in this chair, Bill, has taken on the most important trust in the world today,” he began. “Yet here I am, fresh from the Vice-Presidency, but so ignorant of many serious problems facing our country that I’m forced to sit here for some sixteen hours a day being briefed by every department of government, mostly military and intelligence, about matters I was not kept abreast of.”
He stared at me earnestly a moment.
“Only in a democracy like ours could a fellow like Harry Truman reach such a position,” he continued. “I have little or no experience in world affairs to prepare me for occupying the most important position in the world. The fact is, if it weren’t for those phones you see on my desk, I’d be greatly disturbed as to whether I could carry out my responsibilities. As it happens, I can call any man or women in the country, ask them to come see me, and they’ll drop whatever they’re doing - as you’ve just done - at any sacrifice, ninety-eight per cent of them, to help me get some urgent job done.”
He kept me in suspense for a moment, then leaned forward.
“You know Latin America and you speak their language, in both senses. I need someone who can handle a specific problem that I’m faced with in Peru. I’m asking you to be my ambassador in Lima.”
“Mr. President,” I replied, “I’ll serve as your ambassador anywhere you want me to, where I consider myself qualified.”
He got down to specifics immediately. First priority would be for me to negotiate settlement of a bond debt of $150 million dollars, on which the Peruvian Government had defaulted since 1931. Not too surprisingly, either. For Peru had borrowed the money under highly unfavorable terms in 1927 and 1929, was then hit hard by the collapse of raw material prices in the Great Depression. Thereafter, the country stoutly resisted a dozen separate efforts by bondholders’ committees to negotiate the servicing of the debt.
Since charges had been aired that the son of former President Leguia had been paid a “commission” of $250,000 illegally, renegotiation was an unpopular subject of conversation in Peru.
The fact remained, however, that the Government of Peru had pledged its good faith and the income from the tobacco monopoly - between $6 million and $15 million annually - to service the bonds. Yet no serious effort had ever been made to do so, and accumulated interest had reached $50 million. If American underwriters had been guilty of bribery, then it follows that a Peruvian hand had been held out. American bondholders had bought these securities in good faith. Even though complete servicing of the debt was now unrealistic, the President and I agreed that some reasonable solution must be found.
“I want to help Peru get on her feet,” he summed up. “We owe her a debt of gratitude for being the first Latin American Republic to break relations with the Axis powers.”
Peru did so at the Rio de Janeiro Meeting of Consultation Ministers of Foreign Affairs less then a month after Pearl Harbor, partly thanks to the skillful diplomacy of Walter Donnelly, the Counselor of the American Embassy at Rio. Peru’s action was vital to the American war effort, denying the Japanese Navy access to Peruvian Pacific Ports and fuel oil.

2

For a month before my departure in July, 1945, cabinet officers and other officials gave me the normal briefings for newly appointed Ambassadors. Some sessions proved valuable, others less so. For example, when I sought information on protocol, especially important to the pride of sensitive Latin Americans, I was brushed off by a protocol officer with a four-word briefing: “Just use common sense.”
It proved to be not quite that simple. First of all, there must be an undeviating respect for the customs and traditions of the host country. Disregard for the amenities, in Latin America, as I already knew, can speedily make a shambles of what would otherwise have been a successful mission.
But what was uppermost in my mind was that I had been given my first official opportunity to serve in the “front lines” and to come to grips with alarming trends threatening the Free World. I was eager to play a part, however small, especially after listening to a dominant theme going the rounds at after-dinner social functions attended by Washington’s intellectual elite, the theme being “One World.” Edna and I were appalled by the eagerness of so many distinguished leaders of popular opinion to subordinate our nation’s sovereignty to a world organization free to vote all of our substance away.
Edna and I flew out of Washington in My Lockheed Lodestar, one month before the A-Bomb mushroomed over Hiroshima on August 6, 1945. En route, we enjoyed the hospitality of George H. Brett, Commanding General of the Panama Canal Zone. From his vantage point, Brett was able to underscore for me the strategic importance of the Zone, militarily, economically and psychologically, for the future solidarity of the Western Hemisphere. Today, it is easy to visualize what havoc Castro could wreak if able to achieve a Communist stronghold in Panama, where Communist control of this vital link between the Americas and two oceans would give him a more dangerous base of operations than the island of Cuba.
We passed over Talara, where through the navigator’s bubble, I caught a glimpse of the American air base constructed in cooperation with Peru for the wartime defense of the Panama Canal, as we began the final lap to the capital.
Although it was not a part of my official briefing in Washington, one objective stood high on my personal list, in the post I was about to assume. In addition to the diplomatic interests of my country, I was determined to serve also the legitimate interests of the American business community.
My motivation for this went back to a rude reception I once received, back in China during the ‘30’s, at the hands of our ranking State Department official in Peking, Ambassador Nelson T. Johnson. In my capacity as sales representative for Curtiss-Wright and Douglas Aircraft companies, I was well aware of the official hostility of the State Department toward American efforts to help train and equip China’s fledgling air force. As early as March 24, 1932, neither the State Department nor the War Department were “interested in sending an aviation training mission to China.”
Again, in 1934, a Senate Committee investigating the munitions industry, generally known as the Nye Committee after its Chairman, Senator Gerald P. Nye of North Dakota, had held widely publicized hearings in which American armament manufacturers and dealers were excoriated as men who trafficked in death and fomented wars to swell their profits. The Chief Counsel of this Senate Committee was Alger Hiss, who was later to be exposed in sworn testimony as a leading member of the Washington underground of the American Communist Party. He was subsequently to be convicted of perjury for denying that he had ever turned over secret State Department documents to self-confessed former Soviet espionage agent Whittaker Chambers.
“For the penetration of the United States Government by the Communist Party,” Chambers wrote in his book, Witness. “coincided with a mood in the nation which lightheartedly baited the men who manufactured the armaments indispensable to its defense, as Merchants of Death. It is not surprising that Alger Hiss should first have emerged to public view in the act of helping the Communist Party to abet that disastrous mood.”
In this context, I had called on Ambassador Johnson. After a pleasant enough half hour, upon leaving, I mentioned that sales representatives of other countries had the support of their Ambassadors.
“I am not suggesting,” I said, “that you accompany me on my visits to Dr. Kung or to the Generalissimo, although our foreign competitors again considerable prestige by such support, but may I ask one thing. I’d certainly appreciate it, when you’re in Nanking, if you could gently remind Chiang or the Minister of Finance that some of the finest aircraft in the world are being manufactured in the United States, and that you hope China will give careful consideration to the proposals of American aircraft companies.”
I though that this was a reasonable request. But Johnson’s face purpled with anger.
“Pawley,” he said, “I’m indignant! How can you even suggest that an American Ambassador lower himself before high Chinese officials with a sales pitch for American military products?”
“Mr. Ambassador,” I retorted, “it has always been my assumption that American diplomats were supposed to represent their country’s economic, as well as political, interests abroad.”
This answer he brushed impatiently aside, terminating the interview.
Those of us who had spoken in those terms in Washington in the mid-1930’s were more often disregarded than listened to, except by the military. We often felt that we were inside a sealed glass bottle, making grimaces that amused those on the outside and shouting warnings that they could not possibly hear, bearing on America’s enormous stakes in China.

3

As the B-17 entered the landing pattern at Lima, in addition to the primary objective of serving the interests of my country, I resolved to do everything in my power to help the legitimate aspirations of the Government and people of Peru, and to continue my fight against Communism, wherever encountered.
At this very moment, I was representing a government that not only had been infected right at the top by sympathizers with its mortal enemy, but, equally disheartening, was being misled by totally honest and loyal citizens who considered anti-Communism unfashionable and unnecessary.
My arrival had been timed to present my credentials (an elaborate ceremony, of which more later) to outgoing President Manuel Prado Ugarteche, and to attend the formal transfer of governmental power to Prado’s democratically elected successor, the poet and professor of jurisprudence, Dr. Jose Luis Bustamante Rivero. The inauguration of Bustamante was attended by a distinguished group of international dignitaries, among them General Brett, Congressman Daniel J. Flood of Pennsylvania, and Ambassador Frank P. Corrigan.
At the Chancery, where the Ambassador works, as distinguished from the Embassy, where he resides, I found that a cramped, unattractive office had been assigned to me. And I noted that there were several larger and more suitable offices. I began to get the message when Counselor Edward G. Trueblood informed me that, since the departure of my predecessor, everything had been running smoothly. There would be no necessity, apparently, for me to disturb my rounds on the inevitable entertainment circuit by the drudgery of running my own Embassy. All I needed do, according to Mr. Trueblood, was furnish him with whatever economic and political information I gleaned during my social rounds, to be included in the counselor’s daily reports to Washington.
After a day of sitting at my desk in a virtual isolation booth, I summoned Trueblood and told him that I expected to see all important telegrams, mail and dispatches in order to familiarize myself with every phase of my new job. The request seemed to anger him. Next morning, my personal secretary, Catherine Alford, who had accompanied me to Peru, greeted me apprehensively.
“Mr. Ambassador,” she said, “you have a big surprise in store for you.”
She opened the door. There on my desk, and overflowing onto the floor, were the contents of seven or eight large mailbags, lying where they had been dumped. I summoned Trueblood.
“Get all this stuff out of here,” I told him, “and remove it personally. Hereafter, carry out my instructions. I’ve already told you what I want to see.”
I was not the first to run afoul of Mr. Trueblood, as I learned later from Claude G. Bowers, distinguished difficulties of his own with the same gentleman.
After three months of genuine but abortive efforts to gain my counselor’s cooperation, I arranged to have him transferred out of my Embassy. I then phoned Walter Donnelly, Counselor at Panama, and asked him if he would come down to Lima to serve in the same capacity. I offered the use of my airplane to move his family and belongings. He said that he would consult his wife, Maria Helena, and get back to me. Next day he told me that, by odd coincidence, he had been offered a Central American ambassadorship on the same day as my call. He and Maria Helena, after mulling it over, had decided to join me in Lima.
“You’ve made my day,” I told him.
The Department of State approved his transfer. And from the day that this superbly qualified Foreign Service officer, whom I had known for many years, reported to me, all my staff problems disappeared.

4

In order to accomplish my mission, beginning with the bond debt, I soon recognized that I must move tactfully and, if need by, slowly, in the emotionally charged political climate prevailing in Peru.
After over a decade of dictatorial rule, President Prado had yielded to popular demand and provided for free elections in 1945. The liberal-to-radical forces, banded together in the National Democrat Front, chose Bustamante as their standard bearer, with the backing of the Alianza Popular Revolucionaria Americana (the American Revolutionary Popular Alliance).
The elections had given Bustamante a two-to-one majority over his conservative opponent and left the APRA in control of both houses of Congress. The APRA had refused all Cabinet posts and appointments so as to be free to criticize the Executive Branch. Hence the Executive and Legislative branches were at loggerheads, multiplying no end the headaches facing me in the improvement of relations between Peru and the United States.
I began to see a good deal of President Bustamante and his Foreign Minister, Dr. Enrique Garcia Sayan, on increasingly friendly terms. They pointed the way to the stratagem I must follow toward the bond settlement, which would have to be ratified by the APRA-controlled Congress. This, in turn, made it essential that I meet Victor Haya de la Torre, the magnetic leader of the APRA, convince him that settlement was in the interests of the Peruvian people whom he professed to champion, and, in doing so, contrive to avoid any shadow of suspicion that I was conferring with the political opposition behind Bustamante’s bank.
Haya had absorbed Marxist teachings and, as President of the University Student Federation, he had organized a successful strike of the textile workers. In 1923, he had led a student protest, as a result of which police fired on the students, barricades were erected, three persons were killed, and Haya was driven into hiding. He had been apprehended, imprisoned and deported.
At the Third World Congress of the Communist Internationale in Moscow in 1924, Haya de la Torre fell under the influence of Leon Trotsky, Nicholas Bucharin and other Soviet leaders. Five years later, he turned up in Germany, where he studied the rising Nazi movement and its terrorist methods. How deeply he sympathized with Hitler’s movement remains in doubt, but Peruvian exiles who knew him at that time state that the walls of Haya’s room were covered with photos of Storm Troopers.
By 1945, the time of my arrival, Haya de la Torre had emerged as the single most powerful name in Peru. Although Haya may not have been a Communist, nor even perhaps a “fellow traveler”, he was certainly a dedicated leftist. However, ever since the birth of the Good Neighbor Policy, he had surprisingly appeared to reverse himself, supporting the United States and opposing the Axis powers throughout World War II, lauding former Vice-President Henry A. Wallace, and hailing FDR as a world leader whose Four Freedoms bespoke a goal for all mankind. While still a social revolutionist, he had publicly disassociated himself from the “Moscow brand.”*
I carefully established friendly relations with the President of the Senate and the Speaker of the House, both close friends and representatives of the revolutionary leader. Through them, I received an invitation to visit Haya at Chosica, a town near Lima. So far, so good, but it posed a touchy problem. It wouldn’t do for an American Ambassador to appear to be seeking out a member of Bustamante’s opposition. So I countered with the suggestion that Haya lunch with me at my Embassy. He declined and a deadlock was in the making.
I reemphasized to the Aprista leaders of the two Houses of Congress that I could not carry out my mission unless I met Haya. They encouraged me to try again, and I sent Haya a second invitation to lunch with me at the Embassy and discuss “matters of importance to our two countries.”
When Haya had not arrived by two o’clock the following day, I reluctantly decided to go ahead and have lunch without him. I was already proceeding to the dining room when Haya suddenly arrived, accompanied by the President of the Senate and the Speaker of the House.
In his late forties, burly, tending toward obesity, and under five feet six inches in height, the enigmatic revolutionary leader exuded energy. His eyes pierced mine and he skipped the preliminaries.
“Why did you refuse to come and see me in Chosica?”
“Dr. Haya de la Torre,” I replied, “if you were President of Peru, would you want the American Ambassador to go visiting a political opponent of your administration?”
He reflected for a moment.
“That is a good answer.” He shook my hand and added, “I think we can be friends.”
After a drink and lunch, we plunged into a thorough discussion of outstanding issues between our countries which lasted until late afternoon. I outlined the programs which I believed would be beneficial for Peru and which the U.S. would be willing to finance, once the albatross of the bond debt had been removed. So pleased was he at the prospects thus raised that he offered to ask President Bustamante to join him in appointing a five-man delegation to accompany me to Washington and negotiate with the Bondholders’ Committee. This was all the more encouraging, since previously, our delegations had had to journey to Lima.
While I found these developments gratifying, they did not delude me into believing that the leopard had changed its spots. On September 22, 1945, I reported to Washington:
“I do not believe that Haya de la Torre is in any way democratic in thought or action. I anticipate that, should he gain absolute control, Peru will experience a totalitarian government of the first magnitude.
“I have always been convinced that Hitler could have been stopped in the early stages. I feel now that Haya de la Torre, who learned most of his present organizational techniques in Germany, can be delayed, if not completely stopped, in his aspirations for total control of Peru.”
Once in power, I added, Haya might well spread his anti-democratic influence throughout Latin America to the detriment of American national interests. What I feared was a pattern later to be followed by Fidel Castro, who skillfully cloaked his true intentions until his hour struck.
Sure enough, after I left Peru, Haya forced a bill through Congress imposing strict censorship on Lima’s two outstanding conservative newspapers,El Comercio and La Prensa. A bloody uprising followed in Callao, in which more than 300 people were killed, forcing Bustamante to resort to dictatorship.
While Haya no longer plays an active political role, the Leftist anti-American clique of military dictators who misgovern Peru today (1976) are the spiritual heirs to Haya’s doctrines of revolution and domination by a monolithic political party.

5

Before completing my ambassadorship in Lima and moving on, in June 1946, to the same post in Rio de Janeiro, Brazil, I made strenuous efforts to clear the air between our two countries in two trouble spots: Enemy aliens interned in Peru during the War and obnoxious trade-control practices.
Some 590 Germans had been sent from Peru to the United States for internment, by mutual agreement, to sit out World War II under detention, as a military precaution, as were a large number of Japanese residents of Peru. Many of the Germans were outright Nazi or open sympathizers. Others, however, were merely nationalists who felt that grave injustices had been inflicted on Germany by the Versailles Treaty and who applauded Hitler’s demands for redress.
What concerned me now was that I had been directed by my government, against my instincts, to tell Bustamante that we were changing signals. We would not return the Germans to Peru, as agreed, for the adjudication of their individual cases, but would judge for ourselves which Germans to return to Peru as innocent and which to send to Germany for trial. I felt strongly that those sent to Germany would be found innocent, then quickly make their way to Argentina, thence to Peru, as bitter enemies of the United States.
My protests were only marginally successful. The State Department, after sending some 520 Germans back to their homeland, agreed that of the 70 remaining cases, German aliens with Peruvian children would be returned to Peru, plus the rest, if she wanted them. But it was too little and too late. An unnecessary violation of our agreement would, as I feared, come back to haunt us in Argentina and in Peru.
In January, 1945, Peru had instituted import and exchange control legislation. Acting Secretary of State Dean Acheson had expressed “regret” to the Peruvian Ambassador and I was asked to report on this unwelcome development. I duly reported back to Secretary James Byrnes in October that a few officials were able to “kill business by their own individual decisions, without laws or regulations to govern them.”
Complaints from several other countries were shrill and widespread. Smaller importers were being starved out of the market, and competition stifled, by denial of foreign exchange, to the benefit of larger, and favored, importers. With Washington’s support, I was able to elicit assurances that the system would be liberalized, and that it was emphatically not the policy of Peru to continue such controls indefinitely.
In this and other economic matters, the American business community in Lima was of great assistance to me. I arranged to have regular meetings, approximately every fortnight, with about a dozen key representatives of American firms, at which we held frank, off-the-record discussions of the economic and political problems they faced and of impending developments. Results were so fruitful that I was to continue and expand the technique while Ambassador to Brazil.
Our rights to the air base a Talara were due to expire in the fall of 1946. Accordingly, before relinquishing my duties in Lima in May, 1946, I had arranged for the return of the base to Peru amid a good deal of fanfare and outbursts of local self-congratulating.
I spent a month in Washington for the briefing of my successor, Prentice Cooper. Then, accompanied by Edna and the wife of the Brazilian Ambassador, Madame Martins, and Catherine Alford, I flew down to Miami Beach in the DC-3 which I had exchanged for my Lodestar, preparatory to our departure for Brazil.
The plane was loaded with our luggage and everything we would need for a leisurely trip down the east coast of South America, with many stopovers that had been arranged by Madame Martins. I was unexpectedly interrupted at dinner by a phone call from the President. I hurried to my library.
“I’m sorry to have to change your itinerary, Bill,” Mr. Truman said, “but I need badly for you to go to Peru tomorrow.”
“Peru, Mr. President?”
“Yes, Peru. You know all those air bases we had for the defense of the Canal? Well, it seems that we’ve given them all back. But we’re still going to need the Talara Base.”
“But I’ve just given it back to the Peruvians on your instructions.”
“I know that, but we’re going to need it for another two or three years for the main defense of the Canal.”
“That’s asking a whole lot, sir,” I remonstrated. “I don’t see how President Bustamante can survive politically after all the popular acclaim he’s won for being given the base.”
“General Marshall is here and I’ll put him on.”
The gist of Marshall’s argument was that Bustamante would be bound to realize that defense of the Canal was as much in Peru’s interests as ours. Then Truman came back on the line.
“This is going to be very difficult, Mr. President,” I told him, “but can you do this much for me? Send a messenger to Peru by special plane with a letter to Bustamante saying that you have asked me to proceed to my new post at Rio via Lima, because of a matter of great importance which you have authorized me to take up with him.”
“You’ve got it,” he said.


I canceled our previous flight arrangements and at ten in the morning on June 2, 1946, we left for Peru. After an overnight stop at Panama as the guests of General Willis Crittenberger, commander of our Caribbean Defense Command, we arrived at Lima on the next day. General Crittenberger, formerly commander of integrated Brazilian and American troops in Italy in World War II, was well equipped to give me timely and welcome advice.
It so happened that ex-President Herbert Hoover and his party were occupying the Embassy, which was, of course, fully staffed despite the fact that no Ambassador was in residence. With a sign of relief, Edna and I made our headquarters at the country club, which was beautiful, convenient and a whole lot less formal. We could relax.
To my deep gratification, President Bustamante and Foreign Minister Garcia Sayan, and many others received me with abrazos as old friends. Let me declare it right here that, in all of my travels - and I was fortunate to meet many of the finest people who ever trod this globe - the Peruvians I knew well need stand aside for no man.
Next day, after a further two-hour conference with Bustamante, I knew that I should be able to report to Mr. Truman, “Problem Solved,” although we had gotten off to a bad start on the first day, since Peru could not afford to keep the base open. I had a sudden idea. I said:
“Mr. President, why don’t you announce that you have asked President Truman to let me proceed to Brazil via Peru as there was an urgent matter you needed to resolve. You wanted the United States government to agree to keep the air base for another five years under a rental basis and a joint training operation. This would permit you to eliminate the extremely heavy expense of maintaining Talara, which you would otherwise probably have to close.
“If the United States government could pay you a substantial rent and maintain a joint operation training program that would bring in badly needed foreign exchange for other essential programs - education, hospitals, roads, etc. - based on this, the Peruvian people will accept this as a request coming from Peru.”
The President enthusiastically agreed and suggested a joint press conference, to announce that he had been able to accomplish something that allowed him to take care of badly needed local problems as the U.S. had agreed to rent Talara for five years.
I immediately reported to the President in Washington, by phone, the success of my mission, and proceeded to Brazil, stopping over one night at Cochabamba, Bolivia.
Thus we gained an opportunity to maintain a bastion of strength in our own Hemisphere.