818.51/956
The Minister in Costa Rica ( Lane ) to the Secretary of State
[Received January 27.]
Subject: Service of Costa Rican bonds held in the United States.
Sir: With reference to this Legation’s despatch No. 3727 of October 1, 1941,14 on the afore-mentioned subject, I have the honor to state that since my arrival here I have had numerous informal conversations with Mr. Carlos Manuel Escalante, Minister of Hacienda, with respect to the possibility of Costa Rica meeting its contractual financial obligations in accordance with the agreement of 1939. I have likewise been in informal communication with the Honorable Francis White, President of the Foreign Bondholders Protective Council, Inc. regarding the present position of the Costa Rican Government, and have pointed out that due to the ever increasing governmental expenditures as a result of the war and the improbability of balancing the budget, unless the service on foreign obligations is curtailed, it would be imprudent to assume that the Costa Rican Government can offer a total service of $300,000.00 a year, as Mr. White suggested to me in his letter of November 10, 1941, a copy of which I enclose14 for the Department’s information.
As I had hoped to discuss this matter personally with the Department during my proposed authorized trip to Washington in December, which was cancelled because of the outbreak of the war, I have not reported by despatch on the situation. The substance of my views, however, is contained in a personal letter to Mr. White of December 15, 1941, the pertinent portions of which I quote herewith:
“I have had several conversations with the Minister of Finance since last writing you. He has promised that in the future they will endeavor to carry out their obligations in a more regular manner. It is possible that he will go to the United States within the next few months and make direct contact with you so that there may be no misunderstanding in the future.
“You will appreciate that because of the situation which has developed during the past few days, Costa Rica is going to have some extraordinary expenses which will be difficult to meet under the present budget. Some of these expenses will not only be for the benefit of Costa Rica, but for the United States as well. Accordingly, I shall find it increasingly difficult to put up a reasonable argument in favor of the interests of the bondholders when the interests of the United [Page 240] States Government may lie in another direction. For obvious reasons I am using veiled language, which you will, of course, understand.”
Respectfully yours,