818.6363/137

The Minister in Costa Rica ( Davis ) to the Secretary of State

No. 66

Sir: I have the honor to refer to the Department’s instruction number 81, dated June 13, and to report that on July 3, after conferring with the local representative of the Costa Rica Oil Corporation, I addressed a note to the Secretary of State for Foreign Affairs setting forth the attitude of the Department as indicated in the above mentioned instruction relative to the controversy between the Costa Rican Government and the Costa Rica Oil Corporation. I understand that my note is being studied by the Costa Rican Government and that a reply will be forthcoming at an early date. I am [Page 1003] under the impression that the definite views expressed by the Department will reduce to a minimum the possibility of this Government cancelling the contract by administrative action. I am unofficially informed that the Government will attempt to argue the matter, in the meantime seeking a compromise with the Corporation.

Pending the receipt of instruction referred to above I took occasion on June 25 to informally call the attention of the Secretary of State for Foreign Affairs to the previous cabled representations of my Government in this matter, in accordance with the Department’s instruction number 75, dated May 18, 1922.26 I considered this action necessary because of the pressure that was being brought to bear upon the Government for immediate action, and because of some indication that the Government might yield to this pressure.

Mr. H. G. Wilson, local representative of the Costa Rica Oil Corporation informs me that he has recently received a shipment of materials and supplies for use in connection with drilling operations and that the custom house officers promptly cooperated in admitting these supplies and materials in accordance with the terms of the concession contract. This attitude on the part of these officers reverses the attitude they have shown at other times, when, according to Mr. Wilson, they have refused to facilitate the introduction of supplies, and have insisted upon the payment of duties, presumably contrary to the terms of the contract.

One of the chief points of attack on the Costa Rica Oil Corporation by those who are actively opposing it is that only three wells have been drilled in the 400,000 hectares (nearly 1,000,000 acres) covered by the concession—two having been abandoned at a depth of less than 2,000 feet, and the third now being drilled at a depth of nearly 4,000 feet. It is the opinion of many unprejudiced observers that the Corporation would gain in public confidence and place itself beyond even unwarranted attacks, should it see fit to show additional activity in drilling operations, in the event that the threat of cancellation of the concession contract is removed. Without indicating any criticisms whatever of the Corporation I desire to repeat this opinion to the Department and to observe that it merits consideration.

I will promptly inform the Department of any further developments in this matter.

I have [etc.]

Roy T. Davis
  1. Not printed.