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Memorandum of Telephone Conversation, by the Chief of the Division of the American Republics (Bonsal)

I telephoned Mr. Scotten at 2:35 p.m. and after referring to the Department’s telegram 152, April 18, 7 p.m. and the Legation’s 195, [Page 244] April 19, 6 p.m., I stated that a decision had been reached to assist the Costa Rican Government financially and that a proposal or proposals as to how this might be done would be handed to Señor Escalante, the Finance Minister, prior to his departure from Washington this afternoon. I said, however, that there did not seem to be any way for us to be of assistance without the passage of pertinent legislation by the Costa Rican Government and possibly agreement on the part of the National Bank. The proposal made by Señor Escalante involving the use of the gasoline tax was not feasible.

Referring to the first paragraph of San José’s 195, I said that Señor Escalante had persistently stated that current revenues and expenditures of the Costa Rican Government were more or less balanced and that the financial assistance now requested was to take care of an accumulated floating debt built up over the past couple of years. On the other hand, the telegram refers to the possible inability to meet May 1 payrolls.

The Minister stated that while the financial situation facing the Government is a serious one, he believes that our proposal will meet the requirements of the Costa Rican Government. He pointed out that the regular session of Congress takes place early in May and that, furthermore, there is nothing to prevent the President from calling a special session if he so desires.

I told the Minister that our proposals involved assistance to the extent of a maximum of $1,000,000.