811.20 Defense (M)/8325: Telegram
The Ambassador in Costa Rica ( Scotten ) to the Secretary of State
[Received August 16—12:55 a.m.]
433. Reynolds96 to Rosenthal97 and Bicknell, Board of Economic Warfare and Rubber Reserve.
“Spent yesterday in Panama. After talking with Apodaca and getting views of the Ambassador am thoroughly convinced we cannot reach an agreement with Panama unless we recognize the fact that Panama can pay any price she wishes for rubber produced domestically so long as she sells to Reserve at 33 cents. Full assurance has been given by bank that they will maintain premium payments internally not only to stimulate production of 240 tons necessary for domestic needs but for all possible production. Careful estimates indicate production of approximately 568 tons which means that their plan will require an average of only $1.60 per tire increase in price. Panama officials feel they have complete right to pay their producers what they wish for crude rubber and to sell imported rubber goods at prices determined by Panama.
Understand Board of Economic Warfare objects to higher charge for tires to Panamanian consumers. Let’s be realistic! This is strictly a domestic economic and political problem not for determination by us. Ambassador and Apodaca believed you had recognized this right of Panama since no objection had been received to cables setting forth bank’s plan nor did your reply to bank’s counter proposal indicate objection to internal premium payments of which you had been forewarned.
Only other issue relates to point of delivery at 33 cents and Apodaca has offered two formulas that assure agreement.
Though everybody here realizes this is not ideal, it is the best practical solution of a difficult situation and I strongly recommend that you authorize Apodaca to sign at once.”