818.24/389
The Ambassador in Costa Rica (Des Portes) to the Secretary of State40
[Received June 19.]
Sir: As the Department knows from previous communications, the rapidly rising level of prices has constituted one of the most difficult problems in Costa Rica, profiteering having been particularly marked in the case of certain classes of goods imported from the United States which are in very short supply. In this connection I have the honor to report the following recent developments.
During the visit of Mr. Hector Lazo, Chief of the Office of Exports of the Board of Economic Warfare, in March, the question of prices was discussed at some length, and Mr. Lazo stated that since the prices of all goods sold abroad are controlled before export licenses were granted, it is the policy of the Board that further export licenses should be denied to foreign firms which have been definitely proved guilty of unjustifiable price speculation. Acting on this policy, the Embassy some time ago pointed out to the Oficina de Def ensa Económica that the most effective means of preventing profiteering would be to deny Import Recommendations to firms guilty of this practice, and suggested that the Oficina ask the Junta de Abastos, which is the Costa Rican Price Control Board, to notify it of all cases where its rulings have not been complied with.
Since a reasonable time had elapsed without action having been taken by the Oficina on this suggestion, the matter was brought to the attention of the Minister of Finance,41 who has shown considerable interest in the price problem, and he expressed himself as being entirely in agreement. Some time thereafter, the Minister informed an officer of the Embassy that he was studying new legislation which would place a definite limit on the profit which could be included in the price of imported goods, and on May 30th it was announced in [Page 187] the press that a law was being drafted which would fix the percentage of profit at a maximum of 30 percent and provide severe penalties in case of violation, notably the loss, by the guilty merchant, of his right to make further importations. The local firms who will be affected by this law immediately asked that they be given an opportunity to submit suggestions based on their practical experience for consideration, and the draft law has not yet been submitted to Congress. On June 10th the Chamber of Commerce of Costa Rica presented to the Minister of Finance a specific plan for stabilizing the prices of imported goods, of which it supplied a copy to the Embassy.42 A full report on this plan, and on the reaction of the Minister to it, will be made as soon as it has been discussed with the latter.
Meanwhile, the Oficina de Defensa Económica has furnished the Embassy with a copy of a letter which it wrote to the Junta de Abastos on May 28th which reads as follows:
“For reasons of internal administration, and in accordance with our conversation with the President of the Republic, we hereby ask that, from now on, you communicate to us, as quickly as possible, the names of importers who do not comply with the rulings of the Junta.
“Since the principal function of this office is to authorize importations from other countries, the internal measures which we have taken, in agreement with the American and Canadian Governments, inspire us to request from you the aforesaid information which is of extreme importance at this time when we must all cooperate to the national and international wellbeing.
“It will be appreciated if you will let us have your decision at the earliest possible moment.”
The copy of this letter received by the Embassy shows that a copy was also sent to President Calderón Guardia.
Before the Embassy transmitted its Despatch No. 53 of May 31, 1943,42 in which it recommended the addition of certain important local firms to the Confidential List43 because of price profiteering, the desirability of such action was discussed with and agreed to by the head of the Oficina de Defensa Económica. On the strength of information supplied by the Oficina, there appeared in El Diario de Costa Rica on June 2nd an item stating that the Government of the United States was applying, for the first time in Costa Rica, the penalty of inclusion in its “grey list”, and that four leading importing firms will not be permitted to receive further goods because they have charged excessive prices.
The publication of this statement attracted widespread attention, in fact it touched off a campaign in the press against profiteers and for [Page 188] lower prices which is still continuing. In addition to criticism of the Junta de Abastos, which is directly responsible for controlling prices, there was an immediate demand for the names of the guilty parties. The Embassy was, of course, approached for information as to the alleged “grey list”, and explained that there is only one official list, namely the Proclaimed List. However, it was pointed out that in the issuance of export licenses our Government takes into account all of the information which it receives from its various sources regarding importers abroad, and since the satisfaction of the essential needs of the other American republics represents a definite sacrifice on our part, and the prices of all goods exported from the United States are strictly controlled, the sale of such goods at unreasonably high prices is considered as justification for the denial of further licenses.
[Here follow quotations from the Costa Rican press concerning the applicability of the United States “grey list” to the problem of speculation and profiteering, together with a comment by the Ambassador on the nature of such profiteering.]
It is the intention of the Embassy to continue to recommend for inclusion in the Confidential List all firms which have been definitely proven guilty of flagrant price speculation, in order that the Board of Economic Warfare may shut off further exports to them. As the Department knows, those so far recommended for this penalty belong to the inner circle, and they are known to have boasted that they have nothing to fear since they have large orders pending which cannot be held up and, in any event, that they can obtain what they need indirectly, presumably through cloaks, even if shipment cannot be made in their own name. The Embassy will, of course, keep a close watch on the activities of such firms and will expect the fullest cooperation from the Board of Economic Warfare. In particular, it earnestly recommends that no export licenses be granted either for pending or for new orders destined to firms in that category, and, if possible, that outstanding licenses be revoked.
Respectfully yours,
- The Legation in Costa Rica was raised to the status of Embassy on May 20, 1943, when Ambassador Fay Allen Des Portes, succeeding Minister Robert M. Scotten, presented his credentials to the Costa Rican Government.↩
- Luis Demetrio Tinoco Castro succeeded Carlos Escalante as Minister of Finance in April 1943.↩
- Not printed.↩
- Not printed.↩
- The Confidential List included the names of persons and firms closely identified with the ownership or management of Proclaimed List firms and also the names of persons and firms included in the Treasury’s List of Special Blocked Nationals.↩