740.00112A European War, 1939/27735: Airgram

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

A–527. Reference Department’s circular telegram March 11, 8 p.m.27 The Junta de Custodia has under its control about 10,000 quintals of coffee produced on Proclaimed List properties. This coffee is “frozen” under an arrangement whereby only 15% of Proclaimed List coffee is permitted to be sold in the local market.

The Junta has now asked the Legation whether the importation of such coffee into the United States will be permitted in the event it is expropriated. The Legation’s reaction to this proposal was extremely cool and it was pointed out to the Junta that as long as the coffee producing properties remained in the hands of the Proclaimed List nationals, the expropriation of the coffee for export to the United States would, in effect, be the same as if the finca owner were exporting the coffee directly to the United States. The Junta then asked what would be the position of our Government with respect to the importation of this coffee if the properties on which it was produced were also expropriated. The Legation feels justified in informing the Junta that coffee produced by Proclaimed List farms after the expropriation of the farm and the elimination of the undesirable owner’s interest can be exported freely to the United States, subject only to such restrictions (such as quota, etc.) as are applicable to all coffee importations into the United States.

As to coffee produced by Proclaimed List farms prior to their expropriation (such as the 10,000 quintals now frozen by the Junta) the Department’s views are requested in order that the Junta may be advised accordingly. Actually, more than half of the coffee now “frozen” comes from properties which have been expropriated (Niehaus and Hubbe Hijos).

It is believed in the Legation that our Government would be justified in announcing to the local authorities that importation of coffee from expropriated Proclaimed List properties will be permitted (assuming, of course, that the interests of the undesirable owner in the [Page 103] property have been eliminated) regardless of whether the coffee was produced before or after the expropriation. This would have the double effect of encouraging the local expropriation program and of counteracting, to a certain extent, the frequently repeated complaint that our Government has discriminated against Costa Rica and in favor of Guatemala by permitting importation of Proclaimed List coffee from the latter.

No need is seen, however, to license importation of Proclaimed List coffee from Costa Rica, or even to permit importation of expropriated coffee in cases where the producing Proclaimed List farm has not also been expropriated.

The Department’s early instructions are requested.

  1. Not printed.