The Acting Secretary of State to the Ambassador in Costa Rica (Des Portes)
A–633. Your 776, July 9. The Department does not desire to jeopardize the prospects of effectively controlling this currency by insisting that it be brought under the control of the Junta de Custodia, especially in view of your indication that an “appropriate alternative” exists.
However, the Embassy’s despatch 778, September 10, 1942,37 contains certain information modifying Article 9 of Law No. 66 of June 28, 1942, and drawing a distinction between “frozen funds” and “controlled funds” under the jurisdiction of the Junta. As the Embassy indicates that the Junta is undoubtedly the agency best qualified to exercise supervision over the funds, the Department would naturally prefer that the funds be delivered to the custody of the Junta and in this connection it occurs to the Department that the possible fears of the Spanish Minister to subjecting the funds of the Italian Government to investment in Costa Rican defense bonds might be met if the Junta considered the funds as “controlled” rather than “frozen”.
It is desired that if you see no objection to so doing, you suggest to the Minister of Finance or other appropriate authorities that they approach the Spanish Minister with the suggestion that the funds would be considered as “controlled” and not “frozen” which it is believed would allay any fears of the Spanish Minister in regard to the possible investment of these funds in Costa Rican defense bonds. You are also authorized to inform the Spanish Minister that as an exceptional case this Government would not object to the withdrawal by the power representing Italian interests of such funds as may be necessary for the payment of minimum subsistence to destitute Italians in Costa Rica, It is assumed that these payments would not in any event exceed a total of 300 colones per month and it is suggested that the number of colones to be withdrawn should be based upon the list of indigent Italian subjects which the Embassy has requested be submitted.
If, however, the Embassy feels that in further proposing that the funds be subjected to the control of the Junta the Embassy may [Page 114] jeopardize the possibilities of subjecting the funds to other controls, the Embassy should not necessarily press for control of the funds by the Junta but, before taking final action, should report to the Department which of the three alternatives suggested in the final sentence in numbered paragraph one of the Embassy’s airgram under reference is considered by the Embassy to be most desirable. Payment of minimum subsistence to indigent Italians as referred to above would be permissible under the alternative recommended.
The Department finds it difficult to recommend as between alternatives a), b) and c) as referred to in your airgram because of the important part which it appears is played by the personalities involved in connection with the administration of the local controls. It therefore appears that the Embassy is in a better position than the Department to determine which of the three alternatives offers the best prospects of effective blocking these funds for what may be a prolonged period after they have been converted into colones. The Embassy realizes that once the funds have been credited to the Banco de Costa Rica, the control over these funds now held by this Government is ended and for this reason it may continue to be desirable to permit the funds to remain in the form of dollar bills until effective control over the equivalent in colones would be established.
- Not printed.↩