The Chargé in Costa Rica (Trueblood) to the Secretary of State

No. 545

Subject: Foreign Funds Control: Blocking of Funds Held by Spanish Minister and Owned by the Italian Government.

Sir: I have the honor to refer to the Department’s Airgram A–633 of August 24th and to the previous communications on the above subject and to report that the Minister of Finance, Señor Francisco de P. Gutierrez has issued instructions to the Junta de Custodia to block the funds held by the Spanish Minister in Costa Rica for the Italian Government. A translation of the note sent by the Minister of Finance to the Junta de Custodia on this subject is transmitted herewith.38

Shortly after the appointment of Señor Gutierrez as Minister of Finance, representatives of this Embassy called on him to discuss this subject and left with him a memorandum38 outlining the facts in the case and requesting that prompt action be taken. The Minister replied that he would give the matter his immediate attention and a [Page 115] few days later advised this Embassy that he was in entire agreement with our position and that he was issuing appropriate instructions. The note which he sent to the Junta de Custodia contains all of the points which were set forth in the memorandum which had been prepared by this Embassy. Señor Gutierrez informed the representatives of this Embassy that the dollars would be changed into colones and that the latter would be frozen under the control of the Junta de Custodia but that the Spanish Minister would be permitted to draw no more than ¢300 per month for payment of subsistence expenses to indigent Italians. It will be recalled that this arrangement was approved by the Department and the Treasury Department as announced in the Department’s Airgram A–387 of March 27. It will be noted, however, that in his note to the Junta de Custodia, the Minister of Finance not only fails to mention that any withdrawals will be permitted, but also points to the particular provision of the pertinent Washington Conference Resolution and to the local law under which such withdrawals would not be authorized.

It is expected that the dollars held by the Banco de Costa Rica will now be transferred to the Banco Nacional to be converted into colones and that the Banco Nacional will remit the dollars in question to the Federal Reserve Bank in New York to be credited to its account there in accordance with the understanding already reached with the Treasury Department. The solution which has finally been found to the problem which has been pending for almost a year would appear to be even more favorable than had been expected by this Embassy, since the funds will be controlled directly by the Junta de Custodia and since there is some doubt as to whether any withdrawals at all will be permitted from the account. As is quite evident, the Minister of Finance has taken this action without consulting the Spanish Minister.

There is enclosed herewith a clipping of a news item which appeared in La Prensa Libre, the local afternoon newspaper, concerning the blocking of the funds in question.39

Respectfully yours,

Edward G. Trueblood
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