811.05118/9–453

Memorandum of Conversation, by the Director of the Office of Middle American Affairs ( Burrows )

confidential

Subject:

  • United Fruit Company Officials Describe their Operations in Costa Rica
  • Participants: The Under Secretary1
  • Messrs. Joseph Montgomery (Vice President), Kenneth H. Redmond (President) and Jefferson Coolidge (Chairman of the Board)—United Fruit Company
  • Charles R. Burrows, Director, MID

Mr. Montgomery suggested that Mr. Redmond describe to the Under Secretary his recent conversation in Costa Rica with President-elect Figueres. Mr. Redmond stressed throughout his discussion of this conversation the apparent change in the direction of a more pronounced extremism in Figueres’ attitude toward the Fruit Company. Figueres made it clear to Redmond that his intention first is to increase income tax rates from their present 15% maximum to a 30% maximum for Costa Ricans and to 40% or 50% for the Company. As far as the Quepos area is concerned, where the Company is now growing crops other than bananas, Mr. Redmond said he was told it would be expropriated. Figueres said the Company owes a great deal of money in back taxes but that the Government will give the Company a receipt for these taxes and “one dollar” in return for these lands. In reply to suggestions by Mr. Redmond that the action Figueres had outlined would be violations of the Company’s contract, Figueres said much has happened since that contract was signed and that he will have only a four-year term of office during which he has much to accomplish.

Mr. Montgomery produced a copy of The New Leader of August 31, 1953, which contained an article by Figueres; he described the article as setting forth Figueres’ attitude toward foreign capital as a short-term loan and not a permanent investment.

The Under Secretary asked how much the Company could “take” and what they thought Figueres really intends to do. No direct answer was given to the first question; Mr. Coolidge, however, said that whatever the Company accepts in Costa Rica it will be under pressure to accept in other countries where they have holdings. He said they expect Figueres to advance demands which the Company will have to refuse, and then to instigate labor troubles which will lead to progressive stoppage of operations. The result would be extremely costly to [Page 830] both the Company and the country but he said the Company would win out if it is forced into “economic warfare”.

The Under Secretary made reference to the difficulty of effective counter action and asked what the Fruit Company representatives had to suggest. Mr. Coolidge spoke of the desirability and urgency of an official statement, not directed against Figueres, but emphasizing the sanctity of contracts. (He left a suggested draft of a paragraph2 along these lines with Mr. Burrows.) The Under Secretary expressed his distaste for public statements of this kind without more effective action of some other kind to back them up, but said that at least that much could be done. All three of the Company representatives said they did not expect more at this time and that their position would be strengthened if they could refer to moral support of this kind at an opportune moment. There ensued some discussion of the desirability of conveying a private message to Figueres with reference to the interest of the Department of State in proper and fair treatment of American investments abroad, to the importance of economic cooperation and to the sanctity of contracts in general. It was agreed that if this is to be done it should be accomplished before Figueres’ inauguration and before his inaugural address.

  1. Walter Bedell Smith.
  2. Not printed.