Office of the Historian

818.2376/9–1753

Memorandum by the Assistant Secretary of State for Inter-American Affairs (Cabot) to the Acting Secretary of State 1

confidential
[Washington,] September 17, 1953.

Subject:

  • Departmental Action Supporting United Fruit Company Negotiations with Costa Rica.

Discussion:

Three top officials of the United Fruit Company informed you on September 4 of the expected contract difficulties with President-elect Figueres of Costa Rica. They urged that this Government make an official statement prior to Figueres’ inauguration emphasizing the sanctity of contracts which would give moral support at least to the Company’s contract position; and that this same attitude be brought privately to Figueres’ attention.

ARA believes that Figueres will attempt to renegotiate the 1949 contract for more national advantages. While Figueres believes that new conditions should bring about changes in contracts, he is [Page 831] nevertheless on record as favoring prompt and effective compensation in case of any nationalization of foreign-owned properties. Figueres may be willing to compromise on his extreme demands. However, should negotiations fail, he may be expected to increase United Fruit’s taxes in violation of the Company-Government contract. There is also some reason to believe that the Company may be disposed to compromise with Figueres.

Recommendation:

Your approval of the following courses of action is recommended:2

(a)
I intend to make speeches on October 93 and 144 which will provide a forum for a reference to this Government’s traditional view on the sanctity of contracts.
(b)
Mr. Burrows, MID Office Director, and Congressman Donald Jackson will visit Costa Rica on October 24 as one stop on an area-wide trip. A meeting with Figueres will be arranged, and the United States position on the sanctity of contracts and compensation in the event of expropriation will be explained to the President-elect in a way which, it is hoped, will help to facilitate an amicable arrangement between Costa Rica and the United Fruit Company.
(c)
As an alternative, or in addition to (b) above, Mr. Allan Stewart,5 FSO–2, who is being assigned to Costa Rica as Deputy Chief of Mission, and who will arrive there about October 15, will be instructed to call on Figueres and exchange views with him on the Fruit Company problems prior to the inauguration.

  1. Drafted by Mr. Ohmans; concurred in by Mr. Burrows and Director of the Office of Regional American Affairs Cale.↩
  2. This memorandum was initialed by Acting Secretary Smith.↩
  3. Reference is to Mr. Cabot’s address made before the Pan American Society of New England, Inc., at Boston on Oct. 9, 1953; for text, see Department of State Bulletin, Oct. 19, 1953, pp. 513–518.↩
  4. Reference is to Mr. Cabot’s address delivered before the General Federation of Women’s Clubs, at Washington on Oct. 14, 1953; for text, see ibid., Oct. 26, 1953, pp. 554–559.↩
  5. Charles Allan Stewart.↩