Office of the Historian

811.05118/6–754

Memorandum of Telephone Conversation, by the Officer in Charge of Central America and Panama Affairs (Leddy)

confidential
[Washington,] June 7, 1954.

Subject:

  • United Fruit Company Loan of $1 million to Costa Rica
  • Participants: Mr. Sam Baggett, Vice President, United Fruit Company
  • MID—Mr. Leddy
[Page 845]

Mr. Baggett telephoned from Boston and said that, since the new contract between UFCO and the Costa Rican Government was signed on Friday, June 4,1 the company would now consider Figueres’ request for a loan of $1 million, as an advance against future taxes, and possibly to be followed up by another loan of an equal amount later on. He wanted to know whether the Department had any objections.

I told Mr. Baggett that I felt sure that the Department’s position would be the same now as it was when he raised this subject two weeks ago, namely, that the loan should be divorced from the contract, and immediate action in granting it need not be taken. He confirmed that divorcement had been made, and the contract signed without any reference to the loan; nevertheless, Figueres was ready to press for the loan and the company would not wish to antagonize him under present conditions when they have just achieved a substantial agreement which they hope will endure—Figueres could, for instance, easily stir up labor trouble on the west coast. I replied that, although the company’s position could be clearly understood, our reasons for desiring no immediate action should be of equal importance to the company and had been outlined in a conversation between Mr. Holland and Mr. McClintock on Saturday morning, June 5, of which he, Mr. Baggett, was not yet apprised. I indicated that in the present circumstances in Central America we felt it desirable not to accede at once to petitions from Figueres, but to hold in abeyance all pending matters in order to get a clear idea first of where his Government will stand on the several highly important pending questions hinging around Guatemala. The action of UFCO’s Executive Committee, today, could easily be one of postponement of final decision; and thereafter, it could surely be possible to postpone action. Mr. Baggett said he felt he understood and would be in Washington tomorrow to discuss the matter further.

  1. A copy and translation of the amended contract were transmitted to the Department of State under cover of despatch 920, dated June 15, 1954, not printed (811.05118/6–1554).↩