818.51/718
Memorandum of Conversation, by the Under Secretary of State (Welles)
The Minister of Costa Rica called to see me this morning, ostensibly to tell me of the recent developments in the negotiations which the [Page 468] coffee producing American republics had been having. He said that some six or seven of the republics had now definitely reached an agreement that exportation quotas on coffee must be unanimously agreed to as the necessary basis before any stabilization in the world coffee market could be found. He said that he had been glad to find that these countries had adopted a reasonable point of view with regard to their own exportation quotas and that he had also been encouraged by seeing in the press that the Brazilian Government had indicated its belief that a fair world quota for Brazil would be fifteen million bags. On such a basis as this, he said, a general agreement would be feasible. He told me that he would continue to keep me informed of developments.
The Minister then turned to another subject, which I assume was the real reason for his visit. He said that his Government was greatly disturbed by its inability, because of the collapse of the coffee market, to carry out the agreement which he had reached with the Protective Council of Foreign Bondholders for the servicing of the Costa Rican foreign debt. He said that there was some opposition in the Congress to the agreement itself but that a sufficient majority was in accord with the President, and that the agreement was reasonable and should be carried out. Until and unless, however, coffee prices went back to the higher rate which they had reached four or five months ago, the Government of Costa Rica, he alleged, could not carry out the servicing of the debt in accordance with the terms of the agreement. For that reason, the Government of Costa Rica was interested in knowing whether the Island of Cocos, which was of no use to the Government of Costa Rica, would not be of interest to the Government of the United States in connection with plans for the defense of the Panama Canal. If this Government were interested in the purchase, the money paid could be set aside to service the foreign debt.
I told the Minister at once that his predecessor had discussed this matter with me some three years ago and that I then replied, by direction of the President, that it was the definite policy of this Government not to acquire further territory on this continent and that from the standpoint of strategic importance, the President, after consultation with the naval and military authorities of the Government, had reached the conclusion that Cocos Island was of no importance from a strategic point of view. The Minister said that he fully understood and that he wanted me to realize that what he had said was in no sense an official and definite proposal but merely an informal inquiry to ascertain our point of view. I told the Minister that I so regarded his inquiry, but that he could regard my statement as a definitive statement of policy on our part.