1941: Costa Rica

Enthusiasm for Pan Americanism was notable in this little Republic. Impressive demonstrations, both anti-Nazi and pro-democracy, occurred during the year, and the Government was very active in cracking down on German propaganda. A plan for freezing the assets of the wealthy German colony, which owns many large coffee plantations and sugar mills, was under consideration in June. The nation, with a tiny army of 350 men, is virtually unarmed, however, and its propinquity to the Panama Canal made this a matter of concern to the United States. A United States military mission was, therefore, agreed on during the summer, and modern arms were shipped from the United States. Then came Pearl Harbor and the War of the Pacific. Almost immediately Costa Rica declared war on Japan, having the distinction of being the first Latin American nation to do so.

A boundary dispute with Panama, which caused armed conflict in 1921, was settled with the conclusion of a treaty May 1. The frontier was fixed at the existing de facto line. The area involved includes the mouth of the Sixaola River and land both east and west of the Central American cordillera. Costa Rican claims have rested on an award handed down, in 1914, by United States Chief Justice White, which Panama rejected. The present agreement was concluded without reference to the White award.

A new Export-Import Bank loan, totaling $4,600,000, was contracted, superseding that of 1940. It provided for the early completion of the Costa Rican link in the Pan American highway. Costa Rica is obligated to pay only $2,500,000 of the construction costs. The new loan, bearing interest at 4 per cent, is to be serviced, beginning in 1945, with a gasoline tax.

The long-pending threat of nationalization of the Costa Rican subsidiary of the Electric Bond and Share has been ended with Congressional approval of a new 25-year contract with the Government. Expropriation of this public utility had actually been authorized in 1938.