File No. 422.11 G93/476.]
The American Chargé d’Affaires to the Secretary of State.
Quito, May 18, 1912.
Essential portions of note referred to in your May 16, my May 14:
I had the honor of pointing out to you, in my note No. 275 of the 6th instant (1), that the official intervention of your Government in these affairs seemed to me in every sense unnecessary, since, in the extreme case of not being able to arrive at a friendly settlement between the parties, there remained the arbitration stipulated in the contracts as an unavoidable and sure means of ending the controversy. Then I added that out of special deference to the Chargé d’Affaires of the United States, my Government felt bound to set to work to procure the means of giving to the company the help requested, while denying in principle, the strict obligation to do so.
Consistently with that idea I declare to you, respecting the definite settlement of the company’s claim, that the documents it has submitted as the basis for its claim to the payment of evidently excessive amounts for services rendered and damages sustained during the late revolution, have not yet been accepted by my Government, and much less has the latter recognized a debt to the company of nearly 375,900 sucres in promissory notes viséed by employees of my Government having authorization therefor.
The examination of the aforesaid documents belongs solely to the Minister of Public Works, in whose Department the following obstacles have been encountered: that the company claims the indisputable approval and acceptance of all the accounts presented in previous years by the Director of Public Works; and that among the employees mentioned, there is not one in Quito who has the Company’s authority to accept, in private conferences and in a definite manner, the just observations which there is room to make respecting the whole of the account, the extent of which in itself calls for serious examination.
With the earnest desire to end the whole controversy by means of a private agreement with the Company, and in order to avoid the presentation of fresh difficulties when the time comes to carry out the determined conditions of a later liquidation, my Government resolves today to offer officially to the Company the sum of 280,000 sucres for services rendered and damages sustained by the railway during the late revolution, as the net balance, and after deducting the value of the combustibles supplied by the Government and the amount of the items justly objected to in the account for the damages caused to the railway.
[Page 419]There are included in this amount of 280,000 sucres the equitable average of the receipts of the railway during a period of time immediately preceding the revolution, the 50% and the value of the damages. If the company accepts the offer, it may draw immediately for 86,000 sucres and receive a draft at ninety days sight for 14,000 sucres, the balance of the 280,000 sucres to be paid at the rate of 50,000 sucres monthly, until the total amount is cancelled. But if the company does not accept the proposal, my Government reserves the right to await the result of the arbitration respecting each and all of the company’s charges and their total, that is to say: respecting the whole sum of 375,900 sucres which according to your statements the Company claims.
Notwithstanding this, and with the aforesaid reservation, my Government, with a view to make good the offer contained in my note of the 6th instant, will give to the company the 100,000 sucres, as the aid requested by it, and in the form above stated.
With reference to the previous bills, the greater part of which belong to the administration of President General Eloy Alfaro, which are at present deferred and which the company claims should be accepted in an indisputable manner, my Government, for that very reason, has resolved to examine them carefully, after which, in a short while, the company will be advised of the result; I, meanwhile, am bound to declare to you today that said accounts are not lacking in really incorrect items.