File No. 422.11G93/803.

The British Ambassador to the Secretary of State.

memorandum.

The British Ambassador presents his compliments to the Secretary of State and has the honour to refer to the memorandum from the Department of State, dated the 7th May last, on the subject of the attitude of the Government of Ecuador towards the Guayaquil & Quito Railway Company. In this memorandum was enclosed a paraphrase of a telegram sent to the American Minister at Quito by the Secretary of State on the 26th April last, in which reference was made to an attempt on the part of the Ecuadorian Government to act with the bondholders, and to ignore the rights of the stockholders of the railway company.

Sir Cecil Spring Rice has now received copy of a letter addressed by the council of foreign bondholders in London to Sir Edward Grey, from which it appears that the position, as regards this point, is as follows:

So long as the service of the railway bonds is maintained by the Government in accordance with its contract no foreclosure proceedings can be instituted. The Government of Ecuador has however announced its intention not to make any further payments for the service unless and until the bondholders foreclose on the line and [Page 353]so eliminate the present stockholders. It is stated that this action has been prompted by the representative of Germany. The council think that the attitude of the Government and its desire to make use of them as an instrument in effecting its purpose are made clear in the telegram sent to them by the President of Ecuador on the 8th February last, which was quoted in the instructions sent to the American Minister at Quito on April 26.

The council of foreign bondholders express great disappointment at the course adopted by President Plaza in this matter.