File No. 822.51/196.

The Acting Secretary of State to Minister Hartman.


Your telegram of July 19, 2 p.m. The Department is given to understand by Mr. Farr that the railway company would have no objection to the proposed loan, provided that part of loan proceeds are to apply to payment of arrears in interest and sinking fund on first mortgage prior lien, condores and salt bonds, amounting in all to some two and one half million dollars which would of course necessitate increase of loan to five or six millions; and provided further that necessary customs units pledged for service of bonds under 1908 agreement remain inviolate and that some equitable settlement be made regarding the company’s claims against the Government of approximately nine hundred thousand sucres.

The Department is inclined to believe that the railway company’s conditions are not unreasonable and feels that it would not be justified in assisting the Ecuadorian Government to procure a loan unless some satisfactory arrangement were made looking to the settlement of all differences between the Government and the railway company and the bondholders.

For your information the British Ambassador has advised the Department that his Government will, if approached on the matter refuse any assistance.

A paraphrase of this instruction has been sent to the British Embassy here and you may show this telegram to Mr. Jerome.

Alvey A. Adee.