822.51/277
The Minister in Ecuador (Hartman) to the Secretary of
State
Quito, November 12,
1919.
[Received December 12.]
No. 466
Sir: Referring to my despatch No. 455, of
November 5, 1919,1
and to previous correspondence, relating to a bill passed by
Congress, authorizing the President to make an ad
referendum contract for a loan to Ecuador with the Italian
Government, etc., I have the honor to enclose herewith triplicate
copies of the law, with translation, as it was passed and approved
on November 3, 1919.
By comparing this law with the original proposal submitted to the
Government by Colonel Accorsi, which I reported in my telegram of
October 2, 12 noon, the Department will observe that the original
plan has been considerably amplified.
[Page 176]
I have not made these reports because I believe that any arrangement
will finally be consummated under the authority granted to the
President, for I entertain no such belief. But I have felt that the
Department would be interested in learning of these and all similar
negotiations.
I have [etc.]
[Enclosure—Translation]
Legislative Decree of October 28, 1919,
Authorizing an Italian Loan to Ecuador
The Congress of the Republic
of Ecuador
Decrees:
- Art. 1. The Executive Power is
authorized to make an ad referendum
contract, in accordance with the following general bases:
- First. The Government of Ecuador cedes to the
company which the Government of Italy will organize,
the monopoly which will be established on raw
tobacco produced in the Republic of Ecuador.
- Second. Said company will furnish the Ecuadorean
tobacco industry all the raw material necessary to
attend to the consumption requirements within the
territory of the Republic. At the time of signing
the contract there will be stipulated the bases in
conformity with which there will be fixed each year
the minimum price at which the company will purchase
the raw tobacco, as well as the maximum price at
which it will sell the raw tobacco to the Ecuadorean
tobacco industry, and the manner in which any
difference arising between the producers and the
company will be settled. The Ecuadorean tobacco
industry will be free within the territory of the
Republic. The Executive Power may establish
exemptions from duties on exports of tobacco in
favor of dealers or merchants who up to the date of
the approval of this Law shall have been engaged in
said exportation for South America, in the quantity
shown by the statistics of the Ministry of
Hacienda.
- Third. The company may not intervene in any manner
in the formation, administration, and development of
the national tobacco industry, nor in relation with
the taxes placed upon said industry.
- Fourth. The company may export all its raw or
manufactured tobacco in the manner and form which it
shall deem convenient, but it will not have the
privilege of selling manufactured tobacco within the
Republic unless so to do should be agreeable to the
Ecuadorean dealers, in which event the sale will be
subject to the provisions of Ecuadorean laws.
- Fifth. The Government of Italy will open in favor
of the Government of Ecuador a credit not exceeding
forty million sucres, at the rate of 5 per cent
interest per annum.
- Sixth. This credit is destined exclusively to the
following objects:
- (a)
- Ten million sucres for the construction of
the Esmeraldas–Ibarra–Quito Railroad, and a wharf
in the Province of Esmeraldas, with access to said
railroad.
- (b)
- Ten million sucres for the construction of
Puerto Bolivar–Cuenca, Puerto Bolivar–Loja
Railroad, and a wharf in Puerto Bolivar. In the
event of the construction of this railroad by the
Chilean-Ecuadorean Syndicate, seven million of
these ten million sucres will be utilized in the
construction of the Sibambe–Cuenca–Lojar–Macara
Railroad, and three million sucres in the
construction of the branch of the railroad from
Puerto Bolivar to Zaruma via Santa Rosa.
- (c)
- Five million sucres for the construction of
the Guayaquil–Santa Elena Railroad, and a wharf in
Santa Elena.
- (d)
- One million sucres for the port of Pailon
and public works of Esmeraldas; three million
sucres for the construction of roads to the
Oriente; one million sucres for a road from Quito
to Bahia de Caraquez via Santo Domingo of the
Colorados, and a wharf in Bahia de Caraquez; one
million five hundred thousand sucres for the
railroad from Bolivar to Los Rios; and five
hundred thousand sucres for the dredging of the
Babahoyo River; and
- (e)
- Eight million sucres for the purposes which
the Government of Ecuador may deem convenient,
taking into consideration the vital needs of the
nation.
- Seventh. Said works will be constructed by Italian
companies, guaranteed by the Government of Italy,
and the construction will be effected in the least
possible time, and in the best conditions, according
to concrete studies and decisions which will be made
in common.
- Eighth. The works will be the exclusive property
of the Government of Ecuador, to which the sections
as they are constructed will be transferred, in
order that the Government of Ecuador may place them
in the public service.
- Ninth. In order to supply the funds referred to in
the sixth clause, the Government of Italy will
establish in Quito a branch of one of the great
Italian institutions of credit, in accordance with
the banking laws of Ecuador. Said Italian banking
institution will open in favor of the Government of
Ecuador an account current for a sum not exceeding
forty million sucres, for the objects above
mentioned. Said bank will be charged with the duty
of collecting the interest for the amounts which the
Government of Ecuador shall receive in the account
current and also with the collection of the amounts
for the amortization of the credit.
- Tenth. The Italian company will have the privilege
of buying uncultivated lands, at the current market
values, throughout the entire Republic for the
cultivation of tobacco, and is authorized to bring
to Ecuador specialists, sowers, harvesters, and
dealers, in order to intensify, improve, and
increase the production of tobacco. The transfer of
ownership of these lands shall not be made without
previous authorization from the Executive Power in
each concrete case.
- Eleventh. Should the company bring colonies of
farmers for the production of tobacco or for other
agricultural work, for the establishment of schools
of Agriculture, or for the implantation of new
industries which may employ Ecuadorean raw material,
they will be given, gratis,
in the zones which the Executive Power shall
determine, all the uncultivated lands which they
shall require. At the time of signing the contract
there will be fixed the extensions of land which
will be granted to each person or family, it being
understood that the land conceded is solely private
property and that those acquiring it shall be
entirely subject to Ecuadorean laws.
- Twelfth. The company will administer the monopoly
of tobacco with entire independence, but the
Government of Ecuador is authorized to establish
oversight of the administration through means of an
auditor, in order that it may know definitely the
amount of profits of the company.
- Thirteenth. The profits referred to in the
preceding clause will be apportioned annually in the
following manner: Fifty per cent for the
amortization of the loan above mentioned;
twenty-five per cent for the Government of Ecuador,
and twenty-five per cent for the company.
- Fourteenth. The companies of Italian nationality
may obtain, if the Government of Ecuador deems it
convenient, preference in contracts for the
exploitation of forests and of petroleum and coal
mines, etc., in the interior, on the coast, and in
the Archipelago of Colon. (Galapagos
Islands).
- Fifteenth. At the time of signing the contract the
period of its duration will be fixed.
- Sixteenth. The differences which may arise in
connection with or by reason of the contract shall
not be subject to Diplomatic intervention, and will
be settled by the Judges of Ecuador, in conformity
with Ecuadorean laws.
- Art. 2. With the approval of the
foregoing bases by the contracting Governments, said
Governments will designate special commissions to arrange
the details of the contract to be made.
Given in Quito, etc. October 28, 1919.
[Approved November 3,
1919.]
