422.11G93/1077: Telegram
The Minister in Ecuador (Hartman) to the Acting Secretary of State
[Received February 26—12:20 a.m.]
8. My February 3, 10 a.m. Yesterday afternoon I received a note from the Minister for Foreign Affairs in answer to my number 347 of December 2, 191913 of which following is the substance:
He asserts that the subject is not one for diplomatic intervention. He states desire of Ecuador to fulfill its obligations but says that it has been impossible to fulfill all of them because of complications and conditions enumerated growing out of war. He encloses table prepared by Ministry of Finance showing 1,044,000 sucres of revenue allotted to the service of railway bonds during first 10 months of 1919. Adding a proportionate amount for November and December will total 1,250,000 sucres for the year 1919. In the same period amounts remitted aggregated 125,500 pounds which amount does not cover annual coupons. Owing to the intense fiscal disturbances the proceeds from the revenues allotted to service of bonds have not produced a greater amount. Regarding present year the Government has already sent 20,000 pounds sterling to Glyn Mills Currie Company for service of the bonds and will endeavor to continue remitting successive amounts in the course of the year for this account and for that of the preferred bonds.
Referring to the salt certificates he says that the Minister of Finance has provided that from the 24 of January of this year the treasurers of the four largest provinces will remit semi-monthly to the Commercial and Agricultural Bank of Guayaquil the proceeds of the receipts which during the current year shall be derived from the sale of salt after defraying expenses and that as soon as these deposits reach an amount sufficient for interest and amortization of each half-year they will be remitted upon the order of the Ministry. Thus it is calculated that for this year there will be remitted the amount of 191,291 sucres which is the amount fixed in the Government budget.
Referring to the deposit of 68,000 sucres by railway company to be applied to the bond service in accordance with the agreement of [Page 193] April 6, 1919,14 according to which Ecuadorean Government is obliged to transfer to said company for equipment and improvement of traffic, a sum equivalent to such deposit, he says that the Government has agreed in effect to give to the company on account of a credit which the latter claims for damages caused to it sums equal to the deposits which were invested in improvements of the railroads; but that for reasons beyond the control of the Government it has not been possible to comply with this thus far since according to the laws of consolidation and public credit in order that a claim of previous years may be binding upon the Government, it is necessary that it be liquidated by the tribunal of accounts which up to the present time has not been accomplished as the company was unable to furnish proofs of this claim and the Ministry of Interior undertook to complete the records. Notwithstanding this fact the tribunal of accounts of Guayaquil proceeded with the examination and ascertaining that the proofs were not only deficient but that the accounts of Treasury of Guayas which were indispensable for the liquidation had been destroyed in the fire of 1917. The Minister of Interior applied to Congress for a special decree in order to surmount the difficulty, but Congress did not act and the Government will recommend to the next Congress the prompt dispatch of the matter. He declares that railway company has not applied its surplus profits to pay interest, thereby imposing that obligation upon the Government.
Regarding unpaid balance of 80,000 pounds by the Government from sale of cacao in 1918 he refers to his explanation in a former note to the error which caused the belief that the Government had offered eight hundred and some odd thousand dollars instead of the same amount of sucres. He then reiterated the sincere intention of the Government to fulfill its obligations to the bondholders and the company and says that the Government is at present seeking ways and means of paying the debts due, means which cannot be other than the contraction of a loan in order to prepare upon these basis a financial plan in cooperation with Congress, which will enable the Government punctually to make payments in the future. He says that the efforts to obtain a loan in the United States have been thwarted by the bondholders and the company in an endeavor to discredit financial standing of Ecuador in London and New York and cites attitude of the council of foreign bondholders in connection with the assembling of the Financial Congress in Washington in proof thereon.
He closes by again complaining that the railway company has failed to fulfill its obligations. Full report by mail.
- Not printed; see Department’s instruction no. 225, Oct. 4, 1919, Foreign Relations, 1919, vol. ii, p. 196.↩
- See memorandum on Advisory Commission, Guayaquil & Quito Ry. Co., Apr. 10, 1919, ibid., 1919, vol. ii, p. 182.↩