Office of the Historian

822.61334/19: Telegram

The Secretary of State to the Minister in Ecuador (Hartman)

Washington, November 29, 1920—7 p.m.

40. Your 78, November 23, 10 a.m.39

1.
At conference today between Minister of Ecuador, representative of Mercantile Bank of the Americas and officials of Department, the Minister and bank formulated the following plan and the Minister agreed to urge its adoption upon his Government:
2.
The Ecuadorean Government should immediately call extra session of Congress and take following action: First, extend for period of four or five years the export tax on cacao. Second, remove restrictions on exchange transactions.
3.
There should be an understanding between the Cacao Association and all of the banks concerned: First, that the proceeds of the export tax shall be allocated among all creditors of the Association. Second, that cacao now in the hands of the Association shall be immediately shipped in an amount sufficient to cover present deficit of Mercantile Bank of the Americas.
4.
A representative of the Mercantile Bank of the Americas has handed the following signed statement to the Department: “The Mercantile Bank of the Americas is perfectly willing to continue facilitating the operations of the Association, permitting them to draw against their shipments 80% of the market value of the cocoa. The Mercantile Bank, however, would look to the local banks to provide the remaining 20%. An understanding should be reached between the Association, the local banks and the representatives of [Page 211] the Mercantile Bank in respect to such future financing. Any agreement so reached should have the support of the Ecuadorean Government.”
5.
The Government should exert pressure necessary to bring about understanding between all interests concerned, as such understanding is imperative if disaster is to be averted.
6.
As occasion arises you will use your good offices in support of enactment and application of plan herein outlined.
Colby
  1. Not printed.↩