422.11 Am 8/–: Telegram

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

15. G. Amsinck and Company inform Department that they have claim two years overdue against municipality of Guayaquil amounting to $69,766.97, as of July 1, 1912 [1921], arising from default in payment five sight drafts drawn in dollars, documents attached; Banco Comercial y Agricola collection agent; that drafts were for repayment of monies expended by Amsinck for the account municipality plus 3½ percent commission, all pursuant arrangements whereby Amsinck financed in United States at request of municipality six shipments road making machinery and material ordered direct with shipping instructions by municipality from manufacturers; that though Amsinck agreed to undertake payment in United States relying on bank deposit made by municipality expressly to cover the sight drafts, deposit was diverted to other purposes without payment of drafts; that in addition municipality obtained possession of goods by some illegal means from Custom House where goods were being held as security under documents attached to drafts. Amsinck report further that municipality now claims impossible buy dollar exchange liquidate indebtedness because by law enacted subsequent to default, purchase of dollar exchange except at arbitrary government rate 2.60 illegal (commercial rate being about 4.40).

Investigate at once and if facts are as represented say informally to Government that on account of Government’s financial control over municipalities, arrangements should be made at once for sufficient dollar exchange to meet indebtedness. Point out that failure to do so will be injurious to Ecuadorean credit and good name and add that you assume that Government decree fixing rate of exchange could not be intended to have retroactive effect, especially in case public obligations.

Hughes