422.11 G 93/1183a: Telegram

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

6. In view of the fact that the Congress of Ecuador will meet on August 10, the Department considers it advisable that you bring the following considerations to the attention of the Government of Ecuador without delay: [Page 887]

In view of the specific stipulation in the contract of the Guayaquil and Quito Railway Company that deposits account interest and sinking fund prior lien bonds be segregated in a special fund subject to order of bondholders, you are instructed to inquire whether the Government will not be willing to transfer the funds now held on deposit account railway bonds in governmental account local banks to account of bondholders.
Inquire whether the Government of Ecuador has formulated any plan for paying the past due interest of 47½ per cent as of July 1, next, to the bondholders, and if not, whether the Government of Ecuador is willing to fund the same, giving proper security.
Inasmuch as the special duties allocated by Congress for service of the bonds do not provide the amount called for in the contract, should not provision be made to increase the same at the coming session? In the event that the present budget is shown not to permit such increase, has the Government of Ecuador any financial reorganization in mind which would provide for increased revenues or decreased expenditures?

In making these inquiries of the Government of Ecuador, you should make it plain that this Government fully realizes the difficult situation in which the Government now finds itself and does not intend to convey the impression that it desires to bring undue pressure to bear in support of the American interests involved in the railroad. The Department would, however, appreciate a statement by the Government of Ecuador of any measures which it may have in mind to relieve just claims of those American interests.