422.11 G 93/1197

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

No. 709

Sir: Referring to my despatch No. 707, of August 20, 1921, wherein I acknowledged receipt of Department’s telegram No. 10, of August 18, 5 p.m., and advised the Department that, in compliance with its said telegram I had on August 20th. addressed my note No. 434 to the Minister for Foreign Affairs, etc., I now have the honor to enclose herewith, for the information of the Department, a copy, with translation, of the note No. 38, of August 30, 1921, of the Foreign Office, in answer to my said note No. 434 of August 20, 1921.

I have [etc.]

Chas. S. Hartman
[Page 892]

The Ecuadoran Minister for Foreign Affairs ( Ponce ) to the American Minister ( Hartman )

No. 38

Mr. Minister: I have the honor to answer the courteous note no. 434, which Your Excellency addressed to me on the 20th instant.

In that communication and by direction of Your Excellency’s Government, Your Excellency asked certain questions concerning the payment which the Government of Ecuador should make to the bondholders of the Guayaquil and Quito Railway in accordance with the contract referred to.

In compliance with the instructions which have been given to me in regard to this matter by the President of the Republic, to whom I submitted Your Excellency’s note above mentioned, I answer said note as follows:

In my note no. 18 of December 29th, of last year,24 I have already brought to the notice of Your Excellency that the contract of the Government of Ecuador with the Guayaquil and Quito Railway Company should be and is subordinate in its efficacy and effects; solely and exclusively to the laws to which it is subject and to the appropriate courts.

Although this is known to be true and indisputable, my Government, for its own dignity, as well as for its credit and the national interests, has the pleasure of informing you that in the same way that it makes efforts to fulfill punctually the obligations of said contract for the period commencing September 1, 1920, it is also deeply concerned that the affairs of the public Treasury shall be so arranged as to permit the payment as soon as possible of the overdue interest, notwithstanding the damage wrought by the universal crisis which was the result of the war.

With respect to the amounts deposited during the last year for the service of interest and sinking fund of the bonds of the Southern Railroad, it has been impossible to remit them to London not only on account of the excessively high rate of exchange but also in order not to deprive the national commerce of the exchange which, offered in insufficient quantity and at a very high price, was hardly adequate for its most imperative needs; but the Government, on its own initiative, has taken steps to the end that said amounts be placed to the account and order of the bondholders. In order to accomplish this operation, it is awaiting only, as is natural, the power of attorney [Page 893] of the bondholders, this transaction not having been carried out yet on account of the lack of said power of attorney.

For the payment of the debt of the Government to the banks, a necessary basis to the reestablishment of the normal order in the internal finances, and for the satisfactory arrangement of the foreign debt, the Government is waiting for the National Congress, at present in session, to confer upon it the power of contracting a loan with sufficient guaranty; and expects in like manner that with such guaranty it will not be difficult for it to obtain a loan in terms and on conditions adequate to the necessities and conveniences of the Republic.

I renew [etc.]

N. Clemente Ponce
  1. File translation revised.
  2. Ante, p. 882.