422.11 G 93/1197
The Minister in Ecuador (Hartman) to
the Secretary of State
Quito, August 31,
1921.
[Received September 30.]
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.]
[Page 892]
[Enclosure—Translation23]
The Ecuadoran Minister for Foreign Affairs
(Ponce)
to the American Minister (Hartman)
Quito, August 30,
1921.
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.]
