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

No. 722

Sir: I have the honor to refer to the Department’s telegram No. 9, August 4, 1 p.m.,40 informing me that Mr. A. F. Lindberg was coming to Ecuador to endeavor to arrange a settlement of the debt of the Agricultural Association of Ecuador41 to the Mercantile Bank of the Americas, Inc. Mr. Lindberg arrived in Guayaquil in the latter part of August, and has since been carrying on negotiations with the Association and with the President of Ecuador in regard to this matter.

A bill was eventually introduced and passed by Congress extending the tax of three sucres per quintal on exportations of cacao until December 31, 1925, and providing for a comptroller with large powers, appointed by the Executive to supervise the administration of the Association. Under the terms of this bill, however, 66 percent of the proceeds of the three sucre tax were to be applied to the amortization of the debts of the Association to those cacao growers who are vale holders, and to the Banco Comercial y Agricola and the Banco del Ecuador, of Guayaquil, no mention being made of the Mercantile Bank of the Americas. The remaining 34 percent was to be expended for the administration of the Association and for the protection of the price of cacao, including the maintenance of the agricultural experiment station at Chobo.

In accordance with the Department’s instructions that I render Mr. Lindberg such assistance as may be proper, I have on several occasions held conversations with the President in regard to the proposed settlement and have found him largely in accord with Mr. Lindberg’s views and strongly opposed to the views held by Congress. The bill as described above was therefore vetoed by the President on the ground that it did not take care of all the creditors of the Association. On the next to last day of the present session of Congress the bill was reconsidered and the objections of the President were met, the bill being so amended as to include the Mercantile Bank in the number of those creditors among whom the 66 percent of the tax is to be divided.

While the bill as finally passed is not as favorable as Mr. Lindberg had hoped, it is at least satisfactory in that it places the Mercantile Bank on an equal footing with the other creditors. The Legation has not as yet received a certified copy of the bill, but as soon as I [Page 900] am able to obtain one, I will forward it, with translation, to the Department.42

Mr. Lindberg is now negotiating for an equable [equitable] prorating of the 66 percent between his bank and the other creditors, with, in my opinion, very good chances of success, as the President, who will have a large influence upon the settlement of the apportionment, is very fair-minded and well-disposed towards the Mercantile Bank.

I have [etc.]

Chas. S. Hartman
  1. Not printed.
  2. Cacao Growers Association.
  3. Forwarded with despatch no. 732, Oct. 22, 1921; not printed.