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

No. 296

Sir: There is transmitted herewith for your information a copy of a letter, dated November 29, 1921, from the Mercantile Bank of the Americas, apprising the Department of an understanding reached between the President of Ecuador and the representative of the bank, with respect to the intentions of the Government of Ecuador in connection with the claims of the bank against the Asociacion de Agricultores.44

In your discretion, you will endeavor to verify these statements as a matter of record, and advise the Department.

I am [etc.]

For the Secretary of State:
F. M. Dearing

The Mercantile Bank of the Americas, Inc., to the Secretary of State

Sir: We have received further cables from our representative in Ecuador, Mr. Lindberg, advising us that in response to his request for a reconsideration of the decree allocating to us only one-third of the 66 per cent, of the proceeds of the Three Sucre Per Quintal Export Tax on cocoa prescribed by the recent law for the payment of the Asociation’s debts, the President of the Republic has now agreed that there shall be allocated to us, in addition to said one-third, or 22 per cent, of the whole tax, whatever surplus there may be out of the 34 per cent, of such tax alloted by the law for the general administrative and budgetary expenses of the Asociation, after defraying such expenses.

In securing this reconsideration the good offices of the American Minister in Ecuador were of the utmost value and we again desire to express our appreciation.

[Page 902]

According to the calculations cabled to us by Mr. Lindberg, it is probable there will be a considerable surplus available out of such 34 per cent, and applicable to the reduction of the indebtedness owing to this bank.

While the amounts so to be received by us still will not give us the pro rata with other creditors which we deem we are entitled to receive and for which we asked, nevertheless, we recognize the practical political difficulties against which the President of the Republic has had to contend. Accordingly, Mr. Lindberg, we understand, expressed his conformity with the President’s latest decision, and we have acquiesed, but only on the express conditions, to which the President agreed, and which we desire to place formally on record with you, namely:

  • First: that the three sucre export tax on cocoa shall be extended, beyond its present expiry date, 1925, if necessary to fully liquidate the balance of the indebtedness due to us;
  • Second: that there shall be allocated to us, as above stated, any surplus out of the aforesaid 34 per cent, of the tax over and above the administrative etc. expenses of the Asociation in addition of course to the 22 per cent, of the tax originally allocated to us;
  • Third: that in case the Government obtains a foreign loan onehalf of the indebtedness now due us by the Asociacion shall forthwith be paid to us out of the proceeds of such loan.

Again thanking you [etc.]

Mercantile Bank of the Americas, Inc.
P. J. Eder
, Vice-President
  1. Cacao Growers Association.