422.11Am8/27: Telegram
The Minister in Ecuador (Hartman) to the Secretary of State
[Received February 16—4:33 p.m.]
4. Department’s telegram no. 2, February 7, 1922, 1 p.m. The President has replied as follows: “The statute in question has no retroactive effect in Ecuadoran law. Therefore, (1) drafts which were unpaid when the decree fixing the rate of 3.60 was issued must be paid at that rate no matter when they were due; (2) holders of drafts who received payment at 2.60 before the said decree was issued can not now demand the difference between 2.60 and 3.60.”
The President in a subsequent interview stated clearly that the decree applies to payments under contracts which were made before the first regulating decree of January, 1918, was issued. He declared emphatically, however, that the Government neither intended nor desired to defraud foreign creditors, but that the decree’s sole object was the checking of speculation. He added that there are not sufficient drafts available at any rate at present, and urged that American creditors allow their Ecuadoran debtors, as an evidence of good faith, to deposit sufficient sucres in banks to cover drafts at official rate of exchange, and that the deposits be allowed to accumulate until sufficient drafts are available. He expects the improvement in the cacao market will shortly bring this situation about; the commercial rate of exchange has fallen recently from 4.30 to 4.05. I am sending a full report by mail.8
- Not printed.↩