822.51 Et 3/6: Telegram
The Minister in Ecuador (Bading) to the Secretary of State
[Received October 25—3:30 p.m.]
14. My 13, October 22, 4 p.m.14 Closer study of loan amendments [agreements] shows two clauses giving Government all rights vested in present bonds, which are to remain on deposit uncanceled as an additional guarantee. This apparently seems to be plan of the Government to foreclose as bondholder and get railway for nothing, Government merely furnishing new additional guarantees based on acquisition of the railway.
Stabler15 has telegraphed his principals to ask Department to advise Ecuadorean Minister that the Department will not approve loan. In view of above clauses and the fact that no provision whatsoever is made for payment Mercantile Bank debt according to the President’s previous promise, I recommend this be done.