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

Quarterly Report
No. 23


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As a result of his negotiations with the President and the wholehearted way in which the President used his influence in the Bank’s behalf, Mr. Stabler finally presented him a memorandum accepting in the name of the bank a reduction of the tax to two sucres. Having obtained this reduction from the bank, it was then possible to obtain an increase of one sucre from the Chamber of Deputies, and the bill as amended in that House places the tax at two sucres.

The Chamber of Deputies, however, went much further than merely increasing the tax to two sucres. It maintained the provision that it be continued until the complete extinction of the debt, and then charged the Executive with its collection. It further authorized the Executive to come to an agreement with the Mercantile Bank by means of a transaction or arbitration, and to pay the accounts with 85% of the tax collected, the other 15% to go for the defense of cacao. He was likewise authorised to sell all the real and personal property of the Association of Agriculturists, and to use the proceeds, as well as any money which the Association might have on hand, in the payment of its debts. The Association is therefore completely liquidated, and the administration of the debt is assumed by the Government.

A more satisfactory solution of the difficulty I find it hard to imagine. It seemed impossible to come to any agreement with the Association itself, as that body had practically repudiated the entire debt. The Government, however, will be more disposed to look at the question from the angle of general international relations, should therefore be much easier to deal with, and should at least inspire more confidence than the Association that it will live up to the terms of the agreement.

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The passage of the bill in this form caused a deluge of telegrams from the friends of the Association, and there was considerable talk of its reconsideration in the Chamber of Deputies. This did not take place, however, and the bill has now gone to the Senate for approval of the amendments. I am informed by Mr. Stabler that the President has called in all his senatorial friends and urged upon them the necessity of approving the bill in its amended form. It seems likely that this will be done, as in the contrary event the entire bill would be nullified and there are certain articles thereof granting concessions to the cacao growers which are very much desired. The failure of passage would likewise leave the status quo ante, or the maintenance of the Three Sucre Tax in its entirety, while the reduction to two sucres, as provided for by the bill, is at least some consolation to the cacao growers.26

Mr. Stabler’s handling of this difficult question is worthy of the highest praise. …

I have [etc.]

G. A. Bading
  1. The bill was not passed in 1923.