422.11 G 93/1336

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

No. 449

Sir: With reference to my despatch No. 440 of December 13, 1924,6 in which I reported to the Department the Ecuadorian Government’s and Mr. Dobbie’s efforts to secure the consent of the Bondholders Association of the Guayaquil and Quito Railway Company to utilize the funds on deposit in the British Bank of Spanish America for the purpose of paying one of the long overdue coupons of the 5% bonds, I have the honor to report that I was notified today that the Minister of Hacienda had cabled to Glynn Mills Curry & Co., of London, $222,988.03 with instructions to apply from that amount about $107,000. for payment of interest and sinking fund on the prior lien bonds, which amount falls due on January 2nd. He also has cabled the above mentioned firm that the balance, amounting to $115,988.03 plus $8,000. (balance on deposit in London) is to be utilized for the payment of a coupon of the 5% bonds. As this payment requires a sum of approximately $270,000. the Minister of Hacienda has instructed the Banco Comercial y Agricola, in which there is also a certain amount of Government funds on deposit, to retire from this deposit a sum amounting to $105,000. to be cabled to London, which leaves a balance of approximately $40,000. which the Government treasurer in Guayaquil has been instructed to forward to London. Glynn Mills Curry & Co., have been assured by cable that the entire amount will be in their possession within a day or two.

Thus it seems that the vigorous representations which I made to the Minister of Hacienda, as reported in despatch No. 394 of September 24 [29], 1924 have borne fruit, and it is to be hoped that the Ecuadorian Government will continue in the future to retire the coupons of these 5% bonds, the last one of which was paid in 1913.

As the Department will note, in report No. 14 of December 26, 1924,6 the Ecuadorian Government through the Ministry of Hacienda [Page 701]is endeavoring to ascertain why the Guayaquil and Quito Railway Co. has not lived up to its agreement to pay a minimum of 500,000 sucres annually as its share for the interest and amortization payments on the prior lien bonds. As the information which I have received bears out the fact that nothing whatsoever has been contributed by the Guayaquil and Quito Railway Company, it will be noted that this is the first time that the Ecuadorian Government has carried the entire burden alone in addition to the payment of the long overdue 5% coupon, for which it deserves credit.

I have [etc.]

G. A. Bading
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