822.61334/132: Telegram

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

16. Disregard Department’s 14, August 30, 1 p.m. Information of Mercantile Bank of the Americas mentioned therein was based on a mutilated telegram from its representative in Ecuador which was misconstrued by both the Bank and the Department. The Bank now informs the Department that the following article, dangerous to its interests, is proposed in the budget bill recently presented to the Ecuadorean Congress:

“In any event, the subvention of sucres 2,000,000 for year 1925 (amount estimated tax will produce 1925) is the final amount which the State will deliver to the Association and from December 31, 1925, [Page 702] all obligation of the State ceases in conformity with law of 1921 in respect to the Association as well as to its creditors if such exist.”

If the facts are as stated and you deem it advisable, you are authorized to bring the matter to the attention of the President, pointing out the injustice of the measure to the Bank.

You may also refer to former President Tamayo’s letter of February 5, 1922, to Minister Hartman,8 a copy of which was enclosed in your Legation’s despatch No. 787 dated February 9, 1922.9

If you see no objection you may mention to the President that the Bank wishes to suggest the convenience of passage by the Senate of last year’s bill, which provides for liquidation of the Association and extension of the two sucres tax until debts are paid, as this appears to the Bank to be the only way the promises of the former Executive can be complied with, and that bank believes, if situation remains in status quo ante, debts of the Association will not be paid and the credit of Ecuador in exterior will be thereby impaired. Report briefly by cable.

Hughes