The Consul General at Guayaquil (McDonough) to the Secretary of State

No. 328

Sir: I have the honor to report that according to information obtained today from an undoubtedly reliable source, there is to be no important change in the present Ecuadoran system of control over exchange, imports and exports. The Minister of Hacienda is opposed to any change at present, taking the view that the system should be continued in full force or abolished. Minor administrative changes may be made from time to time.

During two months of the control system petitions for permission to import goods amounting to $1,000,000., United States currency, have been filed with the control authorities and permits amounting to $400,000. have been granted. As imports before the control system was put into effect were about $1,000,000. monthly, the comparatively small amount of imports asked for would seem to indicate that large stocks of imported goods are still available.

Owing to shortage of the Ecuadoran wheat and sugar crops, rather large imports of flour and sugar are being made. Large orders for sugar at low prices have been placed in Peru.

The obligations to American and other foreign exporters which are being paid very slowly are those for goods already shipped before July 31, 1936. The exchange control regulations place on the importer the burden of applying for exchange to pay for these pending obligations. The importer often is not interested in seeing that payment is made. The collecting banks may not be very active in trying to obtain exchange especially as the effort involved probably costs them more than the amount of their commission. The American exporter should urge his clients, agents and collecting bank to take steps to obtain payment of these pending obligations at once.

The right of tourists to spend their foreign money freely in Ecuador has been reaffirmed. Through some misunderstanding, the passengers and sailors of an American passenger ship recently were not permitted to bring any American money ashore with them and there was no place where they could change their funds into sucres. Steps have [Page 527] been taken by the local officials to prevent a recurrence of such an incident. The officials desire that complete freedom shall be given to tourists to spend money or traveler’s checks so that dollars may be left in Ecuador. A tourist is not permitted to cash a check or draft.

The rumors about possible changes in the control system were mentioned on page 3 of report No. 389 of October 23, 1936, entitled “Monthly Economic Report, October, 1936”,46a and in despatch No. 326 of November 2, 1936, on the subject of “Exchange, import and export control”.47

The best opinion at present seems to be that the control system might eventually be terminated suddenly just as it was adopted suddenly without notice to the public.48 The main factor seems [to?] be extent of the need of the Government of Ecuador for foreign currency to meet its obligations.

Respectfully yours,

Dayle C. McDonough
  1. Not found in Department files.
  2. Not printed.
  3. The Consul General at Guayaquil reported in despatch No. 517, August 18, 1937, that the principal features of the import, export, and exchange control decree of July 30, 1936, were revoked by a decree dated July 31, 1937 (822.5151/356), See decree No. 322, July 31, 1937, printed in Registro Oficial, No. 559, August 7, 1937, pp. 1528–1530.