422.11G93/1708
The Minister in Ecuador ( Gonzalez ) to the Secretary of State
[Received July 27.]
Sir: With reference to the Department’s telegram No. 23 of July 7, 2 p.m., 1936, concerning the position taken in connection with the Foreign Bondholders Protective Council in New York, and to my conversational comment despatch No. 437 of July 10, 1936,73 in which I reported conveying to the Minister of Foreign Relations and the Minister of Public Works the substance of the Department’s said instruction, I have the honor to state that an article appeared in the local newspaper, El Comercio, of the 15th instant, relative to further steps having been taken by the Banco Central against The Guayaquil and Quito Railway Company, a translation of which is enclosed.74
In view of the fact that the Jefe Supremo himself had given me to distinctly understand that all proceedings would remain in status quo until the Foreign Bondholders Protective Council in New York had been consulted, I deemed it advisable to discuss the matter today with the Minister of Public Works, who is the cabinet officer in charge of the Railroad. As he was not available I called on the Jefe Supremo to exhibit to him the article above mentioned and to verify my understanding of his agreement in the matter.
He read the article and stated that, of course, the Central Bank owned some bonds as well as the Government. I responded that, according to the memorandum submitted to me by him through the Minister of Public Works, it did not appear that the Central Bank was in fact the owner of any bonds but that they all belonged to the Government. He stated that he himself, in addition to the telegrams heretofore sent to Mr. Sherwell of the Manufacturers Trust Company, had stated that nothing would be done detrimental to the rights of the Bondholders and that the Ecuadorean Minister in Washington75 had conferred with Secretary Welles76 in the matter and had expressed this to him. I informed the Jefe Supremo that my understanding of [Page 545] the conversation had been that all proceedings would remain in status quo; that I had furnished this information to the State Department showing the desire of the Ecuadorean Government to comply with the suggestion made in the recent telegram; and that it did not seem to me that the action taken the day before yesterday by the Central Bank was in accord with this agreement. The Jefe Supremo stated that if I had so understood him he would communicate immediately with the Attorney General and direct that all proceedings be suspended until the Foreign Bondholders Protective Council had had an opportunity to be consulted and to express their opinion in the matter, instead of proceeding as heretofore and then advising the bondholders of the result. He added that he was in fact just writing to Minister Alfaro and that he would request him to notify Secretary Welles that all matters would be left in status quo under the agreement.
Respectfully yours,