822.72 AL 5/39: Telegram

The Acting Secretary of State to the Chargé in Ecuador ( Gade )

21. Your telegram no. 38, April 26, noon. The Department has been informed of the present status of the negotiations of the All America Cables seeking a settlement of the claims of the Ecuadorean Government for alleged back taxes. It is understood that these claims were settled May 17, 1935,56 and duly ratified December 5 of the same year. However, the Government now declares that the settlement was inadequate; that a new agreement must be made providing for a larger payment and that the Company is granted 48 hours in which to accept the Government’s proposal failing which its properties will be seized.

The Department has not had sufficient opportunity to examine into all details of the case but on the basis of the information available it appears that the Company has exhibited a sincere desire and is making [Page 557] every effort to meet the views of the Government of Ecuador. However, it would appear that the demands being made are excessive and burdensome to a point where the Company may be forced to give serious consideration to removing its present installations from Ecuador. The Department naturally would view with serious concern the necessity for such drastic action and is hopeful that the course of the negotiations may definitely remove this possibility.

As concerns the alleged threat to seize the properties the Department anticipates that such action, without considering the rights involved, would involve an immediate and serious interruption of international communications of this and the other governments of the Americas.

You are requested to seek an interview immediately with the Minister for Foreign Affairs and discuss the question on the basis of the foregoing and to express orally the hope of this Government that it will be possible to accord an extension of 2 weeks’ time to afford the Company sufficient opportunity to consider the matter.

  1. Contract of May 17, 1935, ratified December 5, 1935; published in Ecuador, Registro Oficial, January 13, 1936.