Foreign Relations of the United States Diplomatic Papers, 1938, The American Republics, Volume V

822.72 AL 5/40: Telegram

The Acting Secretary of State to the Minister in Ecuador ( Long )

Washington , April 29, 1938—8 p.m.

22. Your telegram 42, April 28, 7 p.m. You will please seek immediately an audience with the President of Ecuador for the specific purpose of discussing orally with him before May 2 the difficulties being experienced by All America Cables.⁵⁷

You should say that this Government is deeply concerned over the apparent unwillingness of the Government of Ecuador to grant an adequate extension of time which would make possible a calm and careful consideration of the implications of its proposed action. However, before considering this aspect of the matter this Government desires to be assured that the President is informed of the facts of the case as well as of certain of the conclusions which the Department has reached on the basis of a preliminary examination into the situation. You may point out that in the opinion of this Government the company has rendered an important service to all of the American Republics in maintaining and perfecting adequate cable communications between them, and that the officials of the company, when problems have arisen, appear to have approached them in a fair and friendly spirit.

With respect to its Ecuadoran business, the company appears to have considered the various requests of the Ecuadoran Government from a particularly sympathetic and comprehending point of view. As the President is doubtless aware, it was previously operating under a contractual arrangement providing exemption “from all kinds of national taxes and contributions”, notwithstanding which the company in 1935 relinquished this exemption and concluded a new arrangement settling all past claims and providing for the payment of taxes in the future. This supposedly definitive settlement was ratified by the succeding government of Ecuador, and hence this Government finds it somewhat difficult to understand on what basis the Ecuadoran Government is now endeavoring to reopen the whole question.

The present case is of especial concern since it has to do with communications affecting not only Ecuador and the United States, but also the other American Republics served by All America Cables. Moreover, this Govermnent, acting in the most friendly spirit, is impelled to observe that unilateral action of the type apparently contemplated by the Government of Ecuador does not appear to be one that could be identified with the practical application of the policy of mutual cooperation and reciprocal respect for each other’s interests to which all the American Republics stand pledged and to which it is believed the people of Ecuador are genuinely sympathetic. This Government accordingly earnestly hopes that the Government of Ecuador, motivated by the same friendly spirit, will grant to the company an extension for a minimum period of 2 weeks in order that the whole question can be reexamined with a view to reaching an equitable and feasible solution.

The Government of Ecuador will doubtless not be unaware of the keen competition which confronts cable companies as a result of existing air mail, radio telegraph and radio telephone services. It is understood that All America Cables, in the event of the imposition by Ecuador of charges which would effectively destroy its competitive position with respect to such services or to other cable services, might conclude that it had no choice other than to remove its installations from Ecuador and run its cables outside Ecuadoran territorial waters.

The Government of the United States believes it likewise necessary to remind the Government of Ecuador of the official position assumed by this Government with which the Government of Ecuador is doubtless familiar, namely, that while the Government of the United States recognizes the sovereign right of other governments to expropriate the properties of citizens of the United States located within their jurisdiction, it nevertheless maintains that such expropriation should only be undertaken upon the payment by such governments of immediate, adequate, and effective compensation to the owners of such properties.

Welles

57. In telegram No. 44, April 30, 5 p.m., the Minister in Ecuador reported representations made pursuant to this instruction. Further discussions for a settlement were conducted by Mr. John K. Roosevelt on behalf of All America Cables. (822.72 AL5/42)