822.51/827
The Ecuadoran Minister for Foreign Affairs (Tobar Donoso) to the American Under Secretary of State (Welles)
Memorandum
1. On September 26, 1939, the Delegation consisting of the Minister of Foreign Relations of Ecuador, and Doctor Antonio Quevedo, Minister of Ecuador in Peru, called upon the Representative of the [Page 603] Secretary of State of the United States of America at the Consultative Meeting in Panamá.
2. In accordance with the conversation during that visit, the Ecuadoran Delegation has the honor to state the following:
A) Contract for the Construction of Public Works in Ecuador
3. The Delegation would greatly appreciate the provision of the required assistance by the Department of State for the favorable conclusion of the negotiations initiated with a view to having one or more United States companies contract for the construction, completion and improvement of the highways, railways and port works specified in the memorandum that Tobar Donoso gave to Mr. Welles during the conversation mentioned.
4. With the mentioned memorandum—another copy of which was delivered some months before in Washington by Señor Colón Eloy Alfaro14—there are included maps of the various Provinces of Ecuador with indications of the railways and highways the construction or improvement of which is desired by the Government of Quito. There are not provided in the mentioned memorandum all the details relating to agricultural, livestock and industrial development, but the data relative to such development will be provided subsequently.
5. The Government of Ecuador does not have available sufficient funds to cover the total expenses required for the construction of these public works, so that the company that makes the contracts, with the benevolent cooperation of the Government of the United States and of the Export-Import Bank, would necessarily advance the capital required which would be refunded subsequently, in the manner and form that shall be agreed upon. The Government of Ecuador does not desire to receive the funds for the works, but the works themselves, so that the funds would be handled by the entity that undertakes the works, without prejudice to the right of the Government of Ecuador to admit the expenditures and to pass upon the technical specifications of the works.
B) Long Term Credits for the Purchase of Railway Material, Machinery, Heavy Materials, etc.
6. The Delegation expressed its appreciation for the statements in Mr. Welles’ speech and referred to that in which he said that for “the purchase of railway material, machinery, heavy materials, etc., there would be required longer term credits”. The Delegation indicated that, in addition to the works specified in the memorandum delivered to Mr. Welles on September 26, there should be constructed or improved certain other productive works that require certain purchases—the [Page 604] respective entities to be indicated opportunely—of materials and machinery, among which are:
- Locomotives
- freight cars
- passenger cars—gas-electric coaches
- rails
- bolts
- nails and railway spikes
- telegraph and telephone material
- steel bridges
- steel bars for reinforced concrete
- cement
- repairs for locomotives and for passenger and freight cars
- machinery for highway construction
- trucks
- cranes with electric motors
The Government of Ecuador desires to be able to purchase the mentioned articles in the United States paying for them over a long period. It would appreciate having the Government at Washington and, especially, Mr. Welles lend cooperation in the steps necessary to attain this objective.
C) Cooperation of the United States in the Economic Development of Ecuador
7. The Delegation expressed appreciation for the declaration made by Mr. Welles that “the Government of the United States desires to cooperate with the other American Governments in the efforts that each one of them may make for development of the resources of its country in accordance with sound economic standards and in noncompetitive fields”; and his statement that “when it may be desired, they would be assisted in negotiating for credits, either through the system of private banks, or through the official agencies of the Government when the latter have at their disposal funds for such purposes”.
8. In respect to this declaration the Delegation indicated that the Government of Ecuador desires to develop the resources of its country, the economic situation of which is being affected by the European war which has closed markets of exportation, rendered difficult the importation into Ecuador of various products, and disorganized the system of transportation that serves the commerce of the country, all of which may produce consequences affecting the stability of Ecuadoran monetary exchange.
Exports According to Ecuador Statistics
9. a) In conformity with the law of March 3, 193915—which would [Page 605] lose its reason for existence if the commercial balance were equalized—in order to ascertain the exact amount of Ecuadoran exports must take into account only 15 percent of the total value of exports of crude petroleum and 20 percent of the value of exports of mineral earth (gold), because from both lines of business, exploited by foreign companies, there remain to the benefit of the country only the mentioned percentage.
b) The average percentage of our exports to Europe is 49.877 percent of the total value of our exports (Annex No. 116).
c) The articles that have been exported the most from 1929 to 1938 and the countries of destination of those exports are set forth in Annex No. 2. Annexes Nos. 3, 4 and 5, indicate in detail the exports of each Ecuadoran article (including the total value, without any deduction, of the exports of gold and petroleum) in the years 1936, 1937 and 1938, respectively. Annex No. 6 summarizes Ecuadoran exports to principal countries and shows that the annual percentages of exports to Germany, which are now paralyzed, varied approximately between 20 and 27 percent of our total exports. France has absorbed from 8 to 12 percent of our exports and Great Britain another percentage; both countries have begun to reduce their importation of the articles they bought in Ecuador. As a result, it may be deduced that the European war has closed markets that consumed from 30 to 40 percent of Ecuadoran exports.
Ecuadoran Import Statistics
10. Everything concerning imports in recent years is set forth in Annexes Nos. 7 and 8.
Ecuadoran International Transportation Statistics
11. Annexes 9 to 16 set forth in detail the manner in which international transportation from and to Ecuador, by air and water, was effected in the years 1931 to 1938. From these tables it appears that German ships have transported more cargo than those of any other flag.
12. As a consequence of this situation it is going to be indispensable to Ecuador to obtain new markets for its products, and to do everything possible so that other navigation lines may transport the cargo that was formerly carried by the Germans.
13. To contribute to the development of Ecuador and to maintain or increase present imports the Government of Quito desires also to develop the agricultural and mineral resources of the country that are not in competition with products of the United States.
[Page 606]Necessity for American Experts
14. The Government desires to obtain the assistance of the Government at Washington for the purpose of sending to Ecuador agricultural and mining experts who may determine which resources of both types may be developed on sound economic bases of non-competition.
Necessity for Capital and Investment from the United States
15. As soon as such experts present their report, the Government of Ecuador would look with gratitude upon assistance from the United States in the investment of American capital necessary for the development of the agricultural and industrial resources to which reference is made.
D) Commercial Relations With the United States Statistics
Ecuadoran Exports
16. Ecuadoran exports to the United States are set forth in Annex No. 17, but it was necessary to decrease in Chapter III of the Annex the total value in the instances of gold and petroleum as mentioned in No. 11 (9?), letter (a) of this memorandum, and fine silver and certain other products set forth in Chapter V of the same Annex which are articles reexported to the United States.
Commercial Balance with the United States
17. Annex No. 18 provides these data respecting the years 1936, 1937 and 1938, with the deductions made as indicated in letter (a) of No. 11 (9?) of this memorandum. Such balance from January 1, 1936 to March 31, 1939 shows an unfavorable balance for Ecuador of 36,147,064 sucres.
Arrangements for Increasing the Commerce Between the United States and Ecuador
18. Taking into consideration this circumstance, the Minister of Foreign Relations of Ecuador hopes to be able to count on the good will of the Government of Washington for the purpose of seeking with it the means for increasing the interchange between the two States, by means of necessary arrangements that will permit an increase in Ecuadoran exports to the United States which will result in an even greater market in Ecuador for American products.
19. In view of the good will manifested by Mr. Welles, the Government of Ecuador will instruct its representatives in Washington to continue discussion of these matters with the Department of State.