822.796/150: Telegram

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

81. Referring to the Department’s telegram No. 54, May 30, 2 p.m., Campbell had not drafted cable when he left for Lima, but said that he would send it from Guayaquil last Wednesday afternoon. Before departing he was acquainted with the substance of my telegram and seemed to think surest way to clear out Sedta was for Panagra to buy them out, if the United States Government would foot the bill. Campbell intimated that with Panagra’s experience it might purchase Sedta, possibly without two Junkers and arrange for the German personnel to fly them out of Ecuador and then liquidate Sedta Company.

Precisely what he cabled I do not know, but assume it must have been above. Reasons why Sedta proposes that the Government acquire a controlling interest are that local shareholders have not paid up and owing to its relatively large investment in physical assets, the company is in need of funds; and that under Government control it would be certain of obtaining Oriente service and other concessions.

A shareholder whose information has been usually dependable states that physical assets amount to 300,000,000 sucres, including two Junkers valued at 1,000,000 each and a third plane now being overhauled in Brazil, radio stations, well stocked repair shops but the large hangar has not yet arrived from Germany.

Under clause 21 of the present German corporation, Campbell can dismiss Sedta employees. (Legation’s despatch No. 244, October 31, 193810).

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