822.51/857: Telegram

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

32. In amplification my telegram No. 31, April 25, 10 p.m., during the past few days Provisional President and Foreign Minister42a have stressed their belief that excessive importations for [from?] our country since January 1, 1940 (when import control was lifted) are of such volume that Ecuadoran buyers may be unable to secure exchange to cover commitments within a reasonable time. Gold reserves said to be down to 32%, legal limit being 30%.

Importations are thought to have been due partially to war, fear that prices would rise and hopes of acquiring strong inventory position while deliveries were certain, also through fear that new restrictions might be imposed. Furthermore, claimed decline in exports accentuation trouble.

Consul Nester and Legation staff have been consulting with Foreign Office. Latter could not state extent of unexportable surpluses, hence that is being rapidly investigated.

We are informed that if something is not done to restore confidence in economic situation, by checking imports and helping to dispose of [Page 858] exports (Ecuador and the United States in part to stabilize sucre) it is feared that political situation will get out of hand.

The Provisional President suggested that an immediate temporary doubling of customs duties applicable to all countries would stop flood of imports. Dr. Cordova and Foreign Minister desire to know whether notice required under trade agreement could by mutual consent be dispensed with and double duties immediately applied.

If Department approves in principle believe provision could be made for non-application to any shipments for which ocean bill of lading has been issued as of announced effective date or previously; thereby reducing likelihood of refusal of merchandise on arrival and protecting exporter’s interests.

Long
  1. Julio Tobar Donoso.