822.24/164: Telegram

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

121. Your 153, February 25, 9 p.m. The Ecuadoran Ambassador has received a letter from the President of the Republic indicating that apparently the President and his advisers are under the impression that Ecuador under the proposed lend-lease agreement would be expected to repay $17,000,000 over a period of 6 or 7 years. It is difficult to understand how such an impression could exist, since the text of the proposed agreement clearly indicates in Article II that Ecuador is expected to pay only 3.53% of the total, or $600,000 over 6 years, at a rate of not over $100,000 per year. In addition there are no interest payments to be made. The Government of the United States believes that the terms being offered Ecuador are exceedingly generous.

The President of Ecuador in his letter asked two questions: (1) Is there any possibility of Ecuador’s having to pay less than $17,000,000? The answer to this is as indicated above. (2) Does the lend-lease agreement include local expenditures and salaries of the Army? The answer to this is no—the lend-lease agreement covers only matériel to be furnished Ecuador from the United States.

The Ecuadoran Ambassador is cabling his Government at once answering these questions.