822.51/985: Telegram

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

167. Reference Department’s no. 118, February 28, 3 p.m. The following is submitted after consultation with Glasser.

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We agree with analysis in cable that the loan request of Central Bank lacks technical basis and is not in best economic interests of Ecuador. The emergency loan of the Government from the Central Bank of 17,000,000 sucres in 1941 was guaranteed by a pledge of 1.3 percent of current Government revenues and 60 percent of profits of exchange control and will presumably be paid off in less than 5 years. The emergency loan of 14 million sucres in 1942 was guaranteed by a series of new taxes which will yield 14 million before July 1943. By February 28 only 16 million of both loans have been used and Government deposits in Central Bank are running 8 million higher than corresponding period year ago. The Government is meeting all obligations faithfully and there is no technical reason for concern over condition of Central Bank. I am unaware of any public dissatisfaction over emergency loans or of any disturbing consequences likely to arise within the near future. I personally think the Government is really worried about where to secure funds for repaying bank and asked extra amount to be sure it could care for rehabilitation of El Oro.