811.20 Defense (M)/6402

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

No. 1119

The Secretary of State transmits herewith copies of a draft agreement between Rubber Reserve Company and the Republic of Ecuador,73 providing for the purchase by Rubber Reserve Company of the exportable surplus of wild rubber produced in Ecuador. The contract has been drafted on the basis of the telegrams recently exchanged between the Ambassador and the Secretary of State.

It will be noted that under paragraph 6 of the agreement, a development fund of $500,000 is to be expended by Rubber Reserve Company. In the very near future Rubber Reserve plans to establish an agency in Ecuador in order to correlate all plans of this Government with respect to rubber development work in Ecuador. Such agency would, of course, operate under the supervision of the Embassy and only to the extent approved by the Government of Ecuador. This agency would be under an administrative head and would furnish the technical or advisory assistants referred to in paragraph number one of the Embassy’s telegram 344 of April 29, 1942. In addition, this organization would make and carry out all the necessary arrangements relating to the purchase of rubber.

It will be noted that certain provisions of the contract are given in general terms. In other countries it has been found desirable to commence operations on this basis and to work out the details as the matter proceeds. The organization which it is planned to send to Ecuador will be prepared to discuss and decide these matters, which include the price differentials to be paid for various grades of rubber.

Paragraph 3 of the draft agreement provides for the fixing of an amount as sufficient to satisfy the essential requirements of Ecuador for rubber products. On the basis of information available here, it appears that, even on a very liberal basis, this amount should be approximately 100 tons. It will be noted that the agreement contemplates an increase in this amount for justifiable causes.

[Page 403]

The proposed agency of Rubber Reserve Company will be fully informed with respect to the conservation measures in effect in the United States, including the information referred to in paragraph two of the Embassy’s telegram no. 344 of April 29.

It is suggested that the Ambassador request the appropriate officials of the Ecuadoran Government to issue an embargo on the export of crude rubber and of rubber products pending the signature of the agreement.

It is suggested that when the form of the contract has been agreed to, it be signed by the Republic of Ecuador and forwarded to the Ecuadoran Embassy here for delivery to the Department to obtain the signature of Rubber Reserve Company. At that time notes would be exchanged here between the Department and the Ecuadoran Embassy confirming the execution of the agreement.

  1. Not printed. The draft agreement provided that the Rubber Reserve Company should have an exclusive right to buy Ecuadoran rubber except for an amount stipulated for domestic use. The Company was to pay a fixed price per pound, provide shipping, and establish a fund for developing raw rubber production. Ecuador agreed to prevent hoarding and to provide a fair wage to the laborers. For the text of a similar agreement with Brazil, see telegram No. 640, March 13, 7 p.m., to the Ambassador in Brazil, vol. v, p. 692.