811.20 Defense (M)/7435

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

No. 3142

Sir: I have the honor to report that, following the receipt of the Department’s telegram No. 423 of June 17, 10 p.m.,74 an appointment was made to discuss the rubber purchasing agreement with the Minister of Finance. Messrs. Lamb,75 Tewksbury,76 and I called on Mr. Illingworth late yesterday afternoon, and he is in accord in principle with all of the conditions outlined in the various instructions from the Department.

The Minister of Finance stated that it would be necessary to issue a decree by which stocks of rubber would be embargoed and exportation of rubber to any country, except the United States would be prohibited. Provision would be made in the decree for the payment of the price established in the contract for all stocks of rubber now on hand in ports in Ecuador. The decree would also authorize some member of the Government to sign a contract on behalf of Ecuador for the purchase of rubber.

The one point regarding which Mr. Illingworth apparently feels somewhat uneasy is the question of rubber which has been purchased by Ecuadoran exporters and which may have been purchased at prices in excess of 33 cents. He inquired if there was not some provision [Page 404] which could be made to protect Ecuadoran exporters who have made legitimate purchases, indicating that the Ecuadoran Government would be prepared to carefully check all such purchases and refuse to give consideration to any cases concerning which there was the slightest doubt. It was emphasized that the Rubber Reserve did not contemplate protecting Ecuadoran exporters and that to do so would establish a precedent which would be very prejudicial to pending negotiations with other countries.

Mr. Illingworth was under the impression that there were probably large stocks of rubber in the ports, but the latest figures that he had covered such stocks as of April 28. Figures which were compiled in the Consulate General indicated that there were approximately 270 tons of rubber on hand as of June 13. It is not believed that stocks in other ports exceed 50 or 60 tons. Thus the rubber exportable at present is not excessive.

It was explained to the Minister of Finance that Rubber Reserve had authorized Grace & Company to purchase all available stocks on hand as soon as the agreement was concluded, and that Grace & Company had indicated that in all probability most of the rubber held in ports had been purchased at less than 33 cents per pound. Mr. Illingworth was pleased that arrangements had been made whereby purchases could be undertaken immediately following any decree which might be issued by the Government restricting exports of rubber.

Mr. Illingworth indicated that he would immediately discuss the entire matter with the President and the Minister of Agriculture in order to conclude as rapidly as possible the final details in connection with the agreement.

Respectfully yours,

Boaz Long
  1. Not printed.
  2. Eric Lamb of the Rubber Reserve Company.
  3. Howard H. Tewksbury, Commercial Attaché.