811.20 Defense (M)/7945: Telegram

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

615. Reynolds85 to Rosenthal86 and Bicknell.87 It is view of the Ambassador and Ecuadoran officials concerned that rubber development and collection should be handled by Ecuadoran Development Corporation. I concur this view and suggest following action.

Arrange a contract in Washington at once between Rubber Reserve and Ecuadoran Development Corporation similar to the chicle contract which contract should authorize Development Corporation to make necessary contracts here with other individuals and companies [Page 408] using development fund. This contract should require approval of local Rubber Reserve representative on development expenditures of under $10,000 and in addition Washington approval on larger expenditures particularly on road and transportation expenditures. Contracts should be subject to cancellation by either party on 30 days’ notice. Rubber Reserve to make no other development contracts in Ecuador. Development Corporation to be responsible for collection and development program and delivery of rubber to Rubber Reserve at ports designated by Reserve. The Corporation will distribute supplies, establish necessary communication transportation, appoint buying agents at agreed points, employ other necessary personnel to handle development collection and delivery of rubber to seaboard.
Suggest you confer immediately with Kinnear88 and have him bring in David Yale who Development Corporation plans to employ for rubber work. If satisfactory send him down at once. If not select another man satisfactory to Kinnear, Rubber Reserve, and BEW. Kinnear will [be?] authorized by Lamb to act for Development Corporation on contract and selection of staff.
Suggest Rubber Reserve in its contract with Development Corporation agree to pay all expenses of rubber program including salaries of employees working on rubber plus not exceeding one-half cent per pound for management commissions.
Pending formal agreement with Development Corporation Wylie89 should have letter of credit for $50,000 to start work immediately on collection and development projects now ready for action. These arrangements to be worked out by Wylie cooperating with Lamb and in name of Development Corporation and to be financed with above letter of credit by advances to Development Corporation.
It will be necessary to maintain small Rubber Reserve staff here to perform following important functions: to obtain complete knowledge of rubber areas, to report weekly on progress of Development Corporation, to cooperate with and stimulate projects to be carried out by Development Corporation, arrange for purchase of supplies in United States needed in rubber program, take over rubber at port and arrange shipping, in cooperation with Embassy, encourage rationing program in Ecuador and arrange through Rubber Reserve and BEW for necessary finished rubber products for Ecuador, pay out development fund as provided by contract, make premium payments to proper Government officials, direct work of Rubber Reserve technicians, audit Development Corporation books on rubber expenditures. [Page 409] It should be made clear in contract that Rubber Reserve or BEW representative shall be entitled to full information at all times and that Rubber Reserve representative in Ecuador shall be an active participant in settling major questions of policy.
It is extremely important if agreement is made with Development Corporation that Kinnear and rubber man selected reach here within a week.
Please cable at once if it is decided to work out above arrangement. Please clear any with us here major changes. [Reynolds.]
  1. Presumably George M. Reynolds of the Board of Economic Warfare.
  2. Morris Rosenthal, Assistant Executive Director of the Board of Economic Warfare.
  3. John W. Bicknell, Vice President of the Rubber Reserve Company.
  4. Edwin R. Kinnear, representative of the Ecuadoran Development Corporation.
  5. David S. Wylie, representative of the Rubber Reserve Company.