Memorandum of Conversation, by Mr. John C. McClintock of the Office of the Assistant Secretary of State (Rockefeller)

Participants: Minister of Foreign Relations Ponce
Ambassador Galo Plaza
Wayne C. Taylor, President, Export-Import Bank
James F. Mersereau, Export-Import Bank
Jerome J. Stenger—ED31a
Milton K. Wells—NWC31b
John C. McClintock—A–R31c

The meeting was held at the request of Minister Ponce with Mr. Wayne C. Taylor, President of the Export-Import Bank, to discuss the possibility of establishing a line of credit for certain projects in Ecuador.

[Page 1011]

Ambassador Plaza, on behalf of the Minister, outlined the general Ecuadoran approach. He stated that after conversations with Mr. Rockefeller the suggestion had been made that a line of credit for twenty million dollars be opened by the Export-Import Bank, funds to be expended under this line of credit for specific projects to be agreed upon by the Ecuadoran Government and the Bank after competent engineering studies had been carried out by a reputable United States engineering firm in the employ of the Ecuadoran Government.

As security for the loan, it was further suggested that whatever funds are appropriated by the United States for the use of the Galápagos Islands would be earmarked for the amount necessary for amortization and interest on the Export-Import Bank loans.

The Ambassador stated that he was hopeful that the Bank could suggest a competent engineering firm to be employed as consultants by the Ecuadoran Government. Mr. Taylor pointed out that the responsibility for choosing engineering consultants rested with the Ecuadoran Government but stated that the Bank would be glad to supply a list of qualified firms as consulting engineers with whom the Ecuadoran Government might negotiate.

Discussion was then had with respect to the status of the Ecuadoran Development Corporation,32 particularly with reference to the role of the Corporation in acting as a planning group in connection with the developmental projects for which the twenty million dollar line of credit is required. Mr. Taylor observed that, as it has been agreed between the Bank and the Ecuadoran Government that the Corporation will as soon as possible be made a wholly Ecuadoran entity and since the past history of the Corporation had not turned out as both parties had wished, it might be preferable to establish a new planning commission which could employ the American firm of engineering consultants who would advise the planning commission with respect to the various projects under consideration.

After discussion between Minister Ponce and the Ambassador, it was the consensus of the Ecuadoran representatives that it would be preferable to utilize the mechanism of the Development Corporation, as the Corporation is already a legally constituted entity, and it would be a simple matter at the next annual meeting to elect new directors with the end in view of choosing men qualified for the new role of the Corporation. Mr. Taylor suggested that as a matter of advice he would recommend that the Corporation divest itself of all operating functions, specifically the experiment farm at Pichilingue,33 so [Page 1012] that the Corporation would be solely a planning organization and would have no operating responsibility nor financial undertakings.

It was brought out during the discussion that the projects which the Ecuadorans have in mind involve construction of port works, improvement of railroad facilities, construction of highways, and irrigation. Mr. Taylor indicated that the Bank would be willing to consider initial financing to cover the cost of engineering surveys so that individual projects could be presented to the Bank under a line of credit to be opened.

Mr. Taylor also indicated that, upon the receipt of an aide-mémoire outlining the steps which the Ecuadorans proposed to follow he would be pleased to place the matter before the Board of Directors of the Bank at their next meeting on July 10 to ascertain whether or not the Board would approve in principle the general line of approach under discussion.

It was established that to clean up the affairs of the present Ecuadoran Development Corporation, place it on a unilateral basis, complete the audit of its books, and elect new directors would take at least sixty days. It was pointed out that undoubtedly a special session of the Ecuadoran Government would be necessary to ratify whatever treaty is drafted for the use of the Galápagos Island bases, and Minister Ponce indicated that a special session of Congress would probably be called later in the year, not only for this purpose but also to ratify the treaty implementing the Act of Chapultepec,34 as well as Ecuadoran adherence to the United Nations Organization.

The meeting concluded with agreement that an aide-mémoire would be prepared to be signed by the Ecuadoran Foreign Minister and presumably representatives of the Export-Import Bank and the Department of State. It was agreed that the Bank would prepare a panel of names of engineering firms who would be competent to advise the Ecuadoran Government with respect to the various projects under consideration.

A subsequent telephone conversation between Mr. Rockefeller and Mr. Taylor made clear that negotiations for the use of the Galápagos Islands are still in a preliminary stage and no determination has yet been made as to the amount which should be paid for the use of the Islands. The subject has not been cleared with the several agencies [Page 1013] of the Government concerned, nor has the matter been presented to the Congress.

John C. McClintock
  1. Division of Foreign Economic Development.
  2. Division of North and West Coast Affairs.
  3. Assistant Secretary of State Nelson A. Rockefeller.
  4. Ecuadoran governmental instrumentality, in the direction of which Ecuadorans and Americans shared.
  5. Site of large cacao and coffee plantations backed by the Ecuadoran Development Corporation.
  6. The Act of Chapultepec was the eighth resolution of the Inter-American Conference on Problems of War and Peace at Mexico City. For documentation on this Conference, see pp. 1 ff.; for text of the Act, signed March 8, 1945, see Pan American Union, Final Act of the Inter-American Conference on Problems of War and Peace, p. 40.