Memorandum by Mr. Henry Dearborn of the Division of North and West Coast Affairs31

Refutation of Ecuadoran View That Ecuadoran Development Corporation Should Be Reimbursed for its Rubber and Cinchona Expenditures

It will be recalled that officials of the Ecuadoran Government have on various occasions expressed the opinion that the Ecuadoran Development Corporation should be reimbursed for that part of its funds expended on the rubber and cinchona programs. They argue [Page 1054] that the Development Corporation was set up to further the economic progress of the country, that the rubber and cinchona programs were carried on as war necessities and not primarily for the benefit of Ecuador, that excessive expenditures were made on these programs, and that Ecuador should not therefore be obliged to repay the EximBank that part of the Development Corporation loan which was channeled to rubber and cinchona production and extraction.

In a letter to Minister of Economy Laso dated March 29, 1945, Mr. Applegate, General Manager of the Ecuadoran Development Corporation, effectively demonstrated that in its rubber and cinchona work the Corporation was acting as the agent of the Rubber Development Corporation and of the Defense Supplies Corporation, respectively. He pointed out that the Rubber Reserve Company (later the Rubber Development Corporation) reimbursed the Ecuadoran Development Corporation for its expenditures on behalf of the rubber program and that with the completion of the liquidation now being negotiated in respect to the cinchona program the Defense Supplies Corporation would have paid the Ecuadoran Development Corporation for the latter’s cinchona expenditures.

Mr. Applegate concludes that there is nothing in the records upon which to base a new claim by the Ecuadoran Development Corporation against the RDC or the DSC.

H. Dearborn
  1. Addressed to the Chief of the Division of North and West Coast Affairs (Wright) and to Mr. Dana G. Munro, Special Adviser to the Director, Office of American Republic Affairs.