Foreign Relations of the United States, 1947, The American Republics, Volume VIII

811.516 Export-Import Bank/3–1147

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

[Extracts]

confidential
No. 5045

Quito, March 11, 1947.

Sir: I have the honor to refer to the Department’s telegram No. 29 of February 5, 7 p.m., 1947,⁴⁸ concerning the scheduled visit to Ecuador of the Export-Import Bank Mission headed by Director Lynn Stambaugh, and to transmit herewith information concerning the activities of the Mission while in Ecuador.

The members of the Mission arrived in Guayaquil on March 3 from La Paz, remaining in Guayaquil until March 5, when they departed for and arrived in Quito. The Mission consisted of the following: Mr. Lynn Stambaugh, Mr. Elmer Chase, Mr. Edwin R. Kinnear, and Mr. Bernard Bell. Their activities in Guayaquil were confined to discussions with officials of the Municipality and the Frederick Snare Corporation concerning the credit agreement whereby $4,000,000 will be made available to the Municipality for improvement and construction of water facilities …

… The Municipality of Guayaquil will authorize the Ecuadoran Ambassador in Washington, Sr. Francisco Illescas Barreiro, to sign the agreement in Washington in behalf of the Municipality. The Ambassador will also have authority to sign in behalf of the Government of Ecuador. With all questions now resolved, the agreement is ready for signature, and, according to the Mission, should be signed soon.

On March 5 at 5 p.m. the members of the Mission, accompanied by the Ambassador and the Acting Commercial Attaché, held a conference with the Ecuadoran Minister of the Treasury, Sr. Enrique Arízaga Toral. The first part of the conference was concerned with matters pertaining to the Consolidation Agreement signed in Washington on February 28. The Consolidation Agreement consolidated Ecuador’s outstanding obligations under Loan Agreement No. 262, authorized on May 7, 1940 for a total amount of $1,480,000, and Agreement No. 316, authorized on March 6, 1942 for $5,000,000. The latter was a joint obligation of the Republic of Ecuador and the Corporación Ecuatoriana de Fomento. By the terms of the Consolidation Agreement the Republic of Ecuador became the sole debtor. The aggregate principal amount outstanding on the notes held as of the date of signing of the Consolidation Agreement on February 28 was $5,650,248.67. Information concerning the Consolidation Agreement was transmitted to the Embassy in the Department’s telegram No. 53 of February 28, 7 p.m., 1947,⁴⁹ for Stambaugh and Chase from Eximbank.

. . . . . . .

After the conclusion of the discussion concerning the Consolidation Agreement, the Minister asked the members of the Mission for the attitude of the Bank concerning an additional credit for completion of the Quevedo–Manta Highway. The Mission pointed out that the Tucker McClure estimate could not be utilized since it was not a recent report. They added that the report of the Resident Engineer of the Public Roads Administration in Ecuador, Mr. Vincent Johnkoski, who is supervising the construction of the Quamote–Tambo Highway, was likewise insufficient to enable the Bank to arrive at a decision. Mr. Johnkoski’s report, which estimated that it would require $3,100,000 to complete the Quevedo–Manta Highway as planned, or $3,600,000 if a bridge over the Rio Quevedo were included, did not make it clear whether or not additional machinery and equipment would be required. According to the Mission, if additional machinery and equipment are required or if presently available equipment is unsatisfactory, Mr. Johnkoski’s estimate of the cost of completion would have to be increased. They stated that they would discuss that matter with Mr. Johnkoski on the following day and would then talk further with the Minister concerning an additional line of credit for completion of the highway.

Since the $1,000,000 credit previously approved for engineering studies has been transferred by the Bank to construction of the Quevedo–Manta Highway and since the Government of Ecuador has deposited $780,000 for the same purpose, the Government of Ecuador desires an additional credit in an amount equal to the estimated cost of completion less $1,780,000.

In conclusion the Minister stated that he was interested in the following matters:

1) Additional credit for the Quevedo–Manta Highway

2) Completion of negotiations on the $4,000,000 loan for Quito water project

3) Completion of negotiations for the Guayaquil water project

4) Continuation of construction of the Guamote–Tambo Highway

. . . . . . .

At 11:00 a.m. on March 6 the members of the Mission, accompanied by the Acting Commercial Attaché, held a conference with the Mayor of Quito concerning the credit for the Quito water project. In addition to the foregoing, the Municipal Engineer, Sr. Enrique Rivadeneira, and the Vice President of the Council, Sr. Ricardo Espinosa, were present.

The members of the Mission first referred to the exchange of correspondence they had had with the Municipality since their visit to Quito last August. The Mayor said that the Municipality had transmitted to six American firms interested in the engineering and construction work specifications prepared by the Municipality. A copy of the specifications had been sent to the Export-Import Bank during the absence from Washington of the members of the Mission. The text of the specifications is attached as enclosure No. 1 to this despatch.

At the present time an American engineer, Mr. Harold T. Smith, is engaged in the construction of water facilities in the North Zone of the city. The Municipality estimates that it will require approximately $500,000 to complete the North Zone project. The Municipality therefore intends to use $500,000 of the $4,000,000 for such construction. Consequently, the specifications transmitted to the six American firms called for construction of water facilities in the South Zone of the city in an amount not to exceed $3,500,000. The six American firms which received the specifications are the following:

• Walsh Construction Company
• Harold T. Smith
• Jones Construction Company
• Parsons, Brinkerhoff, Hogan & MacDonald
• Morrison–Knudson Company
• The Pertuitut Company

The Export-Import Bank has tentatively approved all of the foregoing, with the exception of the Morrison–Knudson Company. Members of the Mission informed the Embassy that although the Bank had not yet approved the Morrison–Knudson Company, there was no doubt that it would do so. It should be noted, however, that actual plans and specifications of the successful American firm must be approved by the Bank before the $4,000,000 credit is made available.⁵⁰

The specifications call for individual estimates on each of the following phases of the project:

1) Determination of source of water supply

2) Design

3) Construction

4) Maintenance or Administration

. . . . . . .

The Export-Import Bank Mission left Quito on March 7, to return directly to Washington.

Respectfully yours,

For the Ambassador:

Alvord L. Boeck

Acting Commercial Attaché

48. Not printed.
49. Not printed.
50. In instruction 1888, of May 29, 1947, the Department advised the officer in charge in Quito that representatives of Ecuador and of the Export-Import Bank had signed an agreement on May 22 providing a credit of $4,000,000 for the waterworks of Quito and an equal amount for a similar purpose for Guayaquil (822.51/5–2247).