Memorandum of Conversation, by Edgar L. McGinnis, Jr., of the Office of South American Affairs



  • Abaca Agreement1
  • Participants: The Ecuadoran Ambassador
  • Thomas C. Mann, Acting Assistant Secretary—ARA
  • Edgar L. McGinnis, Jr.OSA

The Ecuadoran Ambassador told Mr. Mann that he had just been informed by the RFC that a recent White House directive prohibited it from signing the pending abaca contract with Ecuador.2 Ambassador Chiriboga said that the reaction in Ecuador to this development would be one of considerable disappointment. He referred to the lengthy negotiations between the RFC and his Government regarding this contract and said that Ecuador had finally determined about a month ago to sign the agreement on RFC’s terms.

Mr. Mann said that he regretted very much that recent developments had made it necessary for the RFC to discontinue negotiations for a contract with the Ecuadoran Government. He stated that the entire abaca program of the U.S. Government had been reviewed recently from the standpoint of our security needs of the fiber. He said that the review disclosed that no expansion of the abaca program would be necessary or desirable. Mr. Mann pointed out that the abaca program was authorized by law solely to provide abaca to meet the security needs of the U.S. and that the program was in no sense designed for the purpose of rendering economic aid to other countries. Mr. Mann observed that he had expressed misgivings to the Ambassador last fall, when the latter had been asked to call at the Department to expedite Ecuadoran action upon the pending contract, that if further delays were encountered the U.S. might not be able to conduct the program at all.

The Ambassador agreed to this and indicated that it was indeed unfortunate that the Ecuadoran Government had not given its approval to the contract in a form satisfactory to the RFC until it was too late.

  1. Between May and November 1952, representatives of the Reconstruction Finance Corporation (RFC) and Ecuador conducted negotiations for a contract with respect to the development of abaca production in Ecuador. The negotiators agreed on a contract, but the Ecuadoran Government took no action to approve it. In November, the Ecuadorans were notified that the White House had the entire abaca program under review to determine whether any expansion was required in light of U.S. security needs. (Memorandum by Mr. McGinnis to Mr. Mann, dated Apr. 10, 1953, 822.2327/4–1653)
  2. The White House decision was conveyed in a letter from President Eisenhower to RFC Administrator Harry A. McDonald, dated Apr. 10, 1953; a copy is attached to 822.2327/4–1653.