is endeavoring to ascertain why the Guayaquil and Quito Railway Co. has not lived up to its agreement to pay a minimum of 500,000 sucres annually as its share for the interest and amortization payments on the prior lien bonds. As the information which I have received bears out the fact that nothing whatsoever has been contributed by the Guayaquil and Quito Railway Company, it will be noted that this is the first time that the Ecuadorian Government has carried the entire burden alone in addition to the payment of the long overdue 5% coupon, for which it deserves credit. I have [etc.] G. A. BADING CLAIM OF THE MERCANTILE BANK OF THE AMERICAS AGAINST ECUADOR FOR THE DEBT OF THE CACAO GROWERS ASSOCIATION' 822.61334/130: Telegram The Secretary of State to the Minister in Ecuador (Bading) WASHINGTON, August 30, 1924-1 p. m. 14. Department is informed by representative of Mercantile Bank of the Americas that an article in the Budget Bill recently presented to the Ecuadoran Senate, authorizes the executive to liquidate the Association of Agriculturists. The representative of the Bank states that this is contrary to promises made by the President of Ecuador. If the facts are as stated and you deem it advisable you are authorized to bring the matter to the attention of the President, pointing out the injustice of such a measure to the Bank. Report briefly by cable. HUGHES 822.61334/132: Telegram The Secretary of State to the Minister in Ecuador (Bading) WASHINGTON, September 16, 1924-12 noon. 16. Disregard Department's 14, August 30, 1 p. m. Information of Mercantile Bank of the Americas mentioned therein was based on a mutilated telegram from its representative in Ecuador which was misconstrued by both the Bank and the Department. The Bank now informs the Department that the following article, dangerous to its interests, is proposed in the budget bill recently presented to the Ecuadorean Congress: "In any event, the subvention of sucres 2,000,000 for year 1925 (amount estimated tax will produce 1925) is the final amount which the State will deliver to the Association and from December 31, 1925, For previous correspondence concerning the debts. of the association, see Foreign Relations, 1923, vol. 1, pp. 940 ff. all obligation of the State ceases in conformity with law of 1921 in respect to the Association as well as to its creditors if such exist." If the facts are as stated and you deem it advisable, you are authorized to bring the matter to the attention of the President, pointing out the injustice of the measure to the Bank. 8 You may also refer to former President Tamayo's letter of February 5, 1922, to Minister Hartman, a copy of which was enclosed in your Legation's despatch No. 787 dated February 9, 1922.o If you see no objection you may mention to the President that the Bank wishes to suggest the convenience of passage by the Senate of last year's bill, which provides for liquidation of the Association and extension of the two sucres tax until debts are paid, as this appears to the Bank to be the only way the promises of the former Executive can be complied with, and that bank believes, if situation remains in status quo ante, debts of the Association will not be paid and the credit of Ecuador in exterior will be thereby impaired. Report briefly by cable. HUGHES 822.61334/135: Telegram The Minister in Ecuador (Bading) to the Secretary of State QUITO, September 22, 1924-4 p. m. 14. Department's telegram 16, September 16, noon. I have received direct assurance from the President that the Mercantile Bank matter will be arranged satisfactorily. The President favors last year's bill providing for liquidation of the Association and continuation of tax, and is opposed to budget article providing for denial of obligation of the state after December 31st, 1925. BADING 822.61334/135: Telegram The Secretary of State to the Minister in Ecuador (Bading) [Paraphrase] WASHINGTON, October 1, 1924-4 p. m. 17. Your 14, September 22, 4 p.m. Department now advised by Mercantile Bank that Mr. Stabler 10 has cabled that he has been informed that the President, despite assurances given you, has definitely instructed his advisors not to have bill passed as he fears Not printed. 9 Foreign Relations, 1921, vol. I, p. 902. 10 Jordan Herbert Stabler, representing the Mercantile Bank. to assume responsibility of obligating the Government. Foregoing is solely for your information. You will see President at once and remind him of the assurance mentioned in your telegram; you will say that the Department confidently expects he will not delay in having matter arranged satisfactorily. Telegraph brief report on situation and the result of your interview. HUGHES 822.61334/139: Telegram The Minister in Ecuador (Bading) to the Secretary of State QUITO, October 7, 1924—3 p. m. 15. Department's telegram number 17, October 1, 4 p. m. Have had interview with the President, and his answer submitted in writing absolutely ignores promises; merely quotes law of 1921 and states he favors strict compliance therewith. Recommend immediate instructions by telegraph calling for the fulfillment of promises without evasion. BADING 822.61334/139: Telegram The Acting Secretary of State to the Minister in Ecuador (Bading) WASHINGTON, October 14, 1924—5 p. m. 18. Your 15, October 7, 3 p. m. You should discuss this matter again earnestly with the President at the earliest opportunity, stating that the Department relies on the assurances given by ex-President Tamayo, who in his letter of February 5, 1922, to Minister Hartman 11 declared that if in 1925 the credit of the Mercantile Bank of the Americas has not been extinguished the tax will be extended until its cancellation. You should impress upon the President the importance which the Department attaches to the matter and reiterate that the Department relies on his assurances mentioned in your 14, September 22, 4 p. m. and that the Department therefore confidently expects that he will use his influence to have a law passed extending the tax until the debt is paid. You may also point out the decidedly adverse effect upon the credit of Ecuador, should it fail to provide for the payment of its debts, as was recognized by President Tamayo in his letter above referred to. GREW 11 112731-VOL. I-39-52 822.61334/146a: Telegram The Secretary of State to the Minister in Ecuador (Bading) WASHINGTON, November 26, 1924-6 p. m. 19. Department has been informed that the Association of Agriculturists has made full payment on its debts to local banks and holders of "vales". Endeavor to confirm and cable the facts to the Department as soon as possible. Department has also been informed that Article 4 of the Law of Centralization of Revenues provides that the fiscal officials collect all revenues which are not directly provided for in the budget. Cable promptly exact text of Article 4 of this law, or any portion thereof which relates to this matter. Send complete copy of the law by mail. HUGHES 822.61334/149 The Minister in Ecuador (Bading) to the Secretary of State No. 433 QUITO, November 29, 1924. [Received December 29.] SIR: With reference to the Department's cable No. 19, of November 26th, 6 P.M., concerning the matter of the indebtedness of the Asociación de Agricultores del Ecuador to the Mercantile Bank of the Americas, the partial answer to which was cabled in my telegram No. 18 of November 29th, 3 P.M.,12 I have the honor to report that immediately upon receipt of the Department's cable we secured the copy of the law of centralisacion de las rentas and subjected it to a careful study which convinced me that the law does not in any way apply to the law of October 15, 1921, by which was established the tax of three sucres per quintel on cacao for the benefit of the Asociación de Agricultores del Ecuador. I called Mr. Hord, the financial adviser of the Ecuadorian Government, into conference, and he concurred with me in this opinion. In order to ascertain the opinion of the Ecuadorian Government on this question, the matter was referred to Sr. Albornoz, the Minister of Hacienda, and both he and his Undersecretary, Mr. Rivas, expressed the opinion that in view of the fact that the Asociación is a "private institution" the law of centralization is not applicable, and this is further borne out by the fact that the funds derived from this three sucre tax never have been for the benefit of the Ecuadorian Government and that the tax always has been collected by 12 Not printed. the treasurer of the Asociación and never by officials of the Govern ment. Furthermore, we have ascertained that the three sucre tax is being collected and deposited for the benefit of the Asociación as heretofore. The budget finally adopted by the Government, in spite of the protests of Mr. Hord, does not contain any provision whatever in regard to the amount to be collected by this three sucre tax nor as to its disposal. Copy and translation of the law of centralization are hereto attached.13 With regard to the first paragraph of the Department's cable above mentioned, I may state that we are now making an investigation as to whether the Asociación has made full payment of its debts to local banks and holders of "vales" and a report will be made by telegraph, doubtless some time before this despatch reaches the Department. I have [etc.] 822.61334/148: Telegram G. A. BADING The Minister in Ecuador (Bading) to the Secretary of State QUITO, December 2, 1924-11 a. m. [Received December 3-9:10 a. m.] 19. Department's telegram November 26, 6 p. m. From sources believed to be reliable it is learned that all debts to local banks and vale holders have been paid except one vale in litigation. BADING 822.61334/149a: Telegram The Secretary of State to the Minister in Ecuador (Bading) WASHINGTON, December 18, 1924-3 p. m. 21. You will please deliver the following note to the Ecuadorean Government: "I have the honor to inform you that I am instructed by my Government to state that it has given very careful consideration to the question of the debt of the Association of Agriculturists of Ecuador to the Mercantile Bank of the Americas and desires to make known to the Ecuadorean Government its position as follows: His Excellency President Cordova assured the American Minister that this matter could be arranged satisfactorily and expressed his concurrence with a bill introduced into the Ecuadorean Congress in 13 Not printed. |