822.6341 South American Development Co./121
The Consul General at Guayaquil (McDonough) to the Secretary of State
[Received March 9.]
Sir: I have the honor to refer further to the Department’s instruction of February 12, 1938 (file No. 822.6341 South American Development Co./68a),51 concerning the differences which have arisen between the Ecuadoran Government and foreign companies operating in Ecuador, and to report that it is believed that an agreement will be reached between that government and the South American Development on terms which will not include the advance payment of large amounts of taxes. Mr. R. P. Luke, resident manager of the Company, went to the United States by plane on February 26, 1938. The outlook for operations by the Company is now considered as perhaps fairly satisfactory. The troops have been removed from the vicinity and district of the mine. The American and other foreign women and children have returned to the mining camp.
The Anglo-Ecuadorian Oilfields Ltd., a British petroleum producer, which received demands similar to those of the South American Development Company, will probably reach an agreement similar to [Page 554] that of the American company but nothing definite is known on the point. The British Consul at Guayaquil has no information about the intentions of the oil company.
The Supreme Court of Ecuador, according to a press report, has decided in favor of Sr. Cajiao, an employee of the All America Cables, who sued for the pension that he claimed under the decree of December 14 [13], 1937, which is mentioned in the Department’s memorandum of January 28, 1938, a copy of which is enclosed with the instruction under reference. Sr. Cajiao will receive a pension of about 2675.66 sucres monthly although his pay while on active duty was only about 1,410. sucres monthly. He has left work on the strength of the press report or of private information. The Guayaquil office of the Cable Company has received no official notice of the reported finding of the Supreme Court.
The companies, such as the Empresa Electrica del Ecuador, Inc., an American corporation, which had contracts for free entry of certain necessary supplies and equipment, are paying import duties under protest.
The press from time to time announces that the contracts with the All America Cables and the Compania Bananera del Ecuador, an American concern affiliated with the United Fruit Company, will be modified but the companies have had no official or unofficial intimation to that effect. The press reports recently have been less insistent that the contracts would be modified. In spite of much propaganda to the effect that these two companies have much too liberal contracts, they do not appear to have been granted any concessions of much actual financial value.
For the present, the agitation in Ecuador against foreign capital has quieted down considerably.
Respectfully yours,
- This instruction was a circular to American diplomatic officers in the American Republics recapitulating the circumstances regarding the difficulties between the Ecuadoran Government and the South American Development Co. and the action relating thereto taken by the Department of State, and directing the presentation of the pertinent facts to the Ministers for Foreign Affairs, should the Ecuadoran representatives present the attitude of their Government.↩