422.11G93/1009: Telegram

The Chargé in Ecuador (Belt) to the Acting Secretary of State

Department’s January 27, 6 p.m., my February 3, 6 p.m. Memorandum of Minister for Foreign Affairs is somewhat superficial and [Page 178] suggests as the easiest solution of the bonded indebtedness of the railroad the capitalization of the coupons due by the issuance of new bonds for the total amount of said coupons. The fund put aside for the interest service should be increased accordingly in order to meet the interest payments when due. The Minister regards a capitalization of the coupons due would permit a regular payment of the interest and also allow an immediate payment to the bond holders.

Such an arrangement would only go to increase the debt; besides there is no mention of security for the new issue. It is a paper transaction only and would somewhat relieve Ecuador of her present embarrassment resulting from failure to meet her obligations. Memorandum states its contents are views of the Minister and it is submitted as a matter of information.

  1. Text printed from corrected copy received Feb. 14, 6.30 p.m.