The Minister in Ecuador (Hartman) to the Secretary of State

No. 423

Sir: I have the honor to confirm my telegram of August 26, 3 p.m., wherein I set out the substance of a proposed decree submitted to Congress for its consideration by the advisory commission which was created by Executive Decree of March 12, 1919.

I now herewith enclose complete copy of the memorandum accompanying the proposed decree, and the full text of the decree, together with translations of both.39

In support of the recommendation made in my said telegram of August 26, 3 p.m., that the Railway Company should refuse to accept the proposed decree of arbitration, I respectfully submit the following:

The contract of September 30, 1908, constituted a complete settlement of all claims, controversies or differences which have arisen at that date. Article XIX of that contract reads as follows:

“The Government, the Railway Company and the Bondholders accept the present Arrangement as a definite settlement of all claims, controversies or differences which have arisen; and each agrees to loyally and faithfully carry out the terms set forth in this contract. The Arbitrators, to whom have been submitted the questions in dispute between the Government and the Railway Company, shall be requested by the Government and the Railway Company to notify their respective Governments that they accept and approve this contract as a definite settlement of all points referred to their decision.”

In view of the foregoing, no other reason ought to be necessary to justify my recommendation. However, there are other reasons. For example, the agreement contained in the report of the conferences between the Government of Ecuador and the Railway Company, held from March 28 to April 6, 1919, reported to the Department in my No. 387 of June 7, 1919,40 obligates the Government of Ecuador to pay an agreed sum in full settlement of the old claims of the Railway Company, amounting to over 800,000 sucres. The present proposal to again resort to arbitration looks very much to me like an effort on the part of the Government to get released from that obligation. Furthermore, the previous experiences with arbitrations of these matters have not been such as to lead me to look upon arbitration of these questions with any favor. The present administration will expire on August 31, 1920, and it is my belief that it is [Page 196] now proposing arbitration for the sole purpose of delay and to avoid meeting the obligation created by the agreement last above mentioned.

I think it would be a serious mistake for the Railway Company to consent to this proposal, and, in this opinion I have the concurrence of Mr. Dobbie, the Railway’s General Manager.

I have [etc.]

Chas. S. Hartman
  1. Neither printed.
  2. Not printed; see footnote 17, p. 184.