422.11G93/1002: Telegram

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

My January 11, noon.6 Government was unable to secure members for the commission to pass on question of reduction of tariffs. Considerable newspaper comment resulted from this disputed question, mostly in support of the attitude of the Government, namely, for a reduction of the present tariff rates.

General manager of the railroad yesterday in friendly agreement with President and Minister of the Interior mutually agreed to resort to old tariff number 4 to become effective May 1st this year.

It would appear this agreement between the Government and railroad is satisfactory for the following reasons:

Publicity given subject with probable future political effect on railroad.
Railroad by compromise gained four months additional time as Government demanded immediate resumption of old tariff.
Company has received benefit already of 19 [15?] months increased tariff.
Government had a good case and so privately recognized by general manager of railroad.

The main essential feature accomplished by this agreement is the failure on the part of the Government to establish the dangerous precedent, as applicable to tariffs, by which the Government can arbitrarily terminate what the railroad company considers as a mutual contract entered into between the respective parties and only dissolved by mutual consent. The general manager of the railroad considers the present arrangement as satisfactory, while the Legation considers the awkward situation that had developed owing to the Government’s demands on the railroad as relieved considerably.

  1. Not printed; see despatch of the same date.