822.51 Et 3/20a: Telegram

The Secretary of State to the Chargé in Great Britain (Wheeler)

383. Please address a note verbale to the Foreign Office in the following terms:

“The Government of the United States has been advised that the Government of Ecuador is proceeding with negotiations to sign in London a loan contract with the Ethelburga Syndicate, Limited, 75 Bishopsgate, London, and that the customs receipts of Ecuador will be pledged as security for this loan. The Government of the United States accordingly desires to draw the attention of His Britannic Majesty’s Government to the fact that the contract of September 30, 1908, incorporated in an award of November 24, 1908 as a result of arbitration between the Guayaquil and Quito Railway Company, an American corporation, and the Ecuadorean Government, states that the sums required for the annual service of the railroad bonds and for the expenses of the service ‘ shall constitute a first and preferred obligation on the total receipts of the custom house’ and that after December 31, 1908, ‘there shall exist no obligation whatever against the customs revenues that may have preference over or pari-passu with that assigned in favor of the bondholders’ and that in future the Government’ will not establish any obligation whatever against said revenues to the prejudice of the bondholders’ rights’.

In view of the possibility that steps may shortly be taken towards the conclusion of the contract in question the Government of the United States desires to notify His Britannic Majesty’s Government that the Guayaquil and Quito Railway Company disputes the right of the Ecuadorean authorities to pledge the customs receipts of Ecuador in violation of the Company’s rights.”