822.51 Et 3/26

The Ambassador in Great Britain ( Kellogg ) to the Secretary of State

No. 35

Sir: In reply to your telegram No. 383 of December 17, 5 p.m., 1923, concerning the attitude of the Guayaquil & Quito Railway Co. toward the proposed loan from the Ethelburga Syndicate to the Government of Ecuador, I have the honor to forward herewith copies of Foreign Office Note No. A 355/3/54, dated January 22, 1924.

I have [etc.]

Frank B. Kellogg

The British Secretary of State for Foreign Affairs ( McDonald ) to the American Ambassador ( Kellogg )

No. A. 355/3/54

Your Excellency: I have the honour to acknowledge the receipt of Mr. Post Wheeler’s note No. 1160 of the 18th ultimo, in which he was good enough to inform me of the attitude of the Guayaquil and Quito Railway Company towards the contract between the Government of Ecuador and the Ethelburga Syndicate.

It appears that when the agreement of 1908 was made the bondholders of the railway were represented by the Council of Foreign Bondholders, acting in conjunction with the Committee of First Mortgage Bondholders. The Council of Foreign Bondholders now state that the Ethelburga Syndicate is acting in an entirely friendly manner and fully recognizes the rights of the bondholders under the arrangement of 1908.
By clause 25 of the new loan contract a portion of the proposed new issue is appropriated to the purpose of converting and withdrawing outstanding bonds of the External Debt of Ecuador. If this is carried out, the existing hypothecation in favour of the present bonds will of course be at an end, and I am informed that any such conversion will only be carried out with the sanction of a public meeting of the bondholders.

I have [etc.]

(For the Secretary of State)
R. Sperling