822.6341 South American Development Co./108
The Chargé in Ecuador (Gade) to the Secretary of State
[Received March 1.]
Sir: With reference to my despatch No. 1049 of February 17, 1938,49 regarding the obligatory revision of the South American Development Company’s contract with the Ecuadorean Government, I have the honor to report that by a Decree issued on February 18th the Government raised the Company’s gross production tax from 6% to 12% and declared that the other terms of the Company’s “concession” would remain unchanged. A translation of the text of this decree as published in the press on February 19th is transmitted herewith.49
The press on February 19th also published an “official explanation” of the foregoing decree, signed by Señor José De La Cuadra, the Supreme Chief’s Secretary, a translation of which is likewise enclosed.49
Señor Rivas, the Company’s local representative, informs me that he is hopeful that the Decree will be further modified. While the Company could pay the increased production tax under normal circumstances, it might find it too onerous if the mineral earth mined turned out to be poor for some time.
During the last few days the press has given the impression that the Government has won a great victory over the South American Development Company. Various labor organizations have held demonstrations to congratulate General Enríquez.
The Company’s shipment of cyanide precipitate, which was seized by the Ecuadorean authorities on February 15th (my despatch No. 1049 of February 17, 1938) was released and exported to the United States in the S. S. Santa Maria on February 18th.
Respectfully yours,