822.796/407: Telegram

The Minister in, Ecuador (Long) to the Secretary of State

263. For Clayton from Morgan.

“The President this morning informed the American Minister and myself that the Government would immediately order Sedta to discontinue operations, basing this action upon the failure of the company to maintain adequate standards of safety. The Government will then make Sedta an offer for all its stock at a reasonable price and if the offer is not accepted would proceed to expropriate. Panagra must be prepared to carry all the mail immediately.

The President … said that if existing services are curtailed the public reaction will be very severe and highly unfavorable not only to the Government but also to the United States and to Panagra. I hope you can advise me without delay that means will be found to increase Panagra domestic services within Ecuador either by sending one more plane and crew or by sending additional pilots to increase frequencies with present equipment. The President expressed the opinion that Sedta airplanes would not be found usable when taken over.”