811.20 Defense (M)/7595: Telegram
The Ambassador in Ecuador (Long) to the Secretary of State
[Received 11:28 p.m.]
555. I called on the President this morning to say we had been informed that 172 tons of rubber were being shipped southward from Guayaquil about July 8 and to ask whether decrees as prepared some time ago (see enclosures to despatch No. 3156, June 23)78 could not now be signed, thus carrying out the spirit and substance of our understanding.
After some discussion, the President dictated the following which in translation reads:
“The Cabinet in three consecutive sessions has been engaged in the study of the decrees referring to rubber. It has made some modifications which while preserving in substance the exclusive exportation to the United States through the Reserve avoid the constitutional difficulty of declaring a monopoly. The matter has been settled in a definitive manner. (See solution outlined in section 3 of this telegram.79)
The Government has some changes which could be considered of minor importance or of terminology. The only important change is with reference to the premiums of 2½ cents (and 5 cents) which according to the contract would have to be applied to the unexpended balance of the development fund of $500,000. This fund is to be spent by Reserve according to its judgment and the Government of Ecuador complains that if the expenditure does not depend on this Government it would be unjust for premiums which it should receive to be applied to the said balance as this is an expenditure over which it (the Government) has no jurisdiction. The Government believes that if the contract were thus drafted the case might arise where it would not actually receive the premiums if these had to be applied to the development fund which the Reserve in its judgment might not have spent.
The Government suggests one of the following: (1) that the expenditure of the development fund be made by the Government in order that then in case this had not been completed up to 1944 the premiums may be applied to the unexpended balance; (2) that if it is desired that this expenditure (development fund) be left to the judgment of the Reserve the payment of the premiums be independent and be made directly to the Ecuadoran Government, as said premiums become available.”
In continuation the Executive spoke about as follows: the first decree would provide that no rubber shipments could be made save [Page 406] to countries designated by mutual arrangement. In another decree the President would permit exports only to the order of the Rubber Reserve Company. He concluded: “Now the responsibility is with you. Should your Government accept either of the above suggestions, we will endeavor to sign quickly and might be able to finish the business in a day or two.”
The President’s second proposal may offer a formula for definitely concluding the rubber agreement. Carlton80 concurs.