Foreign Relations of the United States: Diplomatic Papers, 1943, The American Republics, Volume VI

822.50/290: Telegram

The Ambassador in Ecuador (Scotten) to the Secretary of State

Quito, October 15, 1943—2 p.m.
[Received 9:25 p.m.]

908. For Pierson³⁹ Export Import Bank from Moore⁴⁰ and Mersereau.⁴¹ Upon arrival Guayaquil Illingworth who has remained here informed us of his irrevocable resignation because of maladministration by the management of the Corporation.⁴² Upon the installation of the sessions October 11 the Ecuadoran directors stated that the Government was dissatisfied with the present management and wanted at least an Ecuadoran assistant general manager. President Arroyo wanted to see the entire board that afternoon as well as the American Ambassador.

Reference is made to the Embassy’s despatch No. 517, September 29, 1943,⁴³ and for the conference with the President reference is made to Embassy’s despatch 568, October 12, 1943.⁴⁴ The President notified the directors and the Ambassador that he desired Ecuadoran participation in the management and mentioned an Ecuadoran co-manager. At the following sessions of the board we pointed out that the President’s suggestion involved a fundamental change in the principle of the Corporation which would require negotiations between the respective Governments. We offered as our personal view the impracticability of divided functions between the Ecuadoran and American co-managers. The Ecuadoran directors were fully in accord. We indicated that our Government’s reaction would probably be in favor of a wholly Ecuadoran entity both directorate and management. This was unsatisfactory to the Ecuadoran directors who requested us not to inform Washington until they had an opportunity to discuss the matter with the President alone. The Ecuadoran members met with the President on the 30th and reported that the President was still of his original view regarding co-management as reported in Embassy’s despatch 568, October 12 and insisted upon American participation on the board. The Ecuadoran directors stated that the President really wanted full managerial control.…

The Ambassador and ourselves met with the President yesterday. We explained to the President that we were unable to meet his view, as regards co-management and that we were prepared to recommend to Washington that if any change were made in the Corporation the latter should be set up as an entirely Ecuadoran entity with appropriate US control over disbursement of funds. The President immediately asked whether this involved cancellation of the credit. We replied that we had not considered this possibility. The President said that although he still preferred the retention of the American directors nevertheless he would be agreeable to a purely Ecuadoran entity if the credit were continued. We informed him that we would of course transmit his suggestion as to co-managers but would also convey our own views and would await instructions. He agreed.

The Ambassador and ourselves upon consideration of the whole situation here feel that a reorganization is not only desirable but necessary and that a purely Ecuadoran entity would relieve the United States of further operational responsibility. [Moore and Mersereau.]

Scotten

39. Warren Lee Pierson, President, Export-Import Bank.
40. Ross E. Moore, Assistant Director of Office of Foreign Agricultural Relations, Department of Agriculture, and a Director of the Ecuadoran Development Corporation.
41. James F. Mersereau, General Counsel and Representative of the Bank in Ecuador, and Director of the Ecuadoran Development Corporation.
42. Rubber Development Corporation.
43. Not printed.
44. Not printed; it reported that President Arroyo charged that the Corporation had produced no tangible results (822.50/289).