102.8951/1077: Telegram
The Ambassador in Ecuador (Scotten) to the Secretary of State
[Received 7:05 p.m.]
915. For Bicknell,45 Rubber Development, from Lowry. Yesterday Fomento directors passed resolution for cancellation effective November [Page 302] 20 of agreement with United States dated October 17, 194246 for management $500,000 development fund. Kinnear advises in addition to returning United States management of unexpended balance of $500,000, Fomento will (1) return to United States as much of road and trail building equipment as has been delivered to them; (2) pay-United States for radio equipment now on order when it arrives; (3) return unexpended balance of $10,000 delivered to Fomento from $500,000 fund for operation Fomento Rubber Department; (4) pay-United States in cash for merchandise as it arrives. We understand cancellation of agreement of October 17 is acceptable to President and we expect to work closely with him on expenditure of balance of fund. Fomento has virtually ceased expenditure of development fund and has no program for unexpended balance. Fomento has no department adequate for operation of organizations on projects and terms specified by United States.
Furthermore future policies of Fomento appear very uncertain in view of persistent demands in the press for reorganization. In view of entire situation and the fact that Fomento has delivered to date only 20 tons of rubber consider it most desirable to accept Fomento’s suggestion in order that program can proceed as rapidly as possible and free of extrinsic problems. We believe we can make satisfactory-arrangements to continue in one way or another features of Fomento rubber program which we consider desirable. This applies chiefly to Oriente operation. In order to avoid delays in program and to conclude this matter while directors are here please rush cable authorizing us to execute agreement with Fomento as outlined above. The Ambassador agrees with me that procurement program for rubber could best be served by accepting this decision of Fomento and carrying out the proposed liquidation, [Lowry.]