Foreign Relations of the United States, 1946, The American Republics, Volume XI

822.154/5–246

Memorandum of Conversation, by Mr. Henry Dearborn of the Division of North and West Coast Affairs

confidential

[Washington,] May 2, 1946.

Participants:	Department of State: Ambassador Scotten
	Mr. Dearborn
	Export-Import Bank: Mr. Martin
	Mr. Gaston
	Mr. Ness
	Mr. Chase

Ambassador Scotten commenced the conversation by stating that he was principally interested in enhancing United States prestige politically and economically in Ecuador. Within this frame of reference, he proceeded to discuss;

a. the H. T. Smith application to the Eximbank for a loan of $3,000,000 to cover the dollar requirements necessary for the construction of municipal waterworks; and,

b. the completion of the Manta-Quevedo Road.

Smith Application. The Ambassador said he would like strongly to recommend the Smith project for the following reasons:

1. Smith himself was an American businessman of the best sort who was strictly honest and who delivered the goods; it would be beneficial to US prestige to have an American of Smith’s caliber working in Ecuador.

2. Smith was not a fly-by-night promoter, but rather an individual who was operating in Ecuador on a long-term basis on a type of project which was of real value to the country.

The Ambassador pointed out that he was not going to go into the financial considerations involved, since such considerations were the Bank’s special concern.

Mr. Gaston remarked that reputable American businessmen were our best representatives abroad and that we should encourage their activities insofar as our limitations would permit. He added that one way for Ecuador to build up her depleted dollar reserves would be through attracting a tourist trade and that if such a plan were to be realized, it would be essential to encourage sanitary improvements, of which good drinking water was one of the most important. Mr. Dearborn observed that another salutary effect of the Smith project would be that it would reach many sections of Ecuador and would not be limited to Guayaquil and Quito, which cities were accustomed to corner any economic advances falling to the country. A reputable American like Smith, working on a nation-wide basis, would have an opportunity to speak for American business in places generally uninformed on the United States.

Manta-Quevedo Highway. The Ambassador stated that he believed the Eximbank, if it could do so within governing statutes and regulations, should advance to Ecuador the funds necessary to complete the Manta-Quevedo Eoad. He emphasized that this would do much toward counteracting the poor record of the Ecuadoran Development Corporation. He recalled that prominent Ecuadorans had expressed the opinion to him that if the Corporation would only finish that one project, it (the Corporation) would have been worthwhile. The Ambassador recognized that if the Bank were to make available funds with which to finish the road, this should only be done as a result of a request from the Ecuadorans.

Mr. Gaston agreed with the Ambassador’s point of view and asked if the latter did not think that the highway should be given priority on the Bank’s list of projects for Ecuador. The Ambassador replied that he thought the highway and the waterworks were equally meritorious. To Mr. Gaston’s question as to whether the Bank would have to extend credit to Ecuador to cover the sucre requirements as well as the dollar requirements in connection with the road, the Ambassador replied that the Bank would undoubtedly have to make available to Ecuador funds for both dollar and sucre requirements.

Mr. Chase recalled that Ambassador Plaza,⁷⁶ on his most recent visit to the Bank, had advanced the following as his idea which he would present to his Government: It is likely that the projects for which certain Eximbank credits are now earmarked will not require the full amounts specified. The excess could be used to finance other development projects. He thought, furthermore, that the million dollars now marked for a general economic survey might be used for the completion of the Manta-Quevedo Road. Finally, Ambassador Plaza suggested, vaguely, that other loans might be extended to Ecuador in accordance with that country’s ability to pay. Ambassador Scotten expressed his surprise that Plaza was willing to consider the use of the million dollar survey loan for another purpose since this represented a very different view than previously voiced to him by Ecuadorans.

There appeared to be general agreement among those present with Ambassador Scotten’s point of view on both the Smith project and the highway.

Mr. Martin and Mr. Gaston explained that the Bank was now in a difficult position with respect to extending credits to Latin American countries. They said that recent loans had been channeled to Europe and they were apprehensive with regard to the availability of funds for worthy projects in the Western Hemisphere. Both men stated that they were very much in favor of continuing to assist the American Republics, and they hoped that their resources for this purpose would not be cut off completely.

Henry Dearborn

76. Galo Plaza, Ecuadoran Ambassador in the United States.