FOREIGN RELATIONS, 1942, VOLUME VI



811.20 Defense (M) /9636: Telegram
The Acting Secretary of State to the Ambassador in Ecuador (Long)

                             WASHINGTON, October 16,1942-9 p. m.
  757. Your 842, October 14. Rubber Reserve Company approves
letter agreement in form quoted by you and authorizes Lowry to exe-
cute on its behalf both English and Spanish texts of the agreement.
Rubber Reserve also authorizes Lowry on its behalf to approve
projects submitted by Ecuadoran Development Corporation under
the terms of the letter agreement.
                                                         WELLES

811.20 Defense (M)/10165c: Telegram
   The Secretary of State to the Ambassador in Ecuador (Long)

                           WASHINGTON, November 6, 1942-8 p. m.
  814. For Lowry from Rubber Reserve. The following is intended
to give you our ideas as to the purpose and scope of development
funds. The sooner useful projects can be developed and financed, the
sooner we will get rubber.
  In general development funds may be used for any purpose which
will serve to procure more rubber.
  1. The funds may be used for permanent improvements, such as
construction of airports, roads, wharves, ship repair units, houses,
drainage and health facilities, provided such projects contribute to
the production of rubber, and, of course, further provided that such
projects shall have been initiated or approved by the appropriate
authorities of the governments concerned, to whatever extent the
Rubber Agreement and local laws require.
  2. The funds can be used to acquire and repair transportation
equipment which will contribute to rubber production.
  3. They can be used to facilitate distribution of supplies and move-
ment of workers into the producing areas.
  4. They can be used to make available medicines, foodstuffs and
other supplies at less than cost to Rubber Reserve if advisable.
  5. They can be used to equalize or defray freight and forwarding
costs. For instance, if it is desired to stimulate production in the
interior, you may use development funds to absorb freight charges
either partially or wholly on supplies of rubber between the interior
and the f.o.b. buying points.
  6. You may use development funds to create more powerful in-
centives for the movement of additional labor into the rubber areas;
to improve living and working conditions in producing areas with
a view to retaining the laborers now there and increasing their
productivity.
  7. The criterion by which such expenditures should be judged is
whether there is a reasonable expectation that they will result in
giving us additional rubber.



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