FOREIGN RELATIONS) 19 4 2, VOLUME VI



controls or accounting which will be required. Ecuador desires to be
assured that a substantial portion of the amount will be available on
signature of the contract.
                                                             LONG

811.20 Defense (M)!/6402
  The Secretary of State to the Ambassador in Ecuador (Long)

No. 1119                                WASHINGTON, May 27, 1942.
  The Secretary of State transmits herewith copies of a draft agree-
ment between Rubber Reserve Company and the Republic of Ec-
uador,73 providing for the purchase by Rubber Reserve Company of
the exportable surplus of wild rubber produced in Ecuador. The
contract has been drafted on the basis of the telegrams recently ex-
changed between the Ambassador and the Secretary of State.
  It will be noted that under paragraph 6 of the agreement, a develop-
ment fund of $500,000 is to be expended by Rubber Reserve Company.
In the very near future Rubber Reserve plans to establish an agency
in Ecuador in order to correlate all plans of this Government with
respect to rubber development work in Ecuador. Such agency would,
of course, operate under the supervision of the Embassy and only
to the extent approved by the Government of Ecuador. This agency
would be under an administrative head and would furnish the tech-
nical or advisory assistants referred to in paragraph number one of
the Embassy's telegram 344 of April 29, 1942. In addition, this or-
ganization would make and carry out all the necessary arrangements
relating to the purchase of rubber.
  It will be noted that certain provisions of the contract are given in
general terms. In other countries it has been found desirable to com-
mence operations on this basis and to work out the details as the matter
proceeds. The organization which it is planned to send to Ecuador
will be prepared to discuss and decide these matters, which include
the price differentials to be paid for various grades of rubber.
  Paragraph 3 of the draft agreement provides for the fixing of an
amount as sufficient to satisfy the essential requirements of Ecuador
for rubber products. On the basis of information available here, it
appears that, even on a very liberal basis, this amount should be ap-
proximately 100 tons. It will be noted that the agreement contem-
plates an increase in this amount for justifiable causes.
  'Not printed. The draft agreement provided that the Rubber Reserve Com-
pany should have an exclusive right to buy Ecuadoran rubber except for an
amount stipulated for domestic use. The Company was to pay a fixed price
per
pound, provide shipping, and establish a fund for developing raw rubber produc-
tion. Ecuador agreed to prevent hoarding and to provide a fair wage to the
laborers. For the text of a similar agreement with Brazil, see telegram No.
640,
March 13, 7 p. m., to the Ambassador in Brazil, vol. v, p. 692.



402