1940: Ecuador

Economic Conditions and Politics.

The inaugural address, Sept. 1, 1940, of President Carlos Arroyo del Río, who was elected in January, constituted a practical analysis of the Republic's situation. The new President, an ex-corporation lawyer, has the support of big business but is generally mistrusted by the average citizen. Expanded powers for the Executive, to meet economic difficulties, are the keynote of a new plan of government prepared by the administration party's Central Committee. The government was conceded emergency powers in January, following the unsuccessful revolt of the supporters of the defeated presidential candidate, José Marfa Velasco Ibarra, and these were extended in April in the face of rumors of further revolt and political friction, caused by the economic plight of the country resulting from excessive government spending and the loss of European markets for coffee and cocoa. Velasco Ibarra won a majority of votes in the chief cities, where he directed a special appeal to the workers and, though now in exile, he is still a force to be reckoned with in Ecuadorean politics. The general amnesty extended March 21 to those involved in the January uprising did not apply to him. Ecuador has had seventeen changes of presidents and dictators in ten years, and the two recent dictatorships, in a period of about four years, drained the treasury.

Foreign Relations.

After Italy entered the European War, the contract of the Italian military mission, which had a strong influence with earlier administrations, was cancelled. A four-year arrangement was completed in December for a United States naval and military aviation mission to advise the defense forces. This makes the eighth Latin American country with an advisory United States aviation mission. Moreover, a series of conferences of military and naval officers of the United States and Ecuador regarding cooperative measures for Canal and Western Hemisphere defense were held in May.

The two principal airlines of Ecuador are Panagra, which is North American-owned, and Sedta (Sociedad Ecuatoriana de Transportes Aereos), which is indirectly controlled by Lufthansa and operates with German personnel. Sedta has been accused of Nazi activities in Ecuador in a new pro-British propaganda sheet. La Defense, edited by Senator Filemón Borja, who has also led the anti-Nazi and anti-totalitarian campaign in the Senate. His proposal not to recognize the new Spanish Minister until Spain's policy regarding the European War was clearer was rejected by Congress but served to stimulate anti-Franco feeling in Ecuador. An anti-Semitic campaign has been started in two papers controlled by Nazi funds. Voz Obrera and Intereses Comerciales. La Defense is being published to counteract the propaganda of the latter. A Congressional investigation of German radio activities and of the Transocean News Service was launched in August.

Ecuador-Peru Boundary Dispute.

The clearer single threat to inter-American solidarity comes from the unsettled boundary dispute between Ecuador and Peru. During the year menacing frontier incidents have recurred, such as have become periodic since negotiations in Washington were broken off several years ago. The Foreign Minister, not a member of the administration party, has been widely attacked for his failure to act regarding the alleged Peruvian advances in the disputed area.

Finance.

On June 4 the Export-Import Bank announced a $1,500,000 credit for highway construction, especially the completion of the Ecuadorean section of the Pan American highway, the purchase of railway equipment in the United States, and research into means of restoring the disease-ridden cocoa industry. A Congressional decree has authorized the government to contract an additional loan up to $30,000,000 for rearmament. The sucre, which in April fell to 4.5 cents, has been pegged to the U. S. dollar at 6.7 cents. In June, in order to check the fall of the currency, following a six-month's trial of unrestricted exchange operations, the government adopted a drastic system of exchange and import controls. The shutting off of foreign markets has very seriously affected the exchange situation. A special body, the Council of National Economy, was formed as a result of the economic crisis, but solution of the Republic's difficulties is complicated by a conflict of interests between it, the Cabinet and the private Banco Contral, as well as between the divergent interests of the port city of Guayaquil and the interior. The ordinary budget for 1940 estimated revenues and expenditures to balance at 113,050,000 sucres, which is 14 per cent below the 1939 budget. Drastic economics in the latter part of 1939 reduced considerably the heavy deficit with which the government was confronted. Extraordinary budgets for 1940 were also authorized, one of 7,405,000 sucres for public works and one of 530,000 sucres for rural schools. For data on the Archeological Survey in Ecuador see ARCHAEOLOGY.