812.6363/3906
Memorandum of Conversation, by the Under Secretary of State (Welles)
The Mexican Ambassador called to see me this morning at my request. I told the Ambassador that, as he well knew, I had been increasingly concerned by the delay on the part of his Government in advancing concrete proposals for adequate and effective compensation for the properties of American nationals which had been expropriated by the Mexican Government. I stated that it seemed to me that every week that passed without such action on the part of the Mexican Government made the eventual solution of these problems more difficult, and that I consequently had written to him a personal letter5 setting forth the views which I had just expressed, my apprehension at this continued delay, and also explaining succinctly the position of the Government of the United States with regard to certain phases of these problems.
I then handed the Ambassador the letter, which he read carefully. He stated that he fully understood and appreciated the position of this Government.
I then said that I was conveying to him a message from the Secretary of State. I said that the Secretary wanted me to make it clear, as I had done in this personal letter which he had just read, that this Government was not in a position to make any proposals to the Government of Mexico as to the type of offer of compensation which that Government should make to the oil companies. The Secretary of State believed that such offer must necessarily be made as of the sole initiative of the Mexican Government, and that this Government was not authorized to speak for the oil companies, nor could it assume any responsibility in indicating whether any particular type of proposal might be acceptable to the oil companies, or even if such proposal [Page 750] might be considered by the oil companies. I went on to say, however, that during the weeks which had transpired since the expropriation of the oil properties, many suggestions had been advanced from many sources as to various forms of solution of the difficulty which the Mexican Government had created. I said that many such proposals had been brought to the attention of the Department of State, and that I knew many such proposals had been brought to the attention of the Mexican Government and of the Mexican Ambassador here. I said that undoubtedly the Ambassador had been giving consideration to some of these proposals, and that as a result of such consideration on his part he might feel, as he had previously indicated to me, disposed to take up personally with President Cárdenas some of the various suggestions which had been made. With a desire to be as helpful as I could, I said that I had had tabulated some of the ideas which I knew had already been laid before the Ambassador, and that he might find such tabulation of value to himself in discussing with President Cárdenas possible solutions of the difficulty.
I said I wished to make it very clear and to have the Ambassador understand without any shadow of doubt that this Government was making no suggestions, and that if it should at any time be alleged in the press or any other source that this Government had advanced any suggestions, I would at once feel free to deny such reports in their entirety. The Ambassador said he understood the position of this Government fully, and that it would be entirely accurate and correct for this Government at any time to deny that it had ever made any suggestions to the Mexican Government as to the solution which should be found. The Ambassador said that he would study these various ideas very carefully during the next day or so, and that he would then probably take an airplane to Mexico City in order to take up personally with President Cárdenas the basic questions involved and the need for advancing as rapidly as possible concrete and implemented proposals for compensation to the oil companies. The Ambassador said that he would have a further talk with me before he left.
The Ambassador then said that he wished to clear up a mistake which had occurred inasmuch as he had indicated to me on the telephone a few days ago that in a conversation which he had had on the telephone with President Cárdenas the latter had promised to segregate 120,000 pesos monthly as a continuing compensation for the expropriation of agrarian properties belonging to American citizens. The Ambassador said that in a further telephone conversation he had had with General Cárdenas the latter had made it clear that this monthly segregation of 120,000 pesos was intended solely to provide compensation for the American owners of agrarian properties in the Yaqui Valley, which President Cárdenas computed as totaling 4,000,000 [Page 751] pesos. The Ambassador said that President Cárdenas was still studying a way in which to pay for the other agrarian properties expropriated, and that he had assured the Ambassador that all of the small American landowners whose lands had been expropriated would be compensated in cash before the end of General Cárdenas’ presidential term. President Cárdenas intended to compensate the large landowners in agrarian bonds.
I said to the Ambassador that I was very glad to have this further information, which was in part encouraging; but that, while I as an individual naturally sympathized more fully with the situation of the small American landowners because of their urgent need of immediate cash compensation and inasmuch as the large American landholders presumably were not in actual financial distress as a result of not receiving immediate cash payment, nevertheless, I wanted to register the very emphatic opinion that insofar as its nationals were concerned, this Government could not agree to the drawing of any distinction between one group of Americans whose properties had been expropriated in Mexico and another group solely because one group happened to own larger tracts than the other. The Ambassador said he fully understood the legitimacy of this position, but that he felt that General Cárdenas wished to make it clear that his Government appreciated the urgent need of some of the American individuals whose lands had been seized and that it was disposed to deal with their cases at the first possible moment.
The Ambassador then recounted a conversation which he had had with Mr. Grafmann with regard to the oil situation and his most recent conversation on the telephone with President Cárdenas. The Ambassador had been assured from both sources that if the oil companies would agree to cooperate in some reasonable manner with the Mexican Government, the volume of oil exploited both from the Government fields and from the expropriated fields would be so greatly increased as to raise the number of workers in the oil industry from 18,000 to 54,000 and to make it possible likewise for the Government to receive such revenues as its share in the sale of such oil as to make it highly probable that the Government could pay off the amount due as the value of the oil properties seized within a short number of years. The Ambassador had received information which led him to believe that the Mexican Government would be willing to consider agreeing to pay a total valuation for all of the oil properties seized of some two hundred million dollars in lieu of the $450,000,000 alleged to be claimed by the oil companies. I told the Ambassador that I had not the faintest idea what the value of the properties might be or what the amount claimed by the oil companies might be, and that, as he would see, in none of the communications addressed to the Mexican Government by this Government had the question of valuation been touched [Page 752] upon. I said that this seemed to me to be a question for negotiation between the Mexican Government and the companies, and that I had reason to hope that the Government would agree at some appropriate opportunity in the near future to have an impartial study of the valuation undertaken by individuals whose impartiality would be recognized by both the Mexican Government and the oil companies.
The Ambassador spoke for a while with regard to some of the problems of the Lima Conference6 and indicated his desire to discuss at some subsequent occasion with me the formulation of a project which might be supported by this Government and by the Mexican Government providing for the prohibition of bombing from the air in time of war as well as certain other humanitarian features. He said that the President had spoken to him of some such project in his last interview with him and that President Cárdenas was likewise very much in favor of some such inter-American treaty. I said I would be glad to talk this over with the Ambassador whenever he desired.
As he was leaving the Ambassador told me that he had received assurances from President Cárdenas that Señor Beteta had been instructed to take up with the head of the Labor Board the difficulties occasioned the La Laja Mining Company through the failure of the Board to declare terminated the strike now going on on the company’s property. The Ambassador said that he believed a final and satisfactory solution of this difficulty would be obtained immediately.