File No. 412.11T54/205.

The Secretary of State to the American Ambassador .

No. 1228.]

Sir: Referring to that part of your telegram of January 30 which relates to the Tlahualilo case, the Department notes with some surprise the position of the Minister for Foreign Affairs as recorded therein.

In stating that he would address to the Embassy a note in which his Government would express its willingness to abandon arbitration as a means of settlement for the difficulties between the Tlahualilo Co. and the Mexican Government without, at the same time, indicating that that note would contain, as an alternative for arbitration, proposals for the settlement of these difficulties by direct agreement between the Mexican Government and the Tlahualilo Co., Mr. Lascurain did not act as the Department understood that he would on the occasion of the conversation between Mr. Lascurain and Secretary Knox on January 3, a memorandum of which was transmitted to you with the Department’s No. 1166 of January 9, 1913.4

You will secure an early interview with Mr. de la Barra and say to him that it is the Department’s understanding, as he will observe by reference to the memorandum of Mr. Lascurain’s conversation [Page 1007] with the Secretary of State, that he would, in the same note in which he would express the willingness of his Government to abandon arbitration as a means of settlement of the Tlahualilo controversy, also propose that the differences between the Mexican Government and the company be settled by some sort of direct agreement; and at the same time would submit definite proposals which should serve as a basis for such agreement in settlement.

In speaking to Mr. de la Barra the Department hopes that you will not lose the opportunity of saying to him that Mr. Lascurain’s remarks to the effect that the company’s contentions are not well founded can not be accepted by the Department without some expression of demurral, since it is understood that the dissenting opinion of the Supreme Court of Mexico at the time of the decision1 to which the company now objects upheld the company’s contentions in almost every particular.

I am [etc.],

P. C. Knox.
  1. Printed under “Claims of American citizens against Mexico, etc.”
  2. That of the Court of Appeal, rendered July 24, 1912.