File No. 812.516/159

Mr. Parker, representing American interests, to the Secretary of State


657. Department’s 631, January 25, 4 p.m. Both banks are still in charge of the Government liquidation committees but reliable information indicates that not only has no progress whatever been made toward liquidation but there was never any serious intention of carrying out the proposed liquidation. The action of the Government now appears as an attempt under legal guise to obtain possession of the metallic reserves. This attempt seems to have been successful inasmuch as the National Bank has loaned to the Government [Page 1007] some six million pesos, the loan to be guaranteed by fifty per cent of the export tax on petroleum and paid before the end of this year. The Bank of London and Mexico was asked to loan three millions to be guaranteed by thirty per cent of the export tax on petroleum but declined. The Government officials then managed by a ruse to have the vaults opened and have kept them open. No one outside of the Government officials knows how much has been taken from the London Bank but it is estimated at about four millions. This course of action has the appearance of legality because both banks are theoretically at least in the hands of the liquidating committees which as receivers can dispose of the funds as they see fit. I was told this morning that Carranza had given orders to use force if necessary to obtain possession of the bullion.