Memorandum by the Chief of the Division of Mexican Affairs, Department of State (Hanna) of a Conversation between the Secretary of State and H. N. Branch, Representing Oil Companies Operating in Mexico

Mr. Branch briefly re-stated and elaborated the facts mentioned in the memorandum of the Division of Mexican Affairs dated July 10, 1922, and added that the Committee which he represented desired to know the Department’s attitude with respect to such a loan or advance payment of taxes.

The Secretary briefly invited Mr. Branch’s attention to the following points:

The Department is advised that the Bankers Committee representing the holders of Mexican bonds have reached an agreement [Page 698] with Mr. de la Huerta for the resumption of interest payment on those bonds and for the settlement of other questions connected therewith, but that this agreement must receive the approval of General Obregon before it becomes effective.
The Department is also advised that a Committee representing what the Department understands to be the principal petroleum producers and operators in Mexico has been in conference with Mr. de la Huerta in an effort to reach an agreement for the continuance of petroleum development in Mexico, and has submitted to him its final proposal for such an agreement, which agreement is also subject to approval by General Obregon. (The Secretary specifically stated that the Department had no participation whatsoever in either of these Conferences.)
The Department is informed that the Mexican Supreme Court has handed down four decisions42 which with the decision of that Court in the Texas Company case43 are said to constitute jurisprudence establishing that Article 27 of the Mexican Constitution is not retroactive or confiscatory in the matters covered by the decisions, but, despite its repeated efforts, the Department has been unable to secure an official copy of the four decisions in reference and understands that they have not yet been published in official form.
The Mexican authorities have repeatedly made public statements that the Mexican Congress would enact legislation for the regulation of Article 27 of the Mexican Constitution, without which the questions arising under the terms of that Article cannot be definitely settled, but no such legislation has yet been enacted.

The Secretary then summarized the above by pointing out that in the absence of Mexican Executive, Judicial or Legislative action affording ample and appropriate guaranties for American interests in Mexico, this Government had submitted, for the consideration of the present Mexican federal authorities, a Treaty of Amity and Commerce which would furnish such guaranties, but the Mexican authorities had not yet seen fit to negotiate an acceptable Treaty.44

The Secretary then stated that, in view of the situation outlined in the foregoing, this Government, which is seeking proper protection for legally vested American rights and interests in Mexico, does not find itself in a position such that it can recognize the existing Mexican regime, and consequently cannot approve of a loan to that regime.

The Secretary made it very clear that, far from any desire to embarrass the existing administration in Mexico, it is his wish that they might find a mutually satisfactory solution for all their difficulties with American interests in Mexico. He stated that, if the petroleum companies wished to make a loan to the unrecognized Obregon regime, [Page 699] for the purpose of arriving at a settlement, they were at liberty to do so. He also made it clear that it is no part of his purpose to embarrass the oil interests represented by Mr. Branch in their effort to arrive at such a settlement.

M[atthew] E. H[anna]
  1. Not printed; see instruction no. 2185, Aug. 15, to the Chargé in Mexico, p. 680.
  2. Foreign Relations, 1921, vol. ii, p. 464.
  3. See pp. 639 ff.