812.51/1640
The Secretary of State to the Chairman of the International Committee of Bankers on Mexico (Lamont)21
Dear Sir: Following a recent talk with you in Washington the Department has received from you a memorandum dated September [Page 491] 25, 1930,22 in regard to the terms of an agreement dated July 25, 1930, known as the Lamont-Montes de Oca agreement which provides for the readjustment of certain Mexican bonds held by foreigners now represented by your Committee. The agreement has been reported to the Mexican Government. It was not submitted to the Department.
In your conversation with the Department, the Department pointed out the fact that according to this new agreement all the bonds represented by your Committee (save railroad bonds) will lay claim to a lien or charge on certain Mexican customs revenues, although at the time these several bond issues were put out, all of them did not have such a claim of security and some of them had no claim of security. Because of this change of status which the new agreement provides for, it would appear that at least some of the bonds covered thereby have bettered their position (so far as security is concerned), to the consequent detriment of other creditors of Mexico and particularly of the claimants under our Claims Conventions with Mexico, in which the Department of State is particularly interested.
The summary of the memorandum submitted by you on this point reads as follows:
“In all the negotiations following the failure of performance of the 1922 Agreement as modified, there was uppermost in the minds of the Minister as voiced by him or his Commission that having bargained with the holder of the unsecured debt on the basis of a very material reduction in principal of that debt and the substitution of an obligation secured by oil and other revenues, and such bargain having been accepted by over 98% of the holders of such debt, it was incumbent upon the Mexican Government to protect that settlement sponsored not only by the Committee but not questioned by our State Department nor by the other Governments concerned.”
It appears, however, from this summary and from the memorandum that the new agreement of 1930, although decreasing the aggregate face amount of the debt treated by it, does increase the aggregate claim of lien or security of the bonds which your Committee represents, in some degree beyond the Committee’s agreement of 1922, and in large degree beyond the terms of the original bond issues.
Your memorandum states that the 1922 agreement was not questioned by this Department. The 1922 agreement proved ineffective and the fact that the Department did not question it seems now not important. But I would not desire that in the future a similar situation should arise as to the Lamont-Montes de Oca agreement, and that you should feel that silence by the Department on the subject at this time meant that the Department acquiesced in it or does not question it.
[Page 492]The Department does not assert that it should have been consulted in regard to the Montes de Oca-Lamont agreement. But since the question raised in your memorandum has now arisen you will understand the Department is not by silence acquiescing in that agreement nor recognizing a duty to support it, nor expressing agreement with your memorandum. It may eventuate that the agreement will impair the resources available for meeting the balance of Mexican foreign debt, (including the claims in which the Department is particularly interested), either by reason of its claims of lien on revenues of the Mexican Government, or because it may turn out that as a whole it would require for its service an unfair share of that portion of the Mexican national resources devoted to foreign debt payment. If such should be the case, the Department will feel free, vis-à-vis Mexico, to disregard the terms of the Lamont-Montes de Oca agreement. Further than this it does not now seem necessary to go.
Very truly yours,