Foreign Relations of the United States, Diplomatic Papers, 1933, The American Republics, Volume V

411.12/1668

The Ambassador in Mexico (Daniels) to the Secretary of State

No. 646

Mexico, October 2, 1933.
[Received October 5.]

Sir: I have the honor to refer to the Embassy’s despatch number 620 of September 22, 1933,¹⁶ in which I reported to the Department the receipt from Doctor Puig, Minister for Foreign Affairs, of a memorandum containing in general terms the proposals of the Mexican Government for an en bloc settlement of claims pending between the United States and Mexico and which have been filed with the General and Special Claims Commissions.

I now transmit a memorandum prepared by Colonel Moreno, analyzing these proposals, their effect on the American claims, and the points of difference with previous studies on the subject (Enclosure number 1).¹⁶

There is enclosed also a memorandum of conversation¹⁷ at a conference held on September 28th between Messrs. Suárez and Sierra of the Foreign Office, and Colonel Moreno. At this conference views were exchanged as to the use, as an index figure in the settlement of the claims before the General Commission, of the percentage recovery that the decisions rendered so far by the General Claims Commission give. This recovery is approximately 24%. Mr. Suárez contended that this figure was too high and not equitable, as it included the award of the Illinois Central Railroad Company claim for approximately two million dollars, which the Mexican Government did not contest and was ready to pay at the time; that this offer of settlement was not approved by the Agent of the United States, who insisted that the case be considered by the Commission; and that, deducting said award, the recovery percentage would not exceed 8%. If the Illinois Central claim is deducted, Mr. Suárez is fairly correct, the percentage being 8.2%. There is strong argument in favor of his position that this claim should be deducted and a figure of 8% applied. Mr. Suárez also stated that the 11½% recovery percentage, heretofore considered by the United States for a settlement of both General and Special Claims, was much higher than the results they had obtained in their examination of arbitration adjustments.

The attention of the Department is also invited to the views of Messrs. Suárez and Sierra on agrarian claims. They contended that the agreements resulting from the Bucareli Conferences¹⁸ are not embodied in a Convention; that the payment for agrarian expropriations¹⁹ is made in bonds which are very much depreciated in value; and, finally, that the arguments of Mexico in connection with the exercise of the right to expropriate lands are such that there is considerable doubt that the Commission would render a decision unfavorable to Mexico. (Enclosure number 2.)¹⁷

The Mexican proposal involves the following points:

I. Elimination of claims in which the memoranda filed with the Secretariats state no amounts.

(From an analysis of the records available at the Embassy, 98 General Claims, aggregating about 83⅓ million dollars, would be affected.)

II. (a) Deduction of the amount covering similar claims presented to both Commissions on the same grounds. (This covers claims duplicated in filing due to uncertainty of jurisdictional provisions.)

(b) Elimination of claims otherwise duplicated in filing.

(c) Elimination of claims that have been withdrawn.

III. Elimination of the Special Claims the filing of which was disapproved by the Commission in its decision of April 24, 1931.²¹

IV. Elimination of claims that have been adjudicated by the Commissions.

V. (a) Deduction from the amount remaining of the value of the claims presented by Mexico against the United States, following the same principles outlined in preceding paragraphs.

(b) Adjustment of the remaining American claims by the payment by Mexico to the United States of the sum resulting by applying a percentage which is not to be very much higher than the average percentage that Mexico has to pay to the Governments of France and Spain under settlements similar to the one proposed to the United States and covering similar claims at least as regards the Special Commission. The statement is made that the above percentage is higher than the real percentage reached under the 1839²² and 1868²³ Commissions between the United States and Mexico.

The average percentage of recovery in the French and Spanish claims is approximately 2.3%. Using this index figure in the American claims, the amount recovered would be approximately 7¾ million dollars plus the amount of the awards to date, 2½ millions, bringing the total to 10¼ millions.

The attention of the Department is especially invited to Point I. The records of the Joint Secretariat of the General Claims Commission contain about 98 memoranda in which no amount is stated. The records of the American Agency show that subsequent to the filing of the memoranda, claimants furnished additional information, so that the 98 claims originally filed with no amounts are reduced to 51. In the 47 remaining cases, the alleged losses or damages aggregate approximately 83½ million dollars. This amount was included in the original en bloc computations.

Of the 47 cases referred to above, it appears from the last survey conducted by the Agency that only 9 may be memorialized for approximately 6½ million dollars. The earlier estimates were for 56 million dollars.

In view of the above situation and of the fact that under the rules of the General Claims Commission a claim shall be deemed to have been formally filed with the Commission upon the presentation to the Secretaries of a memorandum setting forth the name of the claimant, a brief statement of the nature of the claim, and the amount thereof, a requirement lacking in this group of claims, it is deemed desirable not to jeopardize the negotiations through the non-acceptance of this particular point.

From a preliminary study of the proposals and of the factors connected with the solution of the problem, I am inclined to favor the agreement, except as to V (b), on the proposals covered by the points enumerated above. Many of these points have been included in the en bloc studies heretofore prepared by the Embassy and in the proposal submitted to the Foreign Office on June 24, 1932. As regards V (b), the percentage of 2.3% might be accepted in the settlement of the Special Claims. The average percentage recovery of all the claims for revolutionary losses presented by Belgium, Germany, Great Britain, Italy, France, and Spain to Mexico has been approximately 2.6%. These claims are similar to our Special Claims. I do not see how, in view of the fact that six countries have agreed to accept this 2.3% settlement, we could demand a higher percentage on Special Claims, seeing that the claims of these countries stand upon the same basis as those presented by Americans.

In exchanging views with Doctor Puig, I stated that a greater percentage should be considered for the General Claims, a point in which Doctor Puig apparently agreed in general terms. However, he replied that inasmuch as he was not familiar with the details, the matter had better be taken [up] with his advisers. Messrs. Suárez and Sierra of the Foreign Office are strongly of the opinion that the percentage of 2.3 should be applied to both the General and Special claims. However, they stated that a slightly greater percentage might be considered, for the General Claims.

Pending any further exchange of views with the Foreign Office, I should be glad to have the views of the Department on the different points herein presented, which must form the basis of a Convention providing for the en bloc settlement of claims and the method of payment.

Respectfully yours,

Josephus Daniels

16. Not printed.
16. Not printed.
17. Not printed.
18. See Proceedings of the United States-Mexican Commission, Convened in Mexico City, May 14, 1923 (Washington, Government Printing Office, 1925), p. 3.
19. See Foreign Relations, 1923, vol. ii, pp. 528–532.
17. Not printed.
21. Special Claims Commission, United States and Mexico, Opinions of Commissioners, April 26, 1926, to April 24, 1931, pp. 44 ff.
22. Hunter Miller (ed.), Treaties and Other International Acts of the United States of America, vol. 4, p. 189.
23. William M. Malloy (ed.), Treaties, Conventions, etc., Between the United States of America and Other Powers, 1776–1909 (Washington, Government Printing Office, 1910), vol. i, p. 1128.