411.12/1684
The Ambassador in Mexico (Daniels) to the Secretary of State
[Received November 4.]
Sir: I have the honor to refer to the Embassy’s despatch No. 735 of October 25, 1933,24 reporting a conference held by me on October 24th with Ambassador González Roa. We have held other meetings, on [Page 806] October 26th, 28th and 31st. Colonel Moreno has attended these conferences.
Subsequent to general exchanges of views on points involved in an en bloc settlement of claims, Ambassador González Roa on October 28th presented an informal plan for discussion. Under the terms of this plan one or two of the stipulations embodied in the memoranda of the Foreign Office dated September 21, 1933 and October 17, 1933, and calling for the elimination of certain claims are omitted.
Specifically, Ambassador González Roa proposes the settlement of Special claims, after deducting the duplicated, withdrawn and adjudicated claims, on a basis of 2.65% for memorialized claims and of 1.25% for the balance, or unmemorialized claims.
The index-figure of 2.65% is the average percentage in the settlement made by Mexico with Belgium, France, Germany, Great Britain, Italy, and Spain, for revolutionary claims which are similar to the American Special claims.
The index-figure of 1.25% is the average recovery under the Claims Conventions between the United States and Mexico in 1839 and 1868.
For the General claims there is contemplated the deduction of the duplicated, withdrawn, and adjudicated claims, and of those filed by Mexico; the settlement of the net remaining balance to be on the proportional basis of 8% for memorialized claims and of 1.25% for those unmemorialized.
At the conference held on October 31, Ambassador González Roa explained that the effect of the above proposal would be the settlement of one-fifth of the net balance (after deducting the value of claims duplicated, withdrawn, adjudicated, filed by Mexico) on a basis of 8% and the remaining four-fifths on the basis of 1.25%, one-fifth being the proportion of claims memorialized so far by the United States.
In addition, the 83 million dollars worth of American claims, in which the memoranda filed with the Joint Secretariat specify no amount, would be settled on the basis of 1.25%. The elimination of this group of claims is proposed in the two memoranda of the Foreign Office referred to above.
Under the above basis, the Government of Mexico would be called to pay the Government of the United States approximately ten million dollars. This amount includes two-sixth millions [$2,600,000] for the awards heretofore rendered by the General Claims Commission, and eight hundred thousand dollars past due interest.
In view of the complicated procedure and of the different interpretation given to the plan on the computations made by the Embassy, Ambassador González Roa subsequently made a lump sum proposal of 13–1/2 million dollars.
[Page 807]On the computations discussed with Ambassador González Roa on October 24th and reviewed on page three of the enclosure to the Embassy’s despatch No. 735 of October 25, 1933, the anticipated recovery, including awards, would be approximately 14 million dollars.
To this amount should be added two million dollars to cover the settlement on a 1.2% basis of the 83 million dollars worth of claims that have no registered amount in the Joint Secretariat, and about eight hundred thousand dollars interest past due. These two items are included in the plan of Ambassador González Roa. They are excluded in the memoranda from the Foreign Office.
The difference between the two computations is approximately six million dollars. This difference was considered by Ambassador González Roa in making a proposal for 13½ million dollars. He also suggested that in the final documents to be exchanged, no reference be made to percentages, but that it be made to appear that the amount to be paid is a lump sum settlement. In this suggestion I think he is right, and our plan provided for that. It is, of course, in accord with an en bloc settlement.
The amount of 13½ million dollars is an increase of about 2½ million dollars on the terms of the proposal of the Foreign Office dated September 21, 1933, and of approximately 3¼ million dollars on the terms of the second proposal of the Foreign Office dated October 17, 1933. The details of the former are discussed at length in the Embassy’s despatch No. 646 of October 2, 1933, and of the latter, in the Embassy’s despatch No. 720 of October 23, 1933.25
It has been made clear to Ambassador González Roa that all plans must be submitted to the Department of State for the consideration of the views and different plans that have been discussed between ourselves, and that before I can make any recommendations to the Department it is important that it should be made clear what are the plans of the Government of Mexico for the payment of whatever lump sum amount might be agreed to by the two Governments. I have stated to Ambassador Roa that method and dates of payment should be an integral part of any agreement or convention.
Ambassador González Roa is planning to discuss the financial arrangement suggested by me with the Acting Minister for Foreign Affairs, with the Acting Minister of Finance, and with President Rodríguez. He will then be in a position to take up with me this phase of the proposed en bloc settlement.
For the information of the Department there are forwarded herewith eight enclosures26 that relate to the conferences I have had [Page 808] with Ambassador González Roa. A descriptive page accompanies the said enclosures.
I feel it my duty to say that, if possible to reach any fair agreement on a fixed amount, our Government should be ready to go more than half way. The records of past claims conventions with Mexico show that the United States has received—counting from 1838 to the present—an average percentage of approximately 2%. Unless an en bloc settlement is reached, the only alternative is a recourse to the old Claims Commissions, which can be compared to nothing so well as the famous case of Jarndyce vs. Jarndyce.26a The two Claims Commissions, since their organization in 1924, have cost the United States in salaries and expenses about two million dollars. The cost to the Mexican Government is estimated to be between two and one-half to three million pesos. It is far better to concede reductions to Mexico than to continue to pay out such large sums for a period, the length of which cannot be determined. Since 1825, when our first Minister, Honorable Joel R. Poinsett reported that claims, many of them having no substantial foundation, made his duties troublesome, the same difficulty has confronted all American Ministers and Ambassadors. Then and since then claims have tended to mar understanding between the two countries. The continual hearings, with charges and counter-charges growing out of the padded claims presented by both sides, threaten to make friction and deny that relation of brotherhood so much desired.
In order that I may be guided in future discussions, I would appreciate receiving at the earliest opportunity the comments of the Department on the reports heretofore made by me in connection with en bloc discussions. They are covered in despatch No. 620 of September 22; No. 646 of October 21 [2]; No. 720 of October 23; No. 735 of October 25;27 and the present one.
Respectfully yours,