411.12/1706
The Ambassador in Mexico (Daniels) to the Acting Secretary of State
[Received December 13.]
Sir: Yesterday when I called to see Mr. Torreblanca, the Acting Minister for Foreign Affairs, on his regular receiving day, he asked me what progress had been made following my conversations with Ambassador González Roa with reference to the latter’s proposal for an en bloc settlement. I advised him that Colonel Moreno, the Embassy’s expert official on claims, was now in Washington going over the whole situation with the legal officers of the State Department, and that, pending the full exploration of the matter, I could give him no information. I suggested, however, that the proposition of Ambassador González Roa for payment over a period of thirty years provided for a very long period and the claimants would doubtless object to waiting so long for their money. As to the question of acceptance of the sum proposed by Ambassador González Roa of thirteen and a half million dollars, I told Mr. Torreblanca that the suggestion had been submitted to the State Department, but that I had received no intimation of its attitude and no instructions. Mr. Torreblanca expressed the hope that an early answer could be made.
[Page 810]In connection with the thirty-year period of payment, in one of our conversations Ambassador González Roa told me he had based his proposition upon the precedent of the 1868 Commission between the two countries, when the payments extended over a period of about thirty years. However, as a matter of fact, the 1868 awards of $4,000,000 were liquidated in fourteen installments, each amounting to about $300,000 except the last one (see Memorandum of Conversation sent November 16, 193330).
About the time a Special Claims Commission was set up to consider claims of our nationals originating between 1910 and 1920 against Mexico, or following the agreement between the United States and Mexico for the creation of such a Commission, somewhat similar methods were set up looking to an understanding with European countries whose nationals had presented claims against the Mexican Government not unlike those filed by Americans, based on injuries during the disturbed period from 1910 to 1920. As a result, Mexico and all the European countries have agreed that Mexico will make payments on a basis of an average of 2.64 per cent. Ambassador González Roa urged that the United States ought to be willing to accept a settlement of the same percentage. In view of the agreement of all the European countries on a 2.64 percentage, it does not seem that the United States could with good grace and with sound argument press for a larger amount. However, undoubtedly some of our nationals whose claims are for much larger sums than the European claims, would expect a larger payment, though, in view of past settlements growing out of claims, they must recognize that most claims will be scaled. How could we stand out for larger sums than the percentage accepted by Spain and France and other European countries, when the claims are of the same character?
Having long ago reached agreements with France, Spain, Great Britain, Belgium and Germany for a percentage or en bloc settlement, the representatives of these countries seem to be urging the Mexican Foreign Office to proceed to payment either in cash or annual installments. “In every instance”, said the Acting Minister for Foreign Affairs, “when the Ambassadors or Ministers of those countries have urged action, they have been informed by the Foreign Office that it would take up the arrangement of the claims with them as soon as an agreement could be reached with the United States”. Evidently some of the representatives of these nations are pressing for settlement, particularly since the newspapers here have carried notices that the Mexican and American officials have been negotiating with reference to an en bloc settlement. As I understand it, the claims of the European nations are similar to our claims filed with the Special Claims Commission.
[Page 811]It is the expectation of Mexican authorities, as stated by both Minister Puig and Ambassador González Roa, to pay the United States a larger percentage on claims filed with the General Claims Commission than they offer on the Special Claims. If there is wide difference of opinion between the two countries as to the amount which Mexico should pay on the General Claims, would it be wise to consider reaching an understanding on the Special Claims and leave the matter of an agreement on the General Claims open for future negotiations? I am not proposing this, but only suggesting if there is an impasse on General Claims, whether the Special Claims agreement should be held up waiting upon a General Claims agreement.
My own opinion is that the wisest course is to do everything reasonably possible to reach an en bloc settlement on all claims and not take two bites at this cherry. Some day there must be recognition of the true situation and a willingness to meet the Mexicans more than half way on these claims controversies. As long as they are not adjusted, they will constitute a continual running sore. Dr. Puig stressed this danger in his long memorandum (see enclosure to despatch number 16 of April 29, 193331). The two Commissions up to date have cost the United States Treasury nearly two million dollars. The claimants of neither country have obtained anything. And the financial situation of Mexico is such as to make the hope of securing payment of any large sum out of the reach of realization. Indeed, the lion in the path of any settlement is the deficit in the Mexican Treasury.
It is because of my belief that it is of the highest importance to put out of the way issues that continually work for friction between the two countries, my knowledge that many of the claims presented by Americans have no sound basis to rest upon and that the same is true of Mexican claims, and the fear that insistence upon large payments will keep open for years the whole question, that I feel our country should accept a much less sum than we would insist upon if conditions were different. As a matter of fact, Mexico has not paid the interest on its foreign debt for a dozen years or more, and the Government is now running at a loss. Is it not wiser for a creditor to accept much less than he feels he should receive from a debtor who is embarrassed, and thereby promote good feeling? Americans and Mexicans have both greatly padded their claims and many of them cannot stand the light, and not a few Americans filed their claims with both the General and Special Commissions, some of them alleging that they did so because they did not know under which Commission they would be considered. Recalling that our Government has spent nearly two million dollars on the two Commissions in the past ten years, and with negligible results, it does not seem that there is any hope of achieving [Page 812] as good results by re-constituting either of these Commissions as by diplomatic negotiations. Would it not be better to keep our money to pay claimants than to expend it in long drawn out, costly, and ineffective Commissions?
Just before leaving Washington for Mexico last March, after a conference with Secretary Hull, I discussed the en bloc settlement, brought to my attention by Ambassador González Roa, with Honorable Key Pittman, Chairman of the Senate Committee on Foreign Relations. Of course we went into no details. We both felt at that time that if possible an en bloc settlement should be reached—no figures or percentages were mentioned—and then that each country should pass upon the claims of its nationals. Not long ago I received a letter from Chairman Pittman who, writing on another subject, at the close of his letter said: “What is the status of the claim situation as between Mexico and the United States?” Answering his letter, under date of November 16, 1933, I said:
“In response to your inquiry: ‘What is the status of the claim situation as between Mexico and the United States?’, there is nothing definite as yet to report. I have had a number of conferences, first with the Minister for Foreign Affairs, and later with Ambassador González Roa who has submitted a proposition which has been forwarded to the State Department. The more I have studied this matter, the more I become convinced that the claims on both sides have been padded to such an extent that it is difficult to separate the wheat from the chaff. Many of the claims by people in the United States are without merit; some of them are full of merit. The same thing is true to an even greater extent with the claims that Mexico has submitted against the United States. Colonel Moreno, who has given long thought to this matter, is going to Washington shortly to give the State Department all the information in the Embassy, and I sincerely hope a convention may be agreed upon that will be just. As soon as any agreement is reached, I will communicate with you.”
On the same date (see despatch number 808 of November 16, 193332), writing to the Department, I stated that I had received the inquiry from Chairman Pittman. That despatch contained the substance of my reply to Chairman Pittman and added:
“It may be that the Secretary would wish to have a conference with him (Senator Pittman) about this whole matter, which later, if an agreement is reached, will be submitted to his Committee.”
I did not feel at liberty to write to Chairman Pittman the terms of the proposal or give any detailed information, thinking that the Secretary would do this if he thought it advisable.
Answering my letter, I have received the following from Chairman Pittman, dated November 25, 1933: [Page 813]
“I note what you say with regard to the status of the claims situation as between Mexico and the United States. Your report convinces me more than ever that the plan outlined to have each government agree to pay the claims established by its own nationals at some fixed amount is the one way we may successfully handle the matter.”
I shall await your further advices and instructions.
Respectfully yours,