411.12/1776

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

No. 1267

Sir: I have the honor to refer to the Embassy’s telegram No. 33 of March 24, 1934, 5 p.m., in which I made a brief report of the changes suggested informally by the Minister for Foreign Affairs in the Department’s draft of a Convention for the en bloc settlement of Special Claims. I also refer to the Embassy’s airmail despatch No. 1265 of March 24, 1934,63 giving the substance of the conversation I had on that date with the Minister for Foreign Affairs.

I now forward copy of the informal document given me by the Minister and embodying his suggested changes, a translation thereof, and a copy of the Department’s draft of the entire Convention with the changes suggested underscored.64

At the same time, I am adding some observations on certain points of the Department’s draft of the Convention which accompanied the Department’s instruction No. 282 of March 9, 1934.

The draft of the Convention under Article IV, Section IV, refers to “Claims Withdrawn”. The original proposal from the Foreign Office provided for certain deductions including among others “Claims Withdrawn”. The Department’s draft of a Convention to carry out the general plan proposed by the Foreign Office also provides for “Claims Withdrawn”. However, the Department’s interpretation of the term “Claims Withdrawn”, as specified on page 2 of the Instruction, is to the effect that there are included only claims withdrawn by the American Agent because they had been filed too late and not claims withdrawn by claimants themselves because of independent settlements with the Mexican Agent or for other reasons (underscored, supplied).

Under “Withdrawn Claims” two groups should be taken into consideration. One group includes 114 claims aggregating $10,159,922. [Page 443] which were docketed provisionally and the filing of which was disapproved by the Commission in its decision No. 3 of April 24, 1931 (Opinion[s] of Commissioners, Special Commission, p. 39). The other group includes 40 claims aggregating $1,635,117. which the records of the Commission show have been withdrawn already by the Agent of the United States. A list of these claims is attached as enclosure 4.65 Under the Department’s interpretation of the terms “Claims Withdrawn”, this last group could not be deducted, notwithstanding the fact that they have been withdrawn already.

From discussions held in the past with the representatives of the Foreign Office, it would appear that these 40 claims are among those that they consider should be deducted.

Due note has been taken of the views of the Department that the examination of duplicated claims and the determination of which are general and which are special might be postponed for years (page 2, instruction No. 282). The following observations are made in connection therewith:

The terms of the General Claims Convention and of the Special Claims Convention, the one hundred and thirty nine decisions rendered by the General Claims Commission, and the policy followed by the American Agency in the memorialization of 933 General and Special claims, which include about 228 cases that have been filed General and Special, establish sufficient precedents for determining now in the majority of the cases which claims are General and which are Special.

Reference is also made to the analysis of General and Special Claims submitted with the Embassy’s despatch No. 1135 of February 23, 1934,65 and to the supplementary analysis submitted with this despatch (Enclosure 5).65

It would appear from the latest estimate that of the 1072 claims aggregating $268,888,509, that have been filed General and Special, approximately 326 for $182,413,089. are General Claims and 746 for $86,475,420. are Special Claims. Under the circumstances the postponement for two or more years to determine the exact classification of claims is not deemed advisable.

. . . . . . . . . . . . . .

I have presented and urged, in writing and orally, the views of the Department that in deducting the amount of the adjudicated claims, the Santa Isabel claims should be excluded. I have reported to the Department the position of the Minister for Foreign Affairs that he could not entertain any reopening of the Santa Isabel cases which were dismissed by the decision of the Special Claims Commission.

[Page 444]

I desire to set forth my understanding of the case. The American and British claims were presented, argued and adjudicated by corresponding Claims Commissions. The American presentation of the cases was based on the contention that the liability of Mexico was fixed under paragraphs 2 and 3 of Article III of the Convention, acts of forces. The British presentation was based on paragraph 5 which involves lack of protection. The decision of the American Commission did not support the contention by the American Agent and the cases were dismissed. The decision of the British Commission confirmed an agreement between Agents, which provides for the payment of an indemnity amounting to 39,000 gold pesos for the two cases involved. The two judicial decisions are the results of different presentations. Moreover, Article VIII of the Special Convention specifies that the High Contracting Parties agree to consider the decisions of the Commission as final and conclusive. I am enclosing a brief summary reviewing the decisions rendered by the American and British Commissions on the Santa Isabel cases (Enclosure 6).67

Under the circumstances, it appears to me that the Santa Isabel claims are res adjudicata, and that we ought not to press this point.

From past statements of the Foreign Minister and of his advisers it would appear that they will insist upon the simultaneous signing of the Protocol for General Claims and of the Convention for the en bloc settlement of the Special Claims. There has been discussed informally between Mr. Sierra and Colonel Moreno the possibility of exchanging, at the time of the signing of the Protocol, notes providing for settlement of the American Special Claims on the same basis as the settlement made with European countries for similar claims, and specifying that the details of the settlement would be covered in a Convention to be signed later.

I await the instructions of the Department on the changes to the Special Convention that have been suggested informally by the Minister for Foreign Affairs, in advance of the President’s decision on the matter, and on the other points raised in this despatch.

Respectfully yours,

Josephus Daniels
[Enclosure—Translation]

Modifications of Special Claims Convention as Suggested by the Mexican Minister for Foreign Affairs (Puig)

Article I

The claims of the United States of America covered by the Special Convention shall be adjusted, settled and forever thereafter barred [Page 445] from further consideration, by the payment by the Government of Mexico to the Government of the United States of a sum of money which shall equal the same proportion of the total amount claimed by the United States in all such cases (after the deductions provided for in Article IV hereof), as the proportion represented—in respect to the total sum claimed by the Governments of Belgium, France, Germany, Great Britain, Italy and Spain—by the total amount found to be due from the Mexican Government in the settlement of similar claims and under the Conventions concluded with those Governments by the Government of Mexico during the years of …68

To determine said general average percentage resulting from the settlements with said countries for similar claims, the classic arithmetical procedure shall be used, that is to say, the total amount awarded to Belgium, France, Germany, Great Britain, Italy and Spain shall be multiplied by 100 and the product shall be divided by the total amount claimed by said countries.

Having thus determined the general average percentage, in order to ascertain the amount that Mexico should pay to the United States, said percentage shall be multiplied by the total amount claimed by the United States (after the deductions provided for in Article IV of this Convention) and the resulting product shall be divided by 100.

Article III

Deferred payments, by which term is meant all payments made after January 2, 1935, shall bear interest at the rate of one-fourth of one percent per annum for the first year counting from January 1, 1935, and an additional one-fourth of one percent for each additional year until the maximum of one percent is reached, which shall be applied beginning January 1, 1939.

Article IV

Fourth Clause…68

From the claims registered for the same reason with both Commissions, there shall be deducted the total amount of all claims that in fact or apparently should have been registered only with the General Claims Commission established by the Convention of September 8, 1923.

The determination of claims that ought to be withdrawn from the Special because in fact or apparently they should have been registered only with the General for prosecution and adjudication does not prejudice the jurisdiction and validity of said claims, which shall be [Page 446] determined in each case when examined and adjudicated in accordance with the provisions of the General Claims Convention of September 8, 1924 and Protocol of 1934.

Article VI

70 leaving to the judgment of the Mexican Government the furnishing of originals or certified copies thereof and with the specific reservation that no documents shall be delivered which owing to their nature cannot be furnished by said Government.

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  7. Omission indicated in the original.
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