411.12/1788: Telegram
The Ambassador in Mexico (Daniels) to the Secretary of State
[Received 11:35 p.m.]
44. Referring to Department’s telegram No. 52, April 14, 2 p.m., received after Embassy’s telegram 43 April 14, 3 p.m., was sent.
The Department’s position regarding the principle of equality of treatment for American claimants as in the case of European claimants as discussed in the Department’s telegrams 47, April 7, 1 p.m. and No. 50, April 11, 11 a.m., is thoroughly understood; has received most careful consideration; and has been pressed in discussions with the Foreign Office officials. They, in turn, point out that strict application of principle ought to take into consideration that in contemplated negotiations with foreign governments, except Belgian, which has been paid, the plan under consideration involves payment in pesos and no interest, while under proposed convention payments to the United States are to be in dollars with a nominal rate of interest. However, I have persuaded the Minister not to raise the foregoing point and he, in order to bring negotiations to a successful conclusion, proposes that the value of American withdrawn claims be not deducted from the total amount; in other words that paragraph 1 of Article No. IV be omitted. The value of these claims is approximately $1,600,000. The American duplicated claims total slightly over $5,500,000. Deduction of this amount from the total registered claims before applying the average percentage of about 2.6 results in the United; States recovering about $143,000 less in the final settlement. The Embassy has no definite figures regarding the total amount of European claims that were withdrawn or duplicated. It has estimated that the withdrawn claims aggregate about 30,000,000 pesos which would raise the recovery percentage from about 2.6 to about 2.8. The compilation of pertinent data has not been completed by Foreign Office. May I point out that the en bloc proposal presented to the Foreign Office by former Ambassador Clark and which had the approval of the Department provided for the deduction of the value of American claims that had been adjudicated, withdrawn and duplicated and that similar deductions were not made in the totals of past adjudications which were the basis for determining the average percentage [Page 461] of recovery proposed by American Government. Moreover, in the discussions held with the Foreign Office since September 1933 when the present Mexican proposal was first received, the question of making deductions from the European settlement for claims withdrawn and duplicated as in the case of American claims was never brought up nor did it enter into computations made at the time as to what our recovery would be.
Previous estimates as to the net total amount of special claims and which are the basis of Department’s estimate of $300,000,000 (Department’s telegram 50) need revision. Above figure was based on a classification that one-half of the total amount of claims withdrawn in filing on account of jurisdictional grounds correspond to special claims and the other half to general. The total amount of said claims was estimated originally to be approximately $236,000,000. Present estimates now closer to 269,000,000. It is believed that about 182,500,000 may be regarded as general and about 86,500,000 special. Under this basis the net total amount of special claims is approximately $229,000,000 instead of 300,000,000.
In my judgment the Department’s decision in the matter should not be limited to the effect on the special claims but ought also to take into consideration its effect on Mexican cooperation toward other pending problems between the two Governments and prospective negotiations codifying [sic] with their adjustment, such as: diplomatic discussions of agrarian claims, final settlement of general claims following their evaluation under the terms of the protocol, Chamizal award, distribution of waters of the Rio Colorado and of Lower Rio Grande.
From my knowledge of the situation and of local conditions I am confident that the latest comprehensive suggestion from the Minister is as good as we can hope for, although it may not be ideal.