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

No. 673

Sir: I enclose a copy of a memorandum10 left at the Department on March 14, 1935, by Mr. Harold Walker, Vice President of the Huasteca Petroleum Company, and several of his associates, in which are set forth and discussed the difficulties being experienced by American petroleum interests in conducting their operations in Mexico. As of possible interest in this connection, your attention is invited to the views expressed by the Department in its mail instructions Nos. 493 [Page 765] and 555, dated September 29, 1934, and December 19, 1934, respectively.11

If the statements contained in this memorandum are true, as would for the most part appear to be indicated by the information contained in the Embassy’s recent reports on the subjects, and if there is no prospect of a change for the better in the Mexican Government’s present attitude towards the interests of the American companies concerned, the situation will in all probability develop to a point where the companies will feel compelled to invoke the Department’s assistance in order to secure recognition and protection of their legally acquired rights. The Department can not envisage without the utmost concern a possible revival of the serious controversy which engaged the attention of the two Governments for ten years prior to the promulgation of the amended regulations of the Mexican Petroleum Law on March 27, 1928,12 and which it was thought had been satisfactorily and amicably terminated at that time.

The Department would sincerely regret to find itself in a position where it would be called upon to make official remonstrance against acts of the Mexican Government concerning which complaint has been made and which certainly appear to be prejudicial to the legitimate interests of American citizens and contrary to the repeated assurances given this Government by competent Mexican officials. Such representations if made to the Mexican Government would, it is believed, inevitably entail controversial discussions of a nature unlikely to benefit the relations between the two countries. It therefore appears essential, if this unpleasant eventuality is to be avoided, that an effort be made through informal and friendly contacts with the appropriate Mexican authorities to induce them to realize the disagreeable potentialities of the situation and the very earnest desire of this Government to be able to refrain, as a Government, from becoming involved in it. If the Mexican Government is really desirous of avoiding the possible revival of the controversy it is believed that if some speedy action were taken on the long-pending applications for confirmatory concessions filed by American companies, holding oil properties acquired legally and in good faith prior to 1917, such action would serve as a definite indication of that Government’s intentions and relieve at least some of the apprehension now felt by the American interests concerned.

I leave to your discretion and good judgment the devising of methods for carrying out this suggested course of action. It occurs to me, however, [Page 766] that you might appropriately resume with the present Minister for Foreign Affairs the conversation had by you with his predecessor which was reported in your despatch No. 1843 of October 11, 1934.13 Pertinent inquiries and allusions made casually by you and perhaps by the senior members of your staff in personal conversations with Mexican officials might be helpful as indicating the extent of our interest in the matter. In these conversations it would, of course, be advisable to avoid specific reference to the difficulties encountered by any particular American company.

It is also considered desirable that the Embassy maintain close contact with the responsible representatives of the American companies whose interests have been or may be adversely affected. They should be assured of the Embassy’s willingness to cooperate with them and they should be rendered such informal assistance as may be possible and proper in the circumstances.

Very truly yours,

Cordell Hull
  1. Not printed.
  2. Neither printed.
  3. For text of the petroleum law of December 26, 1925, see Mexico, Diario Oficial, December 31, 1925, p. 892. For Spanish text of decree amending the petroleum law, see ibid., March 28, 1928, p. 4; for English text, see Foreign Relations, 1928, vol. iii, p. 301.
  4. Not printed.