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

No. 2450

Sir: Yesterday morning, accompanied by Mr. Norweb, Counselor of the Embassy, I called on the Foreign Minister, and told him I was leaving Monday14 for the United States to be gone several weeks. Before going I asked to bring to his attention several questions upon which I expected to confer with the Secretary of State when in Washington. I was particularly desirous of ascertaining the attitude of the Government with reference to matters touched upon in instruction No. 673, containing the memorandum from Mr. Harold Walker, Vice President of the Huasteca Petroleum Company. Following the expression of that instruction, I refrained from “specific reference to the difficulties encountered by any particular American company”, but propounded questions designed to ascertain the situation, not only with regard to the petroleum question, but also on the payment for agrarian expropriations,15 and the religious situation16 at the present time.

At my request, Mr. Norweb has prepared a memorandum of the conversation, which is appended. The answers to my questions indicate that no immediate response may be expected bearing on the fears [Page 767] of Mr. Walker with reference to the petroleum claims of the Huasteca Petroleum Company.

As to the payment for lands expropriated, the Minister is waiting upon the studies of the Minister of Hacienda. In view of my interest he said he would take the matter up again with the Minister. At a previous interview, when I called his attention to the fact that, whereas bonds had formerly been given in payment for the lands expropriated, but none had been provided recently, he had said that all the bonds authorized by law had been issued, and that no new authority for additional bonds could be obtained until Congress meets in September. A recent statement shows that during February last nearly 50,000 hectares were provisionally donated and 42,017 hectares definitely given to agrarians.

In a former conversation I had told the Minister that the action of certain Mexican states, particularly meaning Tabasco, in closing churches and denying the exercise of their office by priests, had caused much sentiment in favor of the Borah Resolution.17 Yesterday I told him that tourists just from Mazatlan had told me the churches were closed, and asked if there had been any change in the situation with reference to churches and priests. I indicated, as I had formerly done, that such action had militated against the best conditions between the two countries. He realizes the situation and said that the situation is less acute and is improving.

The Minister believes the strike situation will not be as serious as has been generally feared in view of the declaration of some of the labor organizations (there are several and they are antagonistic) for a general strike on April 20th. He bases his optimistic view upon the action of the President in the Puebla strike, brought on by a bitter struggle between rival unions.

The Minister made reference to the fact that his predecessor, Dr. Puig, and myself had arranged to go to the border and at first hand to study the situation regarding the disposition of waters of the Rio Grande and the Colorado River, which was not carried out because, as Dr. Puig was retiring, he concluded to leave the trip and preliminary study for his successor. “I think upon your return”, said Mr. Portes Gil, “it would be well if you and I can carry out the original idea so our governments may know all the conditions that must precede a treaty agreement.” I told him that in 1934 my government had approved the visit and study and I would be pleased to take the matter up with him upon my return in June.

Upon taking leave of the Minister, I asked him to give the same courteous reception and consideration to Mr. Norweb, who would [Page 768] be in charge in my absence on leave, he had always shown me. The Minister and Mr. Norweb are already on good terms and Mr. Norweb will have access to him when public business requires. Inasmuch as May is an “off month” in government circles, with thirteen days of holidays in the public departments, it is not probable that any of the important matters I brought to the attention of the Foreign Minister or now pending will come to a head during my absence. While in the United States I wish to discuss those and other matters with the Secretary of State at his convenience.

Respectfully yours,

Josephus Daniels

Memorandum by the Counselor of Embassy (Norweb) of a Conversation Between the American Ambassador (Daniels) and the Mexican Minister for Foreign Affairs (Portes Gil)

In the usual Thursday interview with the Foreign Minister today, the Ambassador told Mr. Portes Gil that he was leaving for the United States on Monday, and that there were three questions which were sure to be put to him in Washington, namely:

—the petroleum question;
—the possibility of payment for agrarian expropriations;
—the general politico-religious situation throughout the country.

1. Petroleum:

With respect to this question the Ambassador remarked that the Foreign Minister, in view of his active interest in the question in the past, was aware of some of the difficulties experienced by the American petroleum companies in Mexico in their current relations with the authorities. Chief among the present difficulties was the uncertainty as to what the Government meant by the recent announcement of the Minister of National Economy that the Government was making a general revision of petroleum concessions. Some of the American companies feared that this policy might operate against the confirmation of many important applications for concessions which they now have pending. The Ambassador went on to explain that on the basis of the 1928 adjustment18 approximately ⅔ of the pre-constitutionally-held rights had been confirmed, but applications for confirmatory concessions covering over one million hectares of similar land had been pending now for nearly eight years.

The Minister replied that in view of his close contact with the Morrow-Calles arrangement of 1928 and his duties as Attorney General [Page 769] in the previous administration, he was familiar with many of the details. He assured the Ambassador that the study now being made in the Ministry of National Economy covering the question of concessions was in the nature of a housecleaning and would not in any way involve concessions already granted. “We are not thinking,” he said, “of withdrawing from the position adopted at that time. That is a finished chapter. As regards concessions still awaiting confirmation, it is my understanding that the 1928 criteria will apply in these cases. However,” he added, “many of these cases are difficult to decide, and if there have been delays they arise from other causes and not as the result of the Government’s having changed its position with regard to the criteria adopted in 1928.[”]

The Ambassador went on to say that another matter causing some concern to American petroleum companies arose from two recent decisions of the Supreme Court which reversed decisions of that same body in 1932 and 1933, whereby the court now takes the position that subsoil rights flow to the Government from declarations of national waters. Important property holdings of American companies dating from pre-constitutional times have been affected by these two decisions, and there is much uneasiness in the industry that these decisions may be used by the Ministry of National Economy to encroach upon petroleum lands which the companies feel they have legally acquired.

The Minister also appeared familiar with this phase of the matter, as he referred to one of the cases by name, and pointed out that this question of the subsoil rights in Federal Zones was a matter that had never been definitely decided; that these two decisions of the Supreme Court did not constitute a precedent, and that until five decisions have been taken on this issue the Government is free to follow the course of action dictated by the merits of each individual case. Of course, if there were any feeling of denial of justice in any of these cases, or in any other aspect of the petroleum situation as it affected American companies, the Minister would be glad to take it up with the interested Department.

The Ambassador said that he did not intend to discuss any individual cases this morning, but that he merely wished to call the Minister’s attention to the situation in the oil industry as it affected some important American interests, and spoke of his concern lest difficulties in the application of the understanding reached in 1928 might lead to a re-opening of some of the old issues which it was intended permanently and amicably to dispose of at that time.

2. Compensation for Agrarian Expropriations:

Upon inquiring about the present status of this matter, which had been discussed on several previous interviews, the Ambassador was assured by the Foreign Minister that only recently he had again reminded [Page 770] the Finance Minister of our lively interest in this question. He had, however, nothing new to report, but he promised that this was a question to which he would continue to give his attention. He could make no promise, however, as to when the Finance Minister would complete his studies.

3. Politico-Religious Situation:

In discussing the general situation throughout the country, the Foreign Minister minimized the seriousness of the many impending strikes. He was sure that the President’s intervention would end the trouble at Puebla, and that the lesson learned there would remove the danger of a general strike in Mexico City on the 20th of this month.

Asked if there were any change in the general religious situation throughout the country, the Foreign Minister expressed the opinion that the President’s recent public condemnation of excesses in the application of the laws in this respect had had a good effect. Minor officials, he said, in outlying districts, impressed by the President’s words of caution, were more careful not to be overly-zealous in their relations with Church officials. The churches, he admitted, were still closed in some of the States, but he had heard that in the State of Aguascalientes there was a definite improvement in the situation, and there was a disposition on the part of the priests to conform to the regulations.

In concluding the interview, the Foreign Minister announced to the Ambassador that his appointment had been made with the President for 1 o’clock tomorrow—Friday—afternoon.

  1. April 15.
  2. See pp. 753 ff.
  3. See pp. 782 ff.
  4. S. Res. 70, 74th Cong., 1st sess., p. 786.
  5. See Foreign Relations, 1928, vol. iii, pp. 292 ff.