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

No. 5883

Sir: I have the honor to enclose herewith a copy of the conversation on the Yaqui Valley situation between Licenciado Beteta and Mr. Boal, which took place yesterday morning.

Respectfully yours,

Josephus Daniels

Memorandum of Conversation, by the Counselor of Embassy in Mexico (Boal)

In the course of the conversation with Licenciado Beteta this morning he mentioned the question of the Yaqui Valley saying that a new and awkward development had arisen there. His Government had promised ours that the American landowners who had lost property there would get free water for their small properties and free water for the land to be given them. The free water in the latter case would be given upon completion of the dam and irrigation works. The Minister of Agriculture now told him that this would practically eliminate revenues from land which in fact belongs to the Government and therefore he did not see how the Government could continue to exist if it undertook to give free water to the Americans. Of [Page 643] course they would also have to give free water to the Mexicans and others from whom land had been taken in that area. Licenciado Beteta stated that this created a serious problem which he intended to discuss with the President. He realized that it would be wrong and most prejudicial for the Mexican Government to endeavor to withdraw from its commitment. Instructions had been issued, he said, to the Richardson Construction Company to give the Americans free water and the Company had countered with the proposition that they turn the Company over “lock, stock and barrel” to the landholders and let them run it themselves; the landowners had refused to accept the Company. I pointed out that such a proposition would not be a substitute for the Government’s commitment to provide free water. Licenciado Beteta admitted this. He said that if the Government had to subsidize the Company it would cost the Government about three hundred thousand pesos a year. He also said that there was a difficulty in that the agrarians had to pay for their water and they would be upset if they felt that the Americans were getting their water free. He believed that this might be handled by having the Americans continue as they are doing now, to send them “pagares” (promises to pay) for their water and then instead of the Company collecting these, having them receipted and returned and having the Government make them good to the Company as payment of agrarian indemnity. Some such system he thought might be worked out until such time as the new dam came into operation at which time presumably the whole water system of the Valley would be revised. He remarked that free water to the landowners would result, in a few years, in their having in fact acquired much more value than that of their properties. I reminded him that when he discussed the matter before, the suggestion of free water had been made with the idea that it would be a perpetual right going with the land and would increase the sales value of the small properties and new lands to be given as part compensation of the lands that had been given to the ejidos.

Licenciado Beteta said that assuming that there were forty-six Americans in the Valley with one hundred hectares apiece, and that these lands were worth $100.00 pesos an hectare, the total value of the land would be $460,000.00 pesos whereas the three hundred thousand pesos a year that the Government would have to contribute to keep the water company going represented the interest on around ten million pesos.

I told him that I was not in a position to give him any estimate of the sales value of the small properties per hectare. However, it might be that it would be more economical for the Government eventually [Page 644] to buy these small properties at a fair price thereby solving their water problem. He seemed to think that this might be the case; for the time being he said he would discuss the matter with the President with a view to arriving at an adjustment which would provide the landowners with the free water promised to them.

He showed me a map of the Yaqui and pointed out that the only land which could be irrigated by gravity lay to the South West of the present irrigated area and had presumably been given to the agrarians. He said that this dotation was only provisional, and he expected to discuss with the President a readjustment since this was the type of land that had been promised to the Americans in compensation. He would ask, he said, that the Americans be requested by the local representatives of the Company that each one indicate the location of compensation lands they would prefer; they would then see if it would be possible to satisfy them.

The reports on conditions in the Yaqui to which he referred during this conversation had been given him by Gutierrez Roldan who has apparently returned from the Yaqui.

Mexico, December 22, 1937.