812.77/1192: Telegram
The Chargé in Mexico (Boal) to the Secretary of State
[Received June 24—3 a.m.]
161. Lockett70 has just received copy bearing the seal of the Department of Publicity and Propaganda of the text of a decree providing for the expropriation of the Mexican National Railways by the Mexican Government.
The effective part of the decree which is to be published here tomorrow reads:
“On the basis of the considerations expressed above and also on the basis of article 1, fractions 1 and 9 article 2, article 3, articles 10 and 19 of the Expropriation Law of November 23, 1936,71 it is decreed, first, for reasons of public utility properties pertaining to the Ferrocarriles Nacionales de Mexico (Mexican National Railways) are expropriated for the benefit of the Nation. Second, the present declaration will be published in the Diario Oficial of the Nation and the representatives of the company affected will be notified personally for the purpose as indicated in article 5 of the law invoked (expropriation law). Third, at the proper time and in conformity with article 7 of the cited expropriation law possession will be taken of the properties expropriated and with the intervention of the Secretariats of Communications and Public Works and of the Treasury and Public Credit the properties will be delivered to the special organization which is established. Fourth, the Secretariat of Communications and Public Works will proceed according to its duty, [Page 679] (Como Corresponda) to the effect that in accordance with the terms provided for by the expropriation law and with the intervention of the Secretariat of the Treasury and Public Works it may fix the amount of the indemnification to which the Federal Government will be subject. Signed Lazaro Cardenas, President; Francisco J. Mujica, Minister of Communications; Eduardo Suarez, Minister of Finance.”
Preliminary statements to decree state that better organization and efficient operation of railroads must be of deep concern for Government and that such a system of communications is of greatest importance to social and economic progress of country to such a degree that its level of efficiency denotes degree of advancement of Nation that internal political stability and exterior defense depend in large part upon the efficiency of the railroads
“That in our country the company known as Ferrocarriles Nacionales de Mexico S. A. which controls the most important lines of the railway system is organized as a company of capitalistic type, that is to say, with predominantly lucrative purposes although for reasons well known to the public and for a long time it has been operating in a manner which does not correspond to its nature and there have been created and rooted vices and deficiencies in the management of the system which are already endemic and which have delayed the reform of technical progress of the lines with injury to the economy of the country and to each one of the users of the service; that the nature of the company itself has impeded the orientation of its activities in the sense of procuring primarily social benefit and for the same reason the Federal Government notwithstanding its character as principal stock holder has had to consider the company as a private entity for the purpose of demanding of it strict fullfilment of legal dispositions.”
Preliminary statements continue,
“Taking into account that there do not exist in the National Railways of Mexico any private interests different from those of the foreign creditors of the company because the amount of these credits evidently absorbs the value of the properties which form the railway system and moreover that the majority of the stock of the company belongs to the Federal Government. The Federal Executive has arrived at the conclusion that the most convenient step to realize the announced purposes consists in transferring to the Nation all the properties at present belonging to the said company effecting the respective expropriation in which all legal requirements will be strictly complied with that the measure will not cause injury to the creditors of the company since the Federal Government will have to pay them their credits within the limit corresponding to the real value of the properties transferred to the Nation.”
The properties expropriated will be placed under management of a direct dependency of the Presidency created for that purpose eliminating lucrative aims and taking an evident step toward accomplishing our social emancipation.
Repeat to Commerce.