812.77/1206: Telegram
The Chargé in Mexico (Boal) to the Secretary of State
[Received July 9, 1937—2:16 a.m.]
180. Mujica advised Lockett today that the Government had not the slightest intention of expropriating other railroads or industries including petroleum industry which will not be expropriated but excepting other public service enterprises (the implication being that public service enterprises may eventually be expropriated) that newspapers saying Southern Pacific, Mexican and Oriente Railways would be expropriated were without foundation.
Finance Minister, Suarez, said he spoke for President Cardenas when he said “the President has not in his plans the expropriation of other railways”. Suarez said that the Government would take over the Inter-Oceanico Railway but not through expropriation; the Government would negotiate direct with bondholders on outright purchase basis; that Government now has controlling stock vote in [Page 687] Oceanico and has been offered that railroad for 30,000,000 pesos; that he was preparing a statement on National Railways for President Cardenas which will be published first part of next week. In view of reported further expropriations Suarez says he will include in statement assurances of no additional railway expropriations.
Suarez also said that he is still in good standing with International Committee of Bankers and had communicated with Committee for renewal of negotiations and that he would settle with foreign bondholders through Committee on basis of recent tentative agreement in lieu of revaluation of properties or diplomatic negotiation with bondholders and that stockholders are wiped out.
Department may desire to impart this in strict confidence in appropriate quarters.
Please advise Commerce confidentially.