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

No. 7591

Sir: Referring to my despatch 7589 of October 26, 1938,50 I have the honor to report that in pursuance of the request of President Cárdenas I called at the National Palace this morning. He expressed himself as very hopeful of an agreement and stated his earnest purpose to make as large annual payments as the economic condition of the Government makes possible. The fact that he asked me to call on what he regards as important shows his interest in reaching a settlement.

I am enclosing a memorandum giving the gist of a conversation lasting half an hour, together with a copy and translation of the note [Page 711] he gave me51 summarizing his proposal, and a copy of the memorandum I gave to him51 about Presidential Resolutions published in the Diario Oficial since September 1, 1938, affecting American-owned lands. The report of my interview with President Cárdenas indicates the representations I made and his pledge to end dotations while negotiations are in progress.

Respectfully yours,

Josephus Daniels

Memorandum of Conversation, by the Ambassador in Mexico (Daniels)

Accompanied by my Secretary, Mr. Aguirre, I called on President Cárdenas at the National Palace at 11 o’clock this morning. My audience with the President was by his request, which was communicated to me last night through a letter to Foreign Minister Hay, shown to me by the latter.

Upon my arrival at the National Palace an Aide of the President met me on the ground floor and escorted me to the President’s office. After exchanging friendly greetings, the President began by expressing his apologies for having disturbed me last night and asking me to call to see him this morning; he said that only because of the seriousness of the situation, and only as it involved matters affecting pending negotiations between our two countries, had he asked to talk with me—realizing, he said, my willingness at all times to promote understanding between our two countries.

The President then related the gist of the conversation, telephoned to him, which the Mexican Ambassador had yesterday in Washington with Undersecretary Welles, who, he said, had proposed to his Ambassador that the Mexican Government pay one million dollars in 1939 toward the settlement of the agrarian land controversy, and the balance in four equal annual installments. The President went on to explain that this was very difficult for Mexico to do under its present economic possibilities; that since his Government did not know the exact amount which our Government was obligating him to pay, and since this total amount would not be fully known until after the two Commissioners had determined the full amount, his Government could not possibly commit itself to pay the one million dollars in 1939 and the balance in four annual installments.

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He proposed that Mexico pay one million dollars in 1939, one million in 1940, one million in 1941, and so on until the obligation—that the Commissioners should fix within six months—had been discharged.

Another feature of the proposed settlement that was disturbing, he said, was that he could not seek nor obtain the approval of Congress unless he could state to the members of Congress the exact amount of agrarian claims which he had agreed to pay the American Government. He said that if he submitted the proposed settlement to his Congress regarding the four annual installments of the balance due after payment of the one million dollars in 1939, and could not inform the members thereof the exact amount, the Congress would not authorize an unknown sum, particularly since he knew full well that he could not get authority for payment beyond the economic possibilities of his country. On the other hand, the President said, if he could go to Congress and tell them that his Government would pay one million dollars annually until the obligation had been discharged, he felt quite confident that he would secure its approval.

I then asked the President if I was to understand correctly that his proposal was that he would pay one million dollars in 1939 and the balance in similar annual installments until the full amount of the agrarian land claims of American citizens had been discharged. He said that was correct. The President then went over to his desk and he handed me a copy of his proposal, which he said would enable me to understand clearly his proposition. I thanked him and he gave me the memorandum which is appended hereto.52

I took with me to the Presidency a memorandum giving a list of Presidential Resolutions dotating land belonging to Americans which had been published in the Diario Oficial since September 1, 1938. I called to his attention that some of these were for land dotations which had been made the previous year, but were just now being published in the Diario Oficial; and said that publication at this time when negotiations were going on in Washington in an endeavor to reach some settlement over the lands expropriated from American citizens was not looked upon with great favor and hampered negotiations. The President looked very surprised and said that he would immediately call the Ministry of Gobernación and instruct them to suspend publication of all such cases, adding: “I will instruct the Minister to cease publication of any further agrarian cases affecting American citizens until after negotiations in Washington have terminated.”

I then said to the President that inasmuch as efforts were being made to reach an amicable settlement of the land controversy and in order not to hamper the present negotiations, I hoped it would be possible for his Government to stop further expropriation or dotation of American lands. The President thought for a brief moment and [Page 713] said: “Mr. Ambassador, I will give immediate instructions to the agrarian authorities to cease any further expropriation of American lands while negotiations are in progress.”

He then brought up the proposed expropriation of the United Sugar Company properties in Los Mochis, Sinaloa. He said: “Of course I was under the impression and thought the Department of State understood, as I had understood, that the sugar company had agreed to the distribution of the land to the campesinos on the same basis as the Atencingo property (of William O. Jenkins)But when General Mugica53 communicated my wishes to the President the other day he immediately suspended the proceedings that were going on. He said that it was his (the President’s) understanding that the officials of the company had agreed to pay the campesinos, for purposes of harvesting the sugar crop, 700,000 pesos; and that the Mexican Government would make up the difference of 500,000 pesos: a total of 1,200,000 pesos, which was the cost of harvesting this year’s crop; but that apparently the officials told the Mexican Government one thing and told the American Government another. He seemed rather annoyed at the situation that had arisen contrary to his understanding. Everything there has been suspended.

When I took leave of the President, he said he was most anxious that the two Governments should come to an amicable agreement and that his Government was ready to agree to as large a payment as the financial condition of his country would permit. He asked me to communicate any information I might have for him regarding the matters he had discussed with me.

I told the President that I would get in touch with the State Department and convey to him information concerning the attitude of Washington towards his proposals. I told him that after receiving the note last night I had talked to Mr. Duggan of the State Department, who readily granted his request for postponement.

President Cárdenas said he would be glad if I would convey his high regards to President Roosevelt, and assure him that he followed his progressive policies with admiration.

J[osephus] D[aniels]
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  5. Francisco J. Mugica, Mexican Minister for Communications.