824.6363 St 2/411½
Memorandum of Conversation, by the Chief of the Division of the American Republics (Duggan)
. . . . . . . . . . . . . .
The Minister40 then referred to the draft of agreement concerning the Standard Oil controversy41 which I had handed him last Monday. Dr. Guachalla stated that he had studied it carefully in the light of his instructions and that he considered that the draft in general was in conformity with principles which his Government might accept. The Minister stated, however, that there were two important modifications which he would have to have introduced into the draft before recommending it to his Government. The Minister thereupon presented me with the attached informal memorandum of four points, of which only two are important.
With regard to the second point in the memorandum, I made no comment other than to state that of course it would be immediately studied. The Minister here brings up the problem which has been so troublesome in connection with Mexico, namely, that of sub-soil rights.
[Page 341]With regard to the third point in the memorandum, the Minister informed me that the “demanda reconvencional” of 1937 listed five or six complaints of the Government against the company all of which, if proved, would result in the company owing the Government additional sums of money. The question of taxes “patentes” was only one of these complaints. The Minister explained that in Spanish the word “patentes” had a very specific connotation covering, in law, only surface taxes. If the intention in the draft was to indicate all taxes that might be due, the word to be used should be “impuestos.” I informed the Minister that the intention of the Department was to include all sums that might be due by the company to the Government on account of the Government’s complaints.
I told the Minister that an endeavor would be made to straighten out the points that he had brought up.