812.6363/6354½
Memorandum of Conversation, by the Under Secretary of State (Welles)
The Mexican Ambassador called to see me this evening at my request since it was my intention to talk with him concerning the message which Mr. Richberg24 had given me on the telephone yesterday to the effect that in a conversation which Mr. Richberg had had with [Page 665] the Ambassador on Saturday they had both reached the conclusion that negotiations between the oil companies and the Mexican Government for an adjustment of the situation arising from the expropriation of the oil properties were now impossible.
Before I could start the discussion of this topic the Ambassador, who seemed to be very much exercised, took out of his pocket a communication from his Foreign Minister which enclosed a copy of a note he had received from Ambassador Daniels. The Ambassador gave me the copy of the note to read but not the communication from his Foreign Minister. The note from Ambassador Daniels was written in compliance with the Department’s telegraphic instruction of December 525 and had to do with the failure of the Mexican Government to comply with the assurances given the Secretary of State by the Mexican Ambassador on November 10, 1938. The Mexican Ambassador said that General Hay was very much upset by the note from Ambassador Daniels, and the Ambassador then went on to express the opinion that no such assurances had ever been given by him to the Secretary of State as those referred to in Mr. Daniels’ communication. I read Mr. Daniels’ communication again and then remarked to the Ambassador that I thought he and I must be talking about different matters since the assurances referred to in Mr. Daniels’ communication were exactly those which he had officially given to the Secretary of State oh the date mentioned. The Ambassador said that the assurances he had given did not imply that, in any cases of expropriation by Mexico of properties not already in course of condemnation and owned by American citizens, compensation would be paid by the Mexican Government. I asked the Ambassador to wait a minute and sent to my files for the copy of the conversation which the Ambassador had had with the Secretary of State and myself on November 10, 1938, and which contained the textual transcript of the Ambassador’s assurances. … I then stated that the text of these assurances had been discussed between him and myself for some days prior to November 10 and that our discussions had then been reduced to writing; that according to what he had told me at the time, he had read the assurances to President Cárdenas personally and had received the explicit authorization of President Cárdenas to make these assurances in the name of his Government. The Ambassador said that he remembered the circumstances very well and that the text was exactly as he had read it to the Secretary of State and to myself. …
The Ambassador then explained to me what his difficulty was which until then had been inexplicable to me. He said that the authorization which he had received to convey these assurances to the Secretary [Page 666] of State had been received personally from President Cárdenas and had never passed through the Mexican Foreign Office and that consequently neither General Hay nor Under Secretary of State Beteta had any knowledge that these assurances had been conveyed. … The Ambassador said that he would telephone General Hay and tell him that he had spoken with me with regard to Ambassador Daniels’ note and that the questions contained therein were questions which he, the Ambassador, desired to discuss personally with President Cárdenas before any action was taken by the Mexican Foreign Office.
I then reminded the Ambassador that ten days had passed since I had handed him a memorandum with regard to the work of the Agrarian Commission and that I had received no reply and that from what the Ambassador had just told me, I assumed that he would give me no reply until he could communicate with President Cárdenas on the telephone. I went on to say that the situation with regard to the agrarian expropriations was becoming altogether intolerable. I said not only had an entire year passed without a single claim being adjudicated, but new expropriations were being undertaken completely counter to the assurances given to this Government by the Ambassador on November 10, 1938, and that I was very much afraid that the situation in this country, insofar as our own public opinion was concerned, had almost reached the point where an explosion of public indignation on the part of United States citizens was at hand. The Ambassador then said that he could assure me that he had every reason to believe that this whole agrarian question could be settled in a manner satisfactory to us in the near future, and that he was confident that the question raised in my memorandum, namely, recognition of the rights of American shareholders in corporations set up in Mexico owning agrarian properties which had been expropriated, was not going to create any insurmountable difficulty. He also said that he was confident that his Government would prevent any further new expropriations of American-owned agrarian properties and that the assurances conveyed by him on November 10, 1938, would be respected. I said that I was happy to know that the Ambassador felt optimistic in this regard, but that I for one was beginning to lose my own innate optimism insofar as this problem was concerned. I said that I could not over-emphasize the seriousness with which I regarded a continuation of the present situation and that it seemed to me that the Ambassador must make every possible effort to impress upon his Government the gravity with which this Government viewed the situation.
[For the remainder of this memorandum dealing with the oil question, see page 714.]