Memorandum by the Chief of the Division of the American Republics (Duggan)38

Your consideration is called to the attached memorandum39 of conversation with Mr. Mallet, Counselor of the British Embassy, regarding the confirmation by treaty or exchange of notes of any agreement effected between the Mexican Government and the oil companies for a settlement of the present controversy.

The embodiment of any eventual agreement in a treaty has both advantages and disadvantages. It would undoubtedly give the agreement more prestige and stability. It would, however, result in this Government being inevitably drawn into numerous conflicts which are bound to arise even with the best faith on both sides. Whenever the companies thought that the Mexican Government did not comply with the agreement they would appeal to this Government that the treaty had been violated, with the result that this Department would be placed in an extremely difficult position. Were it to give ear to these complaints it would have to establish a special section of experts to investigate in order to determine whether the complaints of the companies were justifiable.

The situation that might obtain between the Mexican Government and the petroleum companies in Mexico, which are privately owned, is entirely different from that existing between the Iranian Government and the Anglo-Persian Company, which I understand is controlled by the British Government.

In private conversation Mr. Richberg has mentioned as the period of the agreement between the companies and the Mexican Government fifty years, so that were the arrangement to be confirmed in a treaty this Department would be concerned for fifty years with the observance of the terms of that treaty.

In considering the desirability of confirming the arrangement by a treaty the suggestion is made that there be considered at the same time the possibility of the Mexican Government exchanging notes with this Government, and possibly the British and Dutch Governments, in which the two Governments would take cognizance of the arrangement arrived at and expressing satisfaction thereof. In this way the several governments would take recognition of the agreement but would not become involved in its observance in every detail by becoming parties to a treaty or treaties.

It is my suggestion that Mr. Mallet be informed when he calls on [Page 679] Thursday that the Department is giving consideration to the matter but has arrived at no conclusion.

L[aurence] D[uggan]
  1. Addressed to the Secretary of State and the Under Secretary of State.
  2. Supra.