Memorandum of Conversation, by the Under Secretary of State (Welles)

The Mexican Ambassador called to see me this morning. The Ambassador told me that he had yesterday received a personal and confidential letter from President Cárdenas which the Ambassador classified as “ambiguous” and which he said contained no precise instructions. President Cárdenas, in referring to the communication the Ambassador had made to him of a personal and informal suggestion I had made as to a possible solution on a temporary basis of the problem of management and operation of the four Mexican corporations to be set up to handle the expropriated properties of the American oil companies, stated that he did not see how this plan would place control of management and operation in the hands of the Mexican Government since the list of individuals agreed upon by Mexico and the United States, from which the companies and the Mexican Government could select three directors on the board of directors, would be composed of persons who had spent their lives in the oil industry and who, for that reason, President Cárdenas said, would be more likely to sympathize with the directors appointed by the oil companies than with the directors appointed by the Mexican Government.

The Ambassador said that he had immediately cabled President Cárdenas explaining the real bases of the suggestion offered and requesting specific instructions which the Ambassador said he thought he would have by Friday morning.

I remarked to the Ambassador that it seemed to me that President Cárdenas had totally misconstrued certain fundamental points in the suggestion I had offered. I said that, in the first place, the list of men to be agreed upon by the Mexican Government and by the United States Government was not intended to be limited to individuals engaged in the oil industry, and that I had specifically stated to the Ambassador that I thought the individuals so selected might well [Page 697] be persons not engaged in the oil industry but persons who had had experience in commerce or in finance. I had stated, I emphasized, that what I thought was required for the individuals comprising this list was recognized ability and character, knowledge of business management and practical experience in some form of finance or industry. Secondly, I said, the only reason I had made this suggestion of a possible solution was because both the Mexican Government and the companies were insisting upon entire control of management and operation. The purpose of the suggestion I had offered was to find a middle ground by which neither the Mexican Government nor the companies would have complete control but by which the balance of power between the two would be vested in the hands of impartial and competent persons.

The Ambassador said that he himself understood this fully and it was exactly these points which were contained in his cable yesterday to President Cárdenas.

The Ambassador spoke to me of a telegram he had received from Mr. Richberg advising him that the oil companies were going to have a meeting in New York this morning. I said I assumed that I would have some word as to the result of these deliberations from Mr. Richberg by tomorrow, Friday, morning and that I would appreciate it if the Ambassador would inform me as soon as possible after he had received the specific instructions he had requested from President Cárdenas.

As he was leaving the Ambassador asked me if I had any further information with regard to the difficulties of El Carrizal. I said I had had no word. The Ambassador said he was glad to tell me that he had this morning received a personal letter from the private secretary of the Mexican President telling him that President Cárdenas had sent personal and positive instructions to Governor Marte Gomez of the State of Tamaulipas informing him that he desired the situation of the Carrizal Corporation in connection with its labor difficulty cleared up immediately and that the just demands of the company were to be granted. I expressed my appreciation to the Ambassador for the information given me, as well as for the personal trouble which he had taken upon so many occasions with regard to this case.

S[umner] W[elles]