812.6363/5992½

President Roosevelt to the President of Mexico ( Cárdenas )

My Dear Mr. President: I wish to acknowledge the receipt of your very friendly letter of July 29,51 which has been handed to me by your Ambassador in Washington.

You have written to me with entire frankness, and I desire to correspond with equal frankness, since I know that we are both equally desirous of doing what may be possible to prevent the continuation of any controversy which has arisen between Your Excellency’s Government and nationals of the United States, or of any controversy which might arise between this Government and nationals of Mexico, because of our joint recognition that so long as controversies of this character persist, so long will it be difficult, if not impossible, for the peoples of our two countries to attain that kind of neighborly relationship—free from misunderstanding, suspicion, and ill-will, and rooted in trust and friendship—which is so indispensable to the best interests and to the progress of both nations.

[Page 704]

In your letter which I am now acknowledging you refer specifically to the dispute which has arisen between the Government of Mexico and certain American companies because of the expropriation by the Mexican Government of the properties of these companies located in Mexico. You set forth the position assumed by the Government of Mexico in this regard, and emphasize the many difficulties which have arisen in the negotiations which have been undertaken between representatives of the Government of Mexico and of the American companies to find a satisfactory solution of the problem presented.

It had of course been my hope that both parties to the controversy which unfortunately exists would recognize their equal responsibility in this search for a fair and satisfactory solution, and that consequently an agreement might have been reached long since.

As you know, throughout the period of these negotiations this Government has done what it felt it appropriately could to facilitate and further negotiations, conferring both with representatives of the Mexican Government as well as with representatives of the American companies in the endeavor to assist in the finding of some common meeting ground. When it appeared a few weeks ago that these negotiations had reached a complete deadlock, the Acting Secretary of State at my direction informally laid before both your Ambassador in Washington and the representatives of the companies a suggested solution of the chief point of difficulty. The prompt discarding of this suggestion by the companies concerned, and its rejection by the Government of Mexico thereafter was, I am frank to say, most disheartening.

In your letter you state that “The expropriation decreed by the Government of Mexico … constitutes a legitimate act of the Government of Mexico, authorized by its own laws, similar in this point to those of other nations, and sanctioned at the same time by the principles of international law.”

As you say, the principle of international law is well known with regard to the expropriation by one country of the property of citizens of another. It requires prompt and effective payment to the extent of the fair and equitable valuation of the property. In various official communications addressed by this Government to the Government of Mexico, it has been made very clear that the authority of the Mexican Government to take property for purposes of public utility was not questioned, and could not be questioned, but it was also pointed out that under international law the procedure of expropriation requires as an integral part for its fulfillment payment of just and adequate compensation. That Your Excellency coincided in these views is made plain by the statement in your letter that “In the light of the laws and principles” cited by Your Excellency, and to which [Page 705] reference has above been made, “the American companies affected can only claim the payment of a just compensation the terms of which my Government has been ready to fix.”

Since it is unfortunately evident that the negotiations which have been in progress have resulted in no solution, and give no promise of attaining any agreement satisfactory to the Government of Mexico and to the companies, and since you inform me that the Mexican Government will under no circumstances undertake to return the properties to the American companies, there would seem to remain no other course of procedure for the Government of Mexico other than the payment of prompt and just compensation to the American companies for the properties taken.

From the negotiations which have taken place, and from what you state in your letter to me, it seems to be equally clear that the Mexican Government and the American companies are in accord neither as to the just valuation of the properties expropriated, nor as to the principles which should determine the amount of compensation to be fixed. If these questions remain unsettled there would seem unfortunately every likelihood that the controversy which has arisen will remain in existence for an indefinite period, with consequent grave prejudice to that friendly feeling between both nations which it is my earnest desire to promote.

As you may recall, in the autumn of 1937, prior to the expropriation by the Mexican Government of these American-owned properties, both of our Governments had taken up for review all of the questions of difference between the two countries, some of them of long standing, with the intention of undertaking to compose all of these questions in a manner which would be just and equitable to both countries, thus clearing the horizon of Mexican-American relations of all matters which might at any time disturb them. Because of the long protracted controversy with regard to the expropriation of oil properties, the negotiations then envisaged have remained in abeyance.

I now make the suggestion that the two Governments agree, without further delay, to take up all of these questions with a view to their individual solution in such manner as the two Governments may in each case determine to be best suited to the achievement of a satisfactory settlement. I further suggest that we include among the questions so to be settled in the immediate future the question of compensation for the American-owned oil properties expropriated and that both Governments agree that the question of the compensation to be paid for these properties be submitted to the decision of impartial arbitrators, selected either in accordance with the provisions of treaties or conventions to which both Governments may be parties, or to be selected by common determination; this suggestion [Page 706] being based upon the premise that the Government of Mexico is willing to provide compensation in accordance with the decision of the arbitrators, and that the arbitral award must determine the time and form of payment. It would further be my suggestion that the terms of the arbitral submission, should the suggestion prove acceptable to you and to the Government of Mexico, be determined as a result of an understanding to be drawn up by the Government of Mexico and by duly authorized representatives of the American companies whose properties have been expropriated, or by the two Governments.

Mexico and the United States live side by side. Both nations have been confronted with many difficult problems during the last six years, but I am confident that, given the exceedingly friendly understanding which fortunately exists between our two Governments, a satisfactory solution can be found for all of the problems between the two nations which yet remain unsettled and to which I have referred; By the peaceful and friendly adjustment of all of these questions, the Governments of Mexico and of the United States can give to a world sorely beset by distrust, fear, and violence, an admirable example of how with good-will the governments and peoples of two neighboring countries can in a peaceful, friendly, and satisfactory way resolve their differences.

I wish to express my very particular appreciation of your most friendly and understanding letter and I warmly reciprocate the good wishes which you have extended to me.

With the assurances of my high personal regard, believe me

Yours very sincerely,

Franklin D. Roosevelt
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