The Chargé in Mexico ( Boal ) to the Secretary of State

Sir: I have the honor to record below a conversation between the Minister of Finance and the Commercial Attaché on September 25, 1939 in reference to the relation between Mexican unused mark credits in Germany and the German vessels now in Mexican ports. The Commercial Attaché reports as follows:

“I asked Minister Suarez the amount of unused mark credits which his Government now had in Germany. He answered that as far as the Mexican Government was concerned it amounted to approximately 3 million dollars. (Mr. W. R. Davis previously stated that his books showed that the unused Mexican credits in Germany totalled slightly in excess of 5 million dollars. Records of Petroleos Mexicanos recorded an unused credit in Germany of 19,000,000 marks) I asked the Minister if he knew the total of private commercial credits in Germany held by Mexican merchants and he replied that he had not made the calculation.

[Page 59]

“I inquired of the Minister what method he intended to employ to secure the withdrawal of his mark credits from Germany. He replied that he had received the assurances of the German Embassy in Mexico that the German Government would fully and scrupulously fulfil all of its contractual obligations with the Government of Mexico. I, then, inquired as to how this would be possible since Germany’s merchant fleet had been practically cleared from the seas. He answered that the German Embassy in Mexico had also told him the merchandise ordered by Mexico against its mark credit would be delivered to a neutral port and then to Mexico in accordance with stipulations in the various contracts. I asked the Minister if he believed that this could be done without serious delays and interruptions to the transportation of the merchandise in question. He answered that he could tell within the next ten days or two weeks whether or not Germany could fulfil its contractual obligations because certain shipments were due within that period.

“In view of the above I inquired of the Minister as to whether or not he had made any plans for withdrawing his credits from Germany in case that country could not make shipments of merchandise. I told him that I asked the question because a number of people had mentioned to me that Mexico would probably receive some of the German shipments [ships?] now in Mexican ports in payment of the obligations. The Minister replied that he had been negotiating with the German Government through its Embassy in Mexico City for the purchase of the two German tankers now in Mexican ports. He said that he wished to emphasize that aside from the petroleum mark credit which his Government had in Germany there was also a cash credit and that he was negotiating for the two tankers in lieu of the cash credit. In order to clarify this point I asked him whether or not he would continue to negotiate for the two tankers even though Germany shipped punctually all of its merchandise obligations. The Minister reiterated that his negotiations now in progress for the two tankers were entirely apart from the petroleum barter credits. He said that he had already made his propositions to the German Government for the two tankers and was awaiting an answer. Should Germany fail to meet its contractual obligations to ship merchandise to Mexico the Minister stated that he would probably be interested in taking over sufficient merchantmen to cover the account.

“I asked the Minister if he could transfer the registry of any of the German vessels without running the risk of seizure on the part of belligerents. He replied that he now believed he could make a legitimate purchase of the vessels from Germany, fly the Mexican flag and not encounter any difficulties with the allies. The Minister then laughed and said that in case a seizure should take place Germany would be the loser of the vessel because his purchase contracts would provide for such an eventuality.

“In concluding the conversation on this subject, Minister Suarez stated that the Germany Embassy in Mexico City had advised him that the German Government would not open any additional petroleum mark credits.”

Respectfully yours,

Pierre de L. Boal