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

The British Ambassador40a called to see me at his request this morning. I had informed the Ambassador by telephone on February 3 that it was the purpose of this Government to propose in the immediate future to the Government of Mexico arbitration of the differences arising from the expropriation by the Mexican Government of petroleum properties owned by American nationals.

The Ambassador commenced the conversation by saying that he was afraid his Government would be very much concerned if the United States proposed to Mexico arbitration of the questions arising from the expropriation of American properties without including in such proposal simultaneous arbitration of the questions arising from the expropriation of British properties. The Ambassador then read to me excerpts from an aide-mémoire which is attached herewith.41 I [Page 983] did not have the opportunity of reading the full text of the document until after the Ambassador had left.

The Ambassador requested in the name of his Government not only that the American proposal for arbitration include the question of the expropriation of British properties, but also that the American suggestion as to the tribunal to arbitrate the differences at issue should be a tribunal composed of three judges selected from the Permanent Court in The Hague and, finally, that before any proposal for arbitration was made by the United States, the American and British Governments agree as to the terms of reference to be proposed.

I said to the Ambassador that it had been my understanding that the Secretary of State had already indicated to him that the United States would not agree to the inclusion of the question of the British properties in its proposal for arbitration nor to a joint American-British proposal for arbitration. I stated that the suggestion of the United States for arbitration would be based primarily upon the treaty obligations of Mexico and of the United States to settle differences arising between the two countries which could not be adjusted by diplomacy and which were susceptible of juridical determination and which obligations arose from the Inter-American Treaty of Arbitration of 1929 which both nations had ratified. Insofar as the question of the arbitral tribunal was concerned, I stated that the treaty referred to made ample provision for the selection of such tribunal. I said that inasmuch as the signatories to this treaty were solely the American Republics, it would be clearly impossible for Great Britain to resort to this treaty for the arbitration of her controversy with Mexico. But more important than this, I said, was the fact that the United States desired in making this proposal to Mexico to present her case—which I believed was unassailable—in such a manner as to gain for the position taken by the United States the unanimous support of the other republics of this hemisphere. I reminded the Ambassador that he had upon repeated occasions, as had his predecessor, Sir Ronald Lindsay, informed me that the reason why Great Britain was so much concerned with the action taken by Mexico was the British fear that such action would create precedents which would be followed in the other American Republics. I stated that consequently it seemed to me that it was particularly important that public opinion in the rest of the American continent, as well as the opinions of the governments of the other American Republics, should regard favorably the position taken by the United States in its requests for arbitration. If at this time, I added, the Governments of the United States and Great Britain were to propose a joint arbitration, or if the United States were to include arbitration of the British controversy in its own request for arbitration, the whole inter-American aspect of the question would be lost, and I said I believed [Page 984] that such action on our part would present a God-given opportunity to propagandists—both propagandists against Great Britain and propagandists against the United States in other parts of the Western Hemisphere—to raise the cry that the two great imperialists were bringing pressure to bear, hand in hand, upon unfortunate Mexico and that, consequently, the other Latin American nations should rally to support the position taken by Mexico. Consequently I said it seemed to me that the request proffered by the British Government was singularly short-sighted.

With regard to that portion of his request which dealt with the terms of reference, I said it was my understanding that the British Government, like the British and American oil companies, desired to assure themselves that the terms of reference would be sufficiently ample so as to include among the powers granted the arbitral tribunal the power to determine that company management and operation of the properties should continue until compensation had been paid. I said I was glad to assure the Ambassador that any terms of reference which would be suggested by the United States or which would be agreed to by the United States would in fact be sufficiently ample so as to make such an award possible.

The Ambassador said he would transmit the reply made to him to his Government.

S[umner] W[elles]
  1. The Marquess of Lothian.
  2. Infra.