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

The Mexican Ambassador called to see me this afternoon at his request. The Ambassador gave me in the greatest possible detail an account of the conversations which had taken place up to the present time between himself and representatives of the Sinclair Oil Company. A considerable portion of this information had already been conveyed to me by the Ambassador and is contained in a previous memorandum reporting my conversation with him and the Mexican Secretary of the Treasury on January 11. The only important new information given me by the Ambassador related to the alleged statement by Mr. Harry Sinclair and his associates that they were demanding greater compensation for their properties expropriated by the Mexican Government than they could obtain by sale of the properties, or than they could have obtained had they continued to operate the properties themselves. According to the Ambassador, the Sinclair representatives, while originally demanding compensation equivalent to 30 million barrels of oil, had subsequently reduced the total to 16 million barrels of oil at 80¢ a barrel. To this second proposal, after much haggling, the Mexican Ambassador by authorization of President Cárdenas had made a counterproposal of 9 million dollars in cash payable at the rate of 3 million dollars a year over a period of three years, in addition to 4½ million barrels of oil to be delivered by the Mexican Government to the Sinclair Oil Company over a [Page 987] period of some years. The Ambassador seemed to be in no way optimistic as to the eventual outcome of these negotiations.

The other information of significance given me by the Ambassador was that before the Mexican Secretary of the Treasury had come to Washington on his recent visit to the United States, he had spent two days in New York and had there conferred secretly with Mr. Harry Sinclair and Colonel Patrick J. Hurley, his attorney, and that at these interviews in New York not only had Mr. John L. Lewis been present, but also Mr. W. R. Davis. Mr. Hurley had subsequently said to the Ambassador that Mr. Davis had been present at these interviews at the specific request of Mr. John L. Lewis. The Ambassador further stated that in the course of a subsequent conference which had taken place in Washington and at which Mr. Lewis (not Mr. Davis) had been present, Mr. Lewis had made the following allegations:

  • First, that he was attending these conferences solely because of his patriotic desire to further good relations between the two countries and that he stood to profit not a cent through his participation therein.
  • Second, that in 1938 he had learned from a confidential source in the Department of State that a very stiff note was to be sent by the Government of the United States to the Government of Mexico and that he had gone to see the President to protest against such action and that the President had consequently instructed the Secretary of State to withhold such communication.
  • Third, that Mr. Lewis had learned some two months ago that this Government intended to propose arbitration of the controversy to the Government of Mexico and that he had considered such action altogether premature, and that he had consequently again intervened with the President and that the President had again instructed the Secretary of State not to take any action looking towards arbitration until the President had had a further opportunity of conferring with Mr. Lewis.

The Ambassador ventured the opinion that these assertions were untrue and stated that he had been informed by Colonel Hurley that Mr. Lewis was very closely associated in a business sense with Mr. Davis.

I told the Ambassador that with regard to that aspect of the question I had no information, but that Mr. Lewis was mistaken with regard to the correctness of the other two assertions he had made, and that because of my own knowledge of all that had transpired, I could tell the Ambassador that the two latter statements made by Mr. Lewis were completely unfounded.

S[umner] W[elles]