Memorandum of Conversation, by the Under Secretary of State (Welles)
The British Ambassador called this morning at his request and left with me a memorandum48 comprising what in effect amounts to a protest against the proposal of the Government of the United States to request the Government of Mexico to submit to arbitration the controversy arising from the expropriation of American-owned oil properties in Mexico. The Ambassador summarized the points contained in the memorandum. At one point he spoke of the “united front” between Great Britain and the United States in dealing with the question of expropriation in Mexico.[Page 995]
I said that I wanted to make it very clear that there had never been anything remotely resembling a “united front” between the governments of the United States and Great Britain; that while both governments had publicly made known their objection to the pursuit by Mexico of the policy of expropriation without compensation, the course pursued by Great Britain had been devoted very largely to a reiteration of her position that the properties should immediately be restored to the owners, whereas the United States in its representations to the Government of Mexico had never questioned the legal right of the Mexican Government to expropriate properties within its jurisdiction, but it insisted that if expropriation were undertaken there was inherent in the exercise of such right by Mexico the corresponding obligation to pay prompt, adequate, and effective compensation for whatever properties might be expropriated. This Government had, furthermore, encouraged negotiations between the companies and the Mexican Government, and while I was prepared to concede that there appeared to be a “united front” between some of the American companies and the British interests, I could not admit that there had been the slightest indication of a “united front” between the two governments.
The Ambassador then in discussing the terms of reference mentioned the points contained in the memorandum of Mr. Richberg’s “five objectives” and stated that they were not covered by the terms of reference. He said the British Government had understood that these “five objectives” had been “approved by the United States Government”.
I said that I found it necessary to take issue with that since, while this Government had approved and encouraged the negotiations between the companies represented by Mr. Richberg and the Mexican Government, this Government had never attempted to determine what the basis for such negotiation should be, nor had it ever specifically approved or disapproved any objectives which may have been presented by the companies so represented.
With regard to the question of the terms of reference, I told the Ambassador that at a conference held two days ago with representatives of the American oil companies, I had stated that we would be glad to give further consideration to suggestions proffered by the companies for amendment of the terms of reference in order to see whether it might be possible to make the suggested terms of reference more satisfactory to the companies, but that by direction of the Secretary of State I had subsequently informed the companies that Tuesday, February 13, was to be regarded as the deadline and that if by that date no suggestions had been received from the companies or no agreement had been reached between the representatives of the companies and the Department of State, our proposal of arbitration would [Page 996] be presented to the Mexican Government. I mentioned again to the Ambassador that this Government had determined from the standpoint of policy to suggest resort to the Inter-American Treaty of Arbitration of 1929, and that since that was the case, it was impossible for me to give further consideration to the suggestion of the British Government that joint arbitration be undertaken in as much as Great Britain was not a signatory to that treaty. The Ambassador said he fully understood that this question of policy had been determined and that he had already so informed his Government.
I said to the Ambassador that he could inform his Government that the communication he had handed me would be given the fullest consideration by the Department of State but that such consideration would be undertaken in the light of the statements I had already made to him.