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

The Mexican Ambassador called to see me this morning at my request.

I asked the Ambassador if he had any recent news from Mexico and he replied that he assumed that the answer to our recent note would be delivered tomorrow, April 24, inasmuch as a meeting of the Cabinet had been called in Mexico City to pass upon the final draft of the note and he thought the document would be despatched immediately after the session of the Cabinet. He said he had no indication as yet from his own Government as to the nature of the reply but that he had strongly recommended upon two occasions that the reply should not constitute a rejection of the United States proposal but should rather be an acceptance in principle of the proposal for arbitration, only modified so as to provide for the constitution of a joint commission with an umpire who, in case of disagreement, would have the final word. He further said—what he had not previously told me—that both in a personal letter to President Cárdenas, as well as in a conversation he had had with the President in the spring of 1938, he had urged the Mexican Government of its own initiative to propose arbitration of the dispute. He offered the opinion that if the Mexican Government had done that at that time, it would have avoided a great deal of unnecessary grief, but he realized, he said, that the situation during the past year had shaped itself in such a manner, because of domestic politics in Mexico, as to make it impossible for President Cárdenas to propose arbitration.

The Ambassador further said that he believed that the final agreement with the Sinclair Company would be signed today. He told me that he had received authorization by cable from President Cárdenas last night to sign the agreement and that he understood that Mr. Sinclair and Mr. Hurley would meet with him at the Embassy this afternoon in order to sign the final documents. He told me that all details had now been agreed upon, but he did not indicate exactly what these details were.

The Ambassador said that the delivery of the note proposing arbitration had resulted in very welcome political support for the government-favored presidential candidate, General Avila Camacho. He said that the simultaneous publication in newspapers and periodicals in the United States, notably Current History, of articles alleging that General Almazan would now be elected and would undoubtedly restore the properties to the oil companies—and which articles had been widely circulated in Mexico—had caused many of General [Page 1017] Almazan’s followers to desert his cause and had unified and solidified support in favor of General Avila Camacho.

I told the Ambassador that that was a phase of the subject which I, of course, was not going to discuss, but I said that I had been afforded a great deal of amusement by reading pamphlets which had been circulated broadcast throughout some of the other American Republics by Señor Lombardo Toledano alleging that the note of the United States Government constituted an act “of imperialistic aggression” and an evidence of “direct intervention in the affairs of Mexico”. I said I wondered whether this kind of propaganda was able to delude many people. I stated that I believed that an overwhelming majority of citizens in the other American Republics were perfectly well aware of what the word arbitration meant and were equally well aware of the fact that arbitration was exactly the way in which “imperialistic aggression” and “intervention” were avoided when disputes arose between two countries, and that I had seen no signs as yet that anyone was taken in by this kind of deliberate and malicious falsehood. The Ambassador blandly said that he thought there were a great many people who would be taken in and that they certainly had been taken in in Mexico. He stated, however, that he had urged upon his Government the need to put an end to this kind of injurious propaganda inasmuch as Mexico has always openly and officially espoused as a weak country the cause of the arbitral determination of international disputes and had expressed it as his opinion that a continuation of this kind of propaganda was highly injurious to Mexico’s own best interests.

I told the Ambassador that I wanted to call to his attention the fact that I had been advised that a decree of the President of Mexico published on February 28, 1940 had provided for the annulling of certain titles in Campeche from which American companies derived title to chicle lands. I said I understood that two of the American companies interested had obtained amparo pending determination of their cases by the Mexican courts. I said to the Ambassador that I was not familiar with the details of these cases but that I did wish to bring this entire subject to his attention. I stated that I was familiar with other cases where American companies had owned properties in Mexico over a period of many generations, had had their titles validated upon several occasions by the highest authorities to which, at that time, they had recourse, and had now been confronted with a new attack upon the validity of their titles as a result of Presidential decree. I stated that it seemed to me that this kind of situation hopelessly and completely destroyed all confidence on the part of American property holders in Mexico. I said that in one case with which I was thoroughly familiar because of our previous discussions about it, citizens of the United States of the highest repute [Page 1018] had had three or four times during the past thirty years to defend their titles against the charge of invalidity and after very considerable expense and recourse to the courts and to the administrative bodies set up to pass upon titles had had their titles declared completely valid. Now, I said, these same individuals were confronted with exactly the same situation and if they now had recourse to the Mexican courts or other bodies set up to pass upon titles and had the validity of their titles once more upheld, what assurance could they possibly have that a year or two years from now they would not again be put to the same difficulty. It must be clear to the Ambassador, I said, that this kind of procedure opened the door to every variety of blackmail, placed the owners of the properties at a recurrent and very considerable legal expense, made them altogether unwilling to spend new capital in the development of their properties, and, finally, gave rise to an increasing feeling in many quarters within the United States that through such an attack on the validity of property titles the Mexican Government was seeking to expropriate without being obliged to resort to expropriation proceedings. I said that I felt the Ambassador would agree with me that the question presented was of the utmost gravity and that I hoped that upon consideration he would be able to suggest some manner in which further problems of this character could be avoided.

The Ambassador replied by a very sweeping and general statement that all of the titles now being attacked by the Mexican Executive were invalid and that no matter how long persons had held properties if their original titles were invalid they had no possible right to consideration. I replied that I was not in the least interested in defending fraudulent or vicious titles, but that what I was interested in upholding was the principle that if the owners of properties had once gone through the Mexican courts to the highest authorities to which they could have recourse and had then had the validity of their titles upheld they should not again be obliged with every changing government in Mexico to go through the same procedure. The Ambassador said that he would study the matter and see what solution could be found. He said, however, that he knew that all of these titles in Campeche had been obtained by fraudulent connivance and gave me a long account of how badly the American companies in question had treated their laborers. I merely remarked that I was sorry to learn of this if the accounts he gave me were correct and that I did not see that the treatment accorded labor by these companies affected in any way the validity or non-validity of the titles to their property.

S[umner] W[elles]