412.11 (41) Agreement/9

Memorandum by the Division of the American Republics

Suggested Plan for Settling the Mexican Claims and Petroleum Expropriation Through Agreement Between the Mexican and United States Governments

1. Mexico will pay to the United States in settlement of the Agrarian Claims Agreement of November 193880 and of any new agrarian claims which have occurred since that time the sum of $19,000,000.

Mexico has already paid $2,000,000 on deposit. It will continue to pay at the rate of $1,000,000 per year until the special claims are paid off in 1945, when the $500,000 a year now used for special claims will be added to the agrarian claims settlement making an annual payment of $1,500,000. Under this arrangement the agrarian claims should be liquidated in 1953.

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2. Mexico will pay to the United States in settlement of claims and counterclaims under the General Claims Convention81 the sum of $17,000,000.

Mexico will pay from its reserves the cash sum of $3,000,000 plus annual payments of $1,400,000. Compensation for the general claims should on this schedule be effected by about 1950 or 1951.

3. The United States will cooperate with Mexico to stabilize the Mexican currency. Since stabilization will make unnecessary the retention of all of the present Mexican currency reserve, a part can be used to effect compensation on account of claims as indicated in numbered paragraph 2. A down deposit of $3,000,000 would be made on the general claims.

Coincident with the announcement of the settlement on claims and the stabilization arrangement, the Mexican Government will make a deposit of $9,000,000 on account for compensation of the expropriated petroleum properties.

At the same time the United States and Mexican Governments will announce the appointment by each government of an engineer who, with assistants, will make an appraisal of the expropriated petroleum properties. Mexico will agree to furnish access to all data including the confiscated company books. The engineers will agree upon an evaluation of the properties. If unable to agree, they will submit their separate estimates to their governments which will agree upon a final figure through diplomatic negotiation.

5. Mexico will pay the petroleum companies the compensation agreed upon on the basis of $ . . . . . a year. Mexico will agree that a fixed amount on each barrel of oil sold shall be set aside in a fund to make compensation. If the proceeds in any one year of this fixed amount do not equal the total annual payment, Mexico will make up the difference from its regular budgetary sources.

6. Upon agreement between the United States and Mexican Governments with regard to the compensation to be made the petroleum companies, the United States will:

Extend to Mexico the necessary credit facilities to permit the completion of the Mexican section of the Inter-American Highway; and
Enter into an agreement for the purchase of Mexican silver.

Further details are provided in the attached memoranda.82 The paragraph numbers in them relate so far as practicable to the paragraph numbers above.