812.5018/76
The Chief of the Division of the American Republics (Bonsal) to the Vice President of the Commodity Credit Corporation (Falk)
Dear Leon: I have to refer to your letter of November 8, 1943,61 regarding the question of lifting the present embargo on vegetable oil cakes and meals.
As your office has been advised by Mr. Carrigan, certain steps have been taken by our Embassy in Mexico City regarding this matter, and our Embassy was assured yesterday that a telegram would go out lifting the embargo along the border. The Embassy was not certain as of this afternoon as to whether these measures would affect future shipments or whether the embargo was merely being lifted on shipments which might be pending. In any event, as you know, the Mexicans appear very desirous to take early action along the same general lines that you mention in your letter.
I had lunch with Ambassador Castillo Nájera today and discussed your letter with him. Along broad lines, as you know, your letter [Page 447] follows more or less the proposals made by the Mexicans in the note they delivered yesterday62 and a copy of which has been sent to you.
I explained at some length to Ambassador Castillo Nájera the interpretation you gave Mr. Carrigan this morning as to the prices set for these oilcakes and meals, that is, that these prices were merely to be considered as measuring rods for the purpose of determining whether corn shipments to Mexico were lagging behind meal and cake shipments from Mexico, or whether the case were the reverse. I explained to him that these prices were not intended to govern in the case of the present pending transactions but that we would of course expect the help of the Mexican Government should, at some future date, the prices charged our people for these meals and cakes become excessive. I explained to him that this was really a very difficult situation, inasmuch as in many ways it might be said that our farmers could use this corn at the ceiling prices instead of vegetable meals and cakes. If the prices for these meals and cakes became excessive, our farmers would naturally prefer to use corn at our ceiling prices for cattle feed.
According to the best information available, Dr. del Rio was able to obtain some corn on the private markets deliverable after November 1. A pooling of this information appears to show that Cargill63 has definitely sold him between five and six thousand tons; and that Fox in New Orleans has definitely sold him roughly six thousand tons. He is also said to have obtained a further five or six thousand tons, probably from Continental,64 but this has not been confirmed. Also, I understand Commodity Credit is making some 1,400 tons available from Cuba. This is, of course, a very satisfactory improvement on a situation which was really the source of very deep concern. I hope they will be able to make substantial further purchases on the open market, and I hope your information tallies with what we have heard, to the effect that there is quite a substantial additional amount they might obtain. It would be exceedingly helpful to us and to our Embassy in Mexico if we might have at an early date some general information as to their further prospects, as well as the specific information on their current shipments which I understand you are getting together: I shall certainly appreciate these data when they are available.
The situation with respect to this corn does seem to be shaping up favorably; however, I am exceedingly grateful for your offer of assistance should the results from private sources not prove as satisfactory as may be necessary to meet the Mexican needs.
[Page 448]I am really very hopeful that a solution satisfactory to all concerned may be found. The immediate problem is of course for us to obtain the vegetable oil meals with a minimum of difficulty and for the Mexicans to obtain adequate corn. I think that lifting the embargo, which, after all, is said to have been established so as to permit these surplus meals to come to us in an orderly fashion, will be most helpful and not difficult of accomplishment. With your assistance, should it prove necessary, I am sure the Mexicans will have their corn.
In many ways, however, I wonder if it might not be well, as soon as we see the meal coming in, and if the corn is moving south of the border adequately, to consider suggesting to our Mexican friends that we abandon the “dollar-for-dollar equivalent” project. From the tone of their note, I gather they might be glad to do so, and it might be a wise move on our part since the continuance of the project might at some time in the future lead to an unfortunate recurrence of this meal embargo proposition. You might desire to give some thought to this: I do not think it would be unduly hard to accomplish on the understanding the two Governments would do everything possible to help each other, should purchases of either product fall into difficulties.
With best wishes [etc.]