The Secretary of State to the Ambassador in Mexico (Messersmith)

No. 2776

Sir: In the Department’s instruction no. 1336 of August 6, 1942,83 you were requested to have discussions with appropriate Mexican officials aimed chiefly at determining “the policies and intentions of the Mexican Government concerning such matters as the conditions under which and the manner in which foreign interests will be requested or permitted to participate (in the Mexican oil industry).”

The basic explanation given for this inquiry was that “when this Government is called upon to consider questions involving financial or other substantial assistance, or involving hemispheric security both [Page 458] military and economic, or involving nationally important activities of its own citizens abroad, it must be in position to judge the long-range consequences of its own actions.”

The immediate aim of these discussions was “to prepare the way for prompt and effective cooperation between appropriate agencies and individuals of both Governments who are directly concerned in the petroleum aspects of the general accord which exists between these two nations.”

Your several telegrams and despatches relating to your discussions with the President and other Government officials, as well as your recent oral reports in Washington, all indicate the probable necessity and even the possible desire on the part of the Mexican Government for some informal suggestions from this Government which might assist the Mexican officials in crystallizing their own ideas in a form which would suit our mutual purposes.

If, in your discretion, some such course is, or becomes, desirable, it is the opinion of the Department that the type of plan generally described herein should be suggested.84

. . . . . . . . . . . . . .

From the foregoing it will be seen that in essence the proposed plan would accomplish the following:

Leave all subsoil rights and titles in the Mexican Government.
Leave the responsible direction, conduct and control of the Mexican oil industry in the hands of Petroleos Mexicanos, subject only to obligations imposed by the Mexican Government and to obligations voluntarily undertaken in its agreements with the contractor.
Make available to Mexico the best possible assistance; technical, commercial and financial in whatever degree and under whatever terms are agreed upon to suit each individual—or type of—circumstance.
Avoid the unfavorable popular reaction that direct negotiation or dealing with an individual American oil company, particularly one of the expropriated companies, might be expected to excite.
Protect the American contracting company from direct or discriminatory legislative action of an unduly burdensome or hazardous nature, by fixing its own obligations and rights in a contract with Petroleos Mexicanos Corporation, which contract would be subject to adjudication in the Mexican courts without involving questions of national sovereignty.
Provide the framework of an agreement as to principles within which the benefits accruing to both contracting parties could be adjusted, case by case, to give each an appropriate share in the total profits.
Furnish-aframework of principles to which each of the Governments concerned could subscribe, thus in effect guaranteeing both contracting parties against failure of either one to perform.
Provide, in the contracting company, an agency through which any qualified American interests could participate through a stock interest and a voice in the management in so far as American investment is concerned.
Afford the opportunity of developing mutual confidence, and a modus operandi, which after a suitable period might lead to the creation of other generally similar contracting companies. (The first such company might be owned by a group of American oil companies, each one with a limited participation and managing voice. Subsequent contracting companies, when the time comes, might represent either groups of companies or a single parent company for each contracting company.)

Very truly yours,

For the Secretary of State:
Dean Acheson
  1. Foreign Relations, 1942, vol. vi, p. 528.
  2. In accordance with this instruction, the Ambassador in Mexico submitted a memorandum dated March 31, 1943, to the Mexican Minister for Foreign Affairs, copy of which was transmitted to the Department in despatch No. 8862, April 2, 1943 (not printed).