Memorandum by Mr. Max Thornburg, Consultant on Petroleum Matters, to the Under Secretary of State (Welles)

Mr. Welles: Acting under the President’s instructions, as communicated by you, the Department arranged for representatives of Petroleos Mexicanos to visit Washington to reach an agreement concerning the type of arrangement under which the proposed 100 octane plant and essential auxiliaries would be built in Mexico.

This Department outlined a plan which, briefly, provided for,

the employment by Petroleos Mexicanos, on a usual fee basis, of some reputable and experienced American consulting firm of experts,
the design and erection of the plants by some reputable American firm specializing in this field,
supervision of all technical aspects of the work by the Petroleum Administration for War,
financing of the dollar investment by this Government, with repayment by sale of products back to this Government,
a staff of skilled American operators to operate the plants, to be supplied and supervised by the consulting firm, and
approval by appropriate agencies of this Government of all contracts and of design, construction and operation as required to safeguard both investment and output.

This plan was reviewed with Secretary Ickes personally and approved by him, with the single qualification that the President may have had in mind that this Government itself should build and operate the plant.

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[Here follows an explanation of the lack of progress in the negotiation.]

My last word from Mr. Buenrostro,85 last night, was that he will return to Mexico, having exhausted his resources in futile efforts to have the Mexican case given reasonable consideration in the Petroleum Administrator’s office.

Neither Mr. Bonsal nor I know what we can do. To both of us it appears that the results of a long period of promising work on the Department’s part, including many months of effort by Ambassador Messersmith and by Morris Llewellyn Cooke,86 all aimed at repairing the situation brought about by expropriation and the conditions which led to expropriation, are precariously close to the brink.

Max Thornburg
  1. General Manager of Petroleos Mexicanos.
  2. One of the experts designated to represent the United States in determining the compensation due the petroleum interests by virtue of Mexico’s petroleum policies. For correspondence on this expropriation policy, see pp. 585 ff.