Memorandum of Conversation, by the Chief of the Division of the American Republics (Bonsal)

The purpose of my call on the Secretary of the Interior was to secure his approval of the press release which it is desired to issue in connection with the arrangements which have so far been agreed to for the construction of the 100 octane gasoline plant in Mexico. (Text attached87). The desirability of such clearance had been indicated to me by Mr. Welles.

I began the interview by pointing out to Mr. Ickes that Señor Buenrostro of Petroleos Mexicanos had now been in the United States over six weeks, and that he was most anxious, for a variety of obvious reasons, to have some statement issued regarding the results achieved in his discussions in Washington. I added that when Mr. Welles and myself were in Mexico last week, both the Mexican Foreign Minister and Ambassador Messersmith had similarly indicated the desirability of a statement of this kind. I also referred in passing to the fact that of course the general nature of Señor Buenrostro’s conversations was known and that it would be helpful to have an authoritative statement on the subject.

Mr. Ickes then launched into a statement indicating his general dissatisfaction with the way in which these discussions have been handled. He said that the Department of State had infringed upon the powers and prerogatives of the Department of the Interior. He referred to [Page 461] Buenrostro’s selection of the Universal Oil Products Company as consultant, rather implying that someone had put something over on Buenrostro. I asked the Secretary whether he did not agree that Petroleos Mexicanos needed a consultant. He replied in the affirmative. I then told him that Buenrostro had selected Universal Oil Products from a number of available concerns, that Buenrostro was familiar with the ownership and control of Universal Oil Products and that the firm in question had done a good deal of work in Mexico previously. I understood Mr. Ickes to say that he appreciated the high professional standing of Universal Oil Products.

Returning to the question of the manner in which the negotiations with the Mexicans had been conducted to date, I said that we in the Department were most anxious for an opportunity of talking this out with the Secretary of the Interior. I stated that I had understood that the plan which had been agreed to between the two Governments and embodied in an exchange of notes, copies of which had been made available to Mr. Ickes, had received Mr. Ickes’ approval in principle. Mr. Ickes then stated that it had been his idea that this Government would build and operate the plant in Mexico. I pointed out to him that this was politically not feasible and I added that there was ample provision in the plan under consideration for the employment by Petroleos Mexicanos of suitable experts and technicians. He then asked me who would pass upon the suitability of these experts. I replied, that I assumed he would. I added that it was, of course, our understanding that all plans and specifications would be submitted to the Petroleum Administrator for War, before any further progress could be made.

Mr. Ickes then took up the question of Mr. Pauley. He stated that Mr. Thornburg had considerably disturbed some of Mr. Ickes’ people by his insinuations as to this phase of the project. Mr. Ickes expressed the conviction that Mr. Davies88 is not moved by any special interest in Mr. Pauley’s project except in so far as the engineering and other studies made by Mr. Pauley and his organization might be of use in the carrying out of the President’s directive to construct a 100-octane plant in Mexico. The Secretary gave Mr. Davies and Mr. Pauley considerable credit for the initial suggestion upon which this directive was based.

I limited myself to the statement that of course when the PAW89 had approved the plans and specifications of the plant, Mr. Pauley would be able to bid.

I concluded that it seemed to me that the Department of State had now carried out its function and that further progress would depend [Page 462] on the activities of the Petroleum Administrator for War. I repeated that I hoped it might be possible early next week on Mr. Acheson’s90 return, to have a thorough discussion of the situation.

Mr. Ickes was obviously very much preoccupied with the coal situation, which he said had just been “dumped in his lap”. He took the proposed press release, said that he would study it and telephone me this afternoon in regard to it. I reported this to Mr. Ickes’ secretary und asked her to do her best to remind him of the matter. Mr. Ickes read the press release but made no specific comment in regard to it.

It was quite evident to me, although he was courteous throughout the interview, that he was definitely prejudiced against the Department in this matter. I believe that I was able to clarify a number of points for him. I spoke to him briefly regarding the general oil situation in Mexico and the expressed desire of Señor Buenrostro to “make peace” with the world oil industry and particularly with the American oil industry, without, of course, relinquishing the principle of the nationalization of the Mexican industry.

  1. Not printed.
  2. Ralph K. Davies, Deputy Petroleum Administrator.
  3. Petroleum Administration for War.
  4. Dean Acheson, Assistant Secretary of State.