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

No. 14904

Sir: I have the honor to refer to my strictly confidential despatch no. 14524 of November 30, 1943 with respect to the conversations which I have been having with the Mexican Government on major oil policy in which I referred particularly to the Department’s strictly confidential telegram no. 1955 of November 12, 3 p.m.

I was finally able to make an appointment with the Minister of Foreign Relations, Dr. Padilla, for a full discussion of major oil policy for December 20 at noon. I had at least a three hour conversation with him on this matter which, on the whole, was most encouraging.

Although, as the Department is aware, I have been in constant touch with the Minister of Foreign Relations on questions of major oil policy which I have also discussed from time to time with the President of Mexico, I had not been able recently to have any discussion with respect to details in view of the fact that the Minister informed me that he was actively pursuing conversations under directive of the President with various of the members of the Government more particularly interested in this matter.

In view of the increasing urgency of the Mexican Government reaching a decision with regard to major oil policy, I thought it desirable for my conversation with the Minister today to prepare for my own assistance and guidance a memorandum of points to be discussed during the conversation. I, therefore, prepared yesterday a very full statement covering in résumé the two major memoranda which I have left with the Mexican Government in August of last year3 and early this year,4 as well as sufficient detail to cover the basis of full consideration by the Minister and his associates.

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

… He said that he understood that we were in complete agreement as to the recognition of the principle that all subsoil rights were the property of the Mexican Government and people. I assured him that we were. He said that he took it for granted that we were in agreement that the American companies and American capital should come in not through concessions but rather through contracts with Petroleos Mexicanos or the Mexican Government which contracts [Page 474] would clearly define the limits of action of the companies. I said on this point there would be no question. The Minister said that he understood that we were in agreement that the refining and distribution of oil for Mexico’s own purposes and needs should not in any way be touched by these contracts as these would remain monopolies of Pemex. I said on this point I felt sure there would be full understanding and no lack of agreement but I expressed the hope that the Mexican Government would not in its declaration of policy altogether exclude the possibility of American companies refining some of the oil which they produced in Mexico with the understanding, of course, that the production would be first available to Petroleos Mexicanos for internal use in Mexico at fixed prices—if so desired. I said that I thought it would not be advisable in the interest of the Mexican economy or industry to close the door entirely to the eventual possibility of some of the American companies being permitted to engage in refining operations as long as such operations did not conflict or compete with those of Pemex. The Minister expressed a good deal of understanding of this point of view. The Minister further said, of course, that it would have to be understood that all questions affecting labor, etc., in connection with the refineries were under the complete authority of the Mexican Government and that companies brought in under contract would not claim any special privileges in this connection. I told the Minister that I was sure there was full understanding of this by the companies.

The Minister said that on the basis of these general understandings he thought he was making progress with the other members of the Government towards a definition of major oil policy. The Minister said that his Government was very glad to discuss this matter with us prior to reaching its decisions on major oil policy, as it considered it of primary importance that Mexico and the United States should work together in this matter. He said, of course, once the Mexican Government arrived at its decisions with respect to oil policy, they would be made as a unilateral statement of the Mexican Government but he was exceedingly hopeful that the policy formulated by the Mexican Government would be entirely satisfactory to our Government before it was put in final form. He considered this as absolutely essential in view of the fact that as he saw it, American companies and capital could and should play the major part in the development of Mexican oil resources so far as foreign capital is concerned.

In this connection the Minister made some interesting observations with regard to the negotiations under progress with Great Britain for the settlement of the expropriation of the British and Dutch companies and I will refer to this in another communication. It is interesting, however, to note that from the Minister’s conversation, it [Page 475] was obvious that he is of the opinion that Mexico’s oil policy must be more closely coordinated with that of the United States than with that of any other country. The Minister is deeply appreciative of the importance of Mexican oil resources and reserves as a matter of continental security and also as a matter of primary concern to us because of our rapid exhaustion of our reserves due to the tremendous amount of oil we are putting into the War effort. I gathered from his conversation that the attitude towards American capital and American companies was favorable and that the Mexican Government would look with more favor on American capital and companies in this relationship with Pemex than that of other countries.

In this connection I may say that I have endeavored in a very proper way to emphasize to various officials of the Mexican Government the importance which I attach to our companies being given a chance and perhaps preferential treatment but at least a first chance in view of the fact that in many respects they are in a better position to aid in the development of Mexico’s oil resources than those of any other country. I feel sure that the President and the Minister of Foreign Relations share this idea. I am not yet certain to what degree it is shared by other members of the Government.

The Minister stated that he realized the essential importance of Mexico’s reaching rapid action on this matter and that he would do everything to facilitate the formulation of a statement of major oil policy. He gave me the hope that the matter was developing in a very satisfactory way and that he would soon have “very good news” for me.

He understands that it is my intention to leave here around January 10 or 11 for a two weeks’ stay in Washington and he said that he hoped that before I left I would have some very definite and favorable information which I could transmit to the Department at that time.

The Department will understand that my leaving this informal memorandum hereto attached5 with the Minister does not undertake any commitment for our Government whatever as I made it clear that the memorandum had been prepared for my own guidance only during my conversation with him and that I was leaving it with him specifically with the understanding that it was an informal and unofficial document which might be of some use to him in the consideration he would give to our conversation of it.

Respectfully yours,

G. S. Messersmith
  1. See instrcuction No.1336, August 6, 1942, to the Ambassador in Mexico, Foreign Relations, 1942, vol. vi, p. 528
  2. See footnote 84, p. 458
  3. Not printed.