812.659/66
The Ambassador in Mexico (Messersmith) to the Assistant Secretary of State (Acheson)
Dear Dean: As you know, the American Cyanamid people have been down here talking with the Mexican Government for some months about an arrangement through which the American Cyanamid would take over certain operating work for the Mexican Government in connection with some of the chemical and drug firms taken over by the Mexican Government from the German firms under our proclaimed list practice and that of the Mexicans. I will not go into detail with regard to these arrangements because our despatches and letters to the Department cover the situation from here and I know that the Department has been giving careful consideration to this matter as indicated by its telegrams to us.
The arrangements have reached the point where the American Cyanamid and the Mexican Government are on the point of signing a contract but the American Cyanamid does not feel that it can do so if our Government raises any objection. We have now a telegram from the Department38 to the effect that the alien property custodian would be willing to enter into certain conversations with the Mexican authorities to the end that he and we would be willing to lend our collaboration. I am authorized by the telegram to make this suggestion to the Mexican Government if I see fit. Bursley, Lockett and I have gone into this matter very carefully from time to time and again on the basis of the last telegram which we had yesterday. We are all of the opinion very definitely that it would be inadvisable to take up this matter with the Mexican Government in the [Page 500] form suggested in the telegram. It would be equivalent in one way or another, directly or indirectly, in [to] our going into business with the Mexicans in this drug and chemical field and I know that the Mexicans would not wish this and I feel sure that they would resent the suggestion. Although they have not said anything to us directly, we know indirectly that they are not happy or at least that the American Cyanamid has had to submit all of its arrangements to our Government. There are those in the Mexican Government who believe that this is equivalent to our interfering in an internal Mexican affair. We have made it clear to the Mexican authorities and I am sure the responsible ones understand that our only interest was from the point of view of the American Cyanamid Company which could not enter into any arrangement as an American company which would be found objectionable to our Government as it would cause difficulties for the American Cyanamid at home. They thoroughly understand this now.
So far as we can see there is nothing monopolistic involved in the arrangements which the American Cyanamid is entering into with the Mexican authorities. I think from our point of view it is a very desirable arrangement for it is the only sure and definite way that I see that we will definitely eliminate these German firms from the drug and chemical business in Mexico in which they are so strong. The Mexican Government of course during the war has undertaken to rim and is operating these companies independently of the former German owners but these firms are difficult to run and require technical and administrative personnel which it is difficult to furnish from here alone. There is a possibility that if the Mexicans run them on their own that at the end of the war in some way or other these firms may get back into the hands of the Germans whether the Mexican Government would push it or not.
If the American Cyanamid comes in under the contract, of which the Department has a copy,39 they will be able to see that these firms run successfully. This will definitely assure the elimination of the Germans from this important drug and chemical field. It is therefore 100% to our advantage.
I can see that there are certain American drug firms at home which may be bringing pressures on the Department because they fear monopolistic practices, etc. For some of these drug firms, which I believe are bringing this pressure, I have no sympathy whatever for they were willing to play with the Germans up until the last minute and probably would be willing to play with them again if they had a chance. I can not see myself anything dangerous to our own drug firms in the proposed arrangement.
[Page 501]One thing is sure and that is if we try to open this question with the Mexicans of the alien property custodian entering into the picture, the Mexicans will resent it and we will not be able to make any progress. If we press an arrangement such as the one the alien property custodian has in mind, the arrangement with the American Cyanamid will break down and we will have confusion and the probability that we will only be creating a problem for ourselves in the drug and chemical field at the end of the war.
I am sending you herewith a copy of a despatch with which is transmitted a memorandum by Lockett,40 Economic Counselor, commenting on the Department’s recent telegram and with which memorandum Bursley and I are in complete accord. I would strongly recommend that as this contract between the American Cyanamid and the Mexican authorities is ready for signature that you inform us or the American Cyanamid that our Government has no objection to the American Cyanamid entering into this contract. I think this should be done without delay as any delay will not do us any good here and will, I believe, be disadvantageous to our interest.
I have taken the liberty of writing you directly about this as I think a decision should be made without delay as delays can only be injurious to us. If we do not approve this project, the Mexicans will unquestionably consider us as having sabotaged it when they entered into it in all good faith and have tried to act in good faith and I believe have done so and when they have been definitely under the impression that our Government saw no reason why they should not consider such an arrangement with the American Cyanamid.
With all good wishes [etc.]