Foreign Relations of the United States: Diplomatic Papers, 1943, The American Republics, Volume VI

812.659/67a

Memorandum by the Secretary of State to President Roosevelt

[Washington,] June 10, 1943.

The proposed contract between the Mexican Government and the American Cyanamid Company was brought to your attention by Mr. Biddle’s memorandum of May 26, 1943.⁴⁴ The matter, which for some time has been carefully studied by the interested agencies, was fully discussed on June 3, 1943 during a meeting of the full Board of Economic Warfare, attended by Mr. Crowley. The interested agencies have agreed to present the following recommendations to you: Despite objections to the Cyanamid arrangements, which have troubled all of us, the Mexican Government should be informed that we will not place any obstacle in the way of the Cyanamid deal. At the same time, Mr. Crowley’s offer should be presented to the Mexicans.

The reasons for this decision are largely political in character. We are concerned that disapproval of the Cyanamid deal would be interpreted by the Mexicans as gringo interference and would provoke charges of non-performance of our promises to assist in Mexico’s replacement problems. But the strongest reason is the fear, shared by all of us, that disapproval—after protracted negotiations between Cyanamid and the Mexicans—will lead to the abandonment of effective Mexican action with respect to Axis businesses. This development would not only jeopardize important war objectives but would also facilitate the post-war re-emergence of German economic domination in Mexico.

It does not seem likely that the Cyanamid arrangements will set a pattern for the other American republics. In those countries in which replacement plans are developing—for example, Brazil and Colombia—the trend has been toward individual reorganizations and not toward big combinations. These other American republics are afraid of concentrated economic power and do not have the Mexican tendency toward large, state-controlled enterprises.

Since Mr. Crowley’s companies can be instruments of governmental policies, it seems desirable to bring his offer formally to the attention of the Mexicans. As indicated in the instruction to Ambassador Messersmith, Mr. Crowley’s proposal seems preferable to Cyanamid’s since his companies can wage economic warfare without a private company’s concern for its stockholders interests. However, in order to avoid suggesting Mr. Crowley’s proposal in a manner which might be considered coercive by the Mexicans, it appears best to couple the counterproposal with a statement of “no objection” to the Mexican-Cyanamid plans.

I am attaching a proposed instruction to Ambassador Messersmith and note for transmittal to the Mexicans,⁴⁵ which follow the recommendations made by the full Board of Economic Warfare and which have been approved by the Vice President,⁴⁶ the Attorney General, and the Alien Property Custodian. The note disclaims responsibility for satisfactory performance by Cyanamid and points specifically to the antimonopoly clause in the proposed contract. The note has been drafted with a view to meeting any domestic criticism which may develop and to giving us a basis for protesting to the Mexicans should the operations under the Cyanamid contract actually involve restraints on trade.

The attitude of the Mexican Government makes a prompt decision necessary. Mr. Wayne Taylor,⁴⁷ who is now in Mexico, is also extremely anxious for a prompt decision in order to avoid embarrassing his mission.

Cordell Hull

44. Not printed; it recommended a plan of the Alien Property Custodian as a guarantee against monopoly and against the return of German control (812.-659/63).
45. Note not printed. For instruction, see No. 3574, June 24, p. 508.
46. Henry A. Wallace, also Chairman of the Board of Economic Warfare.
47. Under Secretary of Commerce.