612.113/266: Airgram

The Chargé in Mexico (Bursley) to the Secretary of State

A–171. At my request Lockett58 saw Finance Minister Suárez on January 14 as a result of my telephone conversation with Mr. Harry Hawkins,59 [Page 1214] in which he stated the attitude of our Government and requested that there be at least a postponement in the effective date of the proposed tariff increase. At the same time I discussed the same subject with Tello60 at the Foreign Office, explaining fully the contents of my conversation with Mr. Hawkins. Tello telephoned to Suárez while Lockett was presenting the matter to the latter. Suárez informed Lockett that the proposed increase in tariffs was for revenue only and formed a part of his plan to halt inflation. He said he had requested Silva Herzog61 to study carefully the entire Mexican tariff and increase duties on practically all items of any importance not included in the Trade Treaty. Suárez stated this was done to avoid violating any commitments with our government and that he chose this form of taxation because of its easy enforcement and in order to take additional funds from circulation. After explaining to Suárez that such a sweeping increase in import duties would seriously affect the trade relationships between our two countries, he said he understood the situation in which it would place our government with reference to other Central and South American countries and therefore he was willing to cooperate with us as far as possible but he emphasized that our government should cooperate with him more fully in helping to solve inflation in Mexico. Lockett told him that the Ambassador62 was also in attendance at the conference with the Secretary in Washington and sent the message that he hoped a deferment in the effective date of the decree would be agreed to by Mr. Suárez.

Suárez said he would recommend to the President63 that the effective date of the decree be postponed 15 days but Lockett requested additional time and he agreed to 30 days. He said he would see the President over the week-end and would advise Lockett or myself of the results not later than Monday.64

With Suárez’ recommendation for a 30-day postponement it is believed that the President will concur as indicated to Mr. McGurk65 over the telephone today. Suárez emphasized that he wished to cooperate with us in this matter of tariff increases, but that the price situation in Mexico is continuing to give the President greater concern, and therefore he requested that there be conversations with officials of our government, with a view to securing greater cooperation along any line that would aid him in his efforts to curb inflation. [Page 1215] In this respect he particularly mentioned the exportation of more goods to Mexico in order to better supply the market and withdraw dollars. He was informed that every indication pointed to a greater flow of exports from the United States during this year.

I will advise the Department immediately upon receipt of Mr. Suárez’ final answer, and await instructions from the Department with reference to exploring further the matter of cooperation which Mr. Suárez emphasized.

Herbert S. Bursley
  1. Thomas H. Lockett, Counselor of Embassy for Economic Affairs in Mexico.
  2. Chief of the Division of Commercial Policy and Agreements; on January 15 he became Director of the Office of Economic Affairs.
  3. J. Manuel Tello, Under Secretary for Foreign Affairs.
  4. Jesús Silva Herzog, Director of Financial Studies, Ministry of Finance and Public Credit.
  5. George S. Messersmith, Ambassador to Mexico.
  6. Manuel Avila Camacho.
  7. January 17.
  8. Joseph F. McGurk, Chief of the Division of Mexican Affairs.