The Ambassador in Mexico ( Messersmith ) to the Chief of the Division of Mexican Affairs ( McGurk )
[Received August 1.]
Dear Joe: I have received your helpful confidential letter of July 28, stating that you have my letters of July 22 and July 2520 reporting on the present status of the movement of freight cars between the United States and Mexico, and in regard to the control which the A. A. R. has been exercising. You recall that I stated that Dr. Padilla had asked me to take up this matter with the Department and with Colonel Johnson. I forwarded you with my second letter under reference the original of a letter from Dr. Padilla to Colonel Johnson, which I note has been delivered, as well as copies of my letters.21
Since writing you on July 22 and July 25, I have been sending you, I believe, daily reports covering the movement of cars and you will note that constantly since July 1 the Mexican railways are delivering daily to the United States more American cars than they are receiving, and that the balance of cars returned over those received is consistently favorable. You will also note that the number of cars being returned loaded instead of empty is increasing in volume. This movement of cars north, empty and loaded, means a very real effort on the part of the railways here. I do not have the figures for today before me, but I am sure that the number of American cars today in Mexico must be something under 8000, which is a very considerable reduction from the 9400 cars which were here around July 1.
It is good of you to give me the full information which you do in your letter and it is very helpful to me. I will not endeavor to comment fully today, but there are a few points which I wish to clarify.
The fact remains that it is the A. A. R. which is carrying through this control and which is determining what shall be shipped and what [Page 1257] shall not be shipped, and that is the assumption of a very serious responsibility by a private organization. There is a good deal of dissimilarity between the functions of the A. A. R. in the United States in the functions it carries through in the distribution of cars among the American railways and in the exercise of this function as it affects another country. In the one case we are concerned with an internal matter in our own country, and in the present case we are concerned with the exercise by the railways or an official of the railway association of a function which so definitely affects many aspects of the economic life of another country, and the economic life of another country which is so largely dependent for much of its raw material upon our country. This is a function which I do not believe that any private organization can properly carry through at home, no matter how well staffed it is, and no matter how well staffed it is it should not try to carry it through. I realize the correctness of what you say in your letter, but the facts do not change the fundamental situation, which is that the A. A. R. is exercising a function which definitely affects many aspects of the economic life of Mexico, and which in practice is causing very serious disturbances.
By the same token, our own Government should not exercise this control nor endeavor to exercise it, for it would put us in the position as a government, let us say through the Office of Defense Transportation, of determining what dislocations would take place in the internal economy of Mexico. I am sure that Colonel Johnson, as head of the ODT, would not wish to assume that function. As you very definitely say, it is the function of the ODT to keep goods moving, and it is not the function of the ODT, as it is not of the A. A. R., to determine which industry shall be favored and which shall not.
. . . . . . . . . . . . . .
In your helpful letter, you do not give me any indication as to what the attitude of the Department, of the ODT and the A. A. R. may be with regard to the recommendation which I have made and which the Mexicans have made as a request, that the restrictions be lifted. The only reference to this in your letter is that you believe that the ODT would not be willing to release its pressure on the A. A. R. until the number of cars in Mexico has at least been reduced to 7000. I think this would be an arbitrary attitude to assume, whether it is by the Department or by the ODT or the A. A. R., because none of us have any adequate basis to determine or have made any proper effort to determine what the maximum number of cars in Mexico, considering the traffic, should be. We have simply gone on the basis that there is bad management in the Mexican railways and improper retention of cars and therefore we apply these what can be nothing [Page 1258] other than haphazard, and therefore demoralizing, measures. The number of cars today, as I have pointed out, is already under 8000, and it has been reduced to this since July 1 from something over 9400. This should be adequate basis for the ODT and the A. A. R. to eliminate the restrictive loading measures, and this in my opinion is what should be done in our interest.
You do not make any comment on the possibility of Colonel Johnson coming to Mexico City I think it would be a good thing for him to do. I repeat that I know it is difficult for him to get away, but if he cannot get away then he should send someone in his confidence down here and whose word he is willing to take.
You make some suggestions that a certain procedure could be worked out similar to one used in the United States with respect to car loadings. This is something which would have to be gone into very carefully, and it should be gone into with the Mexican railways and with the Mexican Government, and its officials here, not in the United States but here, for it is here that we have the problem and it is here that it can be studied. I therefore repeat two recommendations which I hope may be acted upon immediately and favorably by the Department and by the ODT and the A. A. R. I wish it to be clear that I make them as much in our interest as I do in the interest of the Mexican economy. I recommend:
- That the restrictions be lifted as of August 1, completely.
- That as soon as may be feasible Colonel Johnson or someone in his confidence, and a high official of the proper competence of the A.A.R., come to Mexico City in order to discuss this matter with the Embassy, with our Railway Mission here, with the Mexican railways and with such Mexican Government officials as it may be deemed desirable for them to contact in this study of the matter. If any form of restrictive measures should again be necessary, the only way to work out how such restrictive measures should be exercised would be if they come here and talk this matter over.
Mr. Stevens, the head of the Railway Mission, and his principal associates are in accord with my recommendation that the restrictive measures should be completely lifted. Mr. Scanlan, the transportation officer in the office of Mr. Ransom, is in complete agreement with this recommendation.
As the present method of applying the restrictions is obnoxious and as it is causing serious demoralization in industry and economy here, and as the Mexican railways for a period now of almost an entire month have shown such excellent performance in reducing the car balance, I can find no excuse for the continuance of the restrictions except pure arbitrary action, and I am sure that purely arbitrary action is not the basis of procedure of either the Department or of the ODT and the A. A. R.[Page 1259]
I would appreciate your sending a copy of this letter to Colonel Johnson and in his and your discretion also to the A.A.R. I would appreciate information as to the reaction of the ODT and the A.A.R.
With all good wishes,
Cordially and faithfully yours,