Memorandum by the Secretary of State to President Roosevelt

The L. M. Ericsson Company of Sweden which owns and operates one of the two telephone systems in Mexico, has made a firm offer to purchase the International Telephone and Telegraph Corporation’s interests in the Mexican Telephone Company with a view to consolidating the two telephone systems, presumably under Swedish management.

From time to time various proposals have been considered within this Government whereby the Swedish telephone system in Mexico would be purchased by the I T & T and merged and operated as a unified system by that company. These proposals have not materialized, partly because of certain objections of the Attorney General. It [Page 1289] is my understanding that you would favor Mexican participation in any consolidation of the telephone systems in Mexico in which American interests were involved.

Ambassador Messersmith has made the following recommendations in which the Department of State concurs.

The interests of the United States and of the Western Hemisphere would be afforded greater security and would be better served if such a vital means of communication as the telephone system in Mexico were entrusted to Western Hemisphere interests. Accordingly, it is recommended that overtures be made to the Mexican Government under which an American company, possibly the I T & T, would enter into arrangements approved by the United States Government, with the Mexican Government for the consolidation and the operation of the telephone facilities in Mexico under one company. Such a merger may require at least a measure of financing through the Export-Import Bank.

In Ambassador Messersmith’s opinion the Mexican Government is definitely attached to the idea of hemisphere security and would prefer to enter into such a merger with an American company rather than a Swedish concern.

The matter was recently discussed by Under Secretary Grew and Ambassador Messersmith with the Attorney General who advised them that in the light of the information which they furnished him, he would not be inclined to interpose any objection to a loan to the I T & T by this Government for the purpose of buying the Ericsson Telephone Company in Mexico. A copy of Mr. Biddle’s letter of December 19, 1944, is attached.56

I believe that in the national interest of the United States and the interest of the security of the Western Hemisphere the plan suggested by Ambassador Messersmith should be placed before the Mexican Government. I would appreciate an indication of your approval.57

E. R. Stettinius, Jr.

[In a letter to Secretary of Commerce Jesse Jones dated January 8, 1945, the Secretary of State suggested that Mr. Jones discuss with officers of the International Telephone and Telegraph Corporation the next steps to be taken, including a United States loan to the I. T. & T. for the purchase of the Ericsson Telephone Company, negotiations with this Swedish concern, and submission of the details of the proposal to the Mexican Government through the American Embassy in Mexico (812.75/12–1944). When Ambassador Messersmith [Page 1290] inquired in a letter of March 13, 1945, concerning the progress of such negotiations, he was informed in Department’s letter of March 29, 1945, that the Treasury Department seemed to have misgivings about the whole proposal, and the officers of the Export-Import Bank, though in principle agreed to the plan, were being delayed in action by the impending replacement of the Bank’s president, Warren Lee Pierson (812.75/3–1345). Later memoranda in the State Department files indicate that by September 1945, despite further urging of the proposal by Ambassador Messersmith, the Department of Commerce and the Export-Import Bank had decided not to extend loans to the Mexican Government for purchase of the two companies, and by March 1946 the International Telephone and Telegraph Corporation had been released by the State Department from a proscription against the sale of its Mexican subsidiary. (812.75/8–2745, 3–146)]

  1. Not printed; in this letter, dictated in the presence of Messrs. Grew and Messersmith, Mr. Biddle withdrew his objections to the proposed merger and loan (812.75/12–1944).
  2. Memorandum returned by President Roosevelt with the following notation: “ERS Jr, OK, FDR.”