Memorandum of Conversation, by the Secretary of State

Dr. Padilla, the Mexican Minister of Foreign Affairs, called at his request. He said that he had talked with Mr. Ickes54 about a Government loan to the Mexican Government for the development of oil in that country, and that he was favorable. The Minister said that he preferred to carry out further steps and undertakings in this connection with the State Department. I said I should offer this explanation in the light of my remarks to the Minister during his call on July 11 in regard to a loan through Mr. Ickes, and that was that there were a number of Government departments which have jurisdiction in part over loans by this Government to other governments or important private organizations abroad; that, for example, numerous governments for some time have been seeking loans from this Government, offering as collateral gilt-edged securities here in this country for reconstruction or post-war purposes and proposing to invest most of it in this country in machinery and other post-war needs; that this Government so far as I last heard had not adopted a policy on this question, one reason being that this Government had a debt of perhaps $150,000,000,000 and when there were vast reservoirs of private capital available the question of whether this Government should launch a policy of Government loans to other governments promiscuously for post-war purposes was a more or less serious question to be decided upon. I said that the Treasury Department had the chief function in making such loans, the Reconstruction Finance Corporation and the Department of Commerce had certain functions, and the State Department had functions to the extent that foreign policy is involved. I said I frankly did not know just what Mr. Ickes’ authority was. The Minister replied that he could fully understand this situation, but that the President had spoken to him favorably about desiring this Government to make such a loan to Mexico for oil development, and that he had authorized Mr. Ickes to take the necessary steps. I said I had not been advised as to [Page 1339] this latest move on the part of the President, nor did I know whether the Treasury Department or the [Reconstruction Finance Corporation knew about the matter. I said that I would be only too glad to clear up this whole matter by conferring with the appropriate parties at as early a date as possible and communicate with him through Ambassador Messersmith.

The Minister said he could not begin to express his appreciation of the consideration shown him on this trip. We agreed that we would watch every opportunity to improve relations between our countries by adopting new policies, new methods and new undertakings to every practical extent, together with constant planning with reference to the nations of the entire hemisphere and our relations and associations.

C[ordell] H[ull]
  1. Harold L. Ickes, Secretary of the Interior.