Memorandum by President Roosevelt to the Secretary of State

I think Messersmith and some of the people down the line in the State Department are thinking and talking at cross purposes on the Mexican oil policy.

They do not differentiate between oil to be consumed by the public and oil for government purposes.

I am not concerned with the first and I do not think the State Department should be either. As to relations between the Mexican Government and our American oil companies, there is no question of a U. S. Government loan. The whole matter should be handled between the Mexican Government and the American oil companies. It is undoubtedly true that the American oil companies still want to get back the title to their wells, but this is contrary to a very fundamental policy of the Mexican Government.

What I am concerned about is the other question—oil for the ultimate use of the armed forces of the United States—reserves to replace the old policy of naval oil reserves, which were inadequate, and went through the Harding Administration scandals.

The State Department should give every possible assistance by helping to develop for the United States a wholly new reserve. I spoke with Padilla about this and he seemed very favorable.

It is my thought that the United States, with very small expenditure, should aid the Mexican Government in exploring for new oil fields. I am certain that there is far more oil in Mexico than is now known. When a new and adequate dome is found it could be set aside [Page 1347] in toto by the Mexican Government for the purpose of aiding the defense of the Continent. Such a dome should not be drilled except for exploratory purposes, and the whole dome should thereupon be set aside. No oil should be taken out by private companies. No oil should be taken out by the Mexican Government—and oil should be taken out only by the U. S. Government in case of military necessity.
The amount of oil in such a dome can be roughly estimated and the United States could well pay an annual sum to the Mexican Government until the total paid represented the fair value of the oil.
If other domes were discovered in this exploration work, the cost of the American share of the exploration could well be paid back to the American Government for its share, either in cash or in oil.
F[ranklin] D. R[oosevelt]