The Ambassador in Mexico (Messersmith) to the Secretary of State


Dear Mr. Secretary: I wish to refer to my secret letter of July 21,76 in which I reported on a conversation which I had with Dr. Padilla last week in which he set forth to me in full his conversations with the President, with Secretary Ickes and yourself on petroleum. In view of the fact that I had been asked by the Department not to discuss petroleum with Dr. Padilla on his return until I had word from the Department of State, you will recall that I listened to what Dr. Padilla had to say and refrained from comment other than saying that I was awaiting some word from the Department concerning his activities in Washington before I could discuss petroleum. Dr. Padilla fully understood that I was not able to discuss this matter without hearing from you and I think he was as much embarrassed as I was. His objective, as he said, was to inform me fully as to what had happened in Washington while he was there and he did not expect me to make any comment.

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The point that I want to bring out is that I do not see where we are going from now. The President and Mr. Ickes have given the Mexican Government definitely to understand through Dr. Padilla that there is a possibility of the Mexican Government receiving a loan for oil exploration and development and that our Government is disposed to give such a loan. Such a loan would have to be in large amount for it would have to run into scores of millions of dollars and I think it would be useless to think in terms of less than one hundred millions of [Page 1348] dollars to begin with and no one knows where we would end up once we started, so far as amount is concerned. The possibilities of repayment by the Mexican Government would be very obscure indeed in view of the nature of the venture.

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With all good wishes,

Cordially and faithfully yours,

G. S. Messersmith
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