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

No. 20,043

Sir: I have the honor to inform the Department that the Minister of Foreign Relations, Dr. Padilla, has handed me a Memorandum, dated September 6, 1944, of which a copy in the original Spanish is transmitted herewith (Enclosure No. 177), as well as a translation thereof (Enclosure No. 2). In handing this memorandum to me the Minister referred to the conversation which he had had with me on his return from Washington some time since. He said that during his stay in Washington, President Roosevelt had indicated that our Government would be prepared to give to the Mexican Government a loan for the development of Mexican oil resources. The Minister recalled to me that on his return he had brought this conversation with President Roosevelt and Secretary of Interior, Ickes, to my attention and he recalled to me that before leaving Washington he had fully informed Secretary Hull of these conversations.

. . . . . . . . . . . . . .

I have not had any instructions from the Department with regard to this matter since the return of Dr. Padilla from Washington and I have, therefore, been under the necessity of refraining from carrying on any conversations with regard to major oil policy with the Mexican Government in the meantime. It was my understanding from the character of the conversations which had taken place in Washington during Dr. Padilla’s stay, and with particular reference to a loan, that the probabilities were that the initiative remained with us.

I was, therefore, somewhat surprised when Dr. Padilla handed this memorandum to me, which is a definite indication that the Mexican Government wishes to discuss the question of a loan.

I consider this matter as of such fundamental importance, not only so far as major oil policy is concerned, but so far as our relations with Mexico are concerned, that it will be necessary for me to discuss the [Page 1349] matter with you and with the President before I can be in a position to enter into any conversations with Dr. Padilla and the Mexican Government on this matter which involves so grave and important a decision of policy. I, therefore, informed Dr. Padilla this morning that I was transmitting a copy of the memorandum in question to the Department but that in view of the importance of the matter and being without any instructions, I could not discuss it but that I would discuss it with you during my planned trip to the United States on a holiday. The Minister said that he thoroughly understood and that he would understand not hearing from me about this matter until my return.

As you will recall, I am leaving here on September 25 for a brief holiday trip to the United States and it is my plan to be back here during the first days of November. I shall be in Washington October 2, 3 and 4, during which time I hope to have the opportunity of discussing this important matter with you and if you think desirable, with the President.

Dr. Padilla when he handed me this memorandum said that he had not made any reference in the memorandum to the question of setting up a certain part of Mexico’s oil reserves to be used only in time of war. He said that the Mexican Government was favorably disposed to consider this matter but that he did not deem it desirable to include it in the memorandum. I could, however, say to you and to President Roosevelt, that the Mexican Government was prepared to favorably consider the idea of setting aside a part of her petroleum reserves for specific use in time of war and would also be prepared to enter into detailed conversations in this respect.

In view of the fact that I will have the opportunity of discussing this matter with you in the early days of October, I am not making any comment on this proposal of the Mexican Government in this despatch.

Respectfully yours,

G. S. Messersmith

The Mexican Foreign Office to the American Embassy

During the course of an interview which Licenciado Ezequiel Padilla, the Minister of Foreign Relations of the Government of Mexico, had with his Excellency President Franklin Roosevelt, during the recent visit which the former made to the City of Washington, there was clearly brought out the timeliness and the advisability that Mexico explore her petroleum wealth and plan the means of exploiting it in the most suitable way for Mexican interests and for the defense of the Western Hemisphere.

It was agreed that petroleum is a combustible which must be considered [Page 1350] as one of the products of greatest strategic value for the defense of the Americas.

For this reason, his Excellency President Roosevelt and the Minister of Foreign Relations of Mexico, the latter in pursuance of instructions which he had received from President Manuel Avila Camacho, came to the conclusion that there must be secured a full collaboration of North American banking institutions to carry out this exploration and exploitation on the conditions which are set forth in summary form below.

His Excellency President Roosevelt suggested to Licenciado Padilla the advisability of speaking with his Excellency Harold Ickes, the Secretary of the Interior. The interview was held with the knowledge of his Excellency Cordell Hull, the Secretary of State, who was kept informed of these conversations in all their details.

In order that the Department of State of the Government of the United States of America may officially consider the conditions under which the Government of Mexico will accept the collaboration of North American capital in the development of the petroleum industry, the Minister of Foreign Relations permits himself to present the following proposals:

  • First—The program for the operations intended to develop the Mexican petroleum industry will continue to be carried out, as up to the present time, by the Government of Mexico through the proper agencies; the Government of Mexico will also determine the rate at which such exploration and development should be carried forward.
  • Second—Upon request of the Government of Mexico, a North American banking institution, which might be the Export-Import Bank, will advance—in installments—to Petróleos Mexicanos a considerable long term cash loan when the resources of the Government of Mexico are insufficient.
  • Third—This loan will be interest bearing, which would be moderate and regulated in the line of the object for which the loan is intended.
  • Fourth—After meeting domestic requirements of Mexico, Petróleos Mexicanos will agree to cover the amount of the loan, with the available surpluses of crude petroleum, and preferentially in derivatives of petroleum in the proportion which will be agreed upon. In due course there would be determined the form of estimating the domestic requirements of the country with the objective of defining correlatively the surpluses which can be earmarked for exportation. In the same way would be fixed the norms for the determination of the price of the products which are to be delivered.
  • Fifth—The interest would be paid on their respective dates of falling due.
  • Sixth—Petróleos Mexicanos, in accord with the banking institution under reference, if the banking institution so desires, will engage the [Page 1351] services of technicians and specialists in the different branches of petroleum exploration and exploitation. Petróleos Mexicanos will study with pleasure any suggestion in this sense which the above-mentioned banking institution desires to make.
  • Seventh—In connection with the representations which Petróleos Mexicanos makes to the proper North American authorities to acquire machinery and the equipment necessary for carrying out the project herein described in general terms, it will gratefully receive any co-operation which the banking institution may extend to it in this sense.
  • Eighth—Should the points which this memorandum contains be approved, as a base of discussions by the Government of the United States, conversations can be held in this capital with the object of duly implementing it.

  1. Spanish text not printed.