710 Conference W–PW/2–1345

Economic Memorandum No. 1 by Mr. Merwin L. Bohan, a Technical Officer of the Delegation

Luncheon Meeting Attended by Messrs. Zevada,65 Wiechers,66 Beteta,67 Espinosa de los Monteros,68 Machold, Sanders, and Bohan

In answer to an inquiry as to the resolutions which the American Delegation would be interested in, we provided the members of the Mexican Economic Committee with a copy of the attached outline. All were in agreement with the subject classification but had some interesting observations to make with respect to specific subjects. It should be made clear that the observations reported below should not necessarily be taken as the attitude which will be assumed by the Mexican Delegation, but the Department will find considerable food for thought in a careful study of the various statements made by members of the Committee.

War Time.
Modification of Resolution V of the Third Conference of Ministers of Foreign Affairs. 69 We were questioned as to this modification, and upon explaining the necessity for bringing Resolution V into line with the existing situation, no objections were expressed.
Bretton Woods Resolution VI,70 Declaration of January 5, 1943; 71 Gold Declaration of February 22, 1944. 72 No objection was expressed, and it is believed that the Mexican Delegation will go along with us on this Resolution without raising any questions.
Need for continued Hemisphere cooperation in the winning of the war. No particular interest was displayed in this subject, and there was an evident willingness to reaffirm the position previously taken by the Mexican Government in this regard.
Relation of wartime controls to economic objectives of the American Republics. At this point, the Mexicans started the ball rolling. We were questioned quite closely and asked if this were a liberal trade policy resolution. We answered that liberal trade policies as such were covered in another section of Topic III, our interest in this Resolution primarily being to affirm the intention of the American Republics to do away with wartime controls on trade [Page 103] as soon as practicable. Both Beteta and Espinosa de los Monteros, particularly the former, observed that this was a point in which the Mexicans were exceedingly interested, since it was felt that access to raw materials, covered elsewhere, should be complemented by equality of access to manufactured products, especially machinery. The Mexicans observed that demand for industrial goods in the transition and post-war periods would outstrip supply, and that Mexico, as a raw materials producing country, was exceedingly interested in the situation. Our reply was noncommittal, and we did not go beyond observing that we recognized the problem and that consideration was undoubtedly being given in Washington to questions of ceiling prices and fair treatment of all importing countries. The interest of all members of the Committee, including Zevada and Wiechers, was such that we wished to explore this question with care. From previous conversations with the Mexicans, Machold pointed out after this meeting that the Mexican conception of equal access to manufactured products means a system of controls within the United States which would make available for export a certain proportion of American output, particularly heavy machinery. The Mexicans feel deeply their current experience with regard to textile machinery and do not think that equality of access to a long waiting list represents equality of treatment.
Transition. All agreed that the success of the coming Conference depends upon the manner in which the problems of the transition period are met, and the Mexicans emphasized the need for specific solutions and arrangements. We were at a decided disadvantage in discussing this phase of Topic III, and had to deal in such generalities that the discussion was decidedly one-sided. As a matter of fact, there was an undertone in the Mexican’s approach to this problem of fear that the Conference would merely spawn another batch of resolutions. The Mexicans seemed to be fairly definite in their approach to this problem, although we gathered that there was not yet any unanimity of opinion with respect to specific means for meeting the problems of the transition period. Beteta was spokesman for the group and stated quite categorically that fairly long term government procurement contracts should be continued, especially in the minerals field, if this country and others were not going to suffer serious economic repercussions. The need for commodity arrangements was stressed, coffee again being mentioned in this particular. Our preliminary impression is that the Mexicans may be thinking somewhat in terms of regional commodity agreements rather than global ones. This is a point which must be explored further.
Post War. We explained that the topic mentioned in our outline might well be included in a single resolution or presented in separate resolutions.
We purposely did not explore the Mexican attitude with respect to a reaffirmation of liberal trade policies as these concern quotas, tariffs, et cetera, since we sensed, especially on the part of Beteta, a feeling of opposition. When we reached this topic he immediately observed that he hoped “we did not mean the abolition [Page 104] of tariffs.” Time being limited, we avoided any general discussion pending an opportunity of sounding out individually the other members of the Economic Committee.
International Monetary Fund. The Mexicans are in agreement and will support a resolution calling for the early creation of this Fund.
International Bank. The Mexicans will support a similar resolution respecting the Bank. However, Espinosa de los Monteros made it quite plain that the Mexicans are thinking in terms of inter-American financing of development and that they do not like the idea of having European nations passing on essentially inter-American projects. He pointed out that the Latin American nations and the United States together could not force a favorable decision. Seconded by Beteta, he held forth at considerable length on this point and indicated that while thinking had bypassed the inter-American bank as such, an “equivalent” organization should be contemplated, the RFC72a being mentioned as a prototype. Zevada and Wiechers appeared to concur in general with what Espinosa had said and added that in their opinion, the RFC type of organization should take the form of an inter-American development corporation which should not have only financial powers, but also considerable resources for technical assistance, preparation of surveys, and investigation of projects. In this same connection, just before the luncheon began, Zevada and Beteta, in discussing the Joint Economic Commission with Machold, raised the question as to what kind of an organization was going to take its place.
Food and agricultural organizations recommended at Hot Springs. Merely mentioned in passing. The Mexicans seemed to be entirely agreeable to the early establishment of these institutions.
Principles of economic cooperation. Beteta indicated that the Mexican Delegation was thinking in terms similar to our own in connection with the Economic Charter, and this checks with information previously given us by the Foreign Minister and already reported to the Department.
Increasing standards of living. Keen interest was shown in this topic. Beteta pointed out that there were only two ways of doing this, i.e., either through increasing the real prices of raw materials produced and exported by Latin American countries, or through diversification of production within those countries. He fears that, in the post war, the competition from colonial areas will be exceedingly dangerous not only to the economies of the Latin American countries, but to present living standards and feels that definite steps must be taken to counteract the low wages paid in colonial areas and prevent Latin American countries from drifting back into a form of colonial vasselage. It is clear that as far as Beteta is concerned, and he was not contradicted by other [Page 105] members of the Committee, he is thinking in terms of continental protectionism as a basis of continental unity.
Development of resources, industrialization. This point has been commented upon elsewhere in this report, and further information with respect to Mexico’s ideas will be obtained as soon as possible.
Health and sanitation. Mexico’s agreement was expressed to this point and the feeling expressed that concrete results could be secured through cooperative effort, especially in the field of health and against such general maladies as malaria, social diseases, et cetera.

The Department must realize that this preliminary report makes no attempt to go into any detail, nor does it claim to reflect the considered attitude of either the Economic Committee itself, or of the Mexican Delegation. Machold has arranged for an interview with Mr. Wiechers tomorrow, and is having Ingeniero Serrano72b to luncheon on Wednesday. Just before the luncheon today broke up, it was suggested that rather than attempt to get togeher as a group for the next few days, it might be well if we discussed the various and sundry problems with individual members of the Committee and then meet again, since it was felt that it would be very advantageous if there could be a general meeting of minds before the Conference opened.

One point is increasingly clear to all of us. The Mexicans are going to be very much disappointed if the United States comes to the Conference prepared only to discuss the reaffirmation of liberal trade principles. They are looking for something more, and we are not only going to cause disappointment, but real skepticism as to the value of the inter-American system, if we have not made up our minds and evolved a practical and realistic approach to the problems of the transition period. Furthermore, if we expect to win sincere support for our liberal trade principles and to sidetrack many ideas which run counter to them, we must be prepared by the opening of the Conference to present a program that will establish a well defined and realistic basis which will give assurance that, through the acceptance of liberal trade policies, the problems of both today and tomorrow can successfully be met.

  1. Manuel J. Zevada, Mexican Under Secretary of National Economy.
  2. Luciano Wiechers, Mexican Technical Adviser.
  3. Ramón Beteta, Mexican Under Secretary of Finance and Public Credit.
  4. Antonio Espinosa de los Monteros, Mexican Director General of “Nacional Financiera, S.A.”
  5. For text of the resolution, see Department of State Bulletin, February 7, 1942, p. 124.
  6. Department of State, Proceedings and Documents of the United Nations Monetary and Financial Conference, Bretton Woods, New Hampshire, July 1–22, 1944, vol. i (Washington, Government Printing Office, 1948), p. 939.
  7. For text, see Department of State Bulletin, January 9, 1943, p. 21.
  8. 9 Federal Register 2096.
  9. Reconstruction Finance Corporation.
  10. Gustavo P. Serrano, Mexican Secretary of National Economy and Delegate to Mexico City Conference.