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

No. 26,904

Sir: I have the honor to inform the Department that I had a conversation with the Minister of Foreign Relations of Mexico, Dr. Castillo Nájera,13 during the course of which he raised the question of Lend-Lease obligations of Mexico and the general question of Hemisphere security and defense. The character of the conversation, or rather the observations of the Minister, make it desirable for me to report rather fully on this matter and at the outset to give certain background.

With reference to Mexico it will be recalled that there have been two Lend-Lease Agreements; the original Agreement14 which is on the same line as that of the Lend-Lease Agreements with the other American Republics, and a supplementary Agreement which augmented the total of Lend-Lease to be made available to Mexico so [Page 1120] that the total deliveries could amount to $40,000,000 or $41,000,000.16 I do not have the Agreements available and can therefore not give the specific sum but it was one of the two just mentioned. Under the Lend-Lease Agreements with Mexico, according to the latest note transmitted by the Department to the Mexican Ambassador in Washington, under date of August 30,17 the total deliveries by the War Department have amounted to $22,112,101.12 and by the Navy Department to $2,763,370.91, a total of $24,875,472.03. My information is to the effect that up to the present time Mexico has made no payment on these deliveries and technically under certain interpretations of the Lend-Lease Agreement may be considered as in arrears. In the last note of the Department, dated August 30, to the Mexican Ambassador in Washington, it was requested that a check be transmitted in the amount of $4,400,000 as the payment due and in arrears.

In this connection it may be noted that under one interpretation of the Lend-Lease Agreement Mexico could not be considered as in default even though she has not made any annual payments to date. Under this interpretation of the Lend-Lease Agreement Mexico would not be in default unless it fails to liquidate its entire obligation on the last date specified for payment, which is January 1, 1949. This interpretation of the Lend-Lease Agreement is not uniform in the Department but I believe it is justified if we take into account the clear intent of the original documents that payments are to be spread over a period of six years.

I am not able to determine as I do not have a breakdown of the figures available whether the above-mentioned sum of $24,875,472.03 includes deliveries to the Mexican Government of equipment for the Mexican Squadron 201, which participated in the Pacific theatre of the war. In this connection I would refer to correspondence with the Department and particularly to my despatch No. 24,214 of April 28, 1945,17 in which I made it clear that when the arrangements were made for the training and eventual participation in combat of this Squadron that the Mexican Government had been given the definite impression that the cost of maintenance of the men would be chargeable to the Mexican Government as well as the initial equipment but that replace equipment would not be charged to the Mexican Government. The War Department has since taken a completely different attitude on this matter and in the Department’s secret instruction No. 7776 of August 3, 1945,18 acknowledging my despatch No. 24,214 of April 28 and other correspondence regarding the cost of maintenance [Page 1121] of Mexican Squadron 201, I am informed that the War Department in a memorandum, dated July 27, 1945,18 addressed to the Department of State takes the attitude “it is the opinion of the War Department that the cost of maintenance and replacements must be borne under the terms prescribed by the Agreement between the Mexican Government and the War Department”.19 There is no doubt that under the terms of the Agreement as signed by the Mexican Government it has to pay for replacement equipment for the Squadron as well as initial equipment but in this connection the appropriate parts of my despatch No. 24,214 of April 28, 1945 must be borne in mind as they are a loyal and completely correct account of what actually happened in connection with this matter. When the Mexican Government signed the actual Agreement for the equipment of Squadron 201 it knew that the Agreement provided for the payment of replacement equipment as well as original equipment but in order not to delay the going forward of the Squadron it signed the Agreement but it was depending upon our good faith in maintaining the understandings originally entered into between the two Governments with respect to this matter. It is correct that these understandings were oral but the statements were made by responsible officers of our Government and no statements were made by this Embassy except on the authority of responsible officers of the War Department.

[Here follow comments on the program of Lend-Lease aid to the American Republics in general and the recommendation that the entire cost of such aid be borne by the United States.]

Yesterday afternoon while talking with the Minister of Foreign Relations of Mexico, Dr. Castillo Nájera, about the staff conversations held with Mexico some months past and which were most productive, and with respect to the defense arrangement now contemplated between the American Republics,20 and with specific respect to the implementation of the staff conversations by the United States and the other American countries, he referred to the measure which is shortly to be introduced into the Mexican Congress and on the basis of which the Mexican Army will be entirely reorganized along the lines of our own and provision made for its equipment with the same types of material as our own. The Minister went on to say that the revenues of the Mexican Government were decreasing and that certain programs of a social character which the Mexican Government had to go on with were increasingly costly. He said that the cost of [Page 1122] the Army with the best management was increasing and this not taking into account much in the way of equipment. He said that the present burden of the military establishment was already very great. It would be greater. They would have to keep it as small as possible. On the other hand, Mexico wished to collaborate fully in all defense arrangements among the American states as well as to play her part with the other American states in a United Nations security system.

He then went on to say that the Mexican Government had received several notes from our Government with regard to arrears in Lend-Lease payments. He said that the Mexican Government was not in a position to pay at this time without failing to pay other obligations which it believed were more important. He said that the Mexican Government did not wish to be in default on any payment. He said that the Mexican Government would pay for such Lend-Lease deliveries if our Government would eventually determine that such payments would have to be made.

Then he went on to say that when the original agreement for Lend-Lease with Mexico was entered into he had had a conversation with then President Roosevelt. The Minister said that as Mexican Ambassador in Washington he had called the attention of the President to the fact that it might be difficult for Mexico to meet these installments. President Roosevelt had indicated that in his opinion the Ambassador should not be disturbed about this as it was not the intention of the United States Government to call upon the American Republics for such payments, anymore than it would ask the European and Far Eastern Allies to make such payments.

The Minister also went on to say that when Mexico signed the supplementary Lend-Lease agreement, he discussed this matter with then Under Secretary Welles. He said that our Government was willing at the time to fix the amount in the Mexican agreement at $70,000,000. The Minister said that he had informed Mr. Welles that his Government thought deliveries to the amount of $40,000,000 would be adequate during the period of the war. Mr. Welles at the time observed that he did not think it made any difference whether the amount was fixed at $70,000,000 or $40,000,000 as the Mexican Government would not have to pay back any of this amount which might be made in the way of deliveries.

The Minister went on to say that unfortunately there was probably no memorandum of these conversations in the Department but they were as fresh in his memory as though it had been yesterday.

The Minister said that he had just discussed this question of the notes that the Mexican Government had received from us with regard to arrears under Lend-Lease payments and that the President had [Page 1123] said that it was naturally the desire of the Mexican Government to meet all of the obligations which it had incurred and that during his administration it had been most meticulous in meeting such obligations. He was sure that Mexico would meet this obligation if our Government so desired but that he was also sure that our Government was understanding of the financial situation of Mexico and was much more interested in Mexico meeting its obligations under the Agrarian Claims Settlements21 and the Petroleum Settlement22 than under Lend-Lease. The Minister did not say that the President had expressed the belief that we would eventually cancel these Lend-Lease obligations but in view of what the Minister said to me, there was no doubt that he had said the same to the President and that the basic reason for Mexico not having made any payment in any amount is her belief that she should not be called upon for such payment and that the American Republics will eventually be relieved of such payment. The Minister, however, was specific in adding that if our Government would eventually insist on payment that Mexico would pay. I might add in this connection that there is no reason to doubt this statement as the Mexican Government has been most meticulous in meeting its financial obligations in recent years.

It is my definite opinion that those of the American Governments which have paid any substantial sum under Lend-Lease are of the opinion that these sums will be in due course refunded to them. I know it to be a fact that the American Republics consider that the treatment which we have accorded to our Allies in Europe is more favorable than that which we have accorded to them and in fact discriminatory. I think it need not be added that this forms very unfavorable background for those defense arrangements which we know and which the American Republics know are necessary for American security and defense.

[Page 1124]

In my opinion we should give careful consideration among the highest officers of our Government to the following considerations.

Establish it as a principle that the closest inter-American defense arrangements properly implemented are the keystone of our own security and that of the security of this Hemisphere.
That we proceed to fulfill certain definite commitments under Lend-Lease, particularly with Mexico and Brazil to which I called attention in a memorandum now in the Department23 and the deliveries under which would not amount to more than $3,000,000. I believe that the fulfillment of these definite commitments is necessary as a matter of good faith and as a basis for proper defense arrangements among the American states.
That we proceed vigorously with the negotiation of the multilateral defense agreement contemplated in the Acts [Act] of Chapultepec24 and if the other American Republics show a desire, formalize this in a meeting to be held later at Rio de Janeiro.
That we proceed with the completion of the preparation of the legislation of an adequate character for the implementation of the staff conversations as this is basic in any defense arrangements and then see that this legislation is properly presented and pressed through the Congress where I believe it will find a favorable reception if adequately presented.
Begin consideration in the highest policy levels of our Government of the cancelling of all Lend-Lease obligations of the American Republics as a matter of equity and nondiscriminatory treatment and as a necessary basis for the adequate atmosphere for defense arrangements of a lasting character among the American Republics. This will involve the reimbursement in one form or another of certain payments already made by some of the American Republics.

This is a long and somewhat disjointed despatch but I consider that the matter presented is one of the most vital before our Government today. There can be no adequate defense arrangements among the American Republics without the proper political and economic background and the political and economic arrangements are inadequate unless they are supplemented by appropriate and adequate defense arrangements. In the world in which we live and with the leadership which has been thrust upon us we must face these near and long range issues boldly and frankly and we must recognize, in my opinion, as I believe public opinion in the United States recognizes, that the cornerstone of our security and defense lies in this Hemisphere and in the closest collaboration in all fields between the countries of this Hemisphere; and that our usefulness in the world picture and our capacity to carry through our leadership, which has been imposed upon us in the world picture, depends upon our power which in turn depends upon [Page 1125] our presenting in a single front all of the American Republics. The other great powers with which we associated realize their respective situations and are taking the necessary steps in the most realistic way in order to implement their situation. The only hope of peace lies in our acting with equal realism and understanding.

Respectfully yours,

George S. Messersmith
  1. Francisco Castillo Nájera, former Ambassador to the United States.
  2. Signed March 27, 1942, Foreign Relations, 1942, vol. vi, p. 485.
  3. Supplementary agreement and exchange of notes signed March 18, 1943, authoizing total deliveries of $40,000,000, Foreign Relations, 1943, vol. vi, pp. 396402.
  4. Not printed.
  5. Not printed.
  6. Not printed.
  7. Not printed.
  8. Memorandum of Agreement signed January 12, 1945, in Mexico City by Ambassador to the United States Castillo Nájera.
  9. The Ambassador was presumably referring here to the prospective Inter-American Conference for the Maintenance of Continental Peace and Security, postponed in 1945 and held between August 15 and September 2, 1947, at Quitandinha, Brazil.
  10. Agreement for the Settlement of Claims for the Expropriation of Agricultural Lands, effected by exchange of notes at Washington and Mexico City November 9 and 12, 1938, and April 17 and 18, 1939; for text of exchange of notes of November 9 and 12, 1938, and documentation relating to it, see Foreign Relations, 1938, vol. v, pp. 657 ff.; for text of exchange of notes of April 17 and 18, 1939, see Executive Agreement Series No. 158, or 53 Stat. (pt. 3) 2442. See also Claims Convention between the United States and Mexico, signed at Washington November 19, 1941, Department of State Treaty Series No. 980, or 56 Stat. (pt. 2) 1347; for documentation relating to this agreement, see Foreign Relations, 1941, vol. vii, pp. 395397.
  11. Agreement between the United States and Mexico respecting expropriation of petroleum properties, effected by exchange of notes signed at Washington November 19, 1941, Department of State Executive Agreement Series No. 234 or 55 Stat, (pt. 2) 1554; for documentation relating to this agreement, see Foreign Relations, 1941, vol. vii, pp. 371 ff., passim. For further agreement on payment for expropriated petroleum properties, effected by exchange of notes signed at Washington September 25 and 29, 1943, and joint report, see Department of State Executive Agreement Series No. 419, or 58 Stat. (pt. 2) 1408; for documentation relating to this agreement, see Foreign Relations, 1943, vol. vi, pp. 585 ff.
  12. Memorandum dated September 28, 1945, not printed.
  13. Agreement between the United States and other American Republics, contained in the Final Act of the Inter-American Conference on Problems of War and Peace, signed at Mexico City March 8, 1945; for text, see Department of State Treaties and Other International Act? Series No. 1543, or 60 Stat. (pt. 2) 1831; for documentation relative to the Chapultepec Conference, see ante, pp. 1 ff.