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

No. 24,997

Sir: I have to refer to conversations which I have had during the course of this year with the Department and with the Export-Import Bank with reference to loans desired by the Mexican Government. I do not make reference to the specific despatches in the Department on this matter as they are readily available in its files.

The Department is aware that as a result of conversations which I had with the President of Mexico and with the Foreign Office and later with the late President Roosevelt, Secretary Stettinius, and officers of the Department, and with the Export-Import Bank, the requests of the Mexican Government for loans were fully set forth. A loan was desired for the purchase of railway equipment in the United States for the Mexican National Lines; a further loan for road construction; and a loan for rural electrification.

The Mexican Government expressed a preference that the loan for railway equipment to be purchased in the United States be considered first. As a result of conversations in Washington between the Minister of Hacienda of Mexico, Licenciado Suárez, and Mr. Espinosa de los Monteros of the Nacional Financiera, with the Export-Import Bank a credit of 15,000,000 dollars was extended to the Mexican Government through the Nacional Financiera, the proceeds to be used for the purchase of new equipment in the United States for the National Railway Lines of Mexico. This loan has been completed and the credit is available to the Mexican Government. I may say that this Embassy considers this loan as a sound loan in every respect and a wise one for our Government to extend through the Export-Import Bank.

The Mexican Government indicated that next in preference for consideration was the road loan. It will be recalled in this connection that in 1941, the Export-Import Bank had extended a credit to the Mexican Government in the amount of 30,000,000 dollars to be used at the rate of not more than 10,000,000 dollars a year. The Mexican Government has used 10,000,000 dollars of this credit. Owing to the more favorable position of the Mexican Treasury, the very extensive road-building program of Mexico was carried forward without calling beyond these 10,000,000 dollars on the above-mentioned credit. It may be said in this connection that Mexico has in the meantime carried forward a very well planned road construction program. The roads are well built, at reasonable cost, and the whole program has been very carefully and soundly worked out. It is to the credit of the Mexican [Page 1171] Government that, although it had these 20,000,000 dollars available with the Export-Import Bank, it continued this road construction program out of its own resources.

In view of the less favorable prospect for receipts by the Treasury due to the diminishing of the purchase program of strategic materials, and for other reasons which it is not necessary to go into here, the Mexican Government has found it necessary to have this recourse to further credits. It has, therefore, requested the extension of the 20,000,000 dollar unused credit and an additional 10,000,000 dollars. This Embassy gave its strong approval to favorable consideration by our Government and of the Export-Import Bank to the granting of these credits. I am now in receipt of a letter from Mr. Wayne Taylor, the President of the Export-Import Bank, dated June 16, of which a copy is attached hereto (Enclosure 1).84 In this letter Mr. Taylor states that the Export-Import Bank has decided to renew the 20,000,000 dollar unused credit making it available until December 31, 1946. Mr. Taylor states that the Bank has also approved an additional credit of 10,000,000 dollars, the proceeds of which are to be used for the purchase of road-building equipment and machinery and supplies in the United States.

During a conversation with the President of Mexico on June 20, 1 informed him of the substance of Mr. Taylor’s letter of June 16, and he expressed his very real appreciation of the consideration given this matter by our Government and the Export-Import Bank. He expressed full appreciation of the fact that the 10,000,000 dollar additional credit is extended by the Bank for the purchase of road-building equipment, etc., in the United States. I also explained to him the reasons why the rate of interest was now increased from 3.6% to 4%. The President was particularly appreciative that no restrictions were placed upon the 20,000,000 dollars which represent the renewed credit. I should like to say in this connection that I think the action of the Export-Import Bank in renewing the 20,000,000 dollar credit without restriction was wise and sound and will find its understanding in a favorable reflection in our relationships with Mexico.

[Here follows report on arrangements for signing road-credit loan agreement with Export-Import Bank in Washington and comment by the Ambassador on additional, later loan for rural electrification.]

I wish to express to the Department and to the Export-Import Bank the appreciation of this Embassy for the sympathetic and understanding manner in which the credit for railway equipment and for road construction has been considered. I consider that the action of the Department and of the Bank is a further measure in the consolidation of our relationships with Mexico. The understanding and [Page 1172] sympathetic manner in which the Bank has handled these requests is deserved by the performance of Mexico in recent years in reestablishing her credit and her financial situation, and we have gone a long way in consolidating our situation by our action. The Export-Import Bank has been and is, I believe, going to be one of the most effective instruments which we have to implement and consolidate a constructive foreign policy, and the constructive and sympathetic manner in which the Bank has handled its operations with Mexico has strengthened the prestige of our country in many ways.

Respectfully yours,

George S. Messersmith
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