The Acting Secretary of State to the Ambassador in Mexico (Thurston)45

No. 15

Sir: On March 4, 1946, the Department wrote to Colonel Sosthenes Behn, President of International Telephone and Telegraph, releasing his company from the request that the Department had made on January 9, 1945, that the IT&T not sell its Mexican properties to the Empresa de Teléfonos Ericsson. This was the result of a decision that the Department would not sponsor on general security and foreign policy grounds an Export-Import Bank loan to assist IT&T to acquire the Ericsson interest in the latter’s Mexican properties.

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The Department had written the letter of March 4th to Colonel Behn only after receiving letters from the War and Navy Departments46 indicating that those Departments did not feel that sufficient justification existed on national security grounds for the United States Government to give financial support through the Export-Import Bank for this transaction.

Shortly after the March 4th letter was sent to Colonel Behn, high officials of the War and Navy Departments called on Assistant Secretary Braden and explained orally that their earlier letters had not made clear their very real security interest in bringing about the elimination of nonhemisphere ownership of communications systems in this hemisphere. Following this meeting the Secretaries of War and Navy wrote to the Secretary of State expressing this security interest.

Mr. Braden made no commitments to the Army and Navy as to State Department opinion on their new recommendations other than to say that the Services’ point of view would be considered if the question were brought to the Department’s attention by the Export-Import Bank. So far this has not occurred.

If the Mexican Government or officials of the IT&T raise this question with the Embassy they should be informed that, although general discussions of the question of hemisphere security have taken place within the American Government, no actions or decisions reversing the previous position have been taken on the question of financing, through the Export-Import Bank, the acquisition of the Ericsson interests by the IT&T.47

Very truly yours,

For the Secretary of State:
Wm. L. Thorp
  1. Mr. Walter Thurston assumed his duties as Ambassador in Mexico on June 17, 1946.
  2. Letters of February 6 and 2, respectively, not printed.
  3. Ambassador Thurston informed the Secretary of State in despatch 667, August 2, 1946, that President Avila Camacho had informed Licenciado Luis Cabrera, the local attorney for the Mexican IT&T interests, that “he did not consider the merger of the two telephone Companies desirable” (812.75/8–246). In despatch 864, August 20, from Mexico City, Ambassador Thurston reported that a formal notification of the disapproval of the contemplated merger of the two companies named had been received by the Ministry of Communications from President Avila Camacho (812.75/8–2046). The Acting Secretary of State advised Ambassador Thurston, in instruction 414, October 2, 1946, to take no further action in this case, concluding, “in the circumstances this case may be considered closed.” (812.75/8–2046)