812.51/12–1746: Airgram
The Ambassador in Mexico (Thurston) to the Secretary of State
[Received December 23—9:08 a.m.]
A–1713. Last evening I received a note from the Foreign Minister51 transmitting a memorandum from the Minister of Finance,52 dated December 14, 1946, which sets forth the subject matter brought forward by Lie. Beteta in his conversation on December 5, 1946 with Mr. Snyder, the Secretary of the Treasury.53 The note and Memorandum are being translated and will be forwarded as soon as completed.54 The Embassy in the meantime is making a technical and analytical study of the proposals and will forward this as soon as possible. The Embassy recommends that no action be taken or conversations be held with any Mexican officials until its analytical study is received by the Department.
The Memorandum discusses an omnibus, long-term, financing program covering total expenditures of foreign-secured funds during the next 6 years of 900,000,000 pesos ($180,000,000 U.S. Cy), covering certain public works and industrialization projects, many of which are already familiar to the Department. It anticipates that 20-year foreign credits at 4% to cover the projects will be requested at a later date either from the International Bank for Reconstruction and Development or from the Export-Import Bank.
[Page 1004]The views of our Government are sought on these principal points:
- 1.
- The total volume of loans which Mexico may expect.
- 2.
- To what extent the projects are regarded as of a nature appropriate to financing by an international agency.
- 3.
- Whether Mexico’s loan applications would be considered as falling within the scope of Article 4, Section 3, Paragraph C, of the Articles of Agreement of the International Bank of Reconstruction and Development, which provides that parts of certain loans may be made available in gold or foreign exchange.
The Memorandum recalls that Mexico’s foreign obligations are currently being serviced, and that the obligations contracted with the Export-Import Bank are being punctually complied with. It states that it is the intention of the Government of President Alemán to negotiate for the equitable liquidation of the Lend-Lease account.55
It further states that the Government intends to maintain the present rate of exchange between the peso and the dollar, and to maintain the traditional freedom of the exchange market in Mexico. However, because of the rapid drain on the present gold and foreign exchange reserves (which have decreased from $372,000,000 U.S. Cy. to $256,000,000 in the past 8 months, or by something over 30%) a replacement of the funds by means of private capital investments or long-term loans is needed.
Briefly, the “public works” projects are as follows:
- 1.
- Certain irrigation and hydro-electric dams to supplement the Government’s projected investment from its own resources of 1,500,000,000 pesos in irrigation works during the next 6 years. (395,000,000 pesos).
- 2.
- The development of the northwest region of Mexico, to be modeled on the TVA experiment in the United States, including the construction of irrigation dams and hydro-electric plants; the completion of the Kansas City, México y Oriente railway; and the development of the port of Topolobampo. (346,000,000 pesos).
- 3.
- Port works at Manzanillo and Tampico. (49,500,000 pesos).
- 4.
- Development of the Isthmus of Tehuantepec, including a transisthmian highway and an oil pipe line. (129,000,000 pesos).
The so-called “industrial” projects are the following, part of the costs to be financed locally:
- 1.
- A gas pipe line between Poza Rica and Mexico City. (38,000,000 pesos).
- 2.
- Ammonium sulphate plant to supplement Mexico’s need of nitrogenous fertilizers. (37,000,000 pesos).
- 3.
- A coking plant to supplement the needs of Mexico’s steel plants. (18,500,000 pesos).
- 4.
- Electrical and other installations in connection with the Colimilla Dam, owned by the Nueva Compañía Eléctrica de Chapala, which is controlled by the Mexican Government through the Nacional Financiera. (40,000,000 pesos).
- 5.
- A gas pipe line between Reynosa and Monterrey. (14,500,000 pesos).
- 6.
- The modernization of textile plants. (25,000,000 pesos).