Foreign Relations of the United States, 1947, The American Republics, Volume VIII

812.51/4–2047

Memorandum by the Chief of the Division of Investment and Economic Development (Havlik) to the Director of the Office of Financial and Development Policy (Ness)

confidential

Washington, April 29, 1947.

Subject: Mexico—Proposed Export-Import Bank loans.

With the exception of the Poza Rica–Mexico City gas line project,⁴⁴ there is no objection to the proposal contained in the Export-Import Bank document dated April 22⁴⁵ that the Board⁴⁶ approve the extension of credits to Nacional Financiera, S.A.,⁴⁷ to finance the dollar cost of certain projects, as follows:

		Current Estimates of Dollar Requirements
2.	Fertilizer plant near Mexico City utilizing Poza Rica natural gas	$5,500,000
3.	Coke oven and by-products plant in Monclova (To supply coke for steel plants at Monclova and Monterrey)	3,600,000
4.	Colomilla hydroelectric power plant and associated transmission lines and pumping stations (To enlarge power output of Chapala Co. which serves power-short area of Guadalajara and vicinity)	3,700,000
5.	Meat, fish, fruit, and vegetable packing	13,000,000
6.	Highway construction	10,000,000
7.	Hotel construction	5,000,000
	Total	$40,800,000

Poza Rica Pipeline

With respect to the financing of the construction of a natural gas pipeline from Poza Rica to Mexico City which is estimated to require $4,200,000 it has been the position of the Department that this project should not be financed by a US Government loan. (See letter from Mr. Clayton to Mr. Martin, dated September 11, 1946, and Mr. Martin’s reply, dated September 17, 1946.)⁴⁸

The interpretation that a natural gas pipeline falls within the category of “commercial development of Mexican petroleum resources” is a narrow one, and may be subject to challenge. However, PED has specifically objected to the pipeline as being contrary to the President’s policy (see copy of memo attached)⁴⁹ and MA informs us that Mr. Braden concurs in PED’s view.

44. This was item No. 1 in the list of tentative projects given in this document.
45. Not printed.
46. The Board of Directors of the Export-Import Bank of Washington.

47. A financing agency of the Mexican Government. On behalf of that Government the Mexican Ambassador had applied to the Export-Import Bank on February 26, 1947, for a series of loans intended to promote the economic development of Mexico and requiring financing in the aggregate amount of $175,000,000. On May 13 the Export-Import Bank issued a press release stating that the Bank was prepared to approve $50,000,000 of additional credits for Mexico to finance the dollar requirements of projects which fully met the Bank’s specifications.

    See press release by the Treasury Department, May 13, 1947, concerning a Stabilization Agreement entered into with the Banco de Mexico and the Mexican Government, printed in Department of State Bulletin, May 25, 1947, p. 1043.

48. For letter of September 11 from the Under Secretary of State for Economic Affairs (Clayton) to the President of the Export-Import Bank of Washington (Martin), see Foreign Relations, 1946, vol. xi, p. 1001; Mr. Martin’s reply of September 17 not printed.
49. PED’s office memorandum of April 28, 1947, not printed; for documentation on policy as set down by Presidents Roosevelt and Truman in the extension of credits to Mexico for development of the oil industry, see ibid., 1944, vol. vii, pp. 1336 ff., ibid., 1945, vol. ix, pp. 1159 ff., and ibid., 1946, vol. xi, pp. 1005 ff.