The Acting Secretary of State to the Embassy in Mexico

No. 460

Sir: Reference is made to the Embassy’s despatches No. 1464 of August 31, 1948 and No. 1531 of September 10, 19481 on the subject of the Mexican Government’s lend-lease indebtedness to the United States.

It is noted that a formal Note, based upon the draft proposal transmitted as an enclosure to the Department’s instruction No. 330 of July 26, 1948 was addressed by the Embassy to the Mexican Foreign Office on August 18, 1948 and that a reply is expected soon.

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The Department notes with satisfaction that since the approval of a Constitutional Amendment has cleared the way for the acquisition by foreign governments, including the United States, of property in the Federal District for Embassy purposes the Mexican National Government will take steps to cause the State legislatures to expedite the passage of similar amendments which will permit the acquisition of other properties outside the Federal District for foreign buildings purposes.

The Department regrets that it is unable to modify its previously announced position regarding the unsuitability of the Calle Bucareli property to the buildings program. Since that program will eventually involve the expenditure of a comparatively large sum of money by this Government it is most important that care be exercised in the selection of sites which will be both suitable to our needs and compatible with our long-range objectives.

The Department, while prepared to give thorough consideration to any properties of Mexican Government ownership, cannot and will not make any prior commitment to eventually purchase any such property or properties. The success of our program is dependent upon the acceptance by the Mexican authorities of those terms expressed in the text of the settlement arrangement proposal which provide for and permit direct negotiation with private owners of properties by representatives of this Government. Of course, should any given circumstance warrant, consultation with Mexican Government officials would be in order.

In the meantime, pending favorable action by State legislative bodies, there would appear to be no further legal obstruction to impede immediate activation of the buildings program in the Federal District. Consequently, it is important that further delaying tactics on the lend-lease settlement by the Mexican authorities be emphatically discouraged. The question raised on the total amount of the “treaty” lend-lease indebtedness is irrelevant as all billings sent through the Mexican Embassy in Washington by the Department have been supported in the customary manner by fully documented statements of accounts. Back of these, of course, are vouchers held by the various agencies and departments of our Government, bearing the signatures of Mexican officials in acknowledgment of the transfer of materials. It should be understood that the Department’s decision to reduce the overall actual amount of the lend-lease account to round figures was, and is conditional upon the anticipated acceptance by the Mexican Government of terms approximating those contained in the draft proposal; any widely varying counter proposal will necessitate reconsideration of that amount and will also take into consideration the still unliquidated [Page 636] status of such other contingent obligations as cash reimbursement accounts long past due on the books of the Treasury Department and the matter of the request for return of lend-lease copper which has gone unheeded by the Mexican authorities for the past several years. The proposal, as made, is clear cut in its terms and method of payment and is not confused by the introduction of extraneous accounts which are not and never were a part of the lend-lease program. This would refer, among other things, to the matter of wages withheld from Mexican wartime workers in this country for the Railroad Retirement Fund which has already been answered in the Department’s instruction No. 330 as there has been no change of status since that time.

The Department desires to put the foreign buildings program into active operation during the coming year as there is a pressing need for providing United States Government owned office facilities and residential accommodations in Mexico. The proposed draft specifies that the initial payment under a settlement arrangement be made on February 15, 1949, with proportionate quarterly amortization payments thereafter. The Department desires that these payments be made as proposed and, also, that the reservation of the right of this Government to exercise its option of calling for acceleration of payments be retained.

In pressing your negotiations with the Foreign Ministry it should be carefully held in mind that failure to reach a satisfactory settlement arrangement during the earlier stage of the present session of the Mexican Congress may prove prejudicial to the Department’s defined objectives as any delay which would postpone the authorization of an immediate appropriation of funds for a lend-lease settlement might conceivably mean that it would be at least another year before such moneys would be made a part of the Mexican budget.

For the Embassy’s special information, aside from one of the smaller countries whose lend-lease indebtedness is well under $100,000 and which nation has been severely handicapped by internal difficulties, the Republic of Mexico is the only country amongst all of the American republics which received lend-lease aid which has not as yet made at least a substantial reimbursement on its lend-lease indebtedness. By the terms of the Lend-Lease Agreement signed on March 18, 1943, final payment on Mexico’s lend-lease indebtedness is due on January 1, 1949. The character of the proposal now made to the Mexican Government, extending and otherwise alleviating the burden of responsibility resting upon that Government, should be taken as a token of friendly consideration on the part of the Government of the United States based upon an appreciation of Mexico’s serious financial problems, and it is believed that there is now offered a formula for payment [Page 637] fully within the means and ability of the Mexican economy to discharge.

The Embassy is requested to continue its representations before the Mexican authorities in this matter which now includes the early passing of appropriate amendments by the several State legislatures to permit the carrying-out of the full range of the foreign buildings program within the shortest practicable time.

Very truly yours,

For the Acting Secretary of State:
Garrison Norton
  1. Neither printed.