812.51/7–1949: Circular telegram
The Secretary of State to Certain Diplomatic Offices in the American Republics 1
Re application Petroleos Mexicanos loan US funds for development Mex petroleum resources.
Dept and MexFonOff issued joint press release today 4:00 p. m. worded as follows:
“United States and Mexican Government officials have continued their study of the subject of a loan of United States public funds for the development of Mexican petroleum resources and for refining and distribution facilities.
These conversations have not to date resulted in an understanding between the two governments on a basis under which the desired financial aid would be extended.
The conversations have now been suspended at the request of the Mexican Government without prejudice to their resumption in the same spirit of friendly cooperation in which they have been carried out”.
Fol for your own info: Dept proposed to MexGovt in aide-mémoire July 9 that loans would be considered for refineries and pipe lines when larger production effected and if otherwise economically justified provided Mex establishes or clarifies necessary legal basis and actually permits private oil company operations in exploration, development and production. On July 18 MexGovt officially requested loan application be considered as withdrawn. However, MexAmb Washington at same time orally stated his Govt still exploring possibilities toward reaching agreement. Depts position in essence no loans public funds for exploration, development and production petroleum resources abroad as private capital available where terms offered commensurate with magnitude of enterprise and risks involved. This position also applicable to loans for refineries and transportation facilities although USGovt prepared to consider exception in case Mex because of proximity and other factors, should private capital be [Page 686] permitted entry on accepted legal basis and in fact so participates on scale and under terms assuring appreciable increase Mex production of crude.
Further info fol soon by agam or instr.2 Pls airmail local press or other reaction to above quoted release.