The Ambassador in Mexico (Thurston) to the Director of the Office of Middle American Affairs (Reveley)


My Dear Jeff: I feel that in my own interests I should tell you that I cleared Bob Eakens’1 telegram 1389 last night only after considerable [Page 699] discussion with him and much revision of the message submitted by him in its original form.2 In the first place, there has been no particular change in my thinking about the oil problem from the presentation of my opinion in reports already submitted, although, of course, no situation remains unchanged very long; and, in the second place, I did not wish the Department to gain the impression either that I was attempting to intrude into the final discussions regarding the oil loan, or that I desire to be called to Washington—the latter, in fact, being the furthest possible from my wishes. As to Bob Eakens’ reference to the lessening in recent weeks of the “political necessity” for an oil loan (a statement which, as he will tell you, he first desired to attribute to me), there can be little doubt. Nonetheless, when I reported to the Department my belief that the failure of the oil loan negotiations last July and the indecent exploitation of that situation by persons here and in the United States had aroused Mexican feelings, I was reporting a fact. The Department’s action in authorizing me, following its receipt of my telegraphic report, to discuss the matter with Alemán and others here, relieved that situation. Consequently, the Department would not be warranted, if it has, in fact, done so, in continuing to believe that the political pressure here is still great.

Bob’s further statement that the need for a loan does not now appear as great as in the past, was, I believe, based principally upon data furnished by Horace Braun.3 I think Braun’s information is accurate and that, consequently, the principal projects on the Pemex program, such as the Salamanca Refinery, the Tehuantepec pipeline, and the Salamanca pipeline, probably can be carried to completion through the employment of funds available to Pemex, either from its own income, or from outside financing, which, I suspect, has been found, probably from the Bank of America people in California.

I am not quite so certain in my thinking with respect to the attitude which the Mexicans would adopt should we proffer them a very small loan, with or without attached conditions. I am disposed to think that their first reaction might be one of resentment based, in the first instance, upon their well-known pride and sensitiveness. As you know, [Page 700] when Bermudez went to Washington early this year, a most injudicious press campaign was launched here, with much talk of a 470,000,000-dollar loan. Later the press reported the reduction of the loan application to 203,000,000 dollars. It is not unlikely that if it were to become known that the loan had finally dwindled down to a mere ten or fifteen million dollars there would be much hostile comment in the press, and an impairment of Bermudez’s prestige, and possibly that of Alemán as well. If, furthermore, it were to become known that we had coupled this comparatively diminutive loan to conditions such as the creation of a more favorable atmosphere for American private enterprise in the field of exploration and development, and actual outcry might result. This is, of course, pure speculation.

The real essence, I think, of my opinion with respect to this entire loan matter is that we should know exactly what we want and so inform the Mexicans—and that we should do so initially orally and not in writing. I likewise feel that there might be great advantage, in so far as any further negotiations are concerned, in dealing with this matter hereafter in Mexico, quite apart from my feelings, which are well known in Washington, that this Embassy should be reinstated in its proper place, from which it was dislodged so inexcusably and so harmfully last year.

If you think anybody would care to hear me expound and elaborate the foregoing views, I would be glad to come to Washington. I may assure you, however, in all sincerity, that I would much rather stay right here.4

Cordially and sincerely yours,

Walter Thurston
  1. Chief of the Petroleum Policy Staff, Department of State.
  2. The text of telegram 1389, November 29, from Mexico read as follows:

    “From Eakens. After studying oil loan problem here am of opinion political necessity loan lessened recent weeks, that political repercussions proffer small loan could be greater than from failure make loan, and that offer small loan accompanied by explicit or implied conditions, unless preceded by clarifying preliminary oral negotiations, might be rejeced. Moreover, Pemex need for loan does not now appear as great as in past as Pemex has already financed most urgent projects including Salamanca pipeline, crude distillation unit Salamanca refinery, certain immediately essential facilities at Poza Rica, and the isthmus pipeline. In addition, first CIMA wildcat appears to have discovered new field and Wiegand has brought in five producers in first six wells drilled.

    Urgently recommended Department consult Ambassador Thurston before taking any action oil loan. Thurston” (812.51/11–2949)

  3. Attaché at the American Embassy in Mexico City.
  4. No decision was made Prior to the end of the year 1949 by the U.S. Government on the question of the Pemex loan.