Memorandum by Mr. Charles W. Kempter of the Office of Lend-Lease and Surplus Property


For the confidential information and guidance of interested United States Government officials and offices there are transmitted herewith [Page 1475] copies and/or translations of certain notes exchanged between the American Ambassador in Mexico City1 and the Acting Minister for Foreign Relations of the Government of the United Mexican States2 by means of which there was consummated and made effective The Mexican Lend-Lease Settlement Arrangement of February 24, 1951.3 providing for the re-scheduling of the repayment responsibility of the Government of Mexico, in order that there might be reached a final settlement of those defense aid obligations arising from the general terms of the basic Mexican Lend-Lease Agreement of March 18, 1943.4

Under the terms of this Settlement Arrangement, Mexico assumes the payment to the United States of $12 million over a ten year period. Amortization payments of $1 million each are scheduled for the first three years and of $750,000 each for the following three years. The balance thereafter, in the amount of $6,750,000, becomes payable in four equal installments covering the final four year period.

The terms of reference require payment in United States dollars but give this Government the option of drawing Mexican pesos in lieu of any scheduled dollar payment in order to meet United States foreign currency requirements in Mexico. To that end, an Embassy note,5 addressed to the Foreign Office of Mexico following the signing of the Settlement Arrangement, informed the Mexican Government of the United States decision to exercise its option and receive Mexican pesos in settlement of the first six scheduled payments.

This Settlement Arrangement further provides for the suspension, by Mexico, of payments after five years if, by that time, there have not been reached final settlement terms concerned with an outstanding Mexican claim6 which already has been accepted by this Government.

Also included and made a part of the Settlement are the customary provisions covering exchange rates guarantees, restrictions on lend-lease [Page 1476] retransfers and the protection of the rights of American patents and trademarks owners.

[Here follows a list of attachments.]

  1. William O’Dwyer.
  2. Manuel Tello.
  3. The Mexican Government’s notes of December 18, 1950, and February 24, 1951, and a copy of the United States note of the latter date were transmitted to the Department of State under cover of despatch 2141, February 26, 1951, from Mexico City (none printed, all filed under Department of State decimal file number 712.56/2–2651).
  4. For text, see Foreign Relations, 1943, vol. vi, pp. 397400.
  5. Note no. 743, dated February 24, 1951, not printed (712.56/2–2651).
  6. Reference is to the so-called Railroad Retirement Fund Claim, which arose as a result of the deductions made by the Railroad Retirement Board from the wages of Mexican workers who came to the United States to work on the railroads between 1943 and 1945. The Mexican Government at the time objected to the 3¼% tax deduction, but because of the wartime emergency allowed the workers to accept employment, with the understanding that an agreement would later be sought authorizing the refund of the amounts deducted. In an exchange of notes with Mexico signed at Washington, November 15, 1946, the United States committed itself to try to obtain appropriate enabling legislation which would permit the refunds to be made. For text of the notes, see Department of State Treaties and Other International Acts Series (TIAS) No. 1684, or 61 Stat. (pt. 4) 3575.