212. Excerpt From a Memorandum of a Conversation Between the Ambassador in Mexico (White) and the Mexican Minister of Finance (Carrillo Flores), Mexico City, August 20, 19551
Mr. Carrillo Flores then referred to the railroad situation and their recent talks with the Export-Import Bank.
I told him that I had attended a directors’ meeting of the Export-Import Bank while in Washington and that Secretaries Holland and Waugh and Mrs. Hughes were also present. He asked if the World Bank was represented there and I told him that they were not, that there was nobody but directors of the bank and those whom I have just mentioned.
I said the question was brought up whether Señor Carrillo had felt from my talks with him in June that we felt that he should deal with the World Bank exclusively and not with the Export-Import Bank. I said that I had repeated to them that before leaving here for home in April Mr. Carrillo had asked me whether I could give him the answer then, or if not, would I bring him the answer when I returned whether Mexico could feel free to deal with the World Bank in this matter and if they did so, would it cause umbrage to the Export-Import Bank.
I said that I told them Mr. Carrillo had said that Mexico has the best of relations with both institutions and wants to maintain them; that Mexico feels grateful to the World Bank for giving them a loan for rehabilitating the Pacific Railway and also for the timing of their announcement of the 90 million dollar credit for fertilizers and other matters and that also there is an advantage to Mexico in a loan from the World Bank for the railways in that they would be free to purchase materials in any market. On the other hand, they are very grateful to the Export-Import Bank for the financing it has given them in the past and for the financing of the railroads by opening a line of credit of 51 million dollars and for paying some 20 million dollars of back obligations of the railroad under the credit in December which was most effective in raising the dollar reserves up to the 200 million dollar goal. Therefore, they have the best of [Page 678] relations with both institutions and both he and the President were anxious to maintain those relations. Apparently, the World Bank had shown a willingness to study the railway situation and that was what had prompted Mr. Carrillo’s inquiry to me. Mr. Carrillo consented that that was the fact. I said that I had discussed the matter in Washington in May with General Edgerton, who was also present at the meeting in August, and that General Edgerton had told me that if Mexico wanted to discuss a large railway rehabilitation plan with the World Bank, the Export-Import Bank will have no objection thereto and that it would in no wise affect the friendly feeling and attitude of the Bank toward Mexico. I said that General Edgerton had reaffirmed that statement. I told him I had discussed it also with Messrs. Burgess and Overby at the Treasury and they had no objection and they had expressed the thought that the World Bank is perhaps the appropriate institution for such a loan in study because it was more or less set up for that purpose. I said I had reported this to Mr. Carrillo in June and that it was my interpretation that in answering Mr. Carrillo Flores’ question I was expressing the view that I got in Washington that Mexico was at liberty to discuss the matter with whichever of the two institutions it preferred and that his position would not thereby be affected vis-à-vis the other institution.
I said there then ensued a discussion among the Board as to their position at present. I said nearly everyone there expressed an opinion and while all were apparently saying the same thing, it was being said in a little different way, and Mr. Holland had suggested the Bank send him a memorandum so that I could know exactly what the position is and be sure I was interpreting it correctly.
I said that I had just received a copy of that memorandum dated August 122 and I read it to Mr. Carrillo. I said that the position was that the bank had given a credit in 1950 of 150 million dollars to Mexico and they did not want Mexico to feel that they were now unwilling to allot the balance of $23,260,000 to Mexico and, therefore, they were prepared to give consideration to an application from Nacional Financiera for a credit for the benefit of the National Railways up to the amount still unallocated.
I emphasized a couple of times the sentence in the third paragraph of the memorandum reading:
“In considering any such application, the Bank will want to satisfy inself that the program to be financed by the credit will make a real contribution to the improvement of the National Railways.”
Mr. Carrillo said he understood that fully; that, naturally, they would want to know that the money was properly spent and that the money would be of an advantage to the railways and to Mexico.
I said I did not know how this 23 million would fit into the larger program that the Government had in mind. There is no such large program before the Bank—and it is not expressing any opinion on it one way or the other, it is merely saying that at this time it is prepared to consider the allocation to the railways of only the balance of the existing line of credit.
Mr. Carrillo said he understood that and would immediately report the matter to the President. When he was leaving he asked me whether he might have a copy of General Edgerton’s memorandum and I told him that I had but one copy but would have others made and would send him one. This I am doing.
Mr. Carrillo said that Senator Amorós would rather continue with the Export-Import Bank than go to the World Bank because he has dealt with them over a period of years and he and they know one another and he is reluctant to undertake the work of getting acquainted with a new institution but is perfectly willing to do so if the President so desires.
As to his desire to get loans for small power companies, Mr. Carrillo said he would give me the background of that. There are these small power companies, mostly in the northern part of Mexico, who would like to have credits of 100 thousand dollars or so. However, as they are small institutions they cannot afford to send somebody to Washington to negotiate for that amount. He thought it would have a good effect psychologically, if we could broaden the base of lending of the Export-Import Bank so that these smaller companies would also get assistance and not have it limited to just the larger companies. For that reason he would like to have a credit given to the Nacional Financiera which, in turn, could distribute it to the small companies. He was, therefore, very pleased with the last paragraph of General Edgerton’s memorandum saying that the Bank is prepared also to consider an application from Nacional Financiera for credits for the benefit of private electric utility companies of Mexico and said he would report that to the President.
- Source: Department of State, Central Files, 912.712/9–155. Confidential. Drafted by White. Transmitted to Jack C. Corbett, Director of the Office of International Financial and Development Policy, under cover of a memorandum from Ruth M. Hughes of September 1. In her memorandum Hughes wrote: “On August 20, Ambassador White and the Mexican Minister of Finance had a five and one-half hour talk on numerous aspects of United States-Mexican relations. There is attached, in duplicate, a copy of the sections of the memorandum of the conversation which refer to the Export-Import Bank and its dealings with Mexico.” (Ibid.) The source text is printed in its entirety.↩
- Not printed. (Ibid., 812.10/8–1255)↩