Foreign Relations of the United States, 1949, The United Nations; The Western Hemisphere, Volume II

812.51/8–1849

Memorandum by the Assistant Secretaries of State for Economic Affairs (Thorp) and American Republic Affairs (Miller) to the Secretary of State

confidential

[Washington,] August 18, 1949.

Since the receipt of the Mexican reply, withdrawing their request for a loan in view of the conditions specified in our earlier aide-mémoire, there have been no formal developments with the Mexican Government on this matter. The Mexican Ambassador has indicated informally that his government is considering compromise proposals. It is also understood that the President of Mexico¹ in his annual report to the nation will incorporate statements designed to facilitate agreement between us. Meanwhile it has been learned unofficially that the Mexican Government is continuing actively long-standing negotiations with one or two additional U.S. oil companies on contracts similar to the Pauley contract for the conduct of exploration and development operations in Mexico.² The signing of such contracts would meet one of the conditions stipulated in our note. It is not believed that any further steps should be taken on our part until we hear from the Mexicans.

Attached is a Memorandum of Conversation³ between Mr. Edwin M. Martin of ITP and Congressman Grosser, in which the position of the Executive Branch on an oil loan to Mexico is reaffirmed. Congressman Crosser asked that you be informed that he still considers the action proposed highly undesirable, will urge the Mexican Government not to accept a penny of U.S. money on this basis, and felt himself free to take such measures as he saw fit, including possibly public statements, to secure a reversal of the present position. Any such statements will be focused primarily on the State Department, which he considers to be responsible for persuading the rest of the Executive Branch to adopt this position.

It should be noted that Congressman Crosser did not suggest that he would again raise the issue with the White House. On being told that the position taken with the Mexican Government had been approved as to its principal points by the White House, he expressed the view that the President could not have been properly briefed as to the nature of the proposal he was approving.

1. Miguel Alemán Valdes.
2. The “Pauley contract” refers to an agreement reached on March 5, 1949 by Pemex with the Compñaia Independente Mexicana-Americana (CIMA), with which American financier Edwin Pauley was affiliated. The contract was mentioned in the U.S. aide-mémoire of July 6, p. 675.
3. Not printed.