THE MEXICAN LIGHT AND POWER COMPANY, LIMITED

Transcription

1 H.SIM-*^ - ^-7^ Forma M.L.F. THE MEXICAN LIGHT AND POWER COMPANY, LIMITED (COMPARU MEXICANA DE U7Z T FUERZA MOTRIZ, S. A.) DmiMiMliUIUFK.},. M E L p o c o CABLE ADDRESS ) 2A.0ALLEDEGANTEN0.20. APAR P0STAL j. P. 0. BOX 1 M B I8 ) NEAIco,^, p. May 30» 19U9«PERSONAL Dear Dannie* I have been thinking of you often these days and look forward to seeing you around the middle of June* Jimmy, as I wrote you. is back and apparently things are going well with June and the baby and they expect to be home here before very long I think Jimmy said that they would be here about the middle of June, jimmy is continuing to be most helpful to me here and I am really very proud of him, as 1 know you are* Marion is well and 1 am glad to say that in spite of the too great pressures which I have put on myself I seem to be in good shape* I cannot get back the pounds which I lost during the last six months but that is not a serious matter* 1 really have too much to do here and we are putting too much of a strain on some of our top people in the company, but I am hoping that by the end of the year we will be well out of the heavy seas through whioh Mexlight has been traveling and there is, I think, good prospect that we will be in calmer waters as soon as we get the reorganization plan through and the long-term loan effective. I have been so occupied since my return from London that I am afraid I have lacked in courtesy in writing to Swinton, who was very kind to us in London. I have written hi» a letter of whieh I enclose a copy and which you may be interested in glancing through. I think he is a good friend of Sofina and the associated companies and one in whose friendship and loyalty one can have real confidence* The reference to the notes on the lectures which I gave at the Air War College is based on conversations which I had with him in London and in which he expressed an interest in some of my views on some of the major political problems with which England and our country have to deal. I told him about these lectures and he expressed such an interest therein that I said that I would send him a copy for his purely personal information if he would return it to me. I do not comment further as you are familiar with this material which you read in New York. I have asked him to return the copy to me after he has read it* 1 am telling you about this as he might make reference at some time to having read these notes* 1 have written a long letter to Binder bringing him up to date on things which happened simce I left England, and I sent yem a copy without, I believe, a covering letter* You will not wish to read it as yeu are familiar with the substance but I felt that I had to write him at this length. McCloy D. N. Heineman, Esquire, 38, rue de Naples, Brussels, Belgium*. V(AAACA/l/V\AAJr

2 - 2 MoCloy, I understand, will be leaving the bank to take up his new duties as High Commissioner around July 1 but in this respect I have no information other than what I have read in the newspapers. Naturally he is already clearing his desk in the bank and very much ooeupied with the initial stages of his new duties as High Commissioner* Black, who takes his place in the bank, is a very intelligent man and is very much the banker. During the last year as a result of the study which the bank gave to the loan to the Brazilian company and to our own he is more familiar with Latin America and its probleras and I think somewhat more sympathetic, but I am sure that he constantly has in mind the long period of default of some of these countries in their foreign obligations and the attitudes towards expropriation and nationalisation. This will make him cautious but I think the bank's policies have become pretty well consolidated during McCloy's presidency. I know Black quite well and he is a very competent, intelligent and capable man and I shall see more of him during my stays in lew York and Washington. He has up to noti been more engaged in the placing of the bank's bonds than with other aspects of the problems of the bank* Naturally with MoCloy leaving and Black taking over there is a certain amount of uncertainty in the bank among some of the secondary but important personnel, and this found its reflection last week when our lawyers were discussing some phases of the indenture and of the long-term loan and the reorganization plan with officials of the bank. They were not, I understand, as pliable and forthcoming as they had been and were making unnecessary difficulties. There are certain things in connection with the indenture and the plan which have to be settled in the immediate future and settled right, for we cannot hamstring the company, and it has been proposed that Dean and Ford and E. A. Graydon go to Washington this week in order to get some of these things straightened out at the highest level where full understanding can be got. It is a good idea that they should go down and I wrote a personal letter yesterday, Sunday, to McCloy which I got into the mail the same evening so as to be sure that he had it when Dean, Ford and Graydon go down to Washington this week. I am enclosing a copy of the letter and I sent copies to Dean, Ford and Graydon, and also to Wilmers and Lorii. The letter is self-explanatory. One of the things which disturbs some of the secondary personnel in the bank more than it should is this fluctuation innthe peso. It is, of course, extremely important so far as the country is concerned and so far as the company is concerned, but those efao have to make the decisions with regard to loans know that in the world in which we live these fluctuations in the value of money are inevitable. It was a mistake for the Mexicans not to stabilize about two months ago, in my opinion, when I believe they could have done so with safety at around seven to the dollar. They have let the matter drag out too long and the psychological factor is becoming too important and that of course is dangerous. I think that they will do something about this very shortly. In our rate study on which action must be taken during June so that we can go ahead with the presentation of the reorganization plan, etc., the Mexican authorities know that they have to take into account the peso rate with which the company has to deal. As purely

3 3 As purely of personal Interest to you I am sending you herewith a copy of a letter dated May 11 which I received from Carlos Hevia, who is Minister of Foreign Relations of Cuba and an old and good friend, as well as a copy of a letter which I received from the new Cuban Ambassador here when he arrived to take up his duties» You will recall that Ted Weicker asked me to send a telegram on the occasion of the opening of the Squibb plant in Buenos Aires and that I sent you a copy of my telegram to be used on that occasion* I am sending you herewith a copy of a letter which I received from Per6n in this connection which is self-explanatory. The only important thing about this letter is that he took the trouble to write it when it was not necessary. I have before me your letter of May 19 in which you thank me for the letters which I wrote you on the Argentine and on Spain. We will have an opportunity to talk over these matters affecting Argentina and Spain when I see you is New York, but in the meantime in this purely personal letter Iwant to comment briefly on the second paragraph of your letter in which yen mention what Jaspar, the Belgian Minister in Buenos Aires, said to you recently in Brussels. I have told you already my owa, opinion of Jaspar, who was there while I was in Buenos Aires. He is really an insignificant sort of person and I doubt whether he would carry much weight anywhere and certainly he carries none in the Argentine. I personally have no confidence in him whatever as a man and none in his judgment*! He was always inclined to be bitter when I was In the Argentine because he was treated with scant courtesy by some of the Argentine officials and could make no headway on things that he was taking up. Belgium is a responsible and respected country and the word of the Belgian Minister should carry some weight in the Argentine, but as you know, the personality and form of actuation of a Chief of Mission does not always bear a direst proportion to the country which he represents, and I do not believe that Jaspar has been a good spokesman for Belgium in the Argentine. On the other hand, the Argentine has never paid very much attention to Chiefs of Mission except under special circumstances. With respect to Jasparfs comment that a diplomatic d-marche by the Belgian Government regarding Rosario might not be helpful I quits agree with him, but not for the reasons which he sets forth. There is no reason why the Belgian Government should not make a d-marche in the case of the Rosario company, nor would it be resented as interference in the internal affairs if it is done In the right way. The reason why it is not desirable to do it at this time in the case of Rosario is that it would merely be an Irritant and would not help at this time* The problem is so big that it takes something much bigger than Belgium can do to help the Rosario situation* This does not mean that, depending upon the developments in the Rosario situation, it may not still be useful at the appropriate time for the Belgian Government to express its views and do so strongly* Nationalisation may bo the business of a particular oountry but nationalization cannot be carried through when it injures the legitimate and established and recognised interests of the citizens of other countries. As you know, the United States Government did not hesitate to express its views with regard to Artiolo I4.O of the Constitution to the Argentine Government and in very strong terms,

4 ll w terms, in connection with the properties of the American and Foreign Power in the Argentine. I wanted, however, particularly to comment on what Jaspar said to the effect that the efforts of all of the Ambassadors and all of the Ministers combined in Buenos Aires in connection with nationalisation are not as effective as the efforts of Brosens himself, whose standing and influence are very great. You know how I feel about Brosens ana his capacities and his position, etc. I think Sofina and we all are most fortunate that a man of Brosen's capacity is in -the position in which he is and that he has the confidence of the President and his lady. It is, however, puerile and natve, and of course completely unrealistic, to believe that the efforts of Brosens are more effective than those of all the Ambassadors and Ministers combined in this matter of nationalization. So far as the personality of Brosens is concerned there is no doubt that he probably is a much better man than most of the Chiefs of Mission in Buenos Aires. He probably has easier access to the President and to certain high officials, and the President undoubtedly has great faith in his judgment and opinions. On the other hand, the President is under no illusions as to Brosens. He knows that he is the head of a private company which has a great deal at stake in the country. He knows that he is speaking primarily for a,private company and its interest. Sofina and CADE may be very strong financially and they may have good friends, as they do, and they may have done a very constructive job for the Argentine, as we know they have done. But the faot remains that they are a private interest which naturally wishes to operate at profit and which mist operate at profit. On the other hand, when the Ambassador of the United States or of Great Britain or of other oountries speaks he speaks from the point of view of the national interest and poliey of that country, and he may not have as easy access and his personality may not be as outstanding, but he speaks with the authority of his country behind him. The Argentines have this way that they have always had of looking with a certain amount of disdain on other countries and of thinking they can live to themselves, but I think that even these extreme nationalists who are making so much trouble these days in a measure realize that they cannot live to themselves and cannot lift themselves up by their own bootstraps. I do not question but that the word of Brosens carries a great deal of weight with the President and his lady, but the fact remains that Brosens has nothing to offer except the services of his company whose properties are there anyway at the mercy of the government, and when the American Ambassador or the British Ambassador speaks they speak as the representatives of countries which have markets which the Argentine needs, whieh have money whieh they need, which have ships in whioh to carry goods and which have ships of another kind to enforce their will, and whieh have national policies whioh they can find many ways to implement. Perhaps I should not have used so many words in showing the utter ridiculousness of Jaspar's statement and I know you knew how to measure its value, but I have thought it worth while to point out that in these things which are so vital one cannot depend too much on individuals and that there are other things which are stronger than individuals. It is

5 51% is for this same reason that I have told you recently that so much discretion must be used when and if I go to the Argentine. Everything that I have had in the last months shows that Per6n is just as friendly to me as ever. He knows how much he is indebted to me for things which have meant a great deal to him and to his country. I have reason to believe that he has as much confidence as ever in ray objectivity and understanding and friendliness. I have even reason to think that he would be Interested in seeing me. All this does not mean, however, that if I went there in a private capacity I could accomplish certain things unless there are certain concurrent eir** cumstances. This is one of the things I wish to talk over with you and one of the reasons why I am so anxious that hrosens should be there when we discuss these matters. I felt absolutely sure that there would be this detente so far as moving towardb purchase or nationalization of the electric industry is concerned, but the fact that there is this detente and the fact that the Greater Buenos Aires Decree has been signed does not give me any comfort. Basically the situation is unchanged and dangerous and unstable and one in which no move forward can be made with any certainty or security. The only thing which the detente gives is a bit of breathing spell. This, so far as it goes, is good but it does not go far and does not offer any solutions nor doss it open the way to any solutions. The solution for the electric industry in the Argentine must be found through some measures of government and governments which go beyond anything which Sofina or Cade or any similar group can do. It is what can be done in the United States and in Argentina which will open the way to security and possibility to go forward which must be explored and which I should like to explore when I next go north, and in order to do this it would be useful to talk with Brosens, in whose powers of observation, knowledge and judgment I have so much confidence. If Brosens cannot get away it would be wonderful if Bill Arnold could find an excuse to come up, ostensibly on business of Squibb, and I am exploring this situation, for I think that Brosens and Arnold know more about the Argentine situation today than any two non-argentines I know. So far as Spain is concerned I think you can remain entirely tranquil with respeot to the possibility of any credits being extended in anything like the foreseeable future. I was absolutely sure of this because of my conversations with those who make policy, so thgt all this conversation about Moreno and the Spanish propagandists and the press did not give me concern. I cannot help but think it was a good thing for Moreno to come over because he had the background of an all out effort made by Spain through diplomatic, political and propaganda means, and he goes back with his tail between his legs and a full understanding that certain things have to be done in Spain before thers can be any credits for anyone there. Marion joins me in love and good wishes and I hope you will give my best to Samuels and to the Jensens. Cordially and faithfully yours, 5 Enclosures. P. S<

6 - 6 - P. S. The Argentine Ambassador here, Desmar&s, whom 1 knew in the Argentine, is lunching with me on this ooming Wednesday. I asked him because he is shortly going back to the Argentine for a month's stay* I do not place any Importance on talking with him beyond the friendly aspect, for I do not think he has much influence witk Per6n or in the Argentine Government or that his views carry any weight* He is also not the kind of person through whom with prudence I could convey any thoughts to Perono