JANUARY 21 (calendar day, JANUARY 25), 1935.-Ordered to be printed

Mr. PITTMAN, from the Committee on Foreign Relations, submitted the following

REPORT

[To accompany S. 1068]

The Committee on Foreign Relations, to whom was referred the bill (S. 1068) to establish a commission for the settlement of the special claims comprehended within the terms of the convention between the United States of America and the United Mexican States, concluded April 24, 1934, report the same, with amendments, and recommend that the bill as amended do pass.

The bill provides for the settlement of the special claims comprehended within the terms of the convention between the United States of America and the United Mexican States, concluded April 24, 1934. It creates a special commission to examine and adjudicate all claims of the nationals of the United States comprehended within the terms of the convention of April 24, 1934, which, it will be recalled, provided for an en bloc settlement of the claims of American nationals against the Government of Mexico. It includes claims that were heard and rejected by the commission established by the special claims convention concluded by the two Governments on September 10, 1923. The commission is required to complete its work within 2 years from the date on which it undertakes the performance of its duties.

The commission, upon the completion of its work, is to submit a report to the Secretary of State. The Secretary of State transmits to the Secretary of the Treasury the amount of all claims allowed, in whole or in part, and payments are to be made pro rata among the persons in whose favor awards shall have been made from moneys received from Mexico by virtue of the convention of April 24, 1934. Like procedure is followed with reference to any amounts thereafter to be received from the Government of Mexico under such convention. The commission at the time of entering an award on any claim may allow counsel or attorneys employed by the claimants such fees as it shall determine to be just and reasonable for their services in prose

cuting claims, and the allowances shall be entered as a part of the award, and payment made by the Secretary of the Treasury in the same manner as payments are made to claimants. It is provided, however, that such payment shall constitute payment in full to the counsel or attorneys and that no attorney or other person shall contract for, demand, receive, or retain a fee for services in connection with the preparation, presentation, or prosecution of any such claim other than as provided by the commission, and criminal penalty of fine and imprisonment is imposed for violation of this provision.

Although an appropriation of $90,000 is authorized for the expenses of the Commission, it is to be noted that any expenditures from the amount so authorized shall become a first charge upon any moneys received from the Government of Mexico in settlement of these claims and the amount of such expenditures shall be deducted from the first payment by the Government of Mexico and deposited in the Treasury of the United States as miscellaneous receipts.

For the information of the Senate, there is attached hereto a letter from the Secretary of State to the President relative to the transmission to the Senate for ratification the convention of April 24, 1934, together with a letter to the Chairman of the Foreign Relations Committee of the Senate from the Honorable Josephus Daniels, Ambassador to Mexico, explanatory of the convention.

It is believed that these letters contain a full explanation of the terms of the agreement for a lump-sum payment including the basis for arriving at the total amount, the character of claims covered and the manner of procedure it was then hoped would be followed for distribution to the claimants of the moneys paid by Mexico, estimated at around $7,000,000 in all.

The PRESIDENT:

The undersigned, the Secretary of State, has the honor to lay before the President, with a view to its transmission to the Senate to receive the advice and consent of that body to ratification, if his judgment approve thereof, a Special Claims Convention signed by the respective plenipotentiaries of the United States of America and the United Mexican States at Mexico City on April 24, 1934, providing for settlement en bloc of the claims presented by the Government of the United States to the Commission established by the Special Claims Convention, concluded between the two Governments on September 10, 1923, instead of by international adjudication in each case as provided in that Convention.

The Special Claims Convention of September 10, 1923, expired by its own limitations on August 17, 1929. It was twice renewed, the last renewal being the convention of June 19, 1932, which was transmitted to the Senate by President Hoover on July 1, 1932, Senate Executive L, Seventy-second Congress, first session, and yet remains in the Senate, and which is replaced by the present Convention.

By the replacing convention now submitted the Mexican Government agrees to pay a lump-sum amount in settlement of the claims without the necessity of international adjudication of each case upon its merits. The amount to be paid by the Mexican Government in settlement of this class of cases (there are no claims of this class against the United States) has been determined by the Convention in the following manner:

Six European governments-namely, Belgium, Germany, Italy, France, Great Britain, and Spain-had claims against the Government of Mexico for the same general class which totaled about $380,000,000. The claims of those governments were evaluated by means of varying processes and a total liability of about $10,125,000 resulted, or an average liability of about 2.65 percent. By the convention now submitted the Government of Mexico agrees to pay the same average percentage of liability on the claims of the United States as was found, by these adjudications, to be due on all of the European claims. It is impossible to determine precisely the net amount to be paid by the Mexican

Government under this arrangement for several reasons among which are the following:

Many of the claims filed before the special claims commission were also filed before the general claims commission because of uncertainty as to which of the commissions would actually have jurisdiction to adjudicate the cases. Before the net liability of Mexico can be determined these cases must be definitely segregated and classified as special or general claims. It is also necessary in the first instance to make a careful check and comparison of the totals claimed by the European governments and of the total awards thereon in order to arrive at an absolutely accurate determination of the percentage of liability found to be due on European claims. For the purpose of making these determinations and of deciding other minor points, a joint committee would be established under article 5 of the convention.

As the claims of the United States against the Government of Mexico and of Mexico against the Government of the United States have complicated the relations of the two Governments for the past decade or longer, it is the common desire of the two Governments, in the interest of good relations between them, to remove the claims from the field of international intercourse as soon as possible. The convention now submitted represents what both Governments believe to the most practicable, the most equitable, and the most expeditious method of accomplishing their common desire.

At the same time, and in consideration of the conclusion of this convention, another agreement has been concluded with the Mexican Government, in the form of a protocol, which provides a simplified and expeditious means of reaching a similar agreement with respect to the so-called "general claims" of the two Governments. It is hoped that, by means of these two agreements, all these claims may be definitely settled within a comparatively short period, except insofar as relates to the matter of payment which, as determined by the Special Claims Convention, will, so far as special claims liability is concerned, be liquidated at the rate of $500,000 per year, plus interest.

Respectfully submitted.

DEPARTMENT OF STATE,

CORDELL HULL.

Washington, May 5, 1934

WASHINGTON, D. C., May 26, 1934.

MY DEAR SENATOR PITTMAN: In compliance with the request which you made of me at yesterday's meeting of your committee to consider the pending Convention with Mexico providing for an en bloc settlement of the special claims of citizens of the United States against Mexico, I take pleasure in furnishing you the following expression of my reasons for advocating the approval of this Convention which, by direction of the President, I had the honor of signing with the Mexican Minister for Foreign Affairs at Mexico City on April 24, 1934.

I understand that what you desire me to embody in this letter is not a detailed explanation of the provisions of the Convention, as their meaning and intent would appear to have been made sufficiently clear in the report of the Secretary of State of May 5, 1934, which accompanied the President's message of the same date transmitting the Convention to the Senate, and which is printed in Executive I, Seventy-third Congress, second session. You wish, rather, I take it, that I summarize informally in writing the statements which I made before your committee.

First of all, consideration should be given to the fact that all the claims dealt with in this convention originated between the years 1910 and 1920-that is to say, in the tragic years following the departure of Diaz from the country-until the Mexicans began to emerge from a succession of revolutions which sorely rent that country. The truth is that between these years Mexico had no government able to enforce protection in all parts of the bleeding Republic. With the terrible days following the death of President Madero and Vice President Suarez, it will be recalled that President Taft advised Americans residing in Mexico to return to the United States. Upon his becoming fully acquainted with the inability of the Mexican usurping President to offer the semblance of protection, President Wilson gave the same counsel. He provided the means for the safe return of American citizens to escape the danger to which they and others were exposed. When finally, after the A. B. C. Conference, Carranza was recognized, the continual warfare of Villa in the northern part of Mexico, and of Zapata in another sector, and roving bands of other men withholding allegiance from Carranza, the

conditions were beyond the control of the recognized authorities. During these trying 10 years many lives were lost and much property destroyed belonging to Americans and Europeans as well as of Mexicans who were objectionable to some men under arms.

Upon the restoration of a responsible government, having behind it the will of the majority of the people, it was felt in Mexico that the killings and destruction of property were mainly by irresponsible bands or parties not responsible to government control. The United States pressed for the recognition and payment of the claims of our nationals which arose during the tragic 10 years. There seemed to be an impasse. For 3 years the United States refused to recognize the Mexican Government of President Obregon, who had been put in office by the National Revolutionary Party. Mexico earnestly desired recognition by the United States. This was withheld until after the Payne-Warren Commission reach agreements with Mexico by which the Mexican Government pledged itself to submit all claims originating between 1910 and 1920 to a Special Claims Commission and all other claims to a General Claims Commission. These commissions, composed of a Mexican, an American, and a representative of a neutral country, with changing personnel, held sessions a portion of the time after the convention of September 1923. The result of these hearings has been disappointing in the extreme. The cases decided have been few. The cost of these commissions to the United States has been, in round figures, $1,900,000.

Upon my appointment as Ambassador to Mexico, I began a study here in Washington of the questions which would demand my attention in Mexico. The first concerned the settlement of the pending claims. Within a brief period I reached the conclusion that the hearings had been so long drawn out and seemed so interminable that the matter might properly be called the modern case of Jarndyce v. Jarndyce.

I suggested to the Secretary of State that a less expensive and more expeditious method of adjustment should be sought.

About that time I had a call from the Honorable Gonzalez Roa, Ambassador from Mexico to the United States, who presented a message from the Honorable José Manuel Puig Casaurane, Minister of Foreign Relations of Mexico, asking him to take up with me the question of an en bloc settlement. The Minister for Foreign Affairs wired that upon my arrival in Mexico City he would like at once to enter into negotiations looking to such settlement. During the more than a year that has elapsed during my mission in Mexico, my time has been largely Occupied with discussions and conferences relating to the settlement of these claims. The Mexican Government took the ground that a fair precedent for settlement could be found in the percentage agreed upon by Mexico and the United States in the settlements under the conventions of 1839 and 1868. That percentage was 1.25. This view was not acceptable to our Government. Later, after Mexico had reached settlements with all the European countries for like claims originating within the same period, it was ascertained that the average percentage of recovery between Mexico and these European countries was about 2.65. The Mexican Government proposed that a similar settlement be made for like claims between that country and the United States. Inasmuch as our country and Mexico are the nearest neighbors, it seems to me that we could not insist upon receiving a larger percentage for our claims than the European countries had accepted. I therefore recommended acceptance to the Secretary of State. He approved. By direction of the President, I signed the Convention on the 24th day of April 1934, with the Honorable José Manuel Puig Casauranc, Minister for Foreign Affairs, who was thereunto authorized by the President of Mexico. The carrying out of the Convention awaits the approval of the Senates of the United States and Mexico. The Senate of Mexico convenes in September, and I do not think there is any doubt it will ratify the Convention if the Senate of the United States votes ratification at this session of Congress.

Already, in anticipation of favorable action, I have caused officials of the Embassy to take up with officials of the Foreign Office the study, for the benefit of the Joint Commissioners provided for in article 5 of the Convention, of the question of just division of those claims which have been filed by American claimants with both Commissions. We also hope by September, for the information of the Commissioners, to make a definite computation of the total amount of the special claims, and an accurate computation of the specific percentage of liability to be applied. Therefore, if our Senate ratifies the Convention at this session, it will make possible the payment of the first $500,000 by January 1, as contemplated under the terms of the Convention, with like yearly payments of $500,000 each year until the full amount, estimated at around $7,000,000, is paid.

If it be suggested that the percentage is small, the answer is that many of the claims are, as in most claims, both national and international, larger than can be established by evidence. Some of these claims are cf doubtful validity-others are so clearly just that those claimants should not longer be denied such payment as will give them real money during their natural lives. Further delay will in all probability deny them any compensation in time to meet their present needs. The acceptance of the percentage for all the claims, valid or unsustainable, does not at all mean that all claimants will receive the same percentage. By no means. The sum received will be distributed to claimants by a domestic commission or other domestic agency on the basis of the merit of the claims. Those lacking merit will be eliminated by the United States officials charged with the task while the just claims will be promptly awarded the just amount found to be due. It is believed that when the money to be paid by Mexico is properly distributed in this manner each claimant will be fairly dealth with.

Furthermore, these claims are but one of several very important problems which exist in our present-day relations with Mexico. By accepting this settlement, which to my mind is entirely equitable, we would, I firmly believe, go a long way toward demonstrating our friendly and neighborly disposition and thus foster a spirit of cooperation which should help materially to further a solution of other important questions.

In support of the opinion that the proposed basis of settlement is eminently fair to the interested American claimants are the following additional facts:

First. This percentage of liability is to be computed on the basis of all the claims filed, regardless of class or quality, excepting only those cases already decided, and, therefore, while the percentage of liability agreed to be paid by Mexico is comparatively small, it represents, as a matter of fact, what is estimated to be the full value of the meritorious claims.

Second. The percentage of liability to be paid in this case, namely, about 2.65, compares very favorably with that found to be due in other adjudications. For instance, the liability found to be due the United States in the settlements of 1839 and 1868 with Mexico averaged 1.25 percent; the awards of the Spanish Treaty Claims Commission, established pursuant to the Treaty of Paris of 1898, to pass upon all claims against the Spanish Government, amounted to 0.021 percent of the amounts claimed and judgments rendered by the United States Court of Claims during the period 1920-32 amounted to approximately 0.6 percent of the amounts claimed. I have been advised that many letters have already been received by the Department of State expressing the gratification of individual claimants that real progress in the settlement of their claims is now promised.

To sum up, the advantages which will be brought about by the proposed arrangement are:

1. The removal of these contentious claims from the field of international relations;

2. The systematic and definite payment by Mexico, to begin in the near future instead of being postponed indefinitely;

3. The placing of the settlement of the claims of our nationals in the hands of officials of our own country.

I am, with assurance of appreciation of the opportunity of appearing before your committee,

Sincerely yours,

The Honorable KEY PITTMAN,

JOSEPHUS DANIELS.

United States Senate.

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