Protection of American Interests in Mexico

April 7, 1938

Report Outline
Mexico&'s Seizure of Foreign Oil Holdings
American Investments in Mexico, 1876–1911
Protection of American Interests After 1911
Roosevelt Policy Toward Cardenas Regime

Mexico&'s Seizure of Foreign Oil Holdings

Importance of Forthcoming Plans for Identification

A Special Session of the Mexican Congress will convene at Mexico City on April 11 to prepare the legislative basis for indemnifying American and British petroleum companies for oil properties expropriated by the Mexican government on March 18. The course of future relations between the United States and Mexico will be largely governed by the success of the Mexican legislature in devising ways and means of assuring adequate compensation to American oil interests. This was made plain by Secretary of State Hull in a forceful note delivered to Mexico on March 29 in which he declared that this country expects payment to its nationals of “compensation representing fair, assured, and effective value” for the properties expropriated.

In expropriating the entire foreign petroleum industry, the government of Mexico took over oil lands, equipment, and concessions valued by the companies at $450,000,000. Of the 17 foreign concerns involved, 11 are American, including subsidiaries of the Standard Oil companies of New Jersey and California and of the Sinclair-owned Consolidated Oil Corporation. The largest of the foreign companies involved is the Mexican Eagle Company, a subsidiary of the British-owned Royal Dutch-Shell group. Total American investments are valued by the companies at about $200,000,000, while British investments are estimated at roughly $250,000,000.

Origin of Dispute Leading to Expropriation Decree

Signing of the expropriation decree by-president Lazaro Cardenas on March 18 touched off the latest in a series of controversies over foreign exploitation of Mexico's oil resources which began in 1917 with the promulgation of a new constitution providing for nationalization of the country's petroleum deposits. Past efforts to apply the oil nationalization provision have twice—in 1919 and 1927—brought Mexico and the United States to the brink of war.

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