OIL EXPROPRIATION

Dominion, Volume 31, Issue 152, 24 March 1938, Page 11

OIL EXPROPRIATION

“Flagrant Violation Of Property Rights”

COMMENT ON MEXICAN SITUATION By Telegraph—Press Assn.—Copyright. (Received March 23, 8.30 p.m.) New York, March 23. The financial editor of the “New York Times,” in an extensive article recounting the Mexican expropriation of flie oil companies, calls the act “one of the most flagrant violations of international property rights since modern commercial relationships were established among the nations. “The action is, further, untenable under the good-neighbour policy of all the American nations and involves the friendly relationship of the United States and Great Britain, since the Monroe Doctrine precludes European nations from direct intervention in Mexico, thus making the position increasingly awkward.’’ Four American petroleum companies have asked the State Department to make diplomatic intervention in Mexico in regard to the expropriation. In support of the request they claim that there has been a manifest denial of justice.

REPORTS FROM TOKIO

Japan Prepared To Make Oil Contracts (Received March 23, 8.20 p.m.) Mexico City, March 23. Tlie newspapers feature reports from Tokio that Japan is prepared to make oil contracts with Mexico. The "Nielli Nichi Shimbun,” in an editorial, is reported to praise Mexico for “liberating itself from British and American influence.” Mexican newspapers stress the* fact that Japan has enough tankers to transport the petroleum. The American Ambassador, Mr. Daniels, conferred with President Cardenas to-day, handing him a Note from the Secretary of State, Mr. Cordell Hull. The contents were not disclosed. President Cardenas issued a manifesto justifying the expropriation and blaming the foreign companies for breaking labour contracts and maintaining the workers in misery. The President insisted that the expropriation will be carried out even if it disrupts the country’s monetary system and results in the devaluation of the peso. Informed quarters point out that the prohibition of gold purchases and dealings in foreign exchange will be found necessary to prevent the flight of foreign capital frightened by the expropriation decree.

EXPECTED FOR YEARS

Mexican Expropriation Dominion Special Service. Auckland, March 23. That oil companies operating in Mexico had expected for years that their oilfields, refineries and other properties would inevitably be expropriated in some form by the Mexican Government was a statement made by Mr. R. W. F. Newton, a former executive of the Mexican Eagle Oil Company, who is visiting Auckland. Mr. Newton served under the company for 20 years, and when he retired from its service about three years ago he was refinery and port terminal manager at Vera Cruz. He is now chairman of directors of Chain Testing Stations (Christchurch), Limited. Mr. Newton explained that the Mexican Eagle Oil Company is the largest oil concern in the country, operating refineries at Tampico, Miuatitlau and Vera Cruz, besides having a terminal port. It is actually registered as a Mexican company, but its capital is mostly British. One of its biggest shareholders and its founder is Lord Cowdray, formerly Weetman John Churchill Pearson, and who is internationally known as head of Samuel Pearson, Limited, builders of port facilities. Unfortunately for British shareholders, the Mexican Government is in the position of being able to state that as the company is Mexican, any action it has taken against it is purely a domestic matter. Moreover, direct intervention by the British Government would be impossible, under the Monroe Doctrine, without coming in conflict with the United States. Other oil companies in Mexico that have had their property expropriated are Waters, Pierce and Company (owned by the American Sinclair interests) and the Huestca Company, a Standard Oil subsidiary. Each owns>a refinery at Tampico. “I imagine American action to protect the interests of its nationals will be ineffective,” said Mr. Newton. “Opinion in the United States would never countenance direct intervention. No doubt a commission will be appointed, but anything it does or recommends will be frustrated by the Mexican laws. I expect there wfll be appeals to Mexican courts, but shareholders will lose their money. The Mexicans are determined to oust foreign interests.”

Mr. Newton said strikes and wage troubles were merely a weapon that had been used in an endeavour to crush the companies. Staggering wage increases had been put upon them in order to achieve this objective. He had known the President of Mexico when the latter was general-in-charge of the Vera Cruz district. President Cardenas was well educated and in his ordinary life a fair-minded man. 'He was perhaps not so much a politician as a general with a love of power, and he knew there was no escape from a position that might be repugnant to him by retirement. Presidents in Mexico do not retire, and he had been in the position of having to yield to popular clamour or take the consequences. Foreign capital had done much to develop the resources of the country, but gradually the major industries that owed their creation to outside capital, such as railways, had been taken over by the Mexican Governments on their own terms. In recent years the slogan was, “Mexico for the Mexicans,” and it was certain that the property of outside mining interests would soon be absorbed. “My candid opinion is that the oil companies are as much to blame as the Mexicans for what has taken place,” continued Mr. Newton. “The companies tilled all administrative and technical positions with foreigners, some of whom had no conception of the way to treat Mexicans to obtain good service and loyalty, A ruling caste of foreigners was created, and naturally lack of opportunity and the inferiority of their position became intolerable to the Mexican peonla”