812.6363/476
The Consul at Tampico (Dawson) to the Acting Secretary of
State
Tampico, June 10,
1919.
[Received June
25.]
No. 716Sir: I have the honor to refer to my
telegram of June 9/4 P.M.80 advising receipt by General Caesar Lopez de Lara
of an order to stop drilling operations on wells started without
first securing the requisite permit from the Mexican government.
I now beg to enclose herewith, Spanish Text and English translation
of the official document under which this order was issued. It is
believed by the oil companies that the Mexican government is making
this move as the first overt act in its effort to carry out the
provisions of Article 27, and as an earnest of the Government’s
intention to put said article into full effect despite all contrary
protests. The Companies are well aware of the declarations made from
time to time by Mexican officials to the effect that the government
has no intention to confiscate the properties of foreigners. No one
here is deceived by these promises and the specious declarations of
good intention conveyed therein, and the referred to order is now
submitted as concrete evidence of the truthfulness of this
assertion.
Please refer to the second paragraph of the Spanish text, translation
of which is as follows:—
“Inasmuch as the political constitution now in force declares
that the beds and deposits of oil which are found in the
subsoil of the national territory are the property of the
Nation; and as the said Constitution denies to the foreign
companies the right to obtain
[Page 600]
concessions to exploit those mineral
combustibles until they organize themselves according to
Mexican laws; and finally, as the generality of the foreign
companies have not been willing to subject themselves to the
dispositions contained in the decrees of the Executive
relative to the taxes on oil lands and leases; this, (the
Executive Power, Tr.) in all justice and meanwhile [until] the Petroleum Law is issued by
Congress, has refused to grant permits tending to drill with
the purpose of extracting oil to different companies and
individuals who find themselves in the circumstances above
stated.”
It seems to me the real policy of the Mexican government is clearly
and concisely stated in this paragraph, and there is little reason
to doubt the intention of that government to force recognition of
said obnoxious article and its provisions, against which the several
oil companies as well as our own and other governments protest
vigorously. In this order is found documentary evidence which
specious verbal promises cannot nullify.
The immediate effect on some companies of the cessation of drilling
will be to seriously hamper their business. One company in
particular which has contracts for Mexican oil with the United
States Shipping Board, advises that recent developments in the oil
fields clearly indicate the approaching exhaustion of the most
prolific of the oil districts—that of the Tepetate field. This
company’s production comes from two wells in that field; one of
these wells, I am told, has turned to salt water, and the other is
in such close proximity that they fear similar development within a
very short time. To protect themselves against possible exhaustion
they applied for permit[s] to drill other wells, which were not
granted because the Company had not complied with the regulations
emanating from Article 27.
Precisely for the same reason several other companies are drilling
wells without government permits. In no case has this been done
arbitrarily or with the idea of questioning the government’s
legitimate police powers, but only in pursuance of their policy to
do everything they believe they are legally entitled to do, and to
emphasize their non-recognition of and unwillingness to comply with
any and all governmental acts or dispositions based on and growing
out of Article 27 of the Constitution of 1917 insofar as said acts
or dispositions refer to properties acquired prior to May 1,
1917.
In pursuance of this policy they concede the government’s right to
require permits as a police power and on that basis duly applied for
same; but when said permits were withheld on the ground that the
applicants had not recognized Article 27 of the Constitution, they
believed their rights were infringed and acted accordingly,
proceeding with development work as necessity arose.
[Page 601]
While dictating the above, word comes that military forces have
actually shut down work on a well being drilled at Panuco by the
Mexican organization of the Atlantic Refining Company, (an American
concern); and that other troops have gone south to carry out the
order in the southern oil fields.
Here is an example of the use of government troops in the performance
of police powers against foreign interests.
Requests for guarantees by the use of government military forces
against bandits and banditry are evaded on the score that soldiers
cannot be used to perform police duties—see my despatch 689 of May
8, 1919.81
Doubtless the Department is already in receipt of complaints from the
main headquarters of American oil companies in the United States
against this new act of the Mexican government.
I have [etc.]
[Enclosure 1—Translation]82
The Mexican Acting Secretary of Industry,
Commerce, and Labor (Vasquez Schiaffino) to the Mexican Acting
Secretary of War and Navy
Subject: He is advised of the resolution of
the Citizen President of the Republic to suspend the
drilling of oil wells which is being carried on by some
companies without permit from the Executive Power. It is
requested of him that the military forces lend their aid to
the petroleum inspectors with the purpose of suspending such
operations and there are suggested to him the means and form
in which the procedure must be carried out in cooperation
with this Department.
Inasmuch as the Political Constitution now in force declares that
the beds and deposits of oil which are found in the subsoil of
the national territory are the property of the Nation, and as
the said Constitution denies to the foreign companies the right
to obtain concessions to exploit those mineral combustibles
until they organize themselves according to Mexican laws, and
finally, as the generality of the foreign companies have not
been willing to subject themselves to the dispositions contained
in the decrees of the Executive relative to the taxes on oil
lands and leases, this [the Executive Power], in all justice and
until the petroleum law is issued by Congress, has refused to
different companies and individuals who find themselves in the
circumstances above stated permits to drill with the purpose of
extracting oil.
But some oil companies, disobeying the general dispositions of
the Government, and even against the expressed and definite
prohibition
[Page 602]
of this
Department, dictated as the result of a resolution of the
Citizen President of the Republic, have begun to drill wells to
extract oil from the subsoil of the lands of which they are the
owners and of those which they have under lease in the regions
of Tepetate and Chinampa, of the Cantones of Ozuluama and
Túxpam, in the State of Vera Cruz.
In order to prevent at once such disobedience and violation of
the dispositions now in force relative to this matter, the
Citizen President of the Republic has deemed proper to resolve
that use be made of the public force, and with that object in
mind he has seen fit to direct that this Department communicate
with the Department of War and Navy in your very worthy charge,
as I have the honor of doing today, requesting the assistance
and aid of the Federal forces which operate in the Huasteca
Veracruzana, that the operations now being unlawfully carried on
may be suspended and their continuation prevented.
With this object in view, this Department begs to suggest to you
the following:
- 1.
- That immediately and by telegraph you kindly issue
your orders to the Chief of the Military Operations in
the Huasteca Veracruzana, that he arrange with the
Chiefs [of Inspectors] of the Agencies of Petroleum in
Tampico and Túxpam, whose offices are located at Calle
de la Morena Number 20, and Avenida Hidalgo Number 34,
Túxpam, Ver., in order that one or two petroleum
inspectors, employes of this Department, shall go, on
the date agreed on, to the regions of Tepetate and
Chinampa, and those other regions where drilling of
wells might be in progress without due authorization
from the Federal Executive. The said Agencies already
have knowledge of the places where these operations must
be suspended.
- 2.
- That the said Chief of the Military Operations in the
Huasteca issue his orders to the respective chiefs of
the forces that guard the camps of Tepetate, Chinampa,
Juan Casiano, Naranjos, etc., that with the escort which
they may deem sufficient they accompany the petroleum
inspectors commissioned for this purpose to the
different places where the rebel companies are
conducting operations related to the petroleum industry
without due authorization and that they proceed to
suspend immediately such operations.
- 3.
- That the said petroleum inspectors, in accordance with
the instructions already given them by this Department,
make out a record or act of the suspension of such
operations, which they will sign in company with the
Military Chiefs that accompany them and assist in the
suspension of the operations. Of said records copies
will be sent to that Department in your worthy charge as
well as to this Department.
- 4.
- The Military Chiefs that assist in the suspension of
the operations being carried on without due
authorization, or those who may act for them in the
command of the forces of the different regions, will
keep guard of the camps and avoid and prevent the
suspended operations from being renewed until this
Department advises the Department of War and Navy that
the operations may be resumed.
[Page 603]
and that in turn issues the
corresponding orders to the military authorities
entrusted with the fulfillment of this resolution of the
Citizen President of the Republic.
Thanking you in advance for the orders and dispositions which you
may kindly dictate in order to carry out this Accord of the
Citizen First Magistrate of the Nation, I take pleasure in
reiterating to you the assurances of my attentive consideration
and particular appreciation.
Constitution and Reforms. Mexico, May 16, 1919.
The Subsecretary in Chargé of
Office,
J. Vasquez
Schiaffino
[Enclosure 2—Translation]83
Instructions Issued by the Department of Industry, Commerce, and
Labor to the Chiefs of
Inspectors of the Agencies of Petroleum in
Tampico and Túxpam, May 17, 1919
In order to make clear to you all that relates to the operations
which must be suspended, we wish to state that they include all
those which deliberately have as their
immediate object the drilling of oil wells, the
installation of pumps and casings for transportation of oil and
tanks for its storage, but not comprising the
works which are preparatory to the establishment of
refineries, pump stations, or storage or pipe lines for the
installation of which those interested may be endeavoring to
secure the appropriate authorization of the Government.
Finally, we recommend to you that in the records to which Clause
3 of the resolution of the Citizen President84 refers, there should be
stated with the largest number of details possible the state
or conditions in which the operations were at the moment of
being suspended,—this in order to be able to verify, in
case it should become necessary, the fact that the operations
were not continued after having been suspended.
