812.6363/548a: Telegram

The Acting Secretary of State to the Chargé in Mexico ( Summerlin )

2228. Inform Foreign Office substantially as follows:

The Government of the United States has been informed that various corporations owned entirely or in large part by American [Page 611] citizens hold oil leases executed prior to May 1, 1917, on privately owned lands in the State of Vera Cruz by which companies have the right to explore and exploit the subsoil deposits; that in some instances these lease contracts defintely require under penalty of forfeiture the drilling of wells within fixed and limited periods; that the companies in order to meet their contractual obligations and to enjoy their property rights have applied in the appropriate manner to the Mexican Department of Industry, Commerce and Labor for permits to drill wells; that such permits have been denied in some instances and granted conditionally in other instances; that denials have been based on sole ground that companies have not manifested their properties as required by Mexican Decree of July 31, 1918, and have not conformed to Decrees of August 8 and 12, 1918, and that permits granted have been conditioned upon obligation of companies to conform to provisions of a petroleum law to be enacted in the future; that the companies have been notified that under the provisions of the Mexican circular of January 17 [7], 1915, as reaffirmed March 20, 1919, the Government will take over all wells drilled without permits, and that on certain properties so held under leases the Mexican authorities have accepted denouncements by third persons in spite of companies’ protests, which have been overruled because companies have not complied with provisions of decrees of August 8 and 12, 1918.

This would seem to be but another aspect of the situation affecting petroleum deposits in Mexico, which has been discussed in previous representations from the Government of the United States and this opportunity is taken to reaffirm the position of this Government with regard to the matter as set forth in such representations.

In this relation and with specific reference to the action of the Mexican Government as set forth in the foregoing, it may be observed that compliance with or acquiescence in the above mentioned decrees of 1918 by the companies affected would seem clearly to imply a surrender on their part of rights and titles lawfully acquired and legitimately held under Mexican law. Moreover the companies in question cannot reasonably be expected to agree in advance to conform to the provisions of a law to be enacted in the future, concerning the terms of which they have no assurance that their rights will be respected.

In this view of the matter the Government of the United States, owing as it does to its citizens, the duty of protecting them in foreign lands, both in their persons and their property rights, must strongly protest against the action of the Mexican Government as outlined above and characterize it as threatening confiscation and a denial of justice.

The Mexican Government is therefore strongly urged not to permit the Circulars of January 7, 1915, and March 20, 1919, to be enforced in the cases to which reference has been made and to see to it that the interested companies suffer no loss or inconvenience on account of the denouncements upon their properties which appear to have been accepted as aforesaid, but to restore the companies to all the rights to which they are entitled under the leases held by [Page 612] them and the applicable laws of Mexico at the time when such lease contracts were made.

In communicating the foregoing the Government of the United States takes occasion to express the confident hope that pending the general settlement of the petroleum question by specific legislation of the Mexican Congress, the Administrative authorities of Mexico will respect the vested rights of American citizens and evince that respect by withdrawing its insistence that interested American citizens comply with the provisions of the decrees mentioned.