600.127/211

Mr. Frederic N. Watriss to the Under Secretary of State (Fletcher)

Dear Mr. Fletcher: One of the purposes of my visit to Washington was to see the Secretary of State to tell him the circumstances of what has been referred to as the “shut-down” or “embargo” by the American companies producing oil in Mexico.

There has been no shut-down and no embargo; because the export taxes which became effective July 1st make it impossible for most of the companies to ship crude or fuel oil from Mexico except at a loss, most of the companies have decided to discontinue shipments of those oils. They will continue development wherever development cannot be discontinued without damage to the property, and they will continue production until lack of storage facilities stops production; what I want to impress upon your Department particularly is that there has been no concerted action by these companies and no agreement between them or any two of them with regard to their course of action. Each company has done what its particular situation made it necessary to do without reference to what other companies might do—some have discontinued shipments, some have not and some have reduced shipments as far as their contract obligations would permit.

Nor is it true that twenty-five thousand or ten thousand men have been thrown out of work as a consequence—a canvas[s] of the companies seems to show that since July 1st an insignificant number have been discharged. Prior to that date the companies had been compelled to cut down operations because of the tax and market conditions but this had no connection with the suspension of shipments.

I shall be grateful if you will transmit the above information to Secretary Hughes as he indicated that he would like to be kept informed as to what the companies might do.

Sincerely yours,

Frederic N. Watriss