611.127/394

The President of the Standard Oil Company of New Jersey (W. C. Teagle) to the Secretary of State

Dear Mr. Secretary: Because of the urgent nature of the matter mentioned in the accompanying communication to you, I have taken the liberty of sending it by special messenger, for delivery at your residence tonight.

Very sincerely yours,

W. C. Teagle
[Enclosure]

The Executives of the Standard Oil Company of New Jersey, the Mexican Petroleum Company, the Atlantic Refining Company, the Sinclair Consolidated Oil Corporation, and the Texas Company to the Secretary of State

Sir: Your letter of 10th instant to Mr. Watriss,67 giving the substance of instructions issued to Mr. Summerlin, and of his reply stating that the Government of Mexico will receive with pleasure the representatives of the interested companies and discuss with them the matter of Mexico’s export tax on oil, has been submitted to the companies at interest.

We, the undersigned, have been appointed as a committee to go to Mexico, with full power to act for the companies. We shall be in position to make decisions on the ground, and we are ready to start as soon as it is advisable to go.

[Page 454]

We hope to bring out, if possible,

  • First: A settlement of the tax matter on a basis which will permit the companies to operate, and which will be of permanent nature, so that the companies can know the cost of raw material which enters into the products which they market largely under long term contracts.
  • Second: If the first cannot be accomplished at this time, then and in the alternative we would ask (a) an interim abatement of the taxes in question for a reasonable time, pending such readjustment of operations by the companies as may be necessary under the new conditions brought about by the increased taxes, or at least pending full discussion and study of the matter, or again in the alternative (b) that the collection of the taxes in question be suspended during the period last mentioned, without prejudice to the right of Mexico to collect back to the effective dates of the decrees if final negotiations shall fail.

On behalf of the companies at interest we respectfully request that, if consistent with the views and policy of the State Department, a communication be telegraphed to Mexico stating that the companies have appointed a committee composed of executives of five of the principal companies and that the committee has indicated an intention of communicating with the Department of Hacienda and Public Credit, in accordance with the courteous suggestion transmitted through Mr. Summerlin, with a view of arranging for a conference in Mexico City. And it will greatly strengthen the position of the committee if the State Department can add the expression of a hope that all differences may be settled amicably, and also that in event of prolonged negotiations the Mexican authorities can see their way clear in the interest of commerce between the two countries to hold in suspense during the meantime the decree[s] in question. It might be better still—and we certainly would expect that view of the matter if you should feel that the result could be accomplished—if in lieu of the State Department acting in accordance with the suggestion contained in the last preceding sentence of this letter you should ask that pending arrival of the committee and the negotiations which would ensue, the taxes in question be abated in accordance with “A” of paragraph marked second above.

In connection with the foregoing, let us suggest, Mr. Secretary, that it will be very desirable if these decrees can be suspended until the Committee of International Bankers have completed the negotiations in which they are about to engage.68 We believe it probable at least that our committee upon going to Mexico may be asked for a loan, the making of which might conflict with other plans. If such a request should be made, it might be possible to promise good offices and defer action until the bankers are ready to negotiate, and then [Page 455] merge the entire matter into a single plan. We have discussed our program with Mr. Lamont69 and he is in accord. We might even delay our going until Mr. Lamont goes.

The taxes in question, which as you know, are in addition to already heavy export taxes, have had the effect of reducing oil exports from Mexico to such extent that some of the companies are greatly embarrassed in filling contracts made prior to the issuance of the decrees, and it now appears that in order to carry out their contracts they must resume shipments and submit to the losses resulting from the decrees. The oil exports from Mexico in June were approximately 17,000,000 barrels, but as a result of the decrees they fell to approximately 5,000,000 barrels in July. The few companies that continued exporting under the decrees say they will not voluntarily submit to the increased taxes, and are planning to decline payment on the due date, August 25th, which, unless we can accomplish something by our negotiations, will add to the already difficult situation.

We would appreciate the earliest possible decision by the State Department. If our plan is not objectionable to the Department, and you will send a telegram such as we have requested, we will get in communication with the Department of Hacienda and Public Credit at Mexico City now or later as you may think best. It might be possible for us to dispatch our telegram on Saturday of this week, or Monday next, in event you may decide that the State Department should not make the effort for the interim abatement of taxes. If our plan in any way conflicts with the views of policy of the State Department, we shall be glad to obtain an appointment with you and will come immediately to Washington for a conference. Please direct your reply to Mr. Teagle, 26 Broadway, New York.

We are taking every precaution to guard against publicity, as we feel that erroneous impressions might be created and the purposes of our mission defeated.

Yours very truly,

W. C. Teagle

President, Standard Oil Co. of New Jersey
Edward L. Doheny

President, Mexican, Petroleum Company
J. W. Van Dyke

President, Atlantic Refining Company
H. F. Sinclair

Chairman, Sinclair Consolidated Oil Corp’n
Amos L. Beaty

President, The Texas Company
  1. Not printed.
  2. See pp. 493504.
  3. Thomas W. Lamont, Alternate Chairman of the International Committee of Bankers on Mexico.