[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
New
York, August 18,
1921.
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