600.127/250
The Chargé in Mexico (Summerlin) to
the Secretary of State
Mexico, September 8,
1921.
[Received September 21.]
No. 4301
Sir: In confirmation of my telegram No. 173,
September 4, two p.m.,72
reporting briefly the basis of agreement concluded between the five oil
company Presidents, representing American Oil Companies, and Mr. de la
Huerta, the Mexican Secretary of the Treasury and Public Credit, I have
the honor to forward herewith copy of a confidential report prepared on
the night of September third by Mr. Teagle, the President of the
Standard Oil Company, Chairman of the Committee. A copy of this report
was furnished me on the fourth instant.
The entire local press of the fourth instant featured reports of an
agreement having been reached as a result of these conferences and great
credit was given Mr. de la Huerta for their successful termination, but
the nature of the agreement has not been made public. The announcement
has had an excellent effect here, and [Page 458] one of the local papers stated that the members of
the petroleum committee had promised to work for the recognition of
General Obregon.
I have [etc.]
[Enclosure]
Report of a Meeting of the Committee of
Oil-Company Executives with their Tampico Managers, at Mexico,
D. F., September 3, 1921
Chairman Teagle: Gentlemen, we have just
concluded an agreement with Secretary de la Huerta, and he has
agreed to give out a statement to the newspapers at 9:30 tonight.
The basis is, as follows:
- First: The companies will pay to
the Mexican Government, either in Mexican gold at the City
of Mexico or by their drafts payable in U.S. Cy. at New York
at the rate of one dollar for two pesos, the full amount of
the production tax on the quantity of crude petroleum or its
derivatives produced during July 1921. (Our idea is that all
of the Managers here who have not the available gold should,
on Monday, draw a draft on New York for these various
payments; or, if you do not wish to draw a draft, you can
arrange to telegraph your New York office to deposit the
funds in the Equitable Trust Company for account of the
Mexican Government. Details to be arranged with the
Government.)
- Second: The Mexican Government will
issue a decree postponing up to the 25th of December, 1921
the effective date provided for in the decree of June 7,
1921 for the payment of the export tax to which this decree
refers. (In other words, no export tax payable by any one on
shipments from the first of July on.)
- Third: Oil in storage on the 30th
of June 1921 will pay the production tax applicable to the
various products in storage.
- Fourth: Oil produced from August 1,
1921 shall be subject to the production tax in accordance
with the valuations to be established in circulars issued in
accordance with the decree of May 24th.74
(Example: Circular 114 covers the tax for August.)
- Fifth: The Mexican Government will
repeal the infalsicable [sic]
tax,75 established in addition to the other
taxes levied on petroleum. (Note: Effective back to June
30th and forward.)
- Seventh:76 Upon the oil
companies making the payment (which must be made in
accordance with Article 1), the Mexican Government [Page 459] will release all
embargoes, and set aside all proceedings now pending against
the oil companies on account of their resistance in paying
the taxes levied under the decree of May 24th and June 7th,
and such companies, respectively, in turn, at their own
cost, will dismiss their amparo
proceedings on the same account against officials of the
Mexican Government. (Note: The amparo
proceedings in reference apply only to the taxes levied
under the decree of May 24th and June 7th.)
Gentlemen, as I see it, there are two important features in
connection with this matter: The first is, you should all be
familiar with the agreement which we have just stated. The second is
that this memorandum should be treated as strictly
confidential. In other words, we do not wish to give out
any particulars to the newspapers here or anywhere else. If any
information regarding this matter is given out, it should come from
the Department of Hacienda.
Notes
There are no export taxes payable until the 25th of December, 1921.
In other words, the decree of June 7th has not been cancelled, but
merely suspended.
There is to be a production tax every month, but no export tax.
You pay on the 25th of each month for the oil produced during the
preceding month.
Infalsicable [sic] surtax wiped out
entirely.
Query by Mr. Doheny: What will the Manager
do in case he has refined a lot of oil?
Answer: He will not pay any tax on any
crude that he has run through his plant, but only on the products
derived therefrom, such as fuel oil, gasoline, etc.
