600.127/261
The Chargé in Mexico (Surnmerlin) to the Secretary of State
[Received December 29.]
Sir: I have the honor to refer to the Embassy’s despatch No. 3969 of June 16, 1921,77 with which was enclosed a translation of the Executive Decree dated June 7, 1921, imposing an additional tax on petroleum exported from Mexico. At the time this Decree was published, the local press stressed the point that the revenues received under this Decree were to be placed aside for the resumption of interest payments on the country’s national debt. However, the Decree states that these taxes are destined to be used “to cover some of [Page 460] its (the Government’s) urgent expenses and to assist it to renew payments on the national debt”. The Department will recall that in the agreement concluded between Secretary of the Treasury de la Huerta and the Presidents of five oil companies, representing American oil companies, on September 3, last, it was agreed to postpone until December 25, next, the payment of the export tax provided for by the above-mentioned Decree. (Please see the Embassy’s despatch No. 4301, September 8, 1921). In this connection, I may refer also to the enclosure with the Embassy’s confidential despatch No. 4465 of October 21, 1921,78 or to that part of it which refers to a provision in the so-called oil agreement which is reported to provide that the oil producers shall arrange with some banking syndicate to purchase Mexican bonds at an average market price of say forty or fifty and turn them over to the oil producers who in turn would pay them over at par to the Mexican authorities in payment of these export taxes. The local press has announced that these export taxes, which it is stated will amount to slightly more than twenty-two million six hundred thousand pesos, will be paid, but that the matter is receiving the active attention of General Obregon. In view of the reported depleted condition of the Treasury, it is believed that the Mexican authorities may now be easily dissuaded from the original plan to receive Mexican bonds in payment of these export taxes. Whether or not the oil producers will be able to pay these export taxes in cash at forty per cent of the scale set forth in the June seventh Decree, will probably be discussed in New York, in the very near future, between Mr. de la Huerta, the Secretary of the Treasury, and the Committee of Oil Executives. I am reliably informed that Mr. de la Huerta will proceed to New York for further conferences, in a few days, and that he will be accompanied by Mr. Eduardo Iturbide, the local representative of Speyer and Company, and Mr. Manuel Martinez del Campo.
Yesterday’s Excelsior published a special despatch from New York, dated December 12th, on the subject of the petroleum exportation tax as interrelated with the bonds representing Mexico’s foreign debt. Among other things, the article recited that the matter of the deferred petroleum export tax payment is now being handled by means of cables; that rumors are current in Wall Street that the petroleum companies are encountering great difficulties in purchasing in the Exchange the bonds of Mexico’s foreign debt that the Mexican, Government insists must serve as payment of sixty per cent of the exportation imposts, inasmuch as it seems that the banks are monopolizing the bonds in question with the object of precluding the petroleum companies’ delivering them to the Mexican [Page 461] Government. In this connection, it is said that these companies have proposed to the Mexican Government to deposit a sum of money in the “Banco Nacional” representing the bonds whose acquisition is causing so much difficulty.
I have [etc.]