611.127/395

The Chief of the Division of Mexican Affairs, Department of State ( Hanna ) to the Secretary of State

Dear Mr. Secretary: Mr. Harold Walker45 told me this morning that Mr. de la Huerta, before leaving New York City, made the demand on the petroleum companies for the export taxes due for shipments of petroleum from Mexico since January last amounting to approximately 12,000,000 pesos. Mr. Walker added that it is the intention of the companies to pay these taxes. As you know, this is the tax that General Obregon pledged to the payment of interest on the Mexican debt.

Mr. Walker stated further that the production tax on petroleum for June fell off from 6,000,000 to 4,000,000 pesos, and that, due to salt water in the Toteco field and other reasons, a further decrease of 2,000,000 pesos in this tax may be expected in August. For similar reasons, there will also be a decrease in the export tax amounting to about 1,250,000 pesos in August. It is expected that these reductions on the present tax basis may continue for some time and, consequently, Mr. Walker fears that the tax rates may be materially increased in the near future.

M[atthew] E. H[anna]
  1. Representative of the Mexican Petroleum Company.