812.6363/1908

The Ambassador in Mexico (Sheffield) to the Secretary of State

No. 2568

Sir: I have the honor to refer further to the Department’s telegram No. 241, received on July 20, 1926, regarding oil drilling permits, and to state that the British Minister called on me on July 21 in company with Mr. J. A. Assheton, legal counsel for the Aguila Company, a British-owned organization, for the purpose of discussing the steps which were to be taken in connection with this matter.

I informed Mr. Ovey and Mr. Assheton in confidence of the steps which the Embassy had already taken and which were apparently already known to both. Mr. Assheton stated that his Company, while not wishing to make an issue of the question of unlimited bond, would not accept the conditions of the order as it now stood, particularly the third and fourth paragraphs. The Department will recall from my despatch number 2554 of July 20, 1926,67 that this corresponds with the attitude as expressed to me of the Standard Oil and Huasteca companies. I was glad to be assured by Mr. Assheton that his Company would not, as erroneously reported in my telegram No. 317 of July 19, 1926, 2 p.m., agree to the conditions of the administrative order of June 8th. The British Minister stated that he intended, at a meeting with the President which would shortly take place, to present a memorandum prepared by the Aguila Company, protesting against the provisions of the order. I am transmitting a copy of this memorandum in a separate despatch.67

As reported in my telegram No. 319 of today, 12 noon, all of the oil producing companies in Mexico appear to be taking a firm attitude [Page 682] in opposition to the administrative order of June 8, 1926. The only difference of opinion among the companies at the present time seems to be as to the advisability of applying for concessions under the recently enacted petroleum law and regulations, thereby tacitly admitting the weakness of their position with respect to pre-constitutional rights. It is my understanding that both the Aguila and Corona companies, respectively British and Dutch owned, have applied for concessions to drill under the existing law.

I have [etc.]

James R. Sheffield
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