The Chargé in Mexico (Schoenfeld) to the Secretary of State

No. 4275

Sir: Referring to the Embassy’s confidential despatch No. 3954 of April 11, last, and to its confidential despatch No. 4096 of May 11, last,12a with regard to the situation brought about by the refusal of the Mexican Government to issue drilling permits to petroleum companies which have failed to seek confirmatory concessions on pre-constitutional lands, I have the honor to quote below in translation the text of an official statement published in this morning’s local press and issued by the Department of Industry on this subject:

“The Petroleum Agent at Tampico communicated to this Department that some companies, notwithstanding the fact that the respective drilling permits had been denied to them, were drilling and that some of them already had wells under exploitation.

“For this reason the Department ordered the closing of those wells by shutting the valves and securing them with locks, but this measure was useless since the companies, without any official authorization, broke the locks and continued to extract petroleum.

“In view of the fact that this was occurring with great frequency, the Department of Industry, Commerce and Labor requested that of War and Marine to supply it with (military) escorts with a view to preventing by means of the Federal forces that its decisions in these cases should be frustrated. Hereafter these escorts will remain at all places where the Department of Petroleum orders the closing of a well, since these closings are ordered for perfectly justified reasons, especially in the cases where the companies drill without fulfilling the requirements imposed upon them by the laws and, therefore, without having the permission of the Federation.”

It will be observed that the last sentence of this official statement clearly admits the connection between noncompliance on the part of the companies with the requirement of the Petroleum Law and Regulations regarding confirmatory concessions and the refusal of the Government to grant drilling permits. The use of the Federal military to enforce this plainly confiscatory action would seem to constitute further aggravation of a situation which appears to be growing increasingly untenable.

I have [etc.]

H. F. Arthur Schoenfeld
  1. Latter not printed.