812.6363/2973: Telegram
The Chargé in Mexico (Boal) to the Secretary of State
[Received August 5—8:20 a.m.]
215. Your 160, August 2, 7 p.m. Committee of experts investigating economic condition of petroleum companies presented its report to Arbitration Board on the night of August 3.60 Principal points contained therein are that oil companies have never been linked to the country and their interests have always been alien and at times [Page 660] even opposed to national interest; companies have left in the Republic only salaries and taxes without having cooperated in social progress of Mexico; that majority of companies recovered their invested capital more than 10 years ago; that on more than one occasion they have influenced national events; that oil camps in Mexico are about to be exhausted except Pozarica and El Plan; that exploration of new fields is a great national problem which must be solved, otherwise there is danger that Mexico will be obliged to import petroleum in relatively short period; that Aguila represented 59.33 per cent of total production in 1936 which tends toward monopoly; that prices of products sold in Mexico are higher than those sold abroad; that prices of petroleum products in Mexico are so high that they constitute an obstacle to economic development of nation; that annual average capitalization of defendant companies except Mexican Gulf was 164,000,000 pesos during the period 1934–1936; that annual average invested capital not amortized, except Mexican Gulf, was 335,000,000 pesos during the period 1934–1936; that average reserves and profits of defendant companies, except Mexican Gulf, during the period 1934–1936 was 79,000,000 pesos; that average of profit to capitalization, except Mexican Gulf, was 34.28 per cent during the period 1934–1936; that percentage of profit to capital invested, not amortized, except Mexican Gulf, averaged 16.81 per cent during the period 1934–1936; that profits of Mexican companies are higher than those in the United States; that profits of companies have been extraordinarily lucrative during the past 3 years and without prejudice whatsoever to their present or future position, at least during the next few years, they are perfectly able to accede to the demands of the syndicate up to an annual amount of 26,332,756 pesos which recommendations of committee would occasion exclusive of retroactive salaries, construction of hospitals, schools, water works, et cetera; that a mixed national commission be established to decide conflicts arising between company and workmen; that a 40 hour week be established on an 8 hour day basis; that 10 per cent of workmen’s salaries be deducted to which companies must place an equal fund for an employees savings fund; that workmen with up to 10 years service should enjoy 21 days vacation annually with pay and 30 days with pay annually for longer term of service; that companies should spend an additional 1 million pesos per year for hospital improvement; that partial, total and death benefits be increased as specified in the report; that pensions be increased as specified in the report; that wages during strike period should be paid and that the minimum wage should be 5.40 pesos a day, whereas minimum offered by companies in effort to settle strike was 2 pesos. Condensed statement of committee’s report being forwarded regular mail today. Companies have 72 hours [Page 661] in which to answer committee’s statement. Companies feel that report is severe enough but not as unsatisfactory as had been anticipated. Full text of committee’s report will be forwarded promptly.
I had an informal conversation with Beteta today along the lines of Department’s telegram 160 of August 2, 7 p.m., of which I am sending a mail report by next pouch. He told me that both Hacienda and Economy felt sure that there would now be no immediate steps taken to bring about objectives of the proposed petroleum decree. However, indirect word has come to Locket from Silva Herzog, financial adviser to Suarez,61 that Government contemplates increasing taxation on oil companies including National Petroleum Administration, by an additional 6 million pesos yearly.
- See “Report Submitted to the Federal Board of Conciliation and Arbitration in the Conflict of Economic Order in the Petroleum Industry,” in Mexico’s Oil, a Compilation of Official Documents in the Conflict of Economic Order in the Petroleum Industry, with an Introduction Summarizing its Causes and Consequences (Government of Mexico, Mexico City, 1940), p. 5.↩
- Eduardo Suarez, Mexican Minister for Finance.↩