New-York tribune., 1919-01-07
Oil Producers Will
Not Pay Royalties
To Mexican Govt
Assert Payment Would BE
Tantamouni to Admis-
sion OF State Rights
4 hat Do MOI + * > t

Denial was made yesterday by the
executive committee of the Association
OF Mexican Oil Producers of reports
that the American oil interests, as a
result of conferences held here recent
iy with Alfredo J. Pam, representative
Of the Mexican government, had sub
mltted memorandum to Carranza
bearing the Endorsement Of PAM,
stating THEN willingness to pay salts
factory and reasonable royalties to the
Mexican government provided they
were guaranteed absolute ownership
OF and title to the sub-surface rights
Of all oil properties held by them
prior to May 1, 1917 statement is
sued by the committee declared that
the reports in question "obviously en-
anated from unsympathetic sources y
which was taken to mean sources close
10 the Mexican government
In It's statement the executive com
mittee of the Mexican producers
points out that the first thing involved
IN the controversy between the oil
companies and the Mexican govern
ment is the effort of the latter TO take
over all the petroleum in the republic
thus oVerturnng laws of long stand
ing, on the basis of which the owners
OF the SOIL were expressly declared to
be the owners of all petroleum i'm the
sub-soil In Article q of the Mexi-
can Constitution, which became efec-
tive May /, 1917, the government as
sumed to deny the title Of private
owners and TO claim as its own all pc
tro!eum within the boundaries of the
republic. The CaWanza government
early this year undertook by various
DEGREES to put this article into effect
out the companies nave strenuously
opposed such action ON the ground
that ii would mean confscation. In
the negotiations that have followed
and which are still being carried on the
companies have taken the position.
according to the statement. that they
viii not acquiesce in this policy of the
Mexican government and that they will
insist on full and complete rccogn-
Uon Of their vested rights.
Refuse to Pay Royalties
The statement Of the COMMITTEES
specifically says: Sin the DEGREES that
have been signed by President Car
1anza and in petroleum law which
he had submitted to the Mexican Con
gress, the companies have found what
appears TO be determined policy, de-
spite the governments profcssed will
ngness to recognize their vested
rights, to require them to pay rentals
and royalties to the government OF
course the payment Of rentals and
royalties can mean only recognition OF
the governments ownership, for it is
inconceivaDlc that one can pay rentals
and royalties to any one except the
owner Of the property
"Seeing mat their acquiescence in
this plaa would be subversiVe Of the
very principle that they are contend
ing for tnc companies have refused to
give their approval. They have re-
ceivcd repeated assurances from the
representatives OF the Mexican govern
ment having charge Of the petroleum
problem that their rights would be
recognized i'm absolute fashion. but
every time the scheme was reduced to
writing it has been fourd 10 contain
the Objectionable requirement that the
companies pay rentals and royalties"
Attention is also called to the
troublesome matter of taxes The
statement declares that time and time
again the compgnies have expressed
their Willingness TO pay reasonable
taxes. At the present time they are
paying as an export tax alone theo-
rctically 10 per cent on all production.
but actually because of arbitrary and
excessive valuations adopted bv the
Executive this amounts to sometimes
like 20 per cent.