New-York tribune., 1919-04-13
The Other Side of
The Oil Dispute
Financial Editor New York Tribune.

%, which tends to justify the Mexican
attempt to contiscate the oil properties
in Mexico legally acquired by American
companies, and, in the mind Of our gov
ernment and every expert, vitality nee
essary for the success of our merchant
marine. The fact that the government
of Great Britain has recently acquired
all British and Dutch interests in oil
fields in Mexico for the salvation of
England's merchant marine is sufficient
proof of the foregoing statement.
Your correspondent evidently fell
into the hands of some Mexican zealot,
and has not heard the side Of this
question supported by our own govern
ment.
Permit us to quote: "Some form of
taxation must be devised by which
petroleum shall pay its share toward
the common veal" This implies that
petroleum pays little or no tax in Mex
ico AS a matter of fact, 90 per cent of
Mexico's petroleum production is ex-
ported, and petroleum pays an export
tax which amounts to from 90 to SO
per cent OF its value at its port of ex-
port. This is 100 to 800 per cent more
than any Mexican tax on any other
product. And the export tax is not the
only tax paid on petroleum. "The Mex
lean view of Article 27 of the constitu-
tion is based on the old Spanish law of
rp01 DrO0ort,y CDo1;cL I,,l
grants conveyed merely the surface
soil suitable for agriculture" Your
correspondent has been wofully mis-
informed. The Spanish grants passed
right to extract anything in the
subsoil with the exception Of specified
precious metals which were reserved to
the patrimony of the Spanish Crown.
Any guarantee could take clay granite,
salt or any other mineral not reserved
to the Grown from beneath his own
property.
The first mining law passed by Mex
ico specifically recognized this prin
clple and stated coal and petroleum as
among the minerals belonging to the
owner of the surface
Nevertheless, Mr. De Becker saws it
would be illogical to apply the legal
principles governing mines" of re-
served precious metals to petroleum.
The United States government. Emo
land, France and Holland have all pro-
tested against Mexico's proposed con-
fscation of petroleum, on the law above
stated and on the fact that their citi-
zens had created an industry OF petro-
leum development based upon lease and
ownership Of oil deposits under those
laws. The issue is clear-tho respon-
sible governments say "Thou shalt not
steal" Your CORRESPONDENT unfortu-
nately has been misinformed, and is
supporting the contention that confsca-
ton isn't theft. We much regret that
The Tribune has spread this mistaken
concept through the article in question
A most important misstatcment in
the article in question is as follows:
me Oh. interests had set up
state within a state in the oil
jungles. commanded by General Man
uel Pelaez and General Enriquez, who
pretended to hold subordinate an+hor-
ity from Villa"
he proceeds to give an historical
statement of a revolution in the Do
minican canefelds organized bv an
American sugar company and states
the cases are similar
Nothing falser nor moro damacinr
to honorable American companies could
possibly appear in print The first
tribute exacted from American oil
companies in Mexico was cxactcd INV
General Aguilar, recently Secretary Of
State under Carranza, when he COM
manded revolutionary forces in the
Jungle Ho threatened to close in tho
wells, causing them to burst. unless y
total OF $4,000 was Immediately paid
The American companies then SOUGHT
the advice cf John Lind. personal
representative cf President Wilson
and on his advice paid this money to
the Carranza movement, then in the
same category that Palace now je
Alter the dc facto recognition of the
'arranza government local inhabitants
rose IN arms against Carranza and
made the same demands that Aguilar
had made. The companies, as before
set the case before our own State 10
partment and the representative of the
'arranza government in WASHINGTON.
mr. Arredondo advised the oil comma
mes to pay the tribute demanded Tho
companies have since then continually
paid tribute to pelaez, who until re-
Gently has dominated the fields with q
1uil knowledge of tho American and
mexican governments. But when Mr..
oe Becker accuses Americans of msot-
ting up state within a state" he
makes damaging misstatcmcnt which
IL attachablc TO any one company would
be an exceedingly serious matter.
He proceeds: "The retroactive feot-
ure OF Article 27 was in retaliation"
(referring to the constitutional nro-
VISION confiscating petroleum Iands).
ME- dc Becker again has been nisin-
formed. The radical clement of tho
Carranza revolutionary government had
determined to acquire oil prouerties
developed by foreign enterprise and
capital long before Pclaez rose in arms.