The Washington times., 1922-01-11
Stuck by Huerta Bonds, They
Seek to cosrcs Ruler to
Do Their Bidding.
By HENRY wOODHOUsE.

BY HENRY wOODHOUSE.
The new oil tax in Mexico is
much higher than the old oil tar,
but at that the original cost of
Mexican oil is much lower than
American oil and the companies
make substantial profit from oper-
ating in Mexico under that tax.
How'll Was Secured
II was desirable, however. to the
oil group and to the United States
where 30 much OF the Mexican oil
comes, to have the oil tax reduced.
After considerable acrimonious
discussions and attempts to coerce
the Obregon administration into do
! ing what would probably have pre-
cipitated q new revolution. the oil
interests took q practical step-they
went to Mexico to meet Obregon.
The group OF OIL executives that
went to Mexico In August, 1891. In
cluded Walter c. Teagie, president
Of the Standard OF Company. of
New Jersey; II. L. Doheny. president
Of the Mexican Petroleum group;
Harry r. Sinclair, chairman Of the
Sinclair Consolidated Corporation; J.
w. Van Dyke. president of the At.
lantic Refining Company, and Amos
L. Beatty, president of the Texas
Company.
Quickly Reach Agreement.
They were met at San Luis Potosi
on August 2s. 1920, by representa-
tives OF Obregon and the confer.
ences began while they were on
their way to Mexico City. where
'AhAlfA n Ia
retary Of the treasury, and on Au.
gust 30 they met President Obregon
and by September 8 they had
reached an agreement settling all
the difficulties to everybody's salts
faction and removing this question
entirely. Fl
The agreement reached by the oil
men and the Obreson administration
provided that the oil men could pay
the new oil taxes with Mexican DO.
faulted bonds which they could pur-
chase in New York and elsewhere
at low price, but which the Mexicpn
treasury would accept at par. The
Mexican 5 per cent bonds were then
selling around $40 with coupons at
tached, representing q par value OF
S13S with the seven years unpaid
interest coupons. Therefore the oil
men would really only pay less than
one-third of the taxes.
Bankers Reach Scene.
This arrangement suited the oil
men perfectly and they were unani-
NOUS in feeling that the problem had
been settled to their own satisfaction
but Just then Thomas w. Lamont,
a partner Of ]. p. Morgan q Co., ar
rived in Mexico City as representative
of the group Of German, British,
French. Dutch and Swiss bankers who
have pooled their Mexican interests.
The Mexican government had said
to the oil people: "You pay your tax
and then pay this extra tax in Mexi.
can bonds, which we will accept at
par plus accrued interest, and which
you can purchase at very low
figure"
The oil men were to return to New
York and form a syndicate Of bankers
to acquire practically all the bonds,
which were to be used through q
period Of years in this way. 1t might
be said here that q large majority of
the bonds are now, and for some time
have been, in he hands OF the inter-
national bankers.
Practically all the various Mexican
bond issues that were sold In Europe
I'm the past were acquired by the
European governments and have been
given to the international bankers
as collateral for loans arranged by
these bankers, 80 that the bankers
have acquired very large part Of
the various Mexican bond issues at
an extremely low figure and expect
TO make very handsome profit by
forcing the Obregon government to
accert them at par, and herein is
.ha dtffic,,itv