Evening star., 1938-07-10
OIL SETTLEMENT
|SEXPECTED SOON
Early Accord Is Forecast
Due to Attitude of
Companies.
By tie Associated Press.

By tie Associated Press.
Persons close to the State Depart
ment predicted yesterday that the
controversy over Mexico's seizure OF
American-owned oil properties would
b. settled within a matter Of weeks,
due to "softening" in the attitude OF
the American oil companies.
They based this forecast on recent
developments here and in Mexico.
One Of these was the speech made
last week before the University of
Virginia Institute of Public Affairs by
Maj. T, r. Armstrong. representative
OF the Standard Oil Co., in discussions
with the State Department.
Maj. Armstrong proposed two solu-
nons. one that the matter be sub
mitted to the International Court at
The Hague, the other that a commit
tee composed Of an American, an
Englishmsn and Mexican be ap-
pointed to manage the oil properties
conflscated by the Mexican govern
ment.
Not Basis for Solution,
State Department said these proposals
did not represent . basis for a solu-
ton, in their opinion. but indicated
the oil companies were receding from
the rigid position they had main
tained-full payment in cash for the
appropriated properties or return Of
those properties.
The State Department is distin, tly
opposed to the idea of an arbitration
by The Hague court Knowing the
length OF time taken by most arbitra
tlons, 1t takes the view much trouble
would be caused in Mexico before the
Issue could be settled by The Hague.
The oil companies are discussing
The proposals OF President Cardenas
OF Mexico. These have never been
made public. but 1t is believed widely
they are based on the proposition set
forth by Cardenas at a press con-
ference.
President Cardenas suggested in
this conference that he turn over to
the foreign Oil companies, American n.
British and Dutch, go per cent of
the oil produced by the Mexican
government owned (expropriated)
wells. The companies could sell the
OIL abroad. he said. and over a period
OF 10 to IS years retire the principal
OF their investment. He did not
clarity whether he would turn over
the oil without charge or at cost of
production; here it is believed that
ne had the latter in mind.
Retirement at Low Rate.
Retirement Of principal on this
oasis would be at very low rate if
the valuation fixed informally by the
oil companies themselves were ac-
cepted. This is around s42S 900. 900
to $40. .ooo. 900.
At the State Department. a much
smaller valuation is favored The
Department leans more toward an in
formal Mexican valua ton of $45. .OO0.-
600 than it does toward the oil
companies appraisal.
It is believed here that the Amer
lean oil companies are paving in
creaslng attention to the advice the
State Department has given them
This is, in effect: DO not unoer-
estimate the strength of a revolution ="
The companies had thought that the
Mexican government. finding itself
without foreign markets for its oil,
would collapse shortly as a result OF
economic unrest or would ca apitulate
to the companies. The State Depart
ment reasoned that the Cardenas
government was in reality an eco
nomic revolutionary government and
had behind it momentum that would
carry 1t over the hurdle. envisioned BY
the companies.