Evening star., 1938-03-27

ohN houoCND-
Merican financial stringency oc-
Cured simultaneously Dith erpro-
prtdtton OF II foreign -o,Dned oil
companies one Ueek ago. Foreign
exchange dealings Uere suspended
at that time by the Central Bank
OF Merico and peso quotations sub
seQuently dropped as lou as $50 to
the dollar.
BY the Associated Press.
MEXICO CITY, March 26.-Fi-
nancial circles predicted today Mexico
would be forced to resort to controlled
Imitation to ease the monetary situa-
ton precipitated by appropriation of
the foreign oil industry.
The predictions came from bankers
who said they were based primarily on
the tightness of credit, which has put
business almost on a 100 per cent cash
basis.
Their views coincided with an as
sertion by Minister of Finance Eduardo
Suarez that the exchange rate of
$50 pesos to the dollar, in effect be-
fore President Lazaro Cardenas ex-
preparation decree, probably could be
restored in two or three weeks" pro-
vided the people respond to the
necessities of the situation"
Peso Exchange Improves.
The peso improved sharply in to-
days trading, with bankers buying
dollars at the rate of 40 pesos to the
dollar and selling them at 4,20, an
improvement of 80 points over yester-
days closing quotations.
Foreign exchange dealings were
suspended by the Central Bank of
Mexico when the foreign oil industry
was appropriated.
Suarez said everything depended on
the reception accorded the proposed
domestic loan of 100000. 900 pesos to
help indemnify the owners of the ex-
propriated oil properties.
Diplomatic quarters concurred in
the bankers statements that imitation
was likely unless the monetary situa-
tion changed radically.
The credit situation was attributed
to the uncertainty of the peso. the
government lack of cash and the in
ability of the Central Bank of Mexico
to rediscount commercial paper.
Pay Roll Met Promptly.
Juan Gray, secretary general of the
oil workers syndicate and member of
the petroleum council appointed to
administer the oil industry, said the
industry's weekly pay roll of 1,l25,o00
pesos was met promptly and nor
mally"
The most difficult moment has
passed." he said.
Gray said the oil workers union
had agreed to a delay in putting into
effect certain advantages of the ar
bitral verdict raising wages and other
benefits Of the $4,000 employees Of tie
oil industry.
1t was the refusal of the British
and American petroleum companies to
put these increases into effect which
led to appropriation of their prop
critics.
They asserted that to comply would
entail an annual cost OF $l2,OOO,O 600
more than expected profits.
Gray said among the advantages
waived were Inauguration of the 40
hour week and wage boosts until
conditions are entirely normalized y
Suarez Sees Oil Men.
Suarez conferred during the after
mon with Cordenas and the cabinet
He said he also was conferring with
an unnamed representative of the for
eign companies concerning indemni-
f1cation.
A spokesman for the companies said,
however. the conference with the
finance minister was confined to tax
matters. Two of the larger companies,
Aguila and Huasteca, the latter a
subsidiary of the Standard Oil Of New
Jersey, have been presented bills for
$2,00O,000 in back taxes.