Evening star., 1938-03-06
BY CRESTON b. MULLINS,


= EEDS of the New Deal planted south
of the Rio Grande are bearing thorny
\ fruit for the United States, increas-
ing the likelihood that relations with
Mexico as they have been conducted under
the good neighbor" policy will undergo a
re-examination by the State Department
soon.
Repeated avowals by Mexican statesmen
that the vast program of socialization under
the label OF the six-year plan is nothing
more than President Roosevelts reforms
applied to Mexican conditions have failed
to mask increasing sources of friction be-
tween Washington and Mexico City.
President Lazaro Cardenas has done
nothing more than take over the Roose-
Velt program of the more abundant life
and its adaptation has extended in some
cases TO the use of Mr.. Roosevelt's own
words, Mexican diplomats insist by way
OF reinsurance against American apprehen-
sions over the six-year plan.
Economy Nationalistic.
II the Mexican Specialization movement
were reduced by the contribution which the
Roosevelt program has made to it there
would remain a residue of economic ma
tionalism which is in no way related to
the American New Deal.
In this sphere of economic national.
ism the two regimes, which have 50 much
In common in other respects find them
selves at odds. The reasons NAV be
traced to combination of Mexico's grow
Ing financial difficulties and a Mexicaniza-
uon program which is gradually forcing
curtallment of foreign interests in Mexico
Although the first half of President Car
denas' term was marked by great strides
toward attainment of the goals fixed for
1s4o the second half began under
shadow OF financial complications arising
from acceleration of the land program. farm
credit and the uneasiness of capital. both
native and foreign, which has caused a
heavy movement of funds out of Mexico
and consequent decline in reserves of the
Bank of Mexico.
Under growing pressure from the agrarian
element to speed up land distributions from
the big estates, many of which still remain,
and for expanded credit, in conjunction
with the 'ejido" Communal farminp)
movement, Senor Cardenas has been forced
to seek new sources of money In his
dilemma he turned to Washington.
Mexico's most pressing need was for
maintenance of the peso in foreign ex-
change, for any decline would mean loss in
income for producers of Mexican export
surpluses, and consequent lowering of the
wages Of labor and returns to the farmer.
Minister Of Finance Eduardo Suarez in a
visit to the United States two months ago
sold the United States Treasury, through
the Federal Reserve Bank of New York, the
35,000,000 ounces of silver accumulated by
the Bank of Mexico under the London
agreement of 1884 in addition to obtaining
IN American agreement to purchase
monthly during 1888 100000 ounces of
newly-mined Mexican silver.
In addition, the Mexican government has
been reported recently seeking loans in
Boston and London.
Moves to Aid Budget.
Supplementing these requests for finan-
eial assistance from abroad, President Car
denas is undertaking to strengthen his bud
gets for the agrarian benefits by retaining
within the country as much as possible of
the capital Mexico produces. This takes
the form at present of increasing pressure
upon foreign firms exploiting Mexican oil
resources to pay royalties upon their pro-
duction and drastic curtailment of Mexican
imports. The United States is the princi-
pal supplier OF those imports, its trade
amounting to about 10000 900 annually
The oil controversy has been of long
duration, but the question of royalties has
been but recently revived in the debate
Within socialist economy which Presi-
dent Cardenas processes as his aim the
right of society to reap the reward from
exploitation of its natural resources is
fundamental.
Naturalization Declared in 1917.
The principle of naturalization of the
subsoil was contained in article q of the
Mexican Constitution of 1917. The oil
companies had obtained their land titles
under laws of 1884, 1892 and 1909, which,
they contended, vested ownership of petro-
leum deposits in the owners of the surface
land.
The Mexican Supreme Court, holding in
1921 that article q did not apply to oil
rights obtained before 1917 expounded the
new doctrine-that those rights were con-
ditioned upon some positive act' being
performed toward exploitation Of the hold
1ngs. This struck directly at vast oil re-
serves held with expectation of future work.
ing.
When the Mexican Congress passed a
law in 1925 requiring holders of land on
which some positive act" had been per-
formed to exchange their titles for conces-
sions, running to a maximum of so years.
the controversy flared and the deadlock
was broken only in 1928 when Ambassador
Dwight Morrow and President Plutarco
Elias Gales compromised in an unwritten
agreement.
Mexico agreed to apply broadly the doc
trine Of positive acts" by granting con-
Armatory concessions recognizing acquired
rights and removing the 50-year time limit
from concessions. The United States ac-
cepted the doctrine Of positive acts" in its
broadened application and agreed to the
confirmation of titles by concessions How
ever lands on which no positive act" had
h>>o v>nr<or,,, uyoro II, 17nfQVnrah1e a