Evening star., 1939-08-15
BY the Associated Press.

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Following is the statement by Act
ing Secretary of State Welles on the
Mexican oil situation:
On March 18, 1898. the Mexican
government by decree undertook to
appropriate the properties in Mex
leo of certain foreign owned, includ-
ing American owned oil companies
operating there.
This action was similar in nature,
although involving investments OF
far greater magnitude, to the steps
taken by the Mexican government in
recent years to appropriate farm and
other properties belonging to Ameri-
can citizens. With regard to the
seizure of these agrarian properties,
this Government has consistently
pointed out that in the exercise of
the admitted right of all sovereign
nations to appropriate private prop
erty, such appropriation must be &C
companied, in accordance with the
recognized principles of international
law. by provision on the part of the
government of Mexico for adequate
effective, and prompt payment for
the properties seized. This latter
problem was largely settled when. on
November 9-12, 1888. the two gov
ernments exchanged communications
agreeing upon a satisfactory pro-
cedure for the determination of the
fair compensation to be given Amer
lean citizens whose lands have been
taken subsequent to August 80, 1927
and in consequence of which agree
ment, the Mexican government will
provide compensation in cash for
such properties.
Asked Prompt Compensations
Immediately following the action
taken to appropriate the petroleum
properties belonging to American cit
liens, this Government informed the
Mexican government of its expecta-
tions that prompt compensation
would be made in the form of just
and effective payment to the extent
of the fair and equitable valuation
of such properties This Govern
ments position is firmly based not
only on we'll recognized rules of in
ternational law; the elemental con-
siderations of justice and of fair
dealing which should govern the re-
lations between nations demand such
payment for the properties taken
The attitude of applying the prin-
cipleS of established international
law in the solution of this problem
has been consistently maintained by
every official of the United States
Government in it's representations to
both parties to the controversy
throughout the period of the discus
sion. Furthermore, the close and
friendly understanding which this
Government desires to continue to
maintain with the government of
Mexico requires the reciprocal as
Surance on the part of both govern
ments that their relations will in
fact be governed by such principles
of justice and of fair dealings.
Acknowledged Liability.
In the decree of appropriation it
self and on numerous occasions sub
sequently, the Mexican government
recognized its liability to make COM
pensation and stated its willingness
to discuss terms with the petroleum
companies concerned. Since that
time there have been discussions
between representatives of the Mex
lean government and of the petro-
leum companies in an endeavor to
come to some fair and equitable
agreement. This Government has
continuously and consistently sought
to facilitate and to further these ne
gotiations by conferring with both
sides, first with one and then with
the other.
For a time the conversations be-
tween both parties proceeded salts
factorily, appearing to hold promise
of an eventual solution. A set of
bases of discussion, within the scope
of which there might be found an
agreement for the future operation of
the industry, were believed to be de-
termined, but recently serious OBJ
stacle to final agreement was en-
countered. In this situation, this
Government. without prior consul
tation with either party, and in ac-
cordance with its repeatedly demo-
strated desire to further an agree
ment, informally laid before both
parties a suggested solution of this
obstacle, without requesting or re-
ceiving any commitment or obliga-
ton on the part of either party to
accept it.
Board of Nine Suggested.
This proposal was as follows: Each
party had claimed that It must con-