Evening star., 1939-08-27

Goes to Bank With Scheme.
Between 1880 and 1888 there were sew
eral minor ventures, but it was not until
the latter year that Davis hit upon the
plan that was to put him into world oil
politics. AS broker in Boston and
earlier as an oil operator he had be-
come known to officers of the First Ma
tional Bank there. When the Nazis
took over In Germany and American
credits were frozen in German invest
ments and banks, Davis approached the
First National with a highly ingenious
scheme. You have several million dol
lars in blocked marks in Germany which
are doing you no good at ALL he said.
Invest those marks in a refinery at
Hamburg. I will find oil on the world
market TO refine in that refinery and
on this process you will make a hand
some profit"
The deal was concluded There was
formed in Boston a German corporation.
Europaische Tanklager and Transport,
A. G. This company built the refinery
in Hamburg known as Eurotank. For
a time the business was successful
Shortly, however, Davis ran into a
familiar difficulty. He found it i'm
possible to obtain sufficient oil or avail
able terms to maintain a profitable level
of production. And, of course, he saw
behind this the Vaccinations of his old
enemies.
When appropriation took place in
Mexico, he naturally sought a new
source of oil. He went to Mexico City
and very soon had eliminated all COM
petitors, including Francis v. Rickett,
British free lance oil operator, and Ber-
nard E. Smith, wealthy New York stock
operator Davis convinced the Mexi-
cans that he had the financial backing
and the tankers to move their oil.
To do this, of course. he had to per-
suade them that the administration in
Washington would not be too opposed to
such deal. John L. Lewis, head of the
c. I. O., assured Mexican labor leaders
that Davis had financial resources and
tankers,. The first of the deals went
through.
lntenS1fieS Oil Warfare.
The Oil warfare was intensified. Eff
forts were made to bar Mexican oil from
every outlet. Economic pressure. the
law. nearly every means was resorted to
by the big companies.
In London Davis faced serious charges
in connection with contract for an out
let in Denmark for oil from the Ham
burg refinery. In the midst of Mex
ican negotiations year ago he had to
sail for London on fast boat to defend
himself in the courts there. He was
charged with having transferred the as
sets of Foreign Oil to Crusader Pc
troleum Industries Ltd, in order to es-
cape an arbitration award in favor of
the Danish firm.
Davis saw in this, of course, merely
another attack by 1.-The enemy" The
lower court held in favor of the Danish
company, the judge severely critizing
Davis. But the Supreme Court of
Judicature completely overruled this
judgment, pointing out that since the
assets of Foreign Oil were pledged to
the Boston bank there was no damage
done by the transfer of assets, nor any
proof of conspiracy.
The three Lord Justices who sat on
the case were in complete agreement
on the decision. And they refused to
allow an appeal to the House of Lords.
Davis felt that he had been completely
vindicated of charges inspired by his
powerful foes.
The blockade, plus the difficulties he
is encountering in obtaining oil to fill
contracts, has left Davis in a trying
situation. But it would be a mistake
to count him out because of that. He
has squeezed out of tight places often
enough in the past.
Companies More Critical.
Meanwhile the oil companies are
waiting. They say that they cannot
possibly accept less than management
of the properties no matter what the
terms of payment. To accept less, they
say, would jeopardize other and far
more important holdings in Latin
America. They are becoming openly
critical of Mexico's failure to pay and,
by implication, of the State Depart
ments failure to take stronger stand.
And in all probability the tone from
this source will become sterner.
President Cardenas cannot afford,
politically, to restore foreign managers.
Any successor, no matter how conserva-
tive or reactionary, would find this
move difficult or impossible. Already
all candidates for the 1910 election
have declared themselves in favor of
Cardenas' oil policy, including the ex-
treme rightist candidate, General AL
mazan. Such is the growing force OF
Mexican nationalism.
That is the present impasse. Mexican
exports have dropped sharply since
appropriation. Reserves of the Bank
of Mexico have fallen. There is an
acutue scarcity of foreign exchange.
Economic necessity Is no respecter of
attitudes, political or otherwise. Whether
any compromise on self-respecting
terms is still possible is question. But
If it is, then common sense plainly indi-
Gates some agreement before the in
exorable pressure of circumstances
brings about drastic change that no
one today con foresee.