Evening star., 1939-08-31

wells tied up be- David Lawrence.
cause of inability to continue to sup
ply the axis powers with the con-
f1scated oil as at present. and the
American Government could not af-
ford to let the Mexican supply 20
unused.
Hence an early settlement of the
MeXlcan-American controversy be-
comes of strategic Importance from
q national defense standpoint.
Thus, while the quantities of oil
suitable for fuel purposes in Mexico
are relatively small when compared
to the total fuel requirements of the
United States, new equipment, such
as pipe lines, storage tanks, refineries
and facilities for deep draft vessels
could take care of much larger VOL
ume of crude oil than at present.
This could be done quickly if the
American or Mexican government
would guarantee the capital invest
ment
Effect May Be Far Reaching.
The effect on the whole Western
Hemisphere may be far-reaching
when nations east of Gibraltar are
cut of from their normal sources of
supply. Also, it is considered waste
ful to drain the valuable gasoline
producing reserves when other fuel
Oil sources can be made available.
Nor would it be practicable, accord
ing to Oil experts. to draw supplies
OF fuel oil from California because
OF the long voyage through the
Canal. Likewise, the West Coast oil
Is needed for industry there, and
naval uses in the Pacific.
The national defense policies of
the United States, being so closely
related to what might become avail
able from the Mexican oil wells,
are being re-eXamined in the light
OF the Mexican controversy There
has been protracted controversy
over the seizure of the oil proper
ties. The Department of State has
insisted that while Mexico has a
right to conflscate. she must pay for
what she seizeS. This is the oldest
OF rules in international law. Mex
leo. on the other hand, has been
evading the issue of compensation
by declaring she will pay with the
oil taken from the ground. The
Mexican contention is that the sub
soil rights belong to the government.
Such definition of "compensa-
ton" is not only unacceptable to the
American Government, but if
value were placed on the subsoil
rights, the Mexican financial re-
sources would not be sufficient to
pay for them.
Subject of Litigation.
The question of subsoil rights has
long been a subject of litigation, and
the Mexican government in the past
has accepted the American inter-
probation, and her own Supreme
Court has at one time upheld the
view that the subsoil rights went
originally with the properties. At
tempts to modify the constitution
to take away future subsoil rights
and apply the rule retroactively have
met with opposition from owners
of the properties and from foreign
governments generally.
In problem of this sort, the
American Government can argue
with Mexico indefinitely, or it can
exert economic pressure. There is
already sentiment in Congress in
favor of cutting off all purchases
by the United States of foreign sill
yer, and this action would seriously
disturb Mexico's economy. Many
members of Congress feel that Mex
leo has not played ball fairly with
the American owners of property,
who invested their money on the
assumption that the rules of inter-
national law about confiscation
would be obeyed.
At the next session of Congress,
when the whole subject of national
defense will be uppermost in the
minds of members of Congress,
there will be no disposition to hag-
gle about technical questions such
as are being raised by Mexico, but
the problem will doubtless be faced
realistically. In other words, if
Mexico prevents the United States
from having an adequate 1uel OIL
supply and continues to ignore the
basic rules of compensation for
property seized, the relations be-
tween the two countries on an eco
nomic basis. which have hitherto
been friendly, will necessarily be-
come strained.
A simple formula for partner
ship in the properties of the oil
companies, as between the Mexican
government and American owners,
with provision for American con-
troll and management, has been sug-
gested in private negotiations, but
without success. Recent events in
Europe should tend now to ac-
celerate a settlement.
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