Evening star., 1941-11-05

~
in Mexico and
make possible David Lawrence.
developments essential TO good
neighbor policy. but the stumbling
block is matter of principle re-
lating to the treatment of Ameri-
can capital by the Mexican gov
ernment.
The proposed arrangement means
that the United States Government
will be lending Mexico a large sum
out of which payment will be made
to American Oil companies for oil
lands confiscated by the Mexican
authorities. If the United States is
footing the bill indirectly for an
act Of conflscation, it is natural that
the subject should be carefully ex-
amined before government funds
are used for any such purpose.
The controversy over Mexican oil
lands has extended over many years.
Mexico contends that she has the
right to sub-surface minerals but
she does not realize that the leases
previously granted gave American
companies the right to develop such
mineral lands. Hence compensation
must be on the basis of what the
American companies have invested
or else it is not just compensation
~ M Nf tt,tn To-
and equity.
Method vexing.
The desire of Mexico to establish
sovereignty over her oil lands and
to keep foreign companies from
owning such minerals is understand
able but the method chosen to at
tain that objective is what has made
the problem so vexatious. The
United States Government can
hardly condone the confiScation of
private property by any government
in violation of established leases
and contracts made originally with
the encourag cement of that same
1orelSn government.
In note after note sent to Mexico
the State Department has, taken
position OH principle and it would
lie surprising if any course of ex-
r05iancy prompted the department
81 this time to abandon its prin-
Ciple, If it does, American property
and American capital in the future
can hardly be called safe either in
Latin America or in any other for
eign country. The implications are
worldwide.
President Camacho of Mexico
owes his present position to no
small extent to the moral support
given him after the last election
when formal recognition was ex-
tended by the United States. Senor
Camacho is we'll liked in Washing
ton, where it is realized that he has
In mind a constructive program for
his own country and an era of en-
during friendship with the United
States. 1t is important, therefore,
that in the handling of perplexing
Issues arising out of recent contro-
versies due account be taken of his
difficulties.
Makes Partnership.
The oil companies of the United
States have endeavored to present a
program of compromise which will,
on one hand, meet the main desire
of the Mexican government and at
the same time avoid the taking of
any step which will blot Mexico's
record in the eyes of foreign inves-
tors whose good will for the long run
is 50 necessary to any country de-
pendent on foreign capital.
The program involves the recog-
milton by the oil companies of the
ownership by Mexico of all sub-soil
rights. This is step far beyond
anything heretofore conceded. But
along with this concession goes the
proposal that the Mexican govern
ment and the American oil COM
panies enter into partnership for
the development of the oil lands on
a percentage basis whereby over a
long term of years the Mexican gov
eminent will get substantial share
of royalties while the American COM
panies assume the responsibilities of
management Clauses that will pro-
tect labor standards can doubtless he
agreed on, but the important thing
Is that a system of Joint develop
ment may be introduced which will
mean rising production of oil in
the future and a rising nationa!
revenue for Mexico from petroleum
products.
Revenue Cut by ConfiscatiOn.
The present controversy is due to
radical and left-Wing elements in
the labor groups in Mexico who per-
suaded the administration preceding
that of President Camacho, namely
that of President Cardenas. to en-
bark on policy Of outright confis-
cation. Since that time Mexican
government receipts from Oil taxes
have diminished and unemployment
has been increased due to failure of
the Oil wells to be operated effec-
lively.
Mexico needs helping hand in a
financial and economic sense, but
the barrier to cleanup of irrita
tions is the oil controversy. Once
this is settled on an equitable basis
and it can be-the intimacy OF
Mexico and the United States in
the evolution of defense policies can
lead to an era of good feeling such
as never before has prevailed be-
tween the two countries. This will
come in handy, especially in the
OOSt-War DeriOd which will be a