Evening star., 1949-09-18

lAAdi hdkA4AA4ot1 dClOIl Cdl 1Co OuV ltS
ltimillion dollar loan, to the Mexi-
mt and expansion of the oil indus
lly be forgiving but forgetting the
j of the State Departments policy
degree Of craftsmanship in this
respect, but ascribe to him a sim
cere desire to maintain cordial
relations with the country north
of the border.
Regardless of the disagreements
arguments and the confusion thai
has arisen, there are many vita.
conditions to be taken into con.
sideration by our officials before
any large oil loan is made to Mex.
leo or any other country. o.
course. it Is important to keep the
friendship of the people ane
government Of Mexico, and te
maintain stable conditions in the
country next door. We are spend.
ing billions to bolster the Euro.
pean nations against communism
and any economic diaster in Mex
leo would create a dangerous stu.
alton. 1t would open the way
for political unrest and further
Communist penetration in oul
own international community.
Aid Overlooked
At the same time most people
have overlooked the fact that we
have given considerable assist
ance to Mexico in the last four or
five years. more than to any other
Latin American nation. Since
194l the Export Import Bank
alone has granted the Mexican
government more than 5000. .000.-
600 in loans and credits, for i'm
provement of railroads, hydro
eletric developments, steel mills
and other industrial purposes. In
addition the United States
Treasury has put up, or earmarked
SIS. .000, 900 to bolster the Mexican
peso. which in spite of this has
finally been devalued by nearly
eighty per cent.
The World Bank, for which we
supply 10 per cent of the
capital. has contributed $26, 6,100,-
900. For more than two years we
have been spending approximately
81 100000 a month to check the
spread Of the terrible aftosa. foot
and mouth disease. Although this
campaign is in our own interest,
nevertheless it is q life-and-d death
struggle to save the live stock OF
Mexico.
But the development and ex-
ploration OF an oil industry Is not
only an extremely speculative pro-
position; it is also costly. In the
cost Of drilling q well at not less
than $250,000. The well may
turn out to be dry. or q low yielder
which may flow for only q short
time. 1t Is highly specialized en-
terprise. which only big companies,
with millions to spend can afford
to carry on without risking bank
ruptcy.
Facing Financial Crisis
Private enterprise has been per-
fectly willing to undertake the job
in Mexico. or other Latin Ameri-
can countries, provided there is q
chance Of reaping reasonable re-
turns on their investments. But
the Mexican government has en-
acted legislation which does not
permit any new private concern
to own, control, or even operate
oil wells or refineries. The opera
ton Of the industry in Mexico is q
government monopoly. No mat
ter how you look at it, 1t is under
political domination.
Naturally 1t is expected that a
loan made by the Export Import
Bank win be repaid. The Mexican
government, as we have seen, is
already carrying a heavy obliga-
ton for loans from the bank,
which 1t is scrupulously discharg-
ing. At the same time 1t is facing
one Of the most dinicult financial
crises in the country's history.
Apparently officials Of the State
Department were favorable to
granting a moderate loan for the
Improvement Of existing facilities
such as refineries, pipelines, and
to purchase equipment in the
United States, but they were wary
OF putting up money for anything
but the improvement of physical
facilities. They also pointed out
the desirability Of the settlement
Of number Of unsatisfied claims
Of American citizens in connec-
ton with lands and rights in the
oil regions which were expropri-
ated by the Mexican Government.
Other Loans Sought
Another important point the de-
partment must not overlook is the
fact that If an oil loan is granted
Mexico it will be under pressure
to grant similar loans to Brazil.
Chile. and other Latin American
nations. We could hardly afford
to discriminate against the others.
Brazil and Chile made such re-
quests or overtures long before
Mexico and were turned down on
the grounds that there was plenty
OF private capital available for the
purpose.
About the success and efficiency
OF government management of the
oil industry in Mexico there is
still. to say the least, very large
question mark. Many outstanding
Mexicans themselves do not hesi-
tate to say the industry is badly
handled.
The labor situation in the in
dustry is greatly confused. An
industry wide strike was recently
STAYED of by granting some 25. 900
workers an average increase in
wages 0f 2M naSns a doy ~.