In connection with the expropriation of British and American oil concerns by the Mexican Government, this journal had Occasion on March 22 to publish a short criticism of the action taken by President Cardenas's administration, It was unlikely that local Mexicans would entirely appreciate what was then written, and the Mexican Legation sought to refute this journal's remarks in a communication addressed to a local contemporary. The Legation appears to have been under the impression that such a letter might not have been published in this journal, but, as evidence that it would, a communication appearing in the correspondence columns to-day is sufficient proof. This journal is not concerned to answer the Legation's communication as it has not appeared in these columns, but rather to give here a general review of the process which has led to this present expropriation. Since the fall of Porfirio Daiz, who, with the exception of four years, ruled Mexico from 1876 to 1911, internal disturbances in Mexico in which no fewer than eleven presidents figured have continued with varying degrees of intensity and considerable friction—amounting almost to a state of war—arose with the United States. In 1914, Venustiano Carranza assumed control of the government introducing anti-foreign legislation and giving every indication of xenophobia. He started off with the seizure of many properties, some of them being British, and this led to the refusal of the British Government to recognize his administration. The degree to which Carranza departed from his declaration of neutrality during the Great War undoubtedly influenced the British Government when this policy was adopted. Following Carranza's fall brought about by a further revolution in 1920, when he is believed to have been shot by the insurgents, de la Huerta became provisional President, and he, on December 1, 1920, was succeeded by General Obregon, whose coup d'état had brought about Carranza's downfall.
The new government determined to uphold the Carranza constitution drawn up in 1917 which had led to confiscatory measures in connection with the nationalization of the petroleum of the country, and contained, among other departures from the accepted comity of nations, provisions restricting the rights of foreigners which caused the British, American, French and Belgian governments to adopt a policy of non-recognition of Obregon's administration. Under his regime hundreds of properties were expropriated without compensation. Considerable foreign indignation was aroused and protests were made, but eventually all the Powers with the exception of Great Britain conceded recognition, the latter holding out until 1925 when relations between the two countries were re-established. The passage of legislation providing for expropriation may make that process perfectly legal so far as the country itself is concerned, but the fact is that the legislation itself is just as immoral as the end which the legislature had in view. There have been expropriations of land where compensation has been paid in bonds which have sadly depreciated. There are indications in the reports which are coming to hand that President Cardenas's Govt ment is seeking to create counterclaims against the companies they have confiscated to offset the demands for compensation which are being made. Those counterclaims will undoubtedly be heard by the Mexican Courts, and, in furtherance of the Government's policy, will be held to be valid, a proceeding just as immoral as the original expropriation. What the Mexican government has undoubtedly had in mind ever since the passage of Carranza's constitution has been the confication of the property of the gringoes, and of recent years the socialization of the whole country. President Cardenas has apparently timed his stroke for a moment when it was thought European preoccupations would prevent energetic action by either the United States or Great Britain, and is another example of the deterioration of international morality which is giving rise to such universal anxiety. But there is something more. As this journal has already said the poor state of Mexico's finances has been one of the immediate causes of President Cardenas's action.
It is reported from Mexico City that the Government is seeking customers for the expropriated oil, as lack of an export market for the oil had impressed upon it the realization that foreign exchange credit was necessary to finance Mexico's importations of maize and wheat. Despite pegging the peso is falling, and in view of these facts the claim of the Mexican Legation that the country is orderly and prosperous must be taken for what it appears to be worth, and that is not very much. It is clear from the reports appearing in to-day's issue that the United States is in a position to bring very considerable pressure to bear upon Mexico. The United States can, if it so desires, decide to abrogate the U.S-Mexico silver agreement a major factor in the stabilization of the Mexican currency. The decision will not be taken until after April 1, but if the U.S. Treasury decides to cease the purchase of silver from Mexico as from that date a severe blow will be struck at the financial structure of the country, and probably reduce the pesos to lower levels than it has at present reached. That might have very serious effects upon President Cardenas's government for it is doubtful whether it could survive the reduction of the state of Mexico's currency to One of chaos. That there is this danger is apparent from the run on the Bank of Mexico to replace paper holdings with the hard metal, while the fluctuations in the value of the paper peso have been so wide that some merchants have refused to accept anything but silver. There has been some talk of raising a loan of $400,000,000 to pay off the oil companies. In view of the behaviour of the Mexican Government it is quite unlikely that it will secure foreign assistance, though Japan might help, while the issue of such a loan internally, with the country in the state it is, and the peso in the condition it is likely to be, would be foredoomed to failure. If there ever were an instance in which international morality can be thoroughly vindicated, this is it, and if the United States do refuse to assist any longer in maintaining Mexican currency at its normal level, and leave Mexico to stew in its own juice, that country will only have its rulers to blame.
Text read from the printed page and cleaned; old type leaves the occasional error.