File No. 812.512/2106
The Acting Secretary of State to the Ambassador in Mexico ( Fletcher)
Sir: The Department acknowledges the receipt of your No. 1337, of August 21, 1918, with which you enclosed a copy of a translation of note No. 2772 of August 17, 1918, from the Foreign Office, replying to your Embassy’s note of April 2, 1918, protesting against the so-called petroleum decree of February 19, 1918.
You stated that amparo proceedings have been instituted in the courts of Mexico against the recent petroleum decrees; that you have been informed by a representative of the American oil companies that the proceedings are progressing satisfactorily, and that there is hope of obtaining what would amount to a preliminary injunction in our procedure, and that the issuance of the decree of August 12, 1918, has relieved the situation and removed the danger of arbitrary action against the companies by the Mexican Government.
You further stated that a new Congress would convene on the first of September, and that it would not be surprising if an entirely new petroleum law were proposed by the Government almost immediately; that should the decision of the courts uphold the contention of the Mexican and foreign companies and citizens as against the Government, the troublesome question of enforcing retroactively Article 27 of the Constitution would be removed and the way would be open for the Mexican Government to proceed along more moderate and more just lines with the so-called nationalization of petroleum producing lands.
You added that at any rate an acute crisis in the petroleum matter had been avoided and that the indications were that this difficulty, which seriously threatened the good relations between Mexico and the United States, would be adjusted by peaceful and legal methods.
The Department is pleased to learn of the improvement in the situation, which seems to render unnecessary at the present time further representations in the way of protest to the Mexican Government.
However, the Department deems it advisable at this time to take notice of certain statements contained in the note of the Foreign Office copied with your despatch, both because silence on the part of this Government with respect to some of these statements might lead the Mexican Government to suppose, contrary to the fact, that this Government was disposed to acquiesce therein, and also since it seems entirely possible that the Mexican Government is still bent upon putting into effect by Executive decree, or by legislation, the confiscatory features with respect to oil-bearing lands, of Article 27 of the Constitution and the petroleum decree of February 19, 1918.
Therefore, you will please take suitable occasion to reply to the Mexican note of August 17, 1918, substantially as follows:
The Government of the United States has noted with pleasure that, as anticipated by it, the Mexican Government has the intention to conciliate foreign interests and that it regards American interests as worthy of every protection, recognizing that they contribute to the industrial development of the Republic of Mexico, particularly in the petroleum industry. The [Page 785] Government of the United States heartily reciprocates the expressed desire of the Mexican Government that the two nations live in peace, friendship and good relations, and welcomes the statements that the Mexican Government will respect the dignity and the interests of foreigners and has no idea of enacting legislation designed to molest a friendly country or its citizens.
With these views animating the Mexican Government and their hearty reciprocation by the Government of the United States, it would seem that there should be no difficulty in adjusting in an amicable fashion any matters of difference between the two Governments.
The Government of the United States is not unappreciative of the disposition of the Mexican Government to translate on its part these friendly sentiments into action by the issuance of the decree of August 12, 1918, which tends to remove the danger, theretofore feared by the United States, of arbitrary proceedings against foreign oil interests, and the Government of the United States is encouraged by this action to believe that the entire petroleum question, as it affects American interests, will at a not distant date reach an adjustment equitable to all parties concerned.
While the present situation with respect to the matters which have been in difference between the Mexican Government and the petroleum interests, as the Government of the United States understands the matter, is in an orderly process of developing itself with a strong possibility that the outcome will be a satisfactory adjustment between the interested parties, the Government of the United States considers that it would be appropriate for it to state briefly at this time, with the object of clarifying the situation, and of avoiding all possibility of misunderstanding, its views with regard to certain allusions and statements contained in the note of the Mexican Foreign Office, No. 2772 of August 17, 1918.
The Government of the United States regrets to observe the critical attitude which the Mexican Government has assumed towards the efforts made by this Government through diplomacy to protect its citizens in Mexico from what appeared to it to be imminent spoliation of their vested rights in Mexico, and cannot but believe that this attitude is based on a partial understanding of the causes and grounds leading this Government to express its views in its note to the Mexican Government of April 2, 1918. In justice to itself, the United States feels that it is entitled to point out that its diplomatic interposition in this case was consequent upon and flowed directly from the policies and actions of the Mexican Government itself, notwithstanding the unremitting efforts of the United States to explain informally the dire effects of these measures upon American interests in the petroleum fields. Moreover, the representations which the Government of the United States had made with respect to the Mexican petroleum decree of February 19, 1918, were not in any way inspired, as the Mexican Government appears to suppose, by the desire to obtain undue protection to American citizens [Page 786] and American interests, but solely to obtain for them that protection to which they seem to be entitled under the generally accepted rules and principles of international law. The purpose of the Government of the United States was to call the attention of the Government of Mexico, with such earnestness as the critical situation of American interests seemed to demand, to what seemed to the Government of the United States an unwarranted course of action, against which ordinary legal proceedings might fail to provide a sufficient and timely remedy, with the confident belief that upon consideration of the views of this Government, the Mexican Government would appreciate the condition in which such American citizens would be placed by the action apparently contemplated against them, and that the Mexican Government would, therefore, take such prompt steps as would relieve the condition and render unnecessary any further controversy over the matter. The Mexican Government’s mistaken views of the attitude of the Government of the United States in these respects is believed to have been brought about by the conception which the Mexican Government asserts that it has of the duties and obligations of a state to foreigners in its country. The Mexican Government appears to be of the opinion that so long as a state does not discriminate against foreigners and in favor of its own citizens, it is entitled to mete out to foreigners such treatment as it may desire; that foreigners must submit to the treatment, and that their governments have no right to interposition to protect them against it, should it be unduly onerous and unjust, until local remedies have been exhausted in vain.
Applying this view to the petroleum situation, the Mexican Government seems to contend that the decree regulating ownership of mineral deposits is a matter of internal and territorial sovereignty applicable to Mexican citizens and foreigners alike and therefore that there is afforded no rightful basis for interposition by the Governments of interested foreigners, even though the result of the decree should be, as was apparently its purpose, to deprive such foreigners of property rights which they had legitimately acquired under the laws of Mexico.
The Government of the United States believes that this contention of the Mexican Government and the basis upon which it seems to rest find no sound foundation in the principles of the law and practice of nations which in the past have been generally accepted by the governments of the world, and that it could not, therefore, be fairly called upon to recognize or acquiesce in them in opposition to the usage of nations. The Government of the United States is firmly of the opinion that the great weight of international law and practice supports the view that every nation has certain minimum duties to perform with regard to the treatment of foreigners, irrespective of its duties to its own citizens, and that in default of such performance, it is the right of the foreign government concerned to enter protest. Not the least of these duties, as the Government of the United States believes, is to refrain from measures resulting in confiscation of the vested property rights of foreigners, acquired [Page 787] in good faith and in accordance with the laws of the country in which the property is situated. While the Mexican Government may see fit to confiscate vested property rights of its own citizens, such action is in equity no justification for the confiscation of such rights of American citizens and does not estop the Government of the United States from protesting on behalf of its citizens against confiscation of their property. To resist unjust encroachment upon their rights by the governmental agencies of their country, Mexican citizens are armed with a weapon which they may presumably use in addition to judicial remedies. I refer to the orderly processes by which the free people of a democracy may assert their will in respect of governmental policies. But Americans in Mexico have no such recourse. Aside from judicial remedies, they are limited to an appeal for the protection of their governments. If they are to be denied that right of appeal they are clearly placed in a position of disadvantage as compared with citizens in Mexico who have both political and legal remedies at their command to right their wrongs. If the right of protection of this Government is to be denied then one of the means of obtaining that parity of treatment to which the Mexican Government admits Americans are entitled, is plainly destroyed.
The United States is ready to admit that legal remedies should as a rule be tried by its citizens to obtain reparation for or relief from wrongful actions against their property, and it is understood that the American interests affected by the petroleum decree are resorting to such remedies, but the United States cannot admit that diplomatic representation is always premature if made on behalf of its citizens before they have exhausted their legal remedies in the courts of Mexico. If it were necessary to substantiate this proposition, many instances of diplomatic action, before or during legal proceedings, might be cited from the practice of nations, in case of irreparable damage or highly arbitrary action, particularly where it is in the power of the Government to prevent or suspend either. The promulgation of the before-mentioned provision of Article 27 of the Mexican Constitution, followed by the issuance of the so-called petroleum decrees indicated a settled purpose of the Mexican Government to put in execution this provision of the Constitution, without opportunity for full and fair consideration, and without regard to the legitimately acquired rights of American citizens. Such action might have been irreparable in its results, and certainly would have been arbitrary, and within the power of the Mexican Government to prevent or modify as subsequent events have shown. In the circumstances, friendly representations, without prejudice to the prosecution of legal remedies and in the interest of avoiding misunderstanding, can hardly be said to be out of place. On the contrary, the Government of the United States believes that happy results are often the outcome of diplomatic interposition, which therefore serves the best of ends, in the way of averting possible difficulties of a serious nature. Moreover, the argument of the Mexican Government as to the necessity of a resort to its courts by foreigners affected by the decree [Page 788] in question, prior to diplomatic interposition, would have more weight did the decree relate alone to matters of taxation, which is far from being the case, although a casual reading of the note under acknowledgment might lead to that conclusion. As a matter of fact, the immensely important feature of the decree is the attempt made therein to carry out the provisions of Article 27 of the Constitution for the confiscation of the petroleum-bearing subsoil, and this was thoroughly brought out by the Embassy’s note of April 2, 1918, in which it was said, with reference to the taxation feature of the decree, that the Government of the United States reserved opinion on the question as to whether such taxation was confiscatory in effect. Furthermore, in mitigation of what this Government regards as the plainly confiscatory feature of the decree, the note under acknowledgment makes reference to the guaranty established by Article 22 of the Constitution. This Government is at a loss to understand this reference to Article 22 as it would not seem to modify the effect of the decree in question, since the confiscation forbidden by that article of the Constitution appears to relate to punishment for criminal offenses. This cannot, therefore, be regarded as modifying the provision of the Mexican Constitution clearly applicable to this case, namely, the following clause of Article 27:
Private property shall not be expropriated except for reasons of public utility and by means of indemnification.
Indeed this provision seems to contemplate the establishment of judicial procedure for the expropriation of private property.
Therefore, the Government of the United States finds itself quite unable to accept the point of view of the Mexican Government, in respect to parity of treatment of Americans and Mexicans, and to diplomatic interposition in behalf of the former.
This communication should not be concluded without reference to the statement in the note under acknowledgment as to the inconsistency which the Mexican Government indicates that it finds between the action of the Government of the United States in respect to the petroleum controversy, and the utterances and ideals of the President of the United States. Regarding this it may be said that it is believed that the Mexican Government will confess itself unable to find any statement of President Wilson, which by expression or implication, pronounces against the exercise of the right of diplomatic interposition, upon suitable occasion therefore The President has drawn a sharp contrast between the policy of armed intervention and that of diplomatic interposition. He has, on numerous occasions, stated in effect that he would not countenance armed intervention in the affairs of another State for the purpose of gratifying selfish interests, and the composite statement as presented by the Mexican Minister of Foreign Affairs clearly comprehends such a situation. But the President has never stated that lie would forego the right of diplomatic interposition in behalf of American citizens, a distinctly friendly method of supporting legitimate national interests in order to avoid injustice. On the contrary, the President had declared for diplomatic [Page 789] interposition nowhere better than in the following quotation from his address of January 29, 1916:
America has not only to assert her right to her own life within her own borders; she has also to assert her right to equal and just treatment of her citizens wherever they go.1
The Government of the United States asks no more than “equal and just treatment” for its citizens, and therefore cherishes the sincere hope that the Mexican tribunals whose prerogative it may be to pass upon the legal questions involved in the so-called petroleum decree will in the proceedings which it is understood have been initiated and which may hereafter be commenced, protect the legitimately acquired rights of American citizens. Thus the controversy may happily be ended. However, should this hope unfortunately be disappointed, the Government of the United States must reserve to itself the consideration of the questions of interesting itself further on behalf of American citizens concerned in this important and serious matter.
I am [etc.]
- An address of President Wilson delivered at Pittsburgh, Pa. H. Doc. No. 803, 64th Cong., 1st sess., p. 18.↩