Papers Relating to the Foreign Relations of the United States, 1927, Volume III

812.6363/2152

The Secretary of State to President Coolidge

The President: I the undersigned, Secretary of State, have the honor to refer to the Resolution adopted by the Senate on February 3. 1927, which is quoted below:

“Resolved, That the Secretary of State be requested, if not incompatible with the public interest, to give the Senate the following information:

• “1. The names of American individuals and American corporations owning or claiming oil lands or oil concessions in Mexico alleged to have been acquired prior to May 1, 1917; and if the names of all such persons and corporations are not known to the Department, then give the names of those that are known.
• “2. What individuals or corporations, foreign to Mexico, if any, have accepted the law or constitution of Mexico relating to oil lands and oil concessions, or titles based upon rights acquired prior to May 1, 1917.
• “3. The names of American persons or corporations so owning or claiming oil lands or oil concessions in Mexico that have refused to accept the Mexican law or constitution applying to such concessions.
• “4. Has the department given any advice or instructions to any of such American persons or corporations; and if so, what instruction or advice has been given.
• “5. Supply the Senate with copies of all correspondence between the Department, or any of its officials, and any of such persons or corporations so owning or claiming oil lands or oil concessions in Mexico.”

1. In response to the inquiry as to the names of American individuals and American corporations owning or claiming oil lands or oil concessions in Mexico alleged to have been acquired prior to May 1, 1917, I beg to state that, according to the Department’s information, no oil concession was granted before the date mentioned by the Government of Mexico to any American corporation or individual. The Department is informed that American citizens owning oil lands or oil leases before that date acquired them by arrangements with the previous owners thereof, and under the laws then existing.

All American individuals and corporations who purchased lands in Mexico before May 1, 1917, acquired, under the laws then in force, at least after November 22, 1884, the right to extract petroleum therefrom.

Attention is invited to these laws under which the acquisitions in reference were made. The Mexican Mining Law of November 22, 1884, reads in part:

• Article VI. Foreigners may acquire mining property on such terms and with such limitations as the laws of the Republic grant them the capacity to acquire, own and transfer ordinary property …
• Article X. The following substances are the exclusive property of the owner of the land, who may therefore develop and enjoy them, without the formality of entry (denuncio) or special adjudication: …
• Subdivision 4. … salts found on the surface, fresh and salt water, whether surface or subterranean; petroleum and gaseous springs, or springs of warm or medicinal water. In order to develop these substances the owner of the land shall subject his operations to all rules and orders of a police nature.

The Mining Law of June 4, 1892, contained the following:

• Article IV. The owner of the land may freely work without a special franchise (concesión) in any case whatsoever, the following mineral substances: mineral fuels, oils and mineral waters.
• Article V. All mining property legally acquired and such as hereafter may be acquired in pursuance of this law shall be irrevocable and perpetual, so long as the federal property tax be paid, in pursuance of the provisions of the law creating the said tax.

Article II of the Mining Law of November 25, 1909, reads:

The following substances are the exclusive property (propiedad exclusiva) of the owner of the soil:

1. Ore bodies or deposits of mineral fuels, of whatever form or variety.

2. Ore bodies or deposits of bituminous substances.

Attention is also invited to Article 27 of the Mexican Constitution of 1857⁵ in force during the period the said holdings were acquired by American individuals and American corporations. This Article, in part, provided that:

Private property shall not be taken without the consent of the owner, except for reasons of public utility, indemnification having been made.

Ever since the question at issue arose during the administration of President Wilson, the Government of the United States has consistently maintained and continues to maintain that there should be no question as to the security of valid and vested rights which have been acquired by American citizens in accordance with Mexican laws as they existed at the time of their acquisition. This attitude of the Government was asserted by the American Commissioners in their conferences in Mexico City in 1923,⁶ and there is no departure from it in the understanding which they reached with the Mexican Commissioners; and the Government of the United States has maintained this position in the recent diplomatic correspondence upon the question between the United States and Mexico.

It is impossible for the Department of State to furnish the Senate with a complete list of the land acquisitions in Mexico before May 1, 1917, by American individuals and American corporations, as the names of all such persons and corporations are not known to the Department. However, replying specifically to the first inquiry contained in the Resolution, I give below the names of American individuals and American corporations who, according to the Department’s information, own or claim lands in Mexico alleged to have been acquired prior to May 1, 1917, and which have been found to contain or are supposed to contain subsoil deposits of petroleum:

• American International Fuel and Petroleum Co.
• Anderson, M. C. et al.
• Atlantic Lobos Oil Co.
• Axtell, Dr. B. C, Estate of
• Balch, Ernest
• Beckman, A. W.
• Cortez-Aguada Petroleum Co.
• Cortez Oil Corp.
• Dalton, W. H.
• Doub, D. L.
• East Coast Oil Co.
• Exendine, Jasper
• Hall, G. L.
• Hall, J. L.
• Harris, G. S.
• Hawkins, L. O.
• Huasteca Petroleum Co.
• Hodgins, P. J.
• Johnson Land and Fiber Co.
• Kearney, Ed. T.
• Kettering, Mrs. Lena
• Lot Seventeen Oil Co.
• Mexican Coal and Coke Co.
• Mexican Crude Rubber Co.
• Mexican Gulf Oil Co.
• Mexican Petroleum Co. of California.
• Mexican Plantation Co.
• Mexican Sinclair Petroleum Corp.
• Mexico Land Securities Co.
• New England Fuel Oil Co.
• Oil Fields of Mexico.
• Panuco Buston Oil Co.
• Pen Mex Fuel Co.
• Postelle, J. M.
• Bathbone, Charles
• Rhoades, J. Beach
• Sutherland, W. H.
• Tamiahua Petroleum Co.
• Tamesi Petroleum & Asphalt Co.
• Tampico Oil and Refining Co.
• Texas Petrolene & Asphalt Co.
• Tillman, A. N.
• Tuxpam Petroleum Co.
• Weill, Melville K.
• Wilson, Burton W. and associates
• Wright, M. P.
• Yates, Mrs. Carrie.

2. In answer to the second question I desire to state that, according to the Department’s information, the following individuals or corporations, foreign to Mexico, have applied for confirmatory concessions under the provisions of the so-called petroleum law of Mexico,⁷ regulatory of Article 27 of the Mexican Constitution of 1917:⁸

• The Penn Mex Fuel Company,
• The Texas Petrolene and Asphalt Company,
• The East Coast Oil Company, and
• The New England Fuel Oil Company.

I understand that the first two mentioned companies are not actively producing petroleum in Mexico and that the last two own no fee properties in that country.

The Department has not been informed that a concession has actually been granted to any of these four companies, and in this relation may point out that Article 27 of the Mexican Constitution of 1917 seems to prohibit the granting of such a concession to a foreign corporation, and that this interpretation of the Constitution finds support in the opinion of the Attorney General of Mexico, published in the Diario Oficial, December 8, 1917, wherein he held that in view of the Constitutional provisions referred to, alien corporations shall in no event acquire lands, waters and their appurtenances in Mexico.

3. In response to the third inquiry contained in the Resolution, it may be said that, according to the Department’s information, the American persons or corporations listed under the answer to Question No. 1, with the exception of the four corporations listed under the answer to Question No. 2, have refused or have failed to accept the provisions of the above mentioned so-called petroleum law of Mexico.

The Department is further informed that the following American persons or corporations (or individuals or corporations foreign to Mexico) holding their titles in the name of Mexican companies, have refused to accept the new petroleum law:

Atlantic Refining Company,

• Subsidiaries: La Atlantica Compania Mexicana Productora y Refinadora de Petroleo, S. A.
• D. W. Johnson & Cia., Succesores.

Atlantic Gulf Oil Corporation,

• Subsidiary: Cia. Petrolera del Agwi.

Humble Oil and Refining Company,

• Subsidiary: Cia. Petrolera Tamaulipas, S. A.,

Island Oil and Transport Corporation,

• Subsidiary: Cia. Petrolera Capuchinas, S. A.

Standard Oil Company of California,

• Subsidiary: Richmond Petroleum Co. of Mexico, S. A.

Standard Oil Company of New Jersey,

• Subsidiary: Cia. Transcontinental de Petroleo, S. A.

Leopold Newborg,

W. L. Hernstadt,

Malcolm C. Anderson,

• Mexican company: Cia. Petrolera Los Chijoles, S. A.

Anglo-Mexican Petroleum Company, Ltd.

• Subsidiary: Cia. Mexicana de Petroleo “El Aguila”, S. A. (British Eagle)

Royal Dutch Shell,

• Subsidiary: Cia. Mexicana Holandesa, “La Corona”, S. A. (Dutch Corona).

The Department understands that the American and Mexican corporations hereinabove listed as having refused or failed to accept the provisions of the Petroleum Law of Mexico control about 90% of the actively petroleum producing lands of Mexico acquired before the Mexican Constitution of 1917, and that they produce about 70% of the oil produced in Mexico.

Replying to the fourth inquiry, I beg to say that the Department of State has not given any advice or instructions to any American persons or corporations with regard to the above mentioned petroleum law. It has supplied interested American citizens or their counsel with full information regarding the general position of the Government of the United States with respect to the rights of American nationals owning property in Mexico, so that any action taken by such nationals might be based upon a complete understanding of the position of the Government of the United States in the premises. The Department has furnished such nationals with translations of the said petroleum law and of the regulations issued pursuant thereto, as well as with copies of the recently published diplomatic correspondence between the Government of the United States and the Government of Mexico dealing with such law and regulations as well as with the so-called Alien Land Law. The position of the Government of the United States is clearly stated in that correspondence.

5. Referring to Paragraph 5 of the Resolution, I may say that the correspondence between the Department and persons and corporations owning or claiming oil lands in Mexico has been necessarily voluminous. This correspondence consists almost exclusively of inquiries or information concerning the Mexican Petroleum Law and the official attitude of this Government with respect thereto. As above stated, the Department has consistently refrained from giving advice and counsel to such persons and corporations as to the course which they should themselves pursue. I cannot see that the transmission of the correspondence would throw any light upon the situation, and I hesitate to make it public without the consent of the interested persons and corporations, especially in view of the position taken by the Mexican Government to the effect that appeals by such individuals and corporations for the interposition of their own Government would possibly involve forfeiture or serious prejudice of their rights in Mexico.

Respectfully submitted,

Frank B. Kellogg

Washington , February 15, 1927.

Washington, February 15, 1927.

5. See The Mexican Constitution of 1917 Compared With the Constitution of 1851 (Washington, Government Printing Office, 1926).
6. See Proceedings of the United States-Mexican Commission Convened in Mexico City, May 14, 1923 (Washington, Government Printing Office, 1925).
7. See Foreign Relations, 1925, vol. ii, pp. 531 and 551. For text of petroleum law, see Diario Oficial, Dec. 31, 1925. For text of the regulations, see ibid., Apr. 8, 1926.
8. Foreign Relations, 1917, p. 951.