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tion of industry. If not, then a military occupation was advised.
After several weeks of deliberation Secretary Colby announced that, to secure recognition, Mexico must show by performance that it intended to respect the lives and property of American citizens, that it must indemnify foreigners for losses due to the revolution, and abrogate the confiscatory decrees of Carranga. No demand was made at this time (August 17, 1920) for a treaty."
Huerta was hardly seated before the oil men began negotiations with him. However, he refused to nullify Carranza's decrees, a position which he did not modify after the receipt of Secretary Colby's letter. He did make some concessions to the oil men only to have to complain of their obstinacy and threaten them with legal action on back taxes. They paid then under protest.
Were the taxes confiscatory? Several new companies secured concessions and began business after May 1, 1917. The British companies continued in business and some of them paid dividends of 25 per cent and 30 per cent after having paid the taxes. In the 1920 annual report of the Mexican Petroleum Company Mr. E. L. Doheny said that the net profit for the year, after deducting depreciation and taxes, was $9,773,898, or 20.5 per cent as compared with 14.75 per cent for 1919. The Pan-American Petroleum Company made a net profit of 19.5 per cent. Several other companies reported earnings of like amount.10
October 19, 1920, the report was given out that the State Department would advise President Wilson not to recognize the Huerta-Obregon government on account of the murder of Carranza. A day later Secretary Colby had a conversation with R. V. Pesquiera, confidential agent of Huerta, and then announced that the prospects of recognition seemed good. Possibly the blood stains were now considered as having been wiped out by the denunciations leveled at the murderers by Obregon.
'New York Times, Aug. 18, 1920, p. 10. 10Mexican Review, June, 1921, p. 24.
Mr. Pesquiera says that soon after his arrival in Washington “a well-oiled press” gave him "rather disconcerting attention, and it soon became apparent that there were certain sinister influences at work which stopped at nothing in their attempts to coerce concessions and unprecedented conditions in furtherance of their selfish interests." In furtherance of this they submitted, says Mr. Pesquiera, a "supercilious memorandum" to the State Department asking that "Mexico be required to sign on the dotted line to do certain things” which were inconsistent with the dignity of a sovereign, nation, among them the annulment of specified decrees and executive orders.
In the conversation with Secretary Colby Mr. Pesquiera assured him that Mexico would not disavow her obligation and that she would recognize all valid claims, that she would agree to a joint arbitration commission to pass on claims and would recommend that a permanenti arbitration commission be set up. He also stated that Huerta and Obregon had both gone on record that Article 27 was not retroactive and would not be construed so as to violate valid property rights.11
Although Huerta was to give up his office in a few days (November 30), Secretary Colby formulated a protocol of a treaty and forwarded it to him. The terms were substantially the same as had been offered the previous August, particular emphasis being laid upon the condition that Article 27 was not to be retroactive. The protocol was filed by Huerta and Obregon allowed it to rest in peace. January 21, 1921, President Wilson announced that he would make no further efforts for a treaty as the Mexican government did not seem to want one. 12
Meantime other states were recognizing the new government of Mexico. Before the end of the year several of the Latin-American states recognized Huerta, Argentine taking the lead. By September, 1921, a majority of the Latin republics had recognized Obregon, as had also, Austria, Germany, Spain, the Netherlands, Sweden, Italy, China, and Japan. Great Britain and France held back, waiting for the United States to take the lead. A little later several state legislatures, among them Texas, Oklahoma, Arizona, and California, passed resolutions asking for recognition.
11 New York Times, Aug. 14, 1921, VII, 6. 121bid., Jan. 21, 1921, p. 3.
While the United States was trying to get Huerta and Obregon to sign a treaty binding Mexico to respect American rights she was also protesting against certain acts said to be in violation of those rights. As far back as June 16, 1919, the State Department had protested to Carranza against the granting of new concessions covering grants already made to Americans. The British government also protested against similar treatment of its nationals.13 Under Huerta the custom of granting concessions in government reserves along navigable streams was extended to small brooks. These concessions, covering in many cases concessions already made to Americans, were granted to Mexicans who sold many of them at a profit to British companies, a few to French and Dutch companies. The Huerta government is said to have made these grants by wholesale, working up to midnight of November 30, the last day of the provisional government, though the charge is open to question. As the British government now had a controlling interest in the Royal Dutch-Shell Combine, of which the Corona and Aquila companies, the beneficiaries of the grants, were subsidiaries, it made no complaint.14 The oil men themselves declared that they were not receiving any special favors and that the trouble was Americans would not obey the Mexican laws.
To the consternation of the Americans the Aquila Company now notified the American Association that it would withdraw from membership in the association that it might be free to follow its own course and make terms with the Mexican government. One of the objects of the association
131bid., Dec, 11, 1920, p. 9; Dec. 12, p. 21.
14 However, it did protest when the Mexican Supreme Court ordered the return of the Necia Mine to its owners, a protest in which it was joined by the United States.
had been to foment revolutions but in this it had failed to gain its ends. It had backed Robles Domingues for president against Obregon only to see the latter elected by 1,131,751 votes to 47,422 for the former. For a time the assaults on Obregon were continued, but the Cowdray group decided that it was time to quit and make terms.15 This seemed to be a virtual abandonment by the British government of its former position and was regarded by Americans as a part of the move for the monopoly of the world's oil. However, the State Department regarded the protest of 1919 as still standing and directed its protest against the granting of concessions or lands held by Americans to the Mexican government. Apparently the only answer made by Obregon was to accuse the American oil men of furnishing arms to workmen to stir up trouble and thus force the landing of marines. The United States then directed its chargé d'affaires to investigate the oil rulings.16
Two days before the inauguration of President Harding a restatement of Senator Fall's conditions of recognition was given to the press, and these conditions were immediately endorsed by the oil men. Many people assumed that Senator Fall, who became a member of President Harding's Cabinet, would determine the Mexican policy and that it would be "vigorous," but for some time the administration had nothing to say about the matter except that no change had been made.
In May President Obregon gave to an American newspaper correspondent his reasons for refusing to consider the Colby protocol. According to this correspondent he declared that obligations and rights of Mexico, like those of other independent states, were determined by international law and that she would evade none of her obligations. The signing of a convention to secure recognition would be equal to placing in doubt the rights that Mexico has to all the privileges that international law establishes. For her neighbor to make greater demands than had been made by
15 Times Current History Magazine, XVI, 1015.
other nations, by which the government had already been recognized, would be unjust.17
About the same time that this statement was given out Mr. George T. Summerlin, Counselor to the American Embassy in Mexico, started from Washington with a new protocol and this he presented on May 27. It followed very closely the conditions of the Fall Committee, though differing some on detail. It specifically demanded the elimination from the constitution of the provision which would deprive Americans of the right of diplomatic appeal in cases where rights of property in land were involved. The elimination of Article 27 so far as affecting subsoil rights acquired before May 1, 1917, and the modification of several others.18 This was later (June 8) followed by a note from Secretary Hughes who made it clear that such conditions must be met before recognition would be accorded. The reply of Obregon was at once made public and it was that he had no authority to change the constitution by treaty and that the signing of the treaty must be preceded by recognition. At last the impasse had been reached. There were several possible ways of breaking it.
Obregon, who was very desirous of recognition, now made a dignified statement to the American people through the New York World (June 27). In this he stated that Mexico would meet every just obligation without evasion. His purpose was to establish a full partnership between the people and the government for the public good. Though Mexico was called the treasure house of the world, yet 90 per cent of the people lived in ignorance and poverty. The resources of the nation belonged to them and should be used for their improvement. Foreign capital would be welcomed and given justice, but not excessive privileges at the expense of the people's rights. Referring to the charge of confiscation, he continued :
This falsehood is the work of those who resent our policy of nationalization because it blocks future campaigns of exploitation and
17New York Times, May 21, 1921, p. 4. 18 Ibid., May 23, 1921, p. 1.