RELUCTANT RECOGNITIONzTHE UNITED STATES AND , ‘ ‘
THE RECOGNITION OFALVAROOBREGON OF MEXICO. _ ‘f _
1920-1924 1 , , 4“

Thesisfor the Degree of Ph, D,
MICHIGNN STATE UNIVERSITY _ ‘ '
C. DENNIS IGNASIAS
1967

This is to certify that the

thesis entitled

Reluctant Recognition: The United States and
the Recognition of Alvaro Obregon of Mexico,
1920-1924.

presented by

Charles Dennis Ignasias

has been accepted towards fulfillment
of the requirements for

Ph 0 D degree in Hi 3 t OTV

Major professor

Date November 10, 1967

 

0-169

ABSTRACT

RELUCTANT RECOGNITION: THE UNITED STATES AND THE
RECOGNITION OF ALVARO OBREGON OF MEXICO, 1920—1924

by C. Dennis Ignasias

On December 1, 1920, Alvaro Obregén took the oath
of office as President of Mexico; within three months
‘Warren G. Harding was inaugurated as President of the
United States. Two-and-a-half years later official dip-
lomatic relations were finally initiated between the
0bregdn government and the United States. What occurred
during the intervening time was a struggle by Obregén
to acquire diplomatic recognition from the United States.
Confidential agents, an effective and extensive propaganda
program in the United States, personal and informal dip-
lomacy, consPiracies, the interplay of American oil com-
panies in Mexico and foreign holders of securities against
the Mexican government form only part of the intriguing
story beyond the formal diplomatic notes exchanged between
the two governments.

The withholding of recognition from ObregOn involved
certain diplomatic and legal issues. A decade of civil
war in Mexico (1910-1920) brought damage to the life and

pr0perty of American citizens in Mexico. Part of Mexico's

C. Dennis Ignasias

social revolution-—the Constitution of l9l7--affected
American-owned or controlled prOperty in Mexico. Against
the background of disorder, destruction, and constitutional
interpretation in Mexico and interventionist sentiment
in the United States in 1919—1920, the newly inaugurated
Republican administration had to declare a policy toward
Mexico. Wishing to avoid what it regarded as the mistakes
of the Wilson administration, the State Department decided
to coerce Obregon into submitting to its requirements
by withholding his recognition. Consequently, before
recognition was to be accorded, Secretary of State Charles
Evans Hughes demanded written assurances from Obregén
against a retroactive application of Mexico's Constitu-
tion to American property rights in Mexico.

The resulting stalemate revolved around the two
key personalities involved--Obregén and Hughes. Conscious
of a delicate domestic situation which he hoped to strengthen
by recognition, Obregén did acknowledge the legitimate
claims of the United States. What he pleaded for from
the State Department was freedom of action in satisfying
its requirements--to obtain what was politically feasible
'within the limits of Mexico's sovereignty. Any other
alternative meant the overthrow of his government. Poli-
tical realism and financial assistance for his reconstruc-
tion program (impeded by non-recognition) dictated his

policy.

C. Dennis Ignasias

Legalistic and dogmatic, Hughes refused to modify
his stringent position until public criticism and embar-
rassing incidents in 1922 revealed the barrenness of his
policy and made him consent (though somewhat unwillingly)
to compromise. The joint commission in 1923 (The Bucareli
Conference) settled satisfactorily certain disputed points,
and became the basis for Obregdn's recognition. Rebel-
lion in Mexico during the fall of 1923 brought the full
backing of the United States for Obregén. By the spring
of 1924 peace had been restored, and the United States
remained on friendly relations with Obregén to the end
of his term of office in November, 1924.

Among primary sources used in this study were the
State Department records in the National Archives and
the personal papers in the Library of Congress (Manuscript
Division) of WOodrow Wilson, Robert Lansing, Henry P.
Fletcher, Bainbridge Colby, Charles Evans Hughes, John J.
Pershing, and Calvin Coolidge (also the warren G. Harding
Papers in Columbus, Ohio). For the Obregén government
the Archivo General de la Nacion (twenty reels of micro-
film in the Michigan State University Library) was util-
ized. The printed documents of both governments were
found valuable as were the numerous monographs and articles
(propagandist and scholarly) on intervention, recognition
and diplomatic theory, Mexico's petroleum resources and

its foreign debt, Mexican legislation and constitutional

C. Dennis Ignasias

theory, and the personalities involved. Much of the
secondary source material is available in the Library
of Congress or in the Columbus Memorial Library Of the

Pan American union.

RELUCTANT RECOGNITION: THE UNITED STATES AND THE

RECOGNITION OF ALVARO OBREGON OF MEXICO, 1920—1924

BY

”if;

CUVDennis Ignasias

A THESIS

Submitted to
Michigan State University
in partial fulfillment of the requirements
for the degree of

DOCTOR OF PHILOSOPHY

Department of History

1967

PREFAC E

It was fate or misfortune for WOOdrow Wilson to
be faced with two terms of Office which were primarily
concerned with foreign affairs. Three revolutions and
one world war involved the United States in several paths
of policy and action of a more serious magnitude than
since the Spanish-American war. Three major social revol-
utions of the twentieth century had occurred within seven
years of each other--in Mexico in 1910, in China by 1911,
in Russia in 1917. Events and circumstances eventually
brought the United States into the First WOrld war in
1917.

The policies and decisions made by the Wilson ad-
ministration carried over into the Republican administra-
tions of the 1920's. Reaction to EurOpe, the disposition
of China, and the attitude toward Soviet Russia overshadowed
the problem of the revolution in Mexico. By the time
the Harding administration had taken office in 1921, the
Mexican Revolution had run its initial sanguineous course.
But certain policies and acts during the decade of civil
war created apprehension and suspicion in the mind of
Harding's Secretary of State, Charles Evans Hughes, and

other members of the State Department who were concerned

ii

with Mexican affairs. On what it conceived to be in the
national interest of the United States, the State Depart-
ment formulated a precise policy toward Mexico. When
recently elected President of Mexico Alvaro Obregdn sought
recognition from the United States in early 1921 to con-
solidate his domestic position, he was presented with a
firm and inelastic policy. Faced with an imponderable
situation, he had to choose between submitting ip_£2£g
to the American demands to obtain a badly needed recog-
nition or to accommodate such demands to the exigencies
of conditions within Mexico and to Mexican nationalism.
Obregén's efforts at recognition involved a two-and—a—
half year struggle until a joint commission held in 1923
settled satisfactorily certain disputed iSSues for recog-
nition to be granted. Obregén's search for diplomatic
recognition, in light of Mexico's background and problems
and in respect to the State Department's policy toward
Mexico, form the basis of this study.

The author is indebted to Charles C. Cumberland
for the initial suggestion of this study. Professor
Cumberland had portions of the Archivo General de la
Nacién (ObregOn-Calles) microfilmed and on deposit in
the Michigan State University Library. To Professor
Cumberland and also to Professor warren I. Cohen the author
acknowledges the valuable assistance of suggestions, clar-

ifications, and insights.

iii

TABLE OF CONTENTS

PREFACE. O O O O O O O O O O O O O O 0 O O O 0 0

Chapter

I. THE MEXICAN PROBLEM. . . . . . . . . .
II. A.RELUCTANCE TOWARD RECOGNITION. . . .
III. FORMAL AND INFORMAL DIPLOMACY. . . . .
IV. "A PRACTICAL BUSINESS MAN . . ." . . .
V. PETROLEUM AND THE FOREIGN DEBT . . . .
VI. TOWARD A SOFTENING LINE AND COMPROMISE
VII. THE BUCARELI CONFERENCE. . . . . . . .

VIII. REBELLION AND PEACE: THE TEMPORARY
TERMINATION OF THE MEXICAN PROBLEM . .
APPENDIX . . . . . . . . . . . . . . . . . . . .

BIBLIOGRAPHY . . . . . . . . . . . . . . . . . .

iv

ii

45

70

111

148

197

245

277

322

324

CHAPTER I

THE MEXICAN PROBLEM

The headlines and articles in the American newspapers
and magazines during the summer and the fall of 1919 clear-
ly warned that another crisis in U.S.-Mexican relations
was approaching. Beginning with the Mexican Revolution
on November 20, 1910, diplomatic relations between the
United States and Mexico had entered into a most perplex-
ing and antagonizing state Of affairs unequaled since the
Mexican war nearly sixty years earlier. Within the Uhited
States private citizens, existing and newly organized
pressure groups, and a congressional investigation were
working to influence the State Department and public Opin-
ion toward a solution Of the nearly ten years Of crises
with Mexico. By 1919 two overall alternatives had appeared
either in the demand for the military occupation Of Mexico
or for deliberate inaction to allow events to work out
for themselves. The State Department and its staff in
Mexico together with the President's cabinet reflected
these two general alternatives to the crisis of 1919.

Woodrow Wilson had been handed the Mexican problem
in 1913 by the outgoing Taft administration. During his

terms of office Wilson's Mexican policy, which developed

over the recognition of the Victoriano Huerta government,
had become the focus of attention Of U.S.-Mexican rela-
tions. The crisis arising in 1919, however, and the sub-
sequent attitude taken by the warren G. Harding adminis—
tration toward the policy of diplomatic recognition--
directed at the Alvaro Obregén government--were the out-
growth of diplomatic and legal problems which, though
often unavoidable, kept both the American and the Mexican
governments in a state of uneasy tension.

The two principal diplomatic claims registered with
the various Mexican governments since 1910 had dealt with
the destruction of prOperty belonging to U.S. citizens
and with the deaths and injuries caused to U.S. citizens
both in Mexico and in the American Southwest. American
companies with businesses and large industries in Mexico
had complained of the destructiveness of the Revolution
to their property. Other Americans who were residents
of Mexico engaged in management, sales, ranching and
farming, or merely in retirement, were likewise affected
by the civil war. The southwestern states of Texas, New
Mexico, Arizona, and the southern portion of California--
all of which bordered on northern Mexico——were most directly
affected by the disruption of normal business relations

with Mexico, by the stream Of refugees crossing over into

U.S. territory,1 and by the raiding of Mexican bandits.2
Of greater weight and controversy, however, would
be the legal difficulties arising from the Mexican Con—
stitution of 1917 and its implementation by the various
Mexican governments. The Constitution of 1917 was the
climax of the revolution which had begun in 1910 as an
attempt to undertake numerous reforms in Mexican society
and to permit an increased participation by the majority
of the population.3 Land reform, electoral and political
reform, changes in the general educational system and a
more equitable tax distribution were among its early aims.
Gradually the organization of labor, an anticlerical
attitude and the concept "Mexico for the Mexicans" were
aims expanded out of the Revolution. The various programs
and decrees since 1910 which reflected these aims were

finally compiled in detail within the Constitution of

 

l ' I I I 3

These refugees included American Citizens, MeXicans,
and citizens of other nationalities who were living in
Mexico.

2The impact of Pancho Villa's border raids in the
American Southwest in 1916 and the resulting Pershing
Punitive Expedition are described in detail in Howard F.
Cline, The united States and Mexico (rev. ed.; New YOrk:
Atheneum, 1963), pp. 174-183. Chapter XXI of J. Fred
Rippy, The united States and Mexico (rev. ed.; New Ybrk:
Alfred A. Knopf, 1931), is devoted to the emotional issue
of intervention in 1916 and in 1919.

3The causes and the early development of the Mexi-
can Revolution are best analyzed in Charles C. Cumberland,
.Mexican Revolution: Genesis under Madero (Austin:
university of Texas, 1952).

1917. Completed by a constituent convention within two
months, this document retained many features of the exist-
ing Constitution of 18574 but included many of the new
goals and purposes arising from the recent Revolution.

Among the better known articles of the Constitu-
tion,5 Article 27 became the most controversial and the
principal point of disagreement between the United States
and Mexico. The article6 formed the nationalization pro—
gram of the Constitution of 1917. Growing concern over
the extensive influence and control held by non-Mexicans
in the Mexican economy by 1910 had led to an anti-foreign
phase of the Revolution.

By the terms of Article 27 the Mexican Nation was
to retain the ownership of the "lands and waters within
the boundaries of the national territory." This was a

right which, as claimed in the Article, had been "vested

 

4The Constitution of 1857 was the product Of an
earlier reform period.

5Article 3 dealt with education and the general anti—
clerical basis of the Revolution; Article 123 was concerned
with the rights of labor and of labor organization. On
occasion Article 33, which permitted the immediate expul-
sion of any foreigner, became a point of legal dispute
between the united States and Mexico. None of these,
however, affected relations between the two countries to
the same degree as Article 27.

6The best translation of this article may be found
in the edition by the Pan American Uhion, Constitution
of the United Mexican States, 1917 (washington, D.C.:
Pan American Uhion, 1964), pp. 8—10. A selection of the
important portions of the Article is provided in the
.Appendix of this study.

 

originally in the Nation." The implication of the word-
ing was that such ownership by the Nation had at least
existed since Mexico's independence from Spain in 1821,
and was thereby both "inalienable and imprescriptable"
in its past as well as its future application. However
the federal government of Mexico, acting on behalf of
the Nation, might grant concessions of ownership to con-
cessionaires on the basis of their compliance with Mex-
ican laws as prescribed in Article 27. By this article
the Mexican Nation, then, had the right to expropriate
(with indemnity) any private property for the public wel-
fare as well as to transmit title of ownership to private
individuals or to private companies.

The members of the constituent convention had given
a broad meaning to the term "ownership." Particularly
noticeable was the emphasis on the Nation's ownership of
all the natural resources of the land, including those
beneath the surface (or the subsoil),7 and on the broad
powers given to the State to regulate, to conserve and
to distribute their usage. In addition to reasserting
to the Mexican Nation its national domain, the framers of

Article 27 gave to the agency of the State, that is, the

 

7Paragraph four of Article 27 gives a fairly compre-
ihensive and broad listing of these natural resources, which
included ores, petroleum, natural gases and other hydro-
carbons. See the.Appendix of this study.

federal government, the obligation and the power to achieve
this nationalization. Because Article 27 applied to the
nation as a whole, its implementation would naturally
affect, hinder or limit any privately owned foreign enter-
prise or property in Mexico. According to Section I Of
Article 27, only Mexicans "by birth or naturalization and
Mexican companies" had the right to acquire ownership
of the "lands and waters" or to obtain concessions for the
exploitation of the natural resources. Within the dis-
cretion of the federal government, foreigners could be
granted the same rights as Mexicans provided that they
agreed to consider themselves as Mexican citizens on this
property and to rescind their right Of diplomatic protec-
tion from their resPective governments in all matters
relating to this property.

The controversy which initially arose over Article
27 between the Wilson administration and the Mexican
government—-and was inherited by the Harding administration--
involved an interpretation of this Article and its attempted
enforcement. In its simplest terms the interpretation
of Article 27 revolved around the conflict between the
Anglo-Saxon legal system and the Mexican or HiSpanic legal
tradition on the meaning of the concept of private prOperty.
finale primarily a legal question, the controversy directly
influenced the attitude of the Harding administration

'toward the recognition of the Obregdn government. To

understand the relevance of the controversy, the nature
and the extent of the American prOperty holdings and
investments in Mexico—-which made the controversy more
intensive for the position of both countries--must first
be examined.

From the latter third of the nineteenth century
until 1911, Americans as well as Englishmen, Frenchmen
and other Europeans had heavily invested capital in Mexico
in the areas of railroads, mining and petroleum, ranching
and farming, timber, manufacturing, banking, public util-
ities and other fields. From 1876-1911 (the era of
Porfirio Diaz) Mexico went through a period of rapid
economic development in which Americans played the domin-
ant role. American investment in Mexico rose from a few
million dollars in the 1860's to an estimated total of
about one billion dollars in 1911, the largest increase

occurring between 1902 and 1911.8

A comparative report
of the minimum U.S. and foreign capital invested in

.Mexico was prepared in 1914 by the Office of the Chief of

 

8The estimates most frequently quoted have been
derived from the report in 1902 of U.S. Consul General
to.Mexico, Andrew D. Barlow, and from the assessment in
1911 of an American mining engineer William H. Seamon
(included in the report of the U.S. Consul at Chihuahua,
Mexico, Marion Letcher) . Barlow's estimate in 1902 was
$503,000,000; Seamon's in 1911 at $1,044,600.000. Both
:reports have been summarized in Cleona Lewis, America's
EStake in International Investments (washington, D.C.:
'Phe Brookings Institution, 1938), pp. 612-614.

 

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Staff of the war Department.9 According to this report
the total investment of American capital was estimated
at $1,057,775,000. The sum of the English, French, Mexi-
can, and other investments in Mexico listed in that order
of capital invested was $583,284,180, or about one-half
of the American investment.

Although the American investment was overwhelmingly

10

heavy in Mexican railroads and mining, the principal

diSpute over the application Of the Constitution of 1917

11 Unlike the late

came from the investments in petroleum.
nineteenth century investments in railroads and mining,
the petroleum industry was a relatively recent develop—
ment. Commercial production of petroleum, located pri-
marily on Mexico's eastern coast in the state of Veracruz,

12

was not actually undertaken until after 1900. In 1901

 

9American and Foreign Capital Invested in Mexico,
.March 14, 1914, National Archives, washington, Records of
the Department of State, Decimal File No. 812.502/19.
These records are hereinafter cited as NA, followed by
the appropriate file number.

10The investment in railroads was $644,390,000;
that in mining, $249,500,000. See above, footnote 9.

11The petroleum industry in Mexico was tied with the
rubber industry for fifth place among American investments,
each having a total of fifteen million dollars. See
above, footnote 9.

12For a history of its early develOpment see Robert G.
Cleland (ed.), The Mexican Year Book: The Standard.Author-
ity on Mexico, 1920-21 (Los Angeles: Mexican Year Book
LPublishing Co., 1922), pp. 290-320.

 

the Diaz government offered Special inducements for petrol-
eum exploration and exploitation such as exempting petrol-
eum and petroleum products from the export taxes and per-
mitting machinery for wells and refineries and certain
other materials to be imported tax—free. Except for a
minimal stamp tax, all capital invested and output in the
petroleum industry were exempted from federal taxes for

13 As in the case of some other

a period of ten years.
areas of investment in Mexico, the potential and future
value of petroleum was not fully known at the time. Even
though petroleum production from Mexican wells did at

least double in output every year after 1900,14 the real

 

 

 

13Jack R. Powell, The Mexican Petroleum Industry,
1938—1950 (Berkeley: University of California Press, 1956),
p. 8.

14

See the statistics of crude oil production in the
Mexican oil fields from 1901-1920 in the Report of the
Technical Petroleum Commission, 1921, Ministry of Industry,
Commerce and Labor, Archivo General de la Nacion, File
No. 104-P1-P-22. The documents in this set of Mexican
archives are hereinafter cited as AGN, followed by the
appropriate file number. Unlike the great majority of
documents of the State Department in the National Archives
which have an individual file number, the Mexican docu-
ments are filed in folders according to subject matter.
This will account for more than one document having an
identical file number. All documents will be referred
to in an English translation.

The statistics for crude oil production were as follows:

 

“Year Barrels Year Barrels Year Barrels
1901 10,345 1907 1,005,000 1914 26,235,403
1902 40,200 1908 3,932,900 1915 32,910,508
1903 75,375 1909 2,713,500 1916 40,545,712
1904 125,625 1910 3,634,080 1917 55,292,770
1905 251,250 1911 12,552,798 1918 63,828,326
.1906 502,500 1912 16,558,215 1919 87,072,954
1913 25,696,291 1920 163,540,000

 

-10-

impetus for petroleum production began with its intensive
use as fuel oil during World‘War I for military, naval
and commercial purposes. Mexico then became known as a
vast storehouse of low gravity crude mixtures from which
refined oil could easily be derived.

In a rapid program to develop Mexico economically,
Porfirio Diaz had offered advantageous concessions and
favorable legislation as inducements for foreign capital.15
Petroleum exploration and exploitation were only one of
the many areas of opportunities. Extensive tracts Of
privately owned land in Mexico were purchased or leased
by foreign capital at a nominal cost. Considerable sums
of money were invested in the technological development
of the petroleum industry. The overall wording of the
legislation in existence--the decree of 1884 and the laws
of 1892 and l909--left little doubt that the acquisition

of the surface land gave to the owner the exclusive and

complete right to the subsoil deposits of petroleum and

 

15For a background of Diaz' policies and the role

of American investment in Mexico, see David Pletcher, Rails,
Mines, and Progress: Seven American Promoters in Mexico,
1867-1911 (Ithaca, N.Y.: Cornell University Press, 1958),
PP. 2-32.

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minerals for his own use and enjoyment.16 The only appar-
ent restrictions reserved by the Mexican government were
the exercise of law enforcement and the power to tax,
though the only tax at the time was a stamp tax. Those
engaged in the exploration and the exploitation of petrol-
eum could therefore very well believe that they had ac-
quired a legal title to their prOperty substantially

similar to that of "fee simple"17 in the United States.

 

16For a survey of the subsoil controversy as it is
related to the Spanish Crown and to the legislation of
the Diaz regime, consult Charles P. Howland (ed.), gur-
veyiof American Foreign Relations (New Haven: Yale
University Press, 1931), IV, 128-134, and Frederick S.
Dunn, The Diplomatic Protection of Americans in Mexico
(New York: Columbia University Press, 1933), pp. 332-336.
The position of the American oil companies in Mexico is
summarized in Guy Stevens, Current Controversies with
Mexico: Addresses and writings (n.p., 1926-1928), PP.
358-371.

The Mexican government defended its position in
numerous volumes, among them José Vasquez Schiaffino £2
31,, Informes Sobre la Cuestién Petrolera (Mexico: Im-
prenta de la Camara de Diputados, 1919), pp. 17—18, and
in Secretaria de Industria, Comercio y Trabajo, Documentos
Relacionados con la Legislacién Petrolera Mexicana (Mexico:
Talleres Graficos de la Nacién, 1919), pp. 12-16, 21-29,
40-43. J. P. Chamberlain provided a balanced interpreta-
tion of the position of the Mexican government in "The
.Mexican Oil Situation," Nation, January 11, 1919, pp. 66-69.

17Under the Anglo-Saxon legal system, ownership of
land gave to the owner unrestricted rights to its usa e
and disposition. In distinguishing between the pre-Diaz
nfining legislation and the current practice in 1906, U.S.
Consul J. A. LeRoy of Durango, Mexico, concluded that
titles to the surface of the land (including the subsoil)
‘were in effect "fee simple." U.S., Bureau of Foreign and
JDomestic Commerce, Monthly Consular and Trade Reports,
No. 309 (June, 1906), 60-61.

However, there were some U.S. state and Supreme Court
<decisions in the early twentieth century which did restrict
petroleum exploitation in the United States.

-12-

Article 27 of the Constitution Of 1917 not only
altered the legal position of the American investors but
moreover challenged the entire legality Of the Diaz legis—
lation. In its compliance with the provisions Of Article
27, the Venustiano Carranza government encountered the
opposition of foreign interests in Mexico as well as the
strong disapproval of their respective governments.

American investors and property owners in Mexico,
particularly the American oil companies, continually noti-
fied the State Department of the prOposed plans or action
taken by the Mexican government. Following customary
practice, the State Department used its diplomatic channels
(as it had been doing since 1910) to relay official and
stern protests to the Mexican Foreign Office. Theoreti-
cally the practice of interposition, or diplomatic repre—
sentation through the official channels of a state on
behalf of its citizens and their property interests abroad,
was recognized as a fundamental right or duty under inter—

18 Following the accepted principles and

national law.
practices of international law meant, in essence, the laws
of the international community as interpreted, or deter-

mined, by the major powers. Political prestige, economic

wealth, and military strength, coupled with the interplay

of power politics and national interests, determined the

 

18Dunn, Diplomatic Protection, pp. 1-8.

-13-

application or non-observance of international law.
'whether wittingly or unwittingly in pursuing its cus-
tomary practice of diplomatic representation, the United
States under both the Wilson and the Harding administra-
tions interpreted international law according to an
American point of view. Mexico possessed the identical
right or duty under international law but lacked power

19 Consequently Mexico

as compared to the United States.
appeared to be in a defensive position in its diplomatic
protests and official notes to the united States.

The State Department had already been protesting
certain decrees of the Carranza government issued in 1915

20

and in 1916. Two weeks prior to the promulgation on

 

19The Mexican government on more than one occasion
pointed to an American interpretation of international
law which placed American citizens in a more privileged
and favored position than that Of Mexican citizens within
their own country. In one instance the Mexican govern-
nmnt mentioned the equality of nations under international
IBW‘WhiCh was "frequently forgotten by strong governments
in their relations with weak countries." Under Secretary
of State for Foreign Affairs E. Garza Pérez to U.S. Ambas-
sador to Mexico, Henry P. Fletcher, August 17, 1918, trans-
mitted to Secretary of State Robert Lansing, August 21,
1918, in Papers Relating to the Foreign Relations of the
Hflited States (Washington: Government Printing Office,
1918), pp. 768-770. These papers are hereinafter cited
as Erma Rels., with the appropriate year and page numbers.

 

20These decrees became the antecedents of some of
thfia legislation in the Constitution of 1917. See the
detlrees of January 7 and 29, 1915, in For. Rels., 1915,
872~873; 877-878; the decree of August 15, 1916, For.
%., 1916, 774-775.

 

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February 5th of the Constitution of 1917, Secretary of
State Robert Lansing dispatched a strongly worded note
to the Mexican Foreign Office commenting on certain pro-
visions of the prOposed Constitution which affected
American as well as other foreign property rights in
Mexico. He challenged what he termed the arbitrary and
unlimited power granted to the federal government of Mex—
ico in implementing particular articles.21 Fearing the
intent of nationalization explicit in Article 27, Lansing
emphasized that the United States could neither admit
nor acquiesce in "any direct or indirect confiscation

of foreign-owned properties in Mexico."22 Once the Con-
stitution became effective on May lst, Lansing's earlier
note was altered to specify "American-owned prOperties"
rather than "foreign-owned properties," and was expanded

to advise the Mexican government against any discrimina-

tion to American citizens "with reference to their legally

21Lansing to the U.S. diplomatic representative in
Mexico Charles B. Parker, January 22, 1917, For. Rels.,
3%. 947—949.

 

22The phrase "foreign-owned properties" would con-

tirrue to be used as a general principle, including citi-
zeils of various countries who had acquired property in
MeXico. On occasion the State Department made diplomatic

representations on behalf of the nationals of other coun-
tlfilees.

 

-15-

acquired rights and interests in Mexico" (prior to the
Constitution).23
In reply the Carranza government presented the argu-
ments and the precedents for Article 27, especially as
they pertained to petroleum. Pastor Rouaix, the Mexican
Minister of Agriculture and the member who initiated
Article 27 in the constituent constitution, maintained
that from the time of the promulgation of the Constitu-

tion the legal ownership of petroleum and other subsoil

mineral deposits, including the hydrocarbons, was returned

 

23Lansing to U.S. Ambassador in Mexico Henry P.
Fletcher, June 6, 1917, For. Rels., 1917, 1067-1968.
The reactions and the interpretations by American attor-
neys and scholars on the meaning of the Constitution
varied, especially on Article 27. Lawyers generally stressed
its so-called "radical" nature, such as William H. Burges,
A Hot-House Constitution: The Mexican Constitution of
1917 (n.p., 1917); R. B. Gaither, "The Mexican Constitu-
tion of 1917 - Confiscatory Phases," American Law Review,
IN) NO. 5 (July-August, 1921), 481-502; and Ira J. Williams,
"Confiscations of Private Property of Foreigners under
Color of a Changed Constitution," American Bar Association
JOurnal, V, No. 1 (January, 1919), 152-162. Scholars
were critical yet sympathetic to the aims of the Consti-
tution. See J. P. Chamberlain, "Property Rights Under
the New Mexican Constitution," Political Sciencegparterly,
XXXII, No. 3 (September, 1917), 369-390; N. Andrew N.
Cleven, "Some Social Aspects of the Mexican Constitution
Of 1917," Hispanic American Historical Review, IV, No. 3
Ufiugust, 1921), 474-485; and Joseph'Wheless, "The Mexican
Revolution in Word and Deed," American Bar Association
.fournai, IV, No. 4 (October, 1918), 681-698: Wheless,
F'Oreign Legislation, JuriSprudence and Bibliography -
Mexico," Ibid., III, No. 2 (April, 1917), 205-221, and
v, No. 2 (April, 1919), 234-262.

 

—l6-

to its original possession in the Nation.24 This owner-
ship had been based upon the inherent rights of the Spanish
Crown which were in turn transmitted to the Mexican Nation
as the successor of the Crown after 1821.25 The Spanish
Crown originally had invested itself with the rights of
ownership to the subsoil mineral deposits in the New WOrld
(dominium directum). Without ever surrendering those
rights the Crown granted to its vassals for their usage
(dominium utile) the right of the exploitation of the
subsoil deposits.26 Article 27, according to Rouaix,
could in no way be retroactive since it merely restored

to the Nation the fundamental property rights which the
Diaz government in the late nineteenth century had ceded

to private individuals or to private companies through

constitutional amendment and legislation. Article 27 then

 

24Statement of Pastor Rouaix forwarded by Ambassador
Fletcher to the Secretary of State (hereinafter cited
as State), March 17, 1918, For. Rels., 1918, 705-711.

25The Mexican government considered that the rights
of the Spanish Crown were legally transferred to and
vested in the Mexican Nation by the Treaty of Peace and
Amity signed between Spain and Mexico in 1836. See 223
I£ue Facts About the Expropriation of the Oil Companies'
Properties in Mexico (Mexico City: Government of Mexico,
1940), pp. 22-23.

26Though this theory had been expressed earlier,

the mining ordinances for the Viceroyalty of New Spain

(Wfliich included Mexico) issued in 1783 by Charles III
beCame the principal source for the mining laws of Mexico
unit—.11 1884. Refer to Howland, op. cit., p. 128: The True
ws About the Exprcmriation. . ., pp. 22-23.

 

-17-

reasserted what the Mexican Nation had always possessed.
No confiscation of property was involved, Rouaix added,
because the Mexican Nation had not demanded an indemnity
for the benefits accrued under the Diaz legislation.
Beginning in 1918 the Carranza government, acting
in the name of the Mexican Nation, began to enforce in
part the provisions of Article 27.27 The civil war in
.Mexico had not yet been settled, and the Carranza govern-
ment was in need of a source of revenue for its treasury.
The only consistent and rapidly increasing source of wealth
in Mexico was petroleum production. Under extraordinary
powers granted him by the Mexican Congress in the area
of finance, Carranza began to issue in February, 1918,
and continuing throughout 1919, a series of tax decrees on

petroleum-bearing lands and on petroleum production.28

 

27A group of Mexican lawyers and intellectuals
claimed that the Constitution of 1917 was both radical
in nature and unconstitutional in practice, that the con-
stituent convention which drew up the document represented
only the areas in which Carranza held control, and that
the Constitution had been imposed upon the Mexican people
by the Carranza government. The arguments Of this group
in addition to the continuing civil war in Mexico showed
that the Constitution and its provisions had not yet been
Completely accepted throughout Mexico. See Essay On The
figgomstruction of Mexico, trans. H. N. Branch (n.p., 1920).

28Some earlier meager efforts at taxation had been
attempted by former President Francisco I. Madero, and also
by Carranza before 1917. For the February 19, 1918,. decree,
See Fletcher to State, March 1, 1918, For. Rels., 1918,
702~704. The other tax decrees may be found in For. Rels.,

léil£§_and 1919, passim.

 

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-18-

These taxes served a double purpose: to obtain revenue
and to reassert the sovereignty of the Mexican Nation
over the subsoil mineral deposits.29

For purposes of the tax assessment, petroleum-bearing
lands were required to be registered with the federal
government. The Carranza government had already considered
the taxes to be decreed as a rental or royalty upon pro-
perty belonging to the Nation. Moreover, since the provi-
sions of Article 27 had stated that the subsoil mineral
deposits were the property of the Nation, whatever exist-
ing titles held by foreigners to such property upon which
exploration or exploitation for the subsoil wealth was
being, or would be undertaken, were in effect invalid.
A procedure was devised for the denouncement of this pro-
perty; that is, the securing of a permit from the Mexican
government to explore and to exploit the subsoil deposits.
Owners of petroleumebearing lands who were under the im-
pression that they possessed a private and a legal title
had:now merely a preferential right or concession to this
prOperty. To prove its determination to enforce its pol-

icy, the Carranza government enacted penalties for non-

29Secretaria de Industria, Comercio y Trabajo,.Legis-
IEEEiOn Petrolera. Leyes, Decretosgy Disposiciones Admin-
.iEJEEativas Referentes a la Industra Petrolera, 1783—1921
MeXiCO: Talleres Graficos de la NaciOn, .1922),4.pp.-T7--
541. as cited in Wendell C. Gorden, The Expropriation of
gxlEfgign-Owned Property in Mexico (washington, D.C.:
erican Council on Public Affairs, 1941), pp. 61-62.

 

-19-

compliance within the time limits established for the
registration and the denouncement of property. Special
taxes might be assessed, drilling might be suspended and
the oil wells closed by federal troops, and the permits
(or denouncements) on property considered legally acquired
might then be granted to any individual who would comply
with the Mexican laws.

Resisting such attempts to force their submission,
the American oil companies in Mexico protested vigorously
against the assessed taxes as being exorbitant and refused
to complete the registration and the denouncement Of their
properties. The oil companies expressed concern since
practically all known petroleum-bearing land was privately
owned or leased. Any implementation of Article 27 in
whatever form directly affected that private ownership.

Of greater importance to the oil companies than the amount
of the taxes themselves was the general policy that, if
they complied with the request of the Mexican government,
they were admitting the ownership of the subsoil deposits
by the Mexican government and thereby obligated themselves
to abide by the provisions of whatever petroleum legisla-
tion might be enacted in the future. Failing to obtain

. . 3
anyzredress in conferences With the Carranza government, 0

30A joint committee of American petroleum producers

in Mexico held a conference with the Mexican government
during May and June, 1918. See Fletcher to State, June 12,
1918, For. Rels., 1918, 724-732.

 

 

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-20-

the petroleum producers appealed to the State Department
for diplomatic representation on their behalf. They
pointed to their enormous investment and possessions ob-
tained under the mining laws in existence prior to 1910,
and to the necessity of maintaining an adequate oil supply
for the Allied Powers with the war in Europe. Though
less Optimistic about results, they also sought legal
redress by filing in the Mexican courts over one hundred
fifty requests for writs of amparo31 against the applica-
tion of the 1918 decrees. Lastly, they created a prOpa-
ganda organization to present their position.

On the diplomatic level the State Department and

the Mexican Foreign Office exchanged numerous communiqués

 

31The writ of amparo existed for the redress of

injuries to individual rights which were infringed upon

by any branch of the Mexican government. It provided for
, a constitutional interpretation by the federal courts of

Mexico to uphold the Constitution and to prevent any in-

fringement on the part of the Mexican government. Theor-

etically it was a constitutional check against the abuse

of power. Refer to Benito Flores, "The writ of Amparo

Under Mexican Law," American Bar Association Journal,

VII (August, 1921), 388-392. See also "Judicial Precedent

in Mexican Law," Michigan Law Review, XXV, No. 1 (November,
1926), 63-64: the statements by the Mexican jurist and
Professor of law, Manuel Gual Vidal, on Mexican amparo
.Broceedings in John T. Vance and Helen L. Clagett, A Guide
££1_the Law and Legal Literature Of Mexico (washington,
D-(2.: The Library of Congress, 1945), pp. 172-181.

The results of this maneuver by the petroleum com-

PEUIies were a failure since the lower courts ruled against
hug companies, and the Supreme Court did not handle any
a“Aparo cases until 1921.

 

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-21-

on the tax decrees of 1918 and 1919.32

Without essentially
solving the difficulties between the two countries, these
formal notes merely reiterated their respective positions.
The State Department maintained that the provisions of
the tax decrees of 1918, particularly the procedure of
denouncement, arbitrarily rescinded titles to property
legally acquired in Mexico in good faith under the legis-
lation existing prior to the promulgation of the Constitu-
tion of 1917.33
Carranza replied that he was carrying out his func-
tion as the executive of the Mexican Nation in enforcing
the precepts established in the Constitution. He acknow-
ledged that his tax decrees were to be only temporary
measures.34 The Mexican Congress alone, he stressed,

possessed the actual power to enact legislation concern-

ing the implementation or the regulation of the precepts

32According to the Mexican interpretation of inter-
national law the United States should have waited until
local legal remedies (for example, court action) had been
eXhausted or proven inadequate before making diplomatic
representations. Uhder Secretary of State for Foreign
-Affairs E. Garza Pérez to Fletcher, August 17, 1918, E23;
Rels. , 1918, 768-770.

 

33Lansing to Fletcher, March 19, April 4, 1918,
1125;. Rels., 1918, 705-707; 715-716.

34Garza Pérez to Fletcher, For. Rels., 1918, 769.

 

-22-

of the Constitution on subsoil ownership.35 Though Car—
ranza assured that such legislation when it occurred would
respect the existing property rights Of foreigners in

36

Mexico, in the meantime the Mexican government could

merely provide for the equal treatment Of both foreigners
and Mexican citizens under the decrees issued in 1918.37
Carranza reaffirmed that his government had no intention
of confiscating any petroleum-bearing lands in the pro-
cess of exploitation. Realizing the importance of a con-
tinuing flow of petroleum for revenue and for domestic
employment, Carranza followed a cautious policy. In
several subsequent decrees Carranza modified the provi—
sions, not the principle, of the February 19, 1918, decree

by extending the time limits for denouncements and by

issuing temporary drilling permits.

 

35Carranza himself had submitted a proposed organic
petroleum law embodying several of his decrees of 1918
to the Mexican Congress on November 23, 1918. The law
was approved by the Senate but did not pass the Chamber
of Deputies. For a translation of this proposed measure,
see Fletcher to State, December 3, 1918, For. Rels., 1918,
772—783.

36The Carranza government referred to Article 14
of the Constitution of 1917 which provided that "no law
shall be given retroactive effect to the detriment of any
person whatsoever." In an interesting evaluation J. P.
Chamberlain pointed out that the intention of the draftees
of the Constitution was for Article 14 to be used as a
safeguard against retroactive legislation subsequently
passed, and not to be applied to limit Article 27 of the
Constitution as had often been erroneously thought. See
"The Mexican Oil Situation," Nation, January 11, 1919,
p. 67.

37Fletcher to State, February 20, 1917; August 2,
1917, For. Rels., 1917, 1044; 1072.

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-23-

Finding no modification in substance, the State
Department reiterated its position on the tendency towards
confiscation contained in these decrees. The element
of suspicion over the changes Of policy and the intentions
of the Mexican government since 1917 had become only too

pronounced within the State Department.

II

The focus on the war in Europe had temporarily turned
the attention of Americans from the earlier problems with
Mexico. .Murders, robberies, and kidnappings in Mexico
did not receive widespread attention in the American press
during 1917 and 1918. With the armistice ending the war
in November, 1918, and with the creation of the Associa-
tion of Producers of Petroleum in Mexico in late 1918 as
a propaganda organization for the leading American oil
companies in Mexico, Mexico began to receive greater notice
in the press. The following January an outgrowth of the
association of oil companies--the National Association
for the Protection of American Rights in Mexico--was formed
for the ostensible purpose of advancing as a general prin-

ciple the protection of American property rights in Mexico.3

 

38New York Times, January 18, 1919, p. 13. See the
New York Times, January 30, 1919, p. 15, for a partial
listing of the members of this organization. Among those
represented were the principal petroleum companies in
Mexico, a number of mining and smelting companies, several

 

 

-24-

Both organizations were primarily operated as lobbying
groups for the petroleum interests, who held a monopoly
on the prOpaganda as evidenced from the vast number of
pamphlets, Speeches, addresses, a semimonthly bulletin

39 Emotional tracts about condi-

and numerous memoranda.
tions in the Mexican oil fields, on murders, robberies,
and confiscation of property provided a repetitious
theme.4O

Within Mexico by early 1919 Carranza had not suc-
cessfully pacified the country from the chaotic conditions
of the civil war. Though he represented the national
government of Mexico in the office of President, Carranza's
authority was never fully recognized throughout the coun-
try and he held power only in the areas under the control
of the federal forces. He was criticized for the non-

fulfillment of many of his promises since he launched

his revolution against Huerta in 1913. The continuous

 

agricultural and a few land and cattle groups, and a con-
siderable number of bankers and security holders.

39A good sample of this type of material may be

found in the Library of Congress and in the National
Archives (Decimal File Group 812.6363/). A number of
letters and memoranda sent to Ambassador Henry P. Fletcher
and to Woodrow Wilson may be found in the Library of Con-
gress Manuscripts Division, Washington, D.C. (hereinafter
cited as LC), Fletcher Papers and Wilson Papers.

40For example, Thomas E. Gibbon, Mexico under Car-
ranza: A.Lawyer's Indictment of the Crowning Infamy of
Four Hundred Years of Misrule (Garden City, New YOrk:
Doubleday, Page & Company, 1919).

-25-

civil war, banditry, graft and corruption which plagued
the countryside were likewise blamed on Carranza, though
he was not always personally responsible.

Throughout most of 1919 the charges against Carranza
were particularly fostered by an opposition group of Mex-
ican generals. In their desire to obtain power and wealth
they were willing to use any platitudes pleasing to the
Uhited States and eSpecially to American interests in
.Mexico. They would reestablish stable government in Mexico
(as in the Diaz era), protect American lives and property,
and replace the so-called "radical" Constitution of 1917
with its predecessor of 1857. All they requested to assist
them in the overthrow of Carranza was a recognition of
belligerency from the united States and the lifting Of the
arms embargo imposed on Mexico since July, 1919.41

By the summer and fall of 1919 greater emphasis
was being given in the U.S. press and periodicals to wor-
sening conditions in Mexico and to a definitely hostile
attitude toward Carranza. Carranza had recently been
disliked during the world war because, even though his
government had remained neutral, it had been suSpected of

a pro-German sympathy and of harboring representatives of

 

4{See the letter of a representative of General

Felix Diaz to WOOdrow‘Wilson,.March 4, 1919, containing
over three thousand purported signatures of Mexican
citizens within the united States in support of Diaz,
NA, 812.00/22599. Refer also to the Independent,
August 9, 1919, PP- 171-174.

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—26-

the anarchist Industrial Workers of the WOrld. With the
relief of the war ended in Europe, Americans became more
conscious of murders, assaults, robberies and kidnappings-—
all of which some American citizens were victims--which
were continuously being reported in the press. The N33.
YOrk Times printed a chronological list of bandit outrages
(115 raids) committed against American citizens in the

oil fields of the Mexican state of Tampico since August 15,
1917.42 The raids of Pancho Villa into American territory
brought forth further criticism of the Carranza government
for its inability to restore law and order in Mexico and
for the alleged inability of Mexicans to respect any type
of government. Rumors were again revived of the "San
Diego Plot" whereby Mexico was to seize the states of the
American Southwest and to turn them over to the Negroes,
the Japanese and the Mexicans.43 In all, there appeared

to be increasing agitation in the American press and peri-

odicals for a change of policy from WOOdrow Wilson's

 

42New York Times, March 3, 1919, p. 10.

43%., June 10, 1919, p. 15: January 23, 1920,
p. 1.

-27-

44 ‘While there

"watchful waiting" to some type of action.
was diverse opinion over the exact type of action desired,
the alternatives seemed to have been narrowed down to a
form of external pressure as intervention by a punitive
eXpedition (similar to that in 1916) and the establishment
of a protectorate over Mexico.

Congress too in part began to reflect this sentiment,
especially by the senators and representatives from the
states bordering on Mexico.45 Chambers of Commerce,
scholarly organizations and civic groups soon found Mex-

ico to be among one of the popular subjects of serious,

if not emotional, discussion.

 

44Consult the excerpts from comments in the press
found in the Literary Digest, June 28, 1919, pp. 13-14;
August 9, 1919, pp. 14-16; August 30, 1919, pp. 18-19.
See also the Outlook, July 30, 1919, p. 493: December 10,
1919, pp. 451-452; December 24, 1919, pp. 534-535: Sunset,
the Pacific Monthly, September, 1919, p. 11: the Indepen-
dent, August 2, 1919, pp. 141-144: Forum, October-November,
1919, pp. 385-499; WOrld's WOrk, October, 1919, pp. 572-
574: Current Opinion, January, 1920, pp. 13-17: the wash-
ington Post, June 18, 1919, p. 6.

The New York Times carried several full-page spreads
of anti-Carranza Opinion written by Wallace Thompson, a
journalist and former vice-consul at Monterrey, Mexico:
July 6, 1919, IV, p. 1: August 3, 1919, IV, p. 7. See also
the editorial opinion of the New YOrk Times which stressed
the obligation of the united States to protect its citi-
zens and their property rights abroad; July 3, 1919, p.
12: July 11, 1919, p. 10; August 16, p. 6; August 22, p. 10.

A strongly anti-Wilson polemic was written by the
former U.S. Consul General in Mexico, George Agnew Chamber-
lain, who resigned his post in protest in August, 1919.
See his tract Is Mexico WOrth Saving (Indianapolis: The
Bobbs-Merrill Co., 1920), and his articles in Collier's,
The National weekly, January 17, 1920, p. 15: March 6,
p. 13: March 27, p. 12.

45They were joined by Congressmen from Indiana,
(Dhio, Tennessee, and New YOrk. Consult J. Fred Rippy's
summation of the sentiment in Congress by 1919 in his
gghe United States and Mexico, pp. 353-354.

 

-28-

The heated discussion over intervention in Mexico
did not go by unchallenged. The Carranza government
attempted, of course, to justify its position by the
publication of numerous official pamphlets explaining
Mexican laws, circulars, decrees and regulations--parti-
cularly on petroleum.46 In addition Carranza maintained
an Information Bureau and a Financial Agency in New York

City, subsidized a monthly propaganda magazine in the

united States (The Mexican Review), had articles published

 

in several U.S. newspapers and magazines, distributed
motion pictures films of Mexico, and sponsored official
tours into Mexico for American chambers of commerce.

In the united States a group composed of scholars,
students, editors and journalists interested in the study
of international relations had organized the League of
Free Nations Association in 1918, later to become the

47 One of the commit-

Foreign Policy Association in 1921.
tees within this organization, the Mexican committee,
became actively engaged in propaganda supporting the

Carranza government. Of the two main protagonists of the

Mexican committee, Samuel Guy Inman was the most volum-

 

46Most of these pamphlets are available in the

Library of Congress and in the National Archives (Decimal
File Group 812.6363/).

47Membership of this organization may be found in

the New York Times, September 11, 1919, p. l.

-29-
inous author of anti-interventionist tracts on Mexico.48
In addition to his numerous articles in liberal and re—
ligious magazines, his monograph Intervention in Mexico49
presented the Mexican Revolution as a social revolution
and praised the work of reconstruction undertaken by Car-
ranza. Less restrained in tone was Leander Jan de Bekker's
The Plot Against Mexico.50 De Bekker made an undocumented
exposé of the American oil interests in Mexico subsidiz—
ing rebellion within the oil fields of Mexico and urging
military intervention by the united States.

Seizing upon de Bekker's theme of a "plot against

Mexico,"51 liberal magazines as the Nation and the New

 

48Inman, a one-time lecturer on Latin America at
Columbia university, was the director of the Mexican Com-
mittee, a field representative for the Board of Foreign
Missions of thirty Protestant Churches in the united States,
and an executive secretary of the Committee on Cooperation
in Latin America which Sponsored the missionary work of
the Protestant Churches in Latin America.

49Samuel G. Inman, Intervention in Mexico (New York:
George H. Doran Company, 1919).

50Leander Jan de Bekker, The Plot Against Mexico
(New York: Alfred A. Knopf, 1919). His articles in the
Nation deal with the same theme; July 12, 1919, pp. 36-
37: July 26, PP. 106-107; August 9, pp. 164-166. In
addition to being a member of the Mexican Committee, de
Bekker was the publicity agent for the League of Free
Nations Association.

51Two other journalists wrote pamphlets in this
vein. See John Kenneth Turner, Hands Off Mexico (New
YOrk: Rand School of Social Science, 1920), and Arthur
Thomson, The Conspiracy_Against Mexico (Oakland, Calif.:
International Press, 1919).

 

 

 

-30-

Republic editorialized against American intervention in
Mexico. In their opinion the cost in money and lives,
the loss of prestige for the United States in Latin
America, and the difficulties of maintaining a protector-
ate based upon previous American experience in the Carib-
bean, were scarcely considered worth the distorted and
well financed anti-Carranza propaganda of "big business"
and oil magnates.52

Several American Protestant Churches with missions
in Mexico,53 eSpecially the Methodist Episcopal Church,
the Presbyterian Church and the Society of Friends (Quakers),
gradually began to support Carranza. In numerous letters
to U.S. Ambassador Henry P. Fletcher and to President
Wilson54 these churches argued that their missionary work,

unhampered so far by the Revolution, would be seriously

 

52See editorials and articles in the Nation, April 12,
1919, pp. 538—539; August 23, p. 234; November 29, pp.
680-682: December 6, p. 708: February 21, 1920, pp. 228-
229. An editorial in the New Republic referred to the
profits of "Doheny, Hearst, Fall and CO."; September 17,
1919, pp. 64-66. Refer to articles in the liberal journal
The Public, August 2, 1919, p. 817; September 20, pp. 1016—
1017; December 6, pp. 1129—1130. See also the non-inter-
ventionist plea in the Overland Monthly, March, 1920,
p. 260.

53According to Harlan P. Beach and Charles H. Fahs
(ed.), WOrld Missionary Atlas (New York: Institute of
Social and Religious Research, 1925), p. 91, there were
twenty-one Protestant Missionary Societies in Mexico by
1922.

 

 

54LC, Fletcher Papers (Gen. Correspondence, 7) and
Wilson Papers (Division II).

 

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-31-

hindered by intervention, the need for which was merely
the result of propaganda issued by the oil companies.55
They urged a peaceful solution to the Mexican problem by
turning American attention to the necessity of increased
education among the Mexican public, a more vitalized
religion in the country, and an emphasis on health and
sanitation--all this while allowing Mexico to work out

her own salvation.

Such a solution was also advocated by one of the
conferences on international relations sponsored by Clark
university in May, 1920, on Mexico and the Caribbean.

The majority of the delegates at this symposium of scholars,
representatives of the diplomatic service of both the
United States and Mexico, and business men from both coun—

56 Like-

tries, opposed military intervention in Mexico.
wise concerned was Samuel Gompers, President of the
American Federation of Labor. The American Federation

of Labor had been very influential in molding the Mexican

 

55On the other hand, protests to the State Depart-
ment from officials of the Catholic Church dealt with
the redress of injuries and damages to members of the
clergy and to church property arising from the revolu-
tionary program.

56See George w; Blakeslee, Mexico and the Carib—
bean (New YOrk: G. E. Stechert and Company, 1920).

-32-

labor movement along the model of the American labor
movement.57 Gompers feared that intervention in Mexico
would undermine the work accomplished thus far and endan—
ger the recently organized (1918) Pan American Federation
of Labor, a proposed federation of all labor organizations
in the Western Hemisphere.58
Simultaneously With the discussion on the possibil—
ity of intervention in Mexico was a congressional inves-
tigation in 1919 on the entire Mexican problem. By Senate
Resolution 106 a subcommittee of the Senate Foreign Rela-
tions Committee was organized on August 8th to investigate
the threats and destruction to life and property of American
citizens in Mexico Since the Mexican Revolution began.
Senator Albert B. Fall, a Republican from the border state

59

of New Mexico, was appointed Chairman. The other two

 

57See the articles by Chester M, wright in the
Weekly Review, November 10, 1920, pp. 441-443; American
Federationist, June, 1920, n.p. Refer to the Report of
Proceedings of the Fortieth Annual Convention of the
American Federation of Labor (n.p., 1920), pp. 125-126.

58For the interesting and rather unusual role of
the Pan American Federation of Labor during'World'War I
and its connection with the Wilson administration, consult
Sinclair Snow, The Pan American Federation of Labor
(Durham, N. Carolina: Duke University Press, 1964),
Chapter I.

59Fall' S early mining experience and investments
in Mexico made himnwell acquainted with the Mexican legal
system under the Diaz regime. See David H. Stratton,
"New Mexican Machiavellian? The Story of Albert B. Fall,"
Montana: the Magazine of western History, VII, No. 4
(October, 1957), 2—14. Fall's demand for military inter-
vention in Mexico in 1916 is covered in J. Fred Rippy,

 

 

 

-33-

members of the subcommittee who acted in unison with Fall
throughout the investigation were Frank B. Brandegee (R,
Conn) and Marcus Smith (D, Ariz). The result of the ten
month investigation was a two volume work consisting of
nearly 3400 pages of testimony from about 250 witnesses,

a set of prepared statements and documents, and appendices
of statistics on hearings conducted from washington, D.C.,
to the states of Texas, Arizona, and California.60 Nearly
every important individual or organization currently de-
fending or attacking prOposed intervention in Mexico was
subject to the testimony.

Fall's partisan handling of the witnesses and his
tactics as a cross-examiner revealed an overtly emotional
appeal to the American public. Upon closer examination
a considerable portion of the testimony of the witnesses
was based on heresay and dubious information, which not
merely lessened the reliability of the investigation but
proved it to be a sham. The most caustic critic of the

Fall subcommittee hearings, the New York Times, had be-

 

come skeptical of its real intentions from the beginning

 

pp. cit., PP. 348-350. See also Burt Noggle, Teapot Dome:
Oil and Politics in the 1920's (Baton Rouge: Louisiana
State university Press, 1962), pp. 8-12, for additional
data on Fall's early life until he was appointed Secretary
of Interior in 1921.

6OU.S., Congress, Senate, Investigation of Mexican
Affairs, 66th Cong., 2nd Sess., Sen. Doc. 285, 2 volS.,
1920.

 

-34-

of the investigation. Later editorials declared Fall an
interventionist, and Smith and Brandegee as bitter poli—
tical opponents of WOodrow Wilson--implying that there

could scarcely be an "impartial investigation" with such

personnel.61 Moreover, continued the New York Times,

 

Since Fall had not produced evidence for his "sensational
charges," it appeared that he was deliberately attempting
to create a rupture in diplomatic relations with Mexico.

To the unsuSpecting, the evidence--based on the
testimony of the witnesses and on the statistics employed--
appeared to indict the Carranza government more than any
other government Since 1910 for the responsibility of
injuries and damages to the lives and property of Ameri—
can citizens. The overall picture of the investigation
left the unavoidable impression that conditions in Mexico
steadily worsened after Carranza assumed leadership of
the Mexican Revolution in 1913. The consensus of witnesses
also seemed to agree that conditions under the Porfirio
Diaz government (1876—1911) were much less strenuous and
more accommodating for AmericanS--another undisputable
point if it was understood that Mexico was then governed

by a strong dictator and was not in a decade of revolution.

 

61New York Times, August 12, 1919, p. 8; September 9,
p. 16; December 5, p. 14: January 13, 1920, p. 12.

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The crux of the Fall subcommittee investigation,
and perhaps a final convincing argument for those who had
not yet become discouraged or disillusioned after reading
over three thousand pages of testimony to this point, was
the appendix. To a statistically minded public brought
up on the stock market, the appendix of the investigation
presented what appeared to be some sobering figures.

From the time of the resignation of Porfirio Diaz on

May 25, 1911, through May 20, 1920, the appendix listed
785 American citizens or soldiers killed, wounded or
abused in Mexico and on the U.S.-Mexican border, and a
total amount of damages during this decade estimated at
the staggering sum of $505,002,434.00.62 Yet when the
State Department submitted its records to the U.S. Senate
on the damages to American lives and property in Mexico,
the statistics differed sharply. During the approximately
identical period of time (from Diaz' resignation in 1911
through the end of July, 1919), the State Department had
official record of only 217 American citizens killed in

Mexico,63 and a total sum claimed in damages (property,

 

62Senate, Investigation of Mexican Affairs, II,
3382, 3399.

63This figure compared with the estimate Of Ameri-
can citizens living Or residing in Mexico prior to 1911
and up to 1920 Shows an interesting contrast. The testi—
mony of the investigation estimated the actual resident
pOpulation of Americans in Mexico in 1911 to have been
about sixty thousand. The members of the subcommittee
favored the estimates of seventy-five thousand suggested
by former Ambassador to Mexico Henry Lane Wilson. In
1920 the subcommittee estimated the number of Americans
residing in Mexico at about twelve thousand. See Senate,

_35-

death and personal injuries) against the Mexican govern-
ment and filed with the Department since 1911 which amounted
to merely $26,629,597.61.64 The State Department was the
official agency through which claims against a foreign
government were to be registered. Either few Americans

had bothered to register a claim, or most likely, Fall's
statistics were grossly exaggerated.

The desired conclusion which was intended to be de-
rived from the subcommittee's investigation was that the
national honor of the United States was sufficiently at
stake to force Mexico to respect and to fulfill its inter-
national obligations to protect American lives and pro-

perty.65 What those international obligations Should be

 

9p. cit., II, 3311, 3313.

Whether one accepts the subcommittee's report of
785 American citizens killed or wounded during a ten year
period or the State Department's record of 217 American
citizens for the same period, either figure is relatively
minor compared to the size of the American pOpulation
living in Mexico within that same decade.

64U.S., Congress, Senate, Claims Against Mexico,
66th Cong., lst Sess., Senate Doc. 67, August 1, 1919,

pp. 2-3.

65The Republicans could utilize this investigation
in the 1920 presidential campaign. See Cline, pp. cit.,
pp. 190-191. Charles C. Cumberland has pointed out that
Fall's oil interests in Mexico were threatened, so he
used his position as Chairman of this subcommittee to de-
velop a case for his own cause. See Cumberland, Egg
United States-Mexican Border: A Selective Guide to the
Literature of the Region [Supplement to Rural Sociology,
XXV, No. 2 (June, 1960)], p. 22.

 

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and what U.S. policy toward Mexico should consist of, were

outlined in the subcommittee's final report submitted on

May 28, 1920.66

67

Prior to the election of the next Mexican
president, the subcommittee recommended that the current
government disregard the provisions relating to private
prOperty of Article 27 Of the Constitution of 1917, that

it restore the religious freedom restricted by Articles

3 and 130 of the Constitution, that the Mexican government
actively undertake to protect the lives and property of
foreigners, that a claims commission be set up to deter-
mine claims for damages and indemnities to be awarded,

and that “responsible leaders" be selected (implying
Carranza's successor or successors). If any Mexican govern-
ment agreed to these terms (which suggested a return to

a prerevolutionary Mexico), the terms Should be written

68

down in the form of a protocol to avoid later misunder-

standings. Upon such action the subcommittee would suggest

 

66Senate, Investigation of Mexican Affairs, II,
3368-3373; Albert B. Fall to Lansing, October 8, 1920,
NA, 812.00/24680.

 

67The Carranza government by this time had been
overthrown by a successful revolution in the Spring of
1920. A provisional President was in power until elec-
tions were held in August for a constitutionally elected
president to take office on December lst.

68The understanding was that these terms be embodied
in a formal treaty which would be binding on that govern—
ment.

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as a humanitarian gesture that financial aid from the
United States be given to Mexico to sufficiently enable
her to meet all of her outstanding indebtedness. Rejec—
tion of these terms (of international blackmail) should
result in the resumption of strong diplomatic protests
by the United States until a military occupation of
Mexico was subsequently accomplished.

In Washington the State Department was hardly un-
aware of the Mexican problem or of the seemingly Shift-
ing attitudes of American opinion. Nonetheless, preoccupa—
tion with the Paris Peace Conference during 1919 had given
the Department or Wilson69 scant time to seriously eval-
uate and to consider an answer to the recurring problem.

A crisis arbse, however, in November, 1919, which seemed

to force a decision on the problem.70

 

69Wilson had not kept himself informed of the Situa—

tion in Mexico. Lansing was more informed, but be relied
to a considerable extent on Henry P. Fletcher who in early
1919 had returned from the post of Ambassador to Mexico
to be a counselor for the State Department on Mexican and
Latin American Affairs. Later in the year Fletcher became
Uhder Secretary of State. His reports as Ambassador were
the primary contacts the State Department had on the Mexi-
can situation.

The U.S. Chargé d'AffaireS, George T. Summerlin,
was left in command of the American Legation in Mexico
City.

79A very brief sketch of the crisis is found in

Cline, pp. cit., pp. 190-192. For a detailed analysis of
the whole crisis, consult LC, Fletcher Papers, Lansing
Papers, Lansing Diary, and Wilson Papers, for November and
December, 1919. See also Decimal File Group 711.12/ for
the same months.

 

-39-

William O. Jenkins, a U.S. consular agent stationed
at Puebla, Mexico, had allegedly been kidnapped and held
for ransom by bandits. Following his release from the
bandits, he was arrested by the Puebla officials on a
charge of complicity in his false kidnapping.71 This
"Jenkins case," though scarcely novel in view of condi—
tions in Mexico since 1910, appeared to be catalyst for
an abrupt rupture in the already shaky diplomatic rela-
tions between the united States and Mexico.72

Former Ambassador to Mexico Henry P. Fletcher re-
garded the Jenkins case as the culmination of Carranza's
deliberate hostility toward the United States. Viewing
as futile any further friendly relations between the two
countries, Fletcher's memoranda on the crisis stressed
the necessity of impressing Carranza with the gravity of
Jenkins's release, even to the point of an ultimatum over
the severance of diplomatic relations with Mexico and the

suggestion of forceful measures.73 Senator Fall attempted

 

71Charles C. Cumberland, "The Jenkins Case And
Mexican-American Relations," Hispanic American Historical
Review, XXXI, No. 4 (November, 1951), 586-607.

72The Literary Digest, December 13, 1919, PP- ll-
13, reported that a large portion of the U.S. press would
approve military intervention in Mexico over the Jenkins
case. It was the only Opinion digest to make this broad
presumption.

73Fletcher to Lansing, November 21, 1919, LC,
Fletcher Papers (Gen. Correspondence, 7); November 25,
1919, NA, 312.11/8839-1/2.

 

 

 

-40-

to take advantage of the crisis by introducing on Decem-
ber 3rd an unsuccessful concurrent resolution in Congress
for the withdrawal of diplomatic recognition from Carranza
and the severance of diplomatic relations with Mexico.

Secretary of State Lansing was unwilling to utilize
the Jenkins's case as a pretext for intervention74 in
Mexico when in his mind the real issue at stake was the
accumulation of injuries and damages suffered by American
citizens in Mexico, especially under the Carranza govern—
ment.75 To retain prestige for the position of the united
States, however, Lansing did convey a stern warning to
Carranza that U.S.-Mexican relations had nearly reached
the breaking point.76 Fortunately for Lansing's position,
Jenkins was released on December 5th and the crisis began
to lose its momentum.

Upon the joint consultation of Lansing, Fletcher

and the Division of Mexican Affairs, a memorandum was

sent to Wilson on January 3, 1920, which suggested that

 

74Lansing noted in his diary the division of Wilson's
cabinet over the question of strong measures against Mex-
ico. Wilson, already stricken with a stroke and uninformed
of conditions in Mexico, voted against any action. LC,
Lpnsing Diary, November 18, 1919.

75Lansing to Wilson, December 5, 1919, For. Rels.,
Lansing Papers, II, 567-568.

76Lansing Memorandum of a Conversation with the
Mexican Ambassador Ignacio Bonillas, November 28, 1919,
NA, 711.12/229-3/4.

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Mexico be given one more Opportunity within a five week
period to accept another series of prOposals or to face
the severance of diplomatic relations with the united
States.77 The h0pe remained that perhaps different cir-
cumstances might arise in time to alter conditions in
.Mexico, thereby making unnecessary the ultimate remedy
considered--the military intervention of Mexico.78
With the Jenkins case settled, the major question
of petroleum rights and exploitation in Mexico still re-
mained an issue. A crisis over this question was averted
when Carranza in mid-January, 1920, ordered that provi-
sional permits to drill petroleum be issued until an organic
petroleum law relating to Article 27 had been passed in
the Mexican Congress.79
Meanwhile events in Mexico during the early months
of 1920 gradually justified the deliberate procrastina-
tion of the State Department. By the Constitution Carranza

was prohibited from succeeding himself in Office after

 

77
263a.

78Boaz Long, the Chief of the Division of Mexican
Affairs, had already urged that military intervention be
the last resort. Long Memorandum, December 7, 1919, NA,
711.12/228-1/2.

79Fletcher regarded this action as practically set-
tling the acute phase of the oil question. Fletcher to
Uhder Secretary of State Frank A. Polk, January 22, 1920,
LC, Fletcher Papers (Gen. Correspondence, 7). Fletcher
resigned as Under Secretary in January.

Lansing to Wilson, January 3, 1920, NA, 711.12/

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-42-

his term expired on November 30th. He gave his support
to a civilian candidate, Ignacio Bonillas, who as Mexican
Ambassador to the United States was known in washington
but not in Mexico. Whatever his motive in selecting
Bonillas, Carranza passed over the most popular man in
his party, a military hero and a logical candidate to
succeed him--A1varo ObregOn. ObregOn had been reSponSible
for the successful victories of Carranza's Constitutional-
ist Army against Victoriano Huerta, had been claimed as
the only individual who had ever defeated Pancho Villa in
battle, and had served for a time as Carranza's Minister
of war.80 In June, 1919, ObregOn announced his own can—
didacy for the presidential Office.

As the election campaign progressed, a series of
events occurred in the state Of Sonora whereby Carranza
for political reasons invoked the power of the federal

81 The announce-

government against the state Of Sonora.
ment on April 11, 1920, Of an order for federal trOOpS to
move into Sonora created a rebellious atmosphere within

the state. The Governor and the legislature of Sonora

 

80Upon his retirement from the Carranza administra-
tion in early 1917, ObregOn returned to the state of Sonora
to take up farming and a read a good deal in law, history,
geography, logic and psychology. See John W} F. Dulles,
Yesterday in Mexico: A Chronicle of the Revolution, 1919-
1936 (Austin: University Of Texas Press, 1961), p. 15.

81For a brief discussion Of the Revolution of 1920
see Chapter XXVII of Herbert I. Priestley, The Mexican
Nation, A Histopy (New York: The Macmillan Company, 1938).

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voted to secede from Mexico unless the sovereignty of
the state was recognized.82 General Plutarco E. Calles,
a former Minister of Industry and Commerce under Carranza,
conducted the military Operations against the federal
troops. A political program--the Plan of Agua Prieta--
was drawn up on April 23, 1920, in which Carranza was
charged with the attempt to impose by force a presiden-
tial candidate on the Mexican people and with the viola-
tion of the sovereignty of the states under the federal
system. Having agreed that Carranza should no longer be
President, the revolutionaries vowed upon the seizure of
the capital to name a Provisional President to fill the
vacancy until regular elections for the presidency and
for congress could be scheduled.

The Plan of Agua Prieta was an immediate success.
Carranza's army was defeated, and Carranza was allegedly
assassinated on May 21st in an attempt to escape.83 On
May 25th, the Governor of the state of Sonora, Adolfo de
la Huerta, was chosen by Congress as Provisional President

to serve out Carranza's unexpired term of office until

November 30, 1920.

 

82This action gave the Revolution of 1920 the
appearance of a civil revolt against Carranza begun by a
civil governor and legislature rather than by a military
coup.

83Carranza was assassinated one week prior to the
presentation of the final report Of Fall's subcommittee
on Mexico.

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The crisis of 1919, then, had passed without blood—
shed, and the antagonism to the policies and actions of
Carranza had seemed to subside upon his death. The atmos-
phere of tension Slowly declined. Perhaps a solution to
the ten years of crises over Mexico had been reached-—

with Mexico taking the initial step.

CHAPTER II

A RELUCTANCE TOWARD RECOGNITION

A "triumphant, though tardy, vindication“ of
Wilson's policy of "watchful waiting," exclaimed the Chief
of the Division of Mexican Affairs Charles M. Johnston
with perhaps a Sign of relief as he observed Mexicans over-
throw Carranza.1 He admitted rather confidently that
critics of WOodrow Wilson could scarcely discover enough
material in Carranza's overthrow for a political platform
(implying the Republican Party) or for an appeal to the
American public for the military occupation of Mexico.
After all, the State Department had merely been hoping
that a removal of Carranza from power would put the
United States in a better position to revamp diplomatic
relations with a new leader in Mexico.2

Nonetheless, the overthrow of the Carranza govern-
ment had not eliminated the basic issues of diSputeS

between the two countries, which, though often clouded

 

1Charles M. Johnston Memorandum to Secretary of
State Bainbridge Colby, May 25, 1920, NA, 812.00/24920.

2Lansing to Wilson, January 3, 1920, NA, 711.12/263a.

-45-

-46-

over by the man--Carranza--Still remained noticeable.
The Mexican Constitution with its contested Article 27
and the subsequent executive decrees of Carranza had not
been altered. Nor had the fundamental question been
solved, for the United States at least, of the status
of legally acquired property rights of American citizens
in Mexico.

with these issues in mind, the State Department
scrutinized the new leader in Mexico, Adolfo de la Huerta.
The immediate question was whether or not to accord dip-
lomatic recognition to this new government. Disappointed
with the previous experience of Carranza's recognition,
the Department decided to proceed cautiously in its exam-
ination of according any recognition of the existence
of the de la Huerta government. The same day de la Huerta
had been sworn in as Provisional President, Secretary of
State Bainbridge Colby (Lansing's successor)3 dispatched
a note to the American Embassy in Mexico City which expressed
doubts about the strict legality of the recent presiden-
tial succession in Mexico and which urged extreme caution
in dealing with de la Huerta to avoid the least imputation

of any diplomatic recognition.4 The Chief of the Division

3Because of a disagreement over functions of office,
Wilson accepted Lansing's resignation on February 13,
1920.

4Colby to the U.S. Embassy in Mexico City, May 25,
1920, NA, 812.00/24071.

-47-

of Mexican Affairs sustained Colby's decision by recom-
mending that before any diplomatic recognition was accorded
serious efforts be made to secure a definite commitment
from Mexico on fourteen outstanding points of controversy
between the united States and Mexico.5 Among the points
included were the settlement of claims by citizens Of both
countries, the question of retroactivity and confiscation
under the Constitution Of 1917, the apprehension and pun-
ishment of the murderers of American citizens, and ade-
quate protection to American lives and property within
Mexico in the future. In addition Mexico was to consider
the resumption of payment on its foreign debt and the as-
sumption Of debts incurred under the Victoriano Huerta
government, acknowledge the validity of contracts and
concessions made by the Porfirio Diaz and the Francisco
Madero governments, and agree to settle certain other

minor issues.

 

5See above, footnote 1. Leo S. Rowe, Chief of the
Division of Latin American Affairs, concurred in this
memorandum, adding that Mexico's geographic position to
the united States and the extensive investments of Amer-
icans in Mexico could hardly make the united States indif-
ferent to dbmestic events in Mexico. If Mexico were will-
ing to cooperate with the united States in the settlement
of these controversies, then the united States could
accord full diplomatic recognition in addition to the
encouragement of financial aid from American bankers and
investors. Rowe to State, June 15, 1920, NA, 711.12/319.

-48-

From the State Department's reservations in May until
Alvaro Obregén's inauguration as President on December
lst, the de la Huerta government despite salient efforts
was unable to satisfy the prerequisites for recognition
set by the united States. For nearly two-and-a—half years
ObregOn had no better success with the Harding adminis-
tration. Both de la Huerta and Obregén regarded diploma-
tic recognition as their major foreign policy concern,
not only for the economic advantages but more importantly
for that external legality of their political power. In
importance and prestige, recognition from the United States
was the most highly prized. Yet the policy of the united
States towards recognition of the Mexican government proved
to be an obstacle in itself as well as in restraining recog—
nition by other nations.

In international law diplomatic recognition was the
legal accreditation of one government by another, accom-
panied by the exchange of acknowledged representatives
to speak officially for that government.6 Diplomatic re—
cognition was restricted to governments, not states.

With a few exceptions the state retained its continuity

regardless of the change in the form of civil government.

 

6See the summary of discussion on diplomatic recog-
nition in Clyde Eagleton, International Government (3rd
ed.; New York: The Ronald Press Company, 1957), pp. 73-
77.

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Rights and obligations of the state likewise persisted.
Treaties remained binding; financial obligations and pro-
perty rights were unaffected; and claims for damages were
to be assumed. Grouped together, these Specific items
constituted a state's international obligations. The
need of recognition for a new government merely raised
the question, in the assessment of a leading international
lawyer, "whether the community of nations regards the new
government as properly qualified to act with authority
and prOpriety for its state."7

In practice diplomatic recognition was generally
a two-step process. ‘Qp_facto recognition was the prelim-
inary step of acknowledging that a particular government
existed, exerted authority within a geographical area (a
state), and had at least the general support of the popu-
lation. This type of recognition permitted a limited
amount of contact between the two governments concerned.
The second step was‘gp'ippp recognition which imparted a
legality and status to the government in question and
permitted the exchange of official representatives between
the two governments.

While this procedure existed in international law,
there was no binding legal duty for a government to recog-

nize another, nor any Specific time limit within which

 

7Ibido I

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77.

-50-

recognition had to be given.8 A new government could
not expect recognition on the basis of a legal right.
The practice of diplomatic recognition had emerged pri-
marily because of the structure of the nation-state
system, and consequently became the practice of the in-
dividual states themselves.

The recognition policy of the United States had
followed an overall continuous pattern Since its origin
in 1793 under Secretary of State Thomas Jefferson. The
usual prerequisites for recognition had been based upon
a government's ability to maintain domestic control of
a country (state) and to claim popular support, irrespec-

tive of the means by which it had come into existence.9

 

8See the remarks of Edwin D. Dickinson on recognition
within the international comity, Proceedings of the Ameri—
can Society of International Law (Washington, D.C.: Ameri-
can Society of International Law, 1931), 131-135.

9For a discussion of the recognition policy of the
United States, especially as it was related to Latin Amer-
ica, refer to Charles C. Hyde, International Law Chiefly
as Interpreted and Applied py the united States (Boston:
Little, Brown and Company, 1922), I, 66-77; Charles Evans
Hughes, Our Relations to the Nations of the western Hemi-
Sphere (Princeton: Princeton University Press, 1928),
pp. 37-46; Green Hackworth, "The Policy of the United
States in Recognizing New Governments during the Past
Twenty—five Years," Proceedings of the American Society
of International Law, 120-137: Stuart Alexander MacCorkle,
American Policy of Recpgnition Towards Mexico (Baltimore:
The Johns HOpkins Press, 1933): William L. Neumann, Jr.,
Recpgnition of Governments in the Americas (washington,
D.C.: Foundation for Foreign Affairs, 1947); C. Neale
Ronning, Law and Politics in Inter-American Diplomacy
(New York: John Wiley & Sons, Inc., 1963), Chapter II.

 

 

 

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A corollary to the policy appeared in the 1860's and 1870's
when the united States also put stress upon a government's
ability and willingness to adhere to its international
obligations. As American investments and interests abroad
increased in the late nineteenth century, this corollary
acquired a greater importance for the United States in
according diplomatic recognition. Such items as contrac-
tual obligations, the settlement of claims, and the pro—
tection of property of American citizens became increas-
ingly common wording in precise and detailed agreements
as compared with the more vaguely stated and more indivi-
dually interpreted acknowledgment of a government to merely
fulfill its "international obligations."10
The corollary was first applied to Mexico in 1877
by the Rutherford B. Hayes administration on the recog-
nition of Porfirio Diaz. Igp_jp£p_recognition was delayed
a full year until disordered conditions within Mexico
were rectified and outstanding controversies between the
united States and Mexico had been settled.11 In the twen-

tieth century Woodrow Wilson's refusal to recognize a

government not selected by a constitutional procedure,

 

10Ronning, pp. cit., pp. 10-12.

11This was also the first time in U.S.—Mexican rela-
tions that the united States had demanded the signing of a
treaty as a prerequisite for recognition. See MacCorkle,

Op. cit., p. 77.

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as in the case of Victoriano Huerta in 1913-1914, was a
major though Short-lasting deviation from the traditional
policy. Within several years Wilson was forced by cir-
cumstances to return to the already established prerequis-
ites in considering Carranza's recognition.

For any government diplomatic recognition accorded
a legality of its existence beyond its borders. Without
it a new government lacked political prestige abroad and
was often hindered in imposing its authority upon the coun-
try. The absence of recognition implied a certain distrust
by other established governments. Non—recognition could
be politically embarrassing by encouraging rival factions
and instability within the country. Economically, non-
recognition hindered or stifled the normal flow of commerce,
trade, investment, and travel within and outside of a state.
Loans and credits abroad--part of the system of interna-
tional trade and finance—-were likewise withheld from an
unrecognized government. While a new government could
exist without recognition, its initial survival was per-
haps more precarious. Non-recognition, then, could
politically and economically effect a limited isolation
of a new government.12

Within a country such as Mexico which had undergone

a destructive decade of civil war and which seemed inclined

 

12Dickinson, loc. cit.

-53-

in 1920 to restore some degree of stability, diplomatic
recognition was essential. Since the Revolution began,
conditions in Mexico had been unstable. Revolutionary
armies, ambitious generals, and roving bandits acknowledged
no higher authority than themselves. For any new govern-
ment to reestablish order and stability within Mexico
required the confidence both of the Mexican people and
of governments abroad.

Especially noticeable in Mexico's case was the
urgent need for capital, loans and credit. Since 1910
Mexico's financial system had collapsed, its land surface
badly devastated, and agricultural production neglected.l3
Commerce,:industry and manufacturing had dwindled or lay
idle. Transportation facilities as roads and railways
and public utilities as the telegraph had been destroyed
or were in need of repair. Mexico's foreign debt, already
in arrears, had continuously mounted. To aid in the drive
for Mexico's;reconstruction outside financial assistance
was a necessity.

For these reasons the provisional government of

Adolfo de la Huerta sought gp_facto recognition from the

 

13See above, footnote 1.

-54-

United States.14 war-weary Europe was unable to provide
the necessary financial assistance; the United States,
which had taken over Europe's role as the world's banker,
could. Prior to his inauguration, de la Huerta had remarked
that a new government in Mexico (implying after Carranza's
overthrow) would grant full guarantees and rights to Mex-
ican citizens as well as to foreigners and would continue
a policy of complete security for all foreign capital
invested in Mexico.15 By May 20th de la Huerta had
announced that peace and order had been restored in Mex-
ico and that the revolutionaries had received the support
Of the population.16 In conformity with Mexico's inter-
national obligations and in accordance with international
law, the life and property of all foreigners would be

duly respected and protected.

 

l4U.S. Chargé d'Affaires Summerlin remarked on
the hope of the de la Huerta government that with recog-
nition from the United States other countries would quickly
follow suit. This assumption proved to be correct, as the
Chief of the Division of Mexican Affairs later mentioned
in a memorandum that the a number of European powers were
Observing the attitude of the united States before making
a definite commitment of policy. Charles M. Johnston to
State, June 25, 1920, LC, Wilson Papers (II).

15As reported by Consul Dyer at Nogoles, Sonora,
to State, May 13, 1920, For. Rels., 1920, 163-164.

16Confidential Agent of the rebel government,
Alvaro Torre Diaz, to State, May 20, 1920, For. Rels.,
1920, 165.

 

-55-

Presidential candidate Alvaro ObregOn had included
with forethought in his political platform the provision
that he would give every assistance to foreign capital

17

willing to invest in Mexico. In compliance with Mexico's

laws ObregOn was prepared further to fully acknowledge
all rights legitimately acquired by foreigners in Mexico.18
In a later widely quoted Speech Obregén mentioned that the
petroleum question would be settled justly and that "'not
one dollar of foreign or other property will be confis-
cated'" in Mexico.19 To avoid misunderstanding, however,
he carefully stipulated that foreign capital would not be
permitted to monopolize or to intervene in Mexican domes-
tic affairs.

De la Huerta's and ObregOn'S addresses and Speeches
were directed as much to the American public as to the
State Department. While approving Of Carranza's overthrow,

the U.S. press was initially not very optimistic about

much improvement in Mexico under the Plan of Agua Prieta.

 

l7Summerlin's report to State, June 6, 1919, NA,
812.00/22778.

18The New YOrk Times reported that ObregOn had asked
the national convention of his party to insert in the
platform the provision that the Constitution of 1917 be
amended to eliminate features objectionable to foreigners.
N.Y. Times, December 25, 1919, p. 1. In the eventual
platform nothing more was added than what ObregOn had
already stated publicly. Summerlin to State, March 16,
1920, For. Rels., 1920, 132.

19New York Times, May 24, 1920, p. 2.

 

-56—

However, ObregOn's public statements made a definite im-
pression. In contrast to Carranza, ObregOn'S remarks
seemed to reflect moderation, friendship, conciliation
and public concern--qualities which the American public
wished to hear.20 ObregOn's name soon became connected
with the Plan of Agua Prieta.

U.S. policy-makers were more cautious. Faced with
a decision to renew official relations with another Mex-
ican government, Wilson requested the State Department in
June to prepare a memorandum on the formal recognition

21 Although gratified with the changing

of de la Huerta.
conditions in Mexico, the Department advised that the
attitude of the United States Should be one of friendship
and sympathy toward the de la Huerta government but that
gp_£pppp recognition should be postponed temporarily.22
The Department admitted that de la Huerta possessed the

qualifications for such recognition, but in View of pre-

vious relations with Mexico the Department reasoned that

 

201bid., April 13, 1920, p. 8; April 22, p. 10;
April 26, p. 12; May 15, p. 14: May 18, p. 10; May 24,
p. 14. See the comments of the press condensed in the
Literary Digest, May 8, 1920, pp. 35-36: May 22, pp. 26-27:
June 5, pp. 30-31. Refer also the American Review of
Reviews, June, 1920, pp. 613-616; Sunset, the Pacific
Monthly, June, 1920, p. 14.

 

 

 

2lWilson to Colby, June 23, 1920, LC, Wilson Papers
(II).

22Memorandum of the Second Assistant Secretary of
State, Alvey A, Adee, June 24, 1920, NA, 812.01/8-1/2 LH.

 

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-57-

it would be advantageous to observe further evidence of
his efforts to restore order and to enact a reconstruc-

23 and be known to be succeeded

tion program for Mexico,
by a popularly elected president.

Upon the recommendation of the Chief of the Division
Of Mexican Affairs,24 under Secretary of State Norman H.
Davis (who would handle the Mexican problem) decided to
await the outcome of informal talks which were scheduled
with a representative of de la Huerta.25 From the end
of June through the month of October these talks outlined
the principal positions of both governments on the major
obstacles between them in an attempt to arrive at some
common ground for the resumption of diplomatic relations
consistent with public opinion in both countries.

For its part the de la Huerta government was willing

to pay adequate indemnity for all injustices and damages

to the lives and property of foreigners in Mexico which

 

23The Department was fully aware of the improving
conditions in Mexico. Since Carranza's overthrow, Charles M.
Johnson had noted the functioning of police and civil
courts, the restoration of train service without armed
escorts, the pursuit of bandits and the attempt at the de-
mobilization of the majority of the Mexican army. Johnson
to State, June 25, 1920, LC, Wilson Papers (II).

24Ibid.

 

25Davis to Wilson, June 25, 1920, NA, 711.12/51la.

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-58-

had been directly caused by the Revolution.26 Moreover

the Mexican government would maintain sufficient strength
in the future to protect the lives and property of for-
eigners. All financial obligations, including the foreign
debt assumed by preceding Mexican governments,27 would

be acknowledged. Finally, Carranza's foreign policy dur-
ing WOrld'War I was censured, and the United States assured
that the true sympathy of Mexicans during the war had
rested with the Allied Powers.

While pleased with the continued progress in Mexico,
the State Department was hesitant to accept merely ver—
bal statements for the elimination of the principal con-
troversial issues between the two countries.28 Prior to
his resignation Carranza had made verbal promises which

the Department considered were later disregarded.29 When

 

26Under Secretary Davis Memorandum of an interview
with the Mexican representative, Fernando Iglesias CalderOn,
June 30, July 9, 1920, NA, 711.12/466.

27This included the Porfirio Diaz but not the Victor-
iano Huerta government which was declared an illegal go-
vernment. See below, Chapter IV.

28See above, footnote 26.

29Before his pp facto recognition on October 19,
1915, Carranza had given definite assurances that the
lives and prOperty of foreigners in Mexico would be
respected. Confidential Agent Arredondo to State,
October 7, 1915, For. Rels., 1915, 763-765. Prior to
his pp jure recognition on August 31, 1917, assurances
had been given by Carranza that property of American citi-
zens in Mexico, esPecially in the existing petroleum
fields, would be protected and not be confiscated. Report
of Ambassador Fletcher to State, August 2, 1917, For.
Rels.i 1917, 1072.

-59-

de la Huerta enforced the executive decrees Of 1918 and
1919, the Department associated de la Huerta with its
earlier antagonism to Carranza's policies. Fearing a
reiteration of those policies, the Department required
evidence that the de la Huerta government was sincere in
its promises.30
With no agreement reached by September, de la Huerta
replaced his personal representative Fernando Iglesias
CalderOn with Roberto V. Pesquiera. Pesquiera announced
that the de la Huerta government wished to settle all
controversies as quickly as possible, even to the point
of "practically any extreme of concessions which would
be fair" in the petroleum question.31 Pesquiera pointed
out that, if all diSputed issues were settled between the
two countries, pp facto recognition could be granted to
de la Huerta and President—elect ObregOn could enter office
on December 1st with a "clean slate.“ This appeal seemed
to have been presented to benefit Obregén more than de la
Huerta. Although de la Huerta remained Provisional Presi-
dent, the real policy-maker in Mexico was apparently

Obregdn. Of the three revolutionaries from the state of

 

30Under Secretary Davis Memorandmm of a conversation
with Fernando Iglesias CalderOn, August 24, 1920, NA,
812.00/27422.

31Under Secretary Davis Memorandum of a conversation
with the Mexican representative, Roberto V. Pesquiera,
September 23, 1920, NA, 711.12/331.

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-60—

Sonora--de la Huerta, Calles and ObregOn—-ObregOn enjoyed
the greatest pOpularity. His victorious election in Sep-
tember was almost an uncontested fact. pp gpppp_recogni—
tion of de la Huerta would undoubtedly have prepared the
path for the Qp'ippp recognition of Obregén very soon after
his inauguration.32

Wishing to avoid any misconception, Under Secretary
Davis replied that diplomatic recognition in reference
to Mexico would not be based upon any one question such
as the settlement Of the petroleum issue, in which the
Government Of the United States "must necessarily take
an impartial position."33 Recognition for any Mexican
government rested upon the established U.S. policy for
diplomatic recognition--and only then after Mexico had
taken such measures to justify recognition.

Elsewhere in washington efforts were being made to
settle the impassé between the two countries through per-
sonal diplomacy. Henry Morgenthau, Sr., a Wilson campaign
supporter, suggested in a letter to Wilson in September

that the time was opportune for the United States to act

 

32This was the impression Chargé Summerlin received
in an interview with ObregOn. Summerlin to State, Sep-
tember 13, 1920, NA, 812.00/24642-1/2.

33See above, footnote 31.

-61-

on the Mexican matter.34 Conditions in Mexico, he noted,
had changed from the days of Carranza. Now Mexico Sin-
cerely desired the friendship and cooperation Of the
United States, even to the point of satisfying every rea-
sonable condition demanded by the United States. Since
Mexico feared that a Republican victory in the November
presidential election might revive an interventionist
sentiment, Morgenthau advised that diplomatic recognition
for de la Huerta would buttress his efforts to establish
a firm, stable government. Though Wilson remained uncon-
vinced without further positive measures,35 a conference
was presumably held between Wilson, Secretary of State
Colby and George Creel (director of the Committee for
Public Information during WOrld War I) in which it was
decided that Creel be sent to Mexico as an unofficial and
confidential agent Of Wilson.36

Creel continually maintained that his main goal

was to have the de la Huerta government recognized before

 

34Wilson sent the letter on to Colby, Wilson to
Colby, September 24, 1920, LC, Colby Papers (Container
3b). Morgenthau apparently had a conference with Colby
on September 24th.

35Wilson to Colby, September 27, 1920, LC, Wilson
Papers (II).

36(Acting) Charge d'Affaires in Mexico, Matthew E.
Hanna, to State, October 14, 1920, NA, 812.00/24689; Creel
to Colby, October 23, 1920, NA, 812.00/24746—1/2; Creel
to Colby, November 12, 1920, NA, 812.00/24774-1/2.

 

—62-

the presidential election in the United States on Novem—
ber 2nd. Like Morgenthau, Creel wished to vindicate
Wilson's policy of "watchful waiting" as well as to thwart
the Republicans and the American oil interests.37 In
Mexico he was apparently successful in breaking the dip—
lomatic deadlock and in reaching some unspecified agree-
ment with de la Huerta and implicitly with President-elect

ObregOn.38

De la Huerta, General Calles, ObregOn and
other Mexican spokesmen had allegedly admitted to Creel
in a very frank manner that they were unable to develop
Mexico's remaining natural resources or to launch a pro-
gram of national reconstruction without the support and
assistance of other nations, which they realized in turn
depended upon Mexico's acceptance of its "international
Obligations" as these other nations interpreted them.39
Creel added, however, that in view Of the hostility of
the Mexican populace to the U.S. oil companies in Mexico
any Mexican government had to proceed cautiously to avoid
the appearance of an unconditional surrender.

Shortly after Creel's visit to Mexico in the first

part of October, the Mexican representative Roberto Pes-

quiera outlined the exact position of his government in

 

37Ibid.

38Creel to Colby, October 23, 1920, NA, 812.00/24746—1/2.

3?;21Q;, November 12, 1920, 812.00/24774-1/2.

—63-
a letter to Colby on October 26th.40 The de la Huerta
government, and implicitly the incumbent Obregon, would
enact the following measures: 1) to establish a mixed
claims commission to adjudicate the claims of all foreign-
ers arising from the Revolution, and whose decisions were
final and binding; 2) to assert that Article 27 of the
Constitution of 1917 would not be applied retroactively
nor be used to justify confiscation of property:41 and

3) to bear the full responsibility for all of Mexico's
international obligations (in addition to the preceding
points) particularly the payment of its foreign debt.

Two days later Pesquiera announced that, if formal diplom-
atic relations with Mexico were going to be renewed, he
had been empowered as the representative of the Mexican
government to insert every statement of his October 26th
letter into the form of a protocol between the Mexico

and the United States.42

 

4OPesquiera to Colby, October 26, 1920, NA, 812.00/
24701-1/2.

41This point which had been and continued to be the
most controversial read as follows: ". . . not one square
yard of land has been confiscated in Mexico, not a Single
legitimate right of property has been annulled . . .
President de la Huerta, and President-elect Obregén, have
also made repeated public declarations to the effect that
Article 27 of the Mexican Federal Constitution is not and
must not be interpreted as retroactive or violative of
valid property rights.“

42The protocol was to become a treaty after recog-
nition had been accorded. Colby to Wilson, October 28,
1920, NA, 812.00/24757A.

_54_

Upon the examination of these letters Colby informed
Wilson that Pesquiera's letter of October 28th offered
for the united States a satisfactory basis upon which
preliminary steps could be taken toward de la Huerta's
recognition.43 A.memorandum was drawn up which included
the U.S. prerequisites for recognition and the three points
outlined in Pesquiera's letter of October 26th; and Pes-
quiera Signed it.

Nevertheless no action was taken upon this memoran-
dwm, and the negotiations which had been Slowly proceeding
toward recognition were suddenly cancelled. Although
Colby and Davis seemed favorably impressed with Pesquiera's
letter Of October 26th, George Creel's excited and empha-
tic assurances which he claimed he had received from the
leading Mexican spokesmen probably made Wilson suspicious
that Creel might have been deceived or at best misunder-
stood the Mexican position. Wilson always respected Creel's
efforts to help solve the Mexican problem. But Creel's
letters clearly displayed an emotionalism and even a sense
of persecution in that he accused the State Department
of allegedly being jealous of his success and of attempt-

ing to thwart his efforts.44 From Wilson's and Colby's

 

43Both Pesquiera's letters and Colby's reply were
released to the press. See the New YOrk Times, October 30,
1920, p. 1.

44The accusation was made in Creel's November 12th
letter to Colby, NA, 812.00/24774-1/2.

-65-

correspondence it appeared that Creel either misunderstood
or unintentionally misrepresented the position of the United
States to the effect that recognition would immediately
follow Pesquiera's letters Of October 26th and 28th.45
Colby had Spoken of these letters as only "preliminary
steps" toward recognition.

Colby soon became particularly disturbed over a cir-
cular issued in early November by de la Huerta to all
Mexican diplomatic representatives abroad which stated
that Specific conditions as a basis for recognition would
be rejected and that any negotiations toward recognition
had to conform to de la Huerta's public statements.46
To the State Department the circular seemed confusing,
if not contradictory, in view Of the negotiations which
had been proceeding. Though the circular was actually
tuned to a delicate political Situation within Mexico,
the Department interpreted it as inferring that Pesquiera
did not have the full support of his government to make

any binding decision.47

 

45Colby to Wilson, November 20, 1920, LC, Wilson
Papers (II): Creel to Colby, November 12, 1920, NA, 812.00/
24774-1/2.

46Johnston to Colby, November 9, 1920, NA, 812.00/
24765—1/2.

47Colby to Wilson, November 20, 1920, LC, Wilson
Papers (II).

6L

\a.~\ unfi

-66-

In early November reports were received from Mexico
about a resurgence of bandit activity in the oil fields,
increasing labor unrest, and SO-called confiscatory legis-
lation. The Chief of the Division of Mexican Affairs
recommended the temporary discontinuance of all negotia-

48 Wilson concurred,

tions on de la Huerta's recognition.
perhaps recalling his previously unfortunate experiences
with Mexico or the misunderstandings resulting from the
Creel mission, or merely following Colby's and Johnston's
advice. Wilson may have presumed that nothing more could
have been accomplished on the matter of recognition with-
out the unmistakable and written approval Of President-
elect ObregOn. Undoubtedly a determining factor in
Wilson's withdrawal and indecision on the negotiations

was his ignorance of recent Mexican affairs. His atten-
tion had been diverted to Europe and the League of Nations.
The stroke during his campaign trip had left him helpless
in more than the physical sense. During the Jenkins crisis
in November and December, for example, Wilson was confused,

bewildered and suSpiciouS.49 He became leary of any advice

or suggestions, even from his friends. He lacked informa-

 

48See above, footnote 46.

49Letters, memoranda and comments in the Wilson
Papers, Colby_PaperS, and Lansing's Diary during November
and December, 1919, reflected this attitude.

 

)
’er

-67—

tion, and he distrusted that which he received. He appeared
to have trusted only Colby, who like Wilson was already
suspicious on anything regarding Mexico. Both men had
become increasingly hostile to the continuous agitation of
American interests in Mexico. Wilson was particularly
suspicious of the American oil interests, among them the
"predatory" Edward L. Doheny.50 Colby was annoyed at the
American interests in Mexico who beseiged the State Depart-
ment with countless suggestions and memoranda. He had
also become disgusted with the considerable number of
lawyers, including some former members of Wilson's cabinet,
who were under retainer with the Association of American
Producers of Petroleum in Mexico.51
Nonetheless, the negotiations which had come closest
to the settlement of the major issues between the two
countries and which might have prepared a smoother path

toward ObregOn's recognition came to an abrupt halt, never

to be resumed by the Wilson administration.

 

50Wilson to Colby, November 5, 1920, NA, 812.00/

26464; Wilson to Davis, November 23, 1920, LC, Wilson
Papers (II).

51Colby to Wilson, November 6, 1920, NA, 812.00/
26464. Perhaps the best assessment of Colby's and
Wilson's attitude is found in an earlier statement by
Colby on the negative influences of "propagandists, press
agents, informal emissaries, oil men, attorneys and var-
ious like bedevilments." Colby to Wilson, September 25,
1920, LC, Wilson Papers (II).

-68-

Realizing that no agreement would be reached within
the ten days remaining of de la Huerta's term of Office,
Colby feigned a gesture toward the renewal of the nego-
tiations. His suggestion that a commission composed of
representatives of both countries draw up a treaty embody-
ing the statements Of Pesquiera's letter of October 26th
bore no results.52 By November 30th--his last day in
office-—de la Huerta had not received recognition from
the United States; on the next day his successor, Alvaro
ObregOn, was duly sworn in.

Although the Republican candidate Warren G. Harding
had won the presidential election in November, Wilson
still had four months left in office to consider presently
the recognition of the Obregén government. Wilson had
been urged to salvage some political capital for his out-

53 Otherwise the incum—

going administration by doing so.
bent Harding administration could utilize both the threat

of intervention and the according of recognition (in

 

52"we are marking time," concluded Colby. Pesquiera's
letter of October 26th had proceeded further than any other
statements from the Mexican government, he admitted, but
it could serve only as a basis for preliminary negotiations
on recognition. Colby to Pesquiera, November 25, 1920,
NA, 812.00/24701-1/2.

53Both the New York Times and the New Republic had
praised Wilson's patient and forbearing policy toward
Mexico against the interventionist trend (implicit in
the Republican Party), and still saw an opportunity for
Wilson to resolve U.S.-Mexican relations. N.Yk Times,
November 1, 1920, p. 14; New Republic, November 10, 1920,
p. 258.

-69—

addition to financial assistance) as means to Obtain con-

54 The Harding admin-

cessions from the Obreg6n government.
istration would reap the harvest of any good will which
would result from recognition as well as from the final
settlement of the ten year Old Mexican problem. Instead,

the topic of recognition merely faded away in washington

until Warren G. Harding took office on March 4, 1921.

 

54Colby had suSPected that the American oil inter-
ests in Mexico were going to utilize the Harding admin-
istration to gain their ends. Colby to Wilson, November 6,

1920, NA, 812.00/26464.

CHAPTER III

FORMAL AND INFORMAL DIPLOMACY

On December 1, 1920, General Alvaro Obregén took
the oath of office as President of Mexico. For Mexico
at least it was a momentous event. For the first time
in a decade a President took Office after being elected
in a peaceful election. Gifted with a magnetic person-
ality, ObregOn appeared to personify a different type of
Mexican President than his recent predecessors. To some
American observers he was even viewed as another Porfirio
Diaz who would restore Mexico's former peace and prosper-
ity. Obregén's inauguration ceremonies seemed to Signal
a new era for Mexico. Conspicuously absent, however,
among the resident members of the foreign embassies in
Mexico and the several U.S. state governors who greeted
ObregOn was the U.S. Chargé d'Affaires. Summerlin and
the other members of the American embassy had been advised
by the State Department not to attend the inauguration
ceremonies.

Perhaps ObregOn could have expected nothing more from
the united States at the time. All previous efforts, such
as the Mexican special representatives who diligently

worked for recognition during the summer and fall of 1920,

-70-

-71-

ObregOn'S presidential campaign statements which were
refreshingly received by the American public, and ObregOn'S
successful victory in the September election, had been
directed toward obtaining recognition from Wilson before
the November presidential election in the united States.
On the basis of political platforms Mexico might not be
secure in either direction the election went. The Repub-
lican Party platform on Mexico was bold, harshly worded
and sounded repetitious of the demands of the report of
Senator Fall's subcommittee. It called for a "consistent,
firm and effective policy" to protect the life and property
of American citizens in Mexico.1 The platform of the
Democratic Party, though more temporate in tone and word-
ing, had issued a highly vague and interpretative state-
ment which insisted upon Mexico's fulfillment of its inter-
national obligations.2 The Democratic platform and the
term "international obligations” were as undefined as the
Republican platform was fairly clear in its intention of
at least forceful words.

The victory of the Republican Party in the November

5th election3 had gradually lessened the political advantage

 

lKirk H. Porter and Donald B. Johnson (ed.), National
Party Platformsy 1840—1960 (Urbana: The university of
Illinois Press, 1961), p. 290.

2

 

Ibid., p. 221.

3The lack of comment on the election in the Mexico
City press was taken to reveal the displeasure and the fear
with which the victory of the Republican Party was received.

Summerlin to State, November 9, 1920, NA, 711.12/296.

-72-

to be gained by Wilson in recognizing de la Huerta. The
failure of the negotiations begun in late October and
Harding's victory at the polls convinced Obreg6n that
Wilson would no longer consider the recognition Of any
Mexican government. Consequently ObregOn would have to
attempt to evaluate Wilson's successor. When President-
elect Harding was vacationing in southern Texas, President-
elect ObregOn happened to be vacationing in northern Mex-
ico. Several delegations of Texas business men informed
Harding that they could arrange a conference with Obreg6n
at the border. Harding graciously declined and stated
that he would not consider any official business until
after his inauguration.4

Harding's inauguration in March, 1921, brought
more than a change of administrations in washington.
It created a change in the conduct of foreign policy-
making. While WOodrow Wilson had argued and relied upon
his constitutional prerogatives in the area of foreign
policy, Harding realized his shortcomings in this area
and relinguished the formulation and the conduct of his
foreign policy to his Secretary of State, Charles Evans
Hughes. AS an attorney, Hughes had already served a

brilliant career in the legislature of New York, as

 

4Obregc’an was reported to have invited Harding as
guest of honor at his inauguration on December lst. New
York Times, November 10, 17, 1920, p. 3: p. 1.

 

-73_

Governor of that state, and as an Associate Justice of
the Supreme Court.5 His devotion to public service and
his integrity had won for him a vast admiration. As the
Republican presidential candidate in 1916, Hughes had been
a stern critic of Wilson's Mexican policy which he viewed
as humiliating for the rights of U.S. citizens in Mexico.
In Harding's opinion no man was better qualified
for the position of the head of his cabinet than Hughes.
At a press conference in St. Augustine, Florida, on
February 19, 1921, Harding introduced Hughes to the press
correspondents as his Secretary of State designate, adding
that “'from this time on, Gentlemen, you will get your
news as to the foreign relations of the United States from
the State Department."'6
Hughes's appointment as Secretary Of State brought

no comment from the Mexican press. But the confirmed

 

5For a brief biography of Hughes, consult Charles C.
Hyde's chapter in Samuel Flagg Bemis (ed.), The American
Secretaries of State and Their Diplomacy (New YOrk: Alfred
A. Knopf, 1929), X, 221-401. See also the chapter on
Hughes by John Chalmers Vinson in Norman A. Graebner (ed.),
An uncertain Tradition: American Secretaries of State
in the Twentieth Century (New York: McGraw-Hill Co.,
1961), pp. 128-148. The first of the two volume biography
by Merlo J. Pusey, Charles Evans Hughes (New YOrk: Mac—
millan Co., 1951-1952), provides greater detail on Hughes's
early life. The most psychological and recent study of
Hughes is Betty Glad, Charles Evans Hughes and the Illusions
of Innocence (Urbana: University of Illinois Press, 1966),
whose first seven chapters cover Hughes's life to 1921.

6A3 quoted by Hyde in Bemis (ed.), pp. cit., pp.
223-224.

 

-74-

appointment of former Senator Albert E. Fall as Secretary
of the Interior gave little relief to Mexico's hopes for
renewed friendship with the united States. Since Decem-
ber, 1920, press releases in the united States had been
predicting that Fall was clearly in line for the post of
either Secretary of State or of the Interior.7 Forty-
eight hours before Harding's inauguration, Fall continued
publicly to oppose the recognition of any Mexican govern-
ment until all pending issues between the United States
and Mexico had been settled in a written agreement.8

The appointment of former Ambassador Henry P.

Fletcher as Under Secretary of State, the second highest

 

7New York Times, December 9, 24, 1920, p. 9. Harding
received several letters severely criticizing the rumor
of Fall's appointment as Secretary of State, which in the
Opinion of the authors would be disastrous for U.S. pol-
icy. No explanations were given. See Harding Papers
(Box 23). Hughes had been notified of a plan whereby Fall
was to become Secretary of State because he could dominate
Harding more easily as the chief cabinet member. See let-
ters to Hughes, NA, 812.00/24877, 24882.

8New York Times, March 2, 1921, p. 14. For some
time Fall argued that the State Department had practically
adopted the majority of the recommendations of his sub-
committee's report of May, 1920, as its guideline for a
recognition policy towards Mexico. Circular of the Na-
tional Association for the Protection of American Rights
in Mexico to its members, March 15, 1921 (including Fall's
letter to this organization on January 19, 1921), NA,
812.6363/808-1/2.

In his Biographical Notes Hughes gave the impression
of Fall as being an extremely loquacious man on foreign
affairs who said nothing of any real value. Hughes stated
that he had little contact with Fall. Refer to Pusey,
pp. cit., p. 427.

 

 

 

 

-75_

position in the Department, seemed to be another ominous
Sign for Mexico.9 As Under Secretary in the Wilson admin—
istration in late 1919 Fletcher had suggested forceful
measures be taken against Carranza. Since the United
States had withheld only Official diplomatic relations
with Mexico, it still maintained a foreign Officer inferior
in rank to an ambassador--the Chargé d'Affaires--to act

as its spokesman in Mexico. George T. Summerlin retained
his post as Chargé. As Harding took the oath of Office

on March 4th, the Mexican press expressed a dubious h0pe
that the incoming administration would Show a friendlier

attitude towards Mexico than had the Wilson administration.10

II

The first problem facing Secretary of State Hughes
was the formulation of a policy toward Mexico. Avoiding
a haphazard approach, Hughes relied upon the advisory
Opinion available to the Department. In early April

former President Wilson visited Hughes and conferred with

 

9Obreg6n's legal advisor in‘WaShington, Myron M.
Parker, warned of the appointment of men like Fall and
Fletcher who shared Similar viewpoints on Mexican affairs.
Myron M. Parker to Obregon, March 1, 1921, AGN, lO4—Rl-
E-9 Pq l6.

10Summerlin to State, March 4, 1921, NA, 711.12/

313.

-76-

him on Mexico.ll Despite the ObregOn government, Wilson
saw as hOpeless any immediate improvement in U.S.-Mexican
relations. However Wilson was confident that ObregOn
would eventually be forced to turn to the united States
for assistance on any condition which the United States
might demand.

On the same day as Wilson's visit Summerlin reported
that ObregOn seemed to be losing daily his grip of power

12 Summerlin

to the so-called "Bolsheviks" in his cabinet.
listed among them, Minister of Government Plutarco E.
Calles, Minister of Finance Adolfo de la Huerta, and
Minister of Agriculture Antonio I. Villarreal: in addition,
the Governor of Yucatan Salvador Alvarado. Moreover,
Summerlin hastily observed, Obregén had accomplished no-
thing noteworthy in the four months he had been in office.
In mid-April the two solicitors (chief legal coun—
sels) to the State Department J. R. Baker and F. K. Nielson
had examined the Constitution Of 1917 and reported that
the Mexican government had a weak legal argument (compared
to Anglo-American law) inits position on Article 27 and

the petroleum decrees Of 1918. The conclusion of their

memoranda was that Article 27 and the petroleum decrees

 

llHugheS Memorandum, April 4, 1921, NA, 812.00/25088.

12Summerlin to Fletcher, March 4, 1921, NA, 812.00/
24874-1/2.

i
0;

“a.

43f
R1
C02

q-
u

-77-

of 1918 provided for the retroactive confiscation of pro-
perty.l3

By the end of April a general meeting of the Depart-
ment was called to determine a policy toward Mexico.l4
With the pessimistic advice before him, Hughes expressed
concern that a weak policy would be politically embarras-
sing to the general platform of the Republican Party and
would expose the united States to serious criticism abroad.
Among the issues and solutions presented, agreement was
soon reached that the only weapon short Of military force
which could enable the United States to obtain an acknow-
ledgment of the protection of the lives and interests
of its citizens in Mexico was the withholding of recog-
nition from the ObregOn government. It was decided at
the meeting that the official U.S. policy towards Mexico
was to rest firmly upon the principle of protection to the
life and property of American citizens in Mexico, and the

policy was to be carried out to the maximum extent. If

the technique of nonrecognition failed to achieve the aim

 

13J. R. Baker Memorandum on American Petroleum
Interests in Mexico as Affected by Provisions of the Con-
stitution of 1917, Ajpril 16, 1921, NA, 812.6363/1448:
F. K. Nielson to Fletcher, April 20, 1921, NA, 812.6363/
874.

14'Eletcher Memorandum, April 27, 1921, NA, 711.1211/
213. Among those present were Hughes, Fletcher and Summer-
lin (who was temporarily called to washington for the
conference).

-78-

of this policy, then the United States could justifiably
consider the ultimate weapon--military force against Mex-
ico. In the announcement of the policy, however, Hughes
wished to make it absolutely clear that the policy was
based upon international law which applied to Mexico as
well as to any other country and.which was not undertaken
on behalf of any private American interest in Mexico.

The policy formulated by the Department aptly fit
Hughes's thinking. The policy was to rest first upon a
principle and secondly to be based on international law.
Hughes's earlier legalistic training carried over into
the office of Secretary of State. He came to View the
community of nations as an extension of the order in
society and the existence of domestic law within a state
or nation. This "image of the world order“ persisted through-
out Hughes's career.15 Hughes continually upheld inter-
national law as the body of rules to govern this community
of nations or international society. When Hughes referred
to international law in the formation or application of
policy, he considered himself to be an impartial jurist
(if such were possible). In his estimation international
law applied equally and impartially to all nations.

The existence of the theory of international law

by no means suggested its continued application and practice.

 

15For an elaboration of this concept see Glad, Op.
cit., Chapter 10.

-79-

In an imperfect world national interests or power poli-
tics usually took precedence over international law.

Nor was any law static or fixed but constantly remained
open to interpretation. In theory rights and duties under
international law applied equally to small and large states
alike; in practice, the larger and more powerful states
held sway in interpreting or discarding them. Hughes
inadvertently held ObregOn to an American interpretation
of international law on the protection of the life and
especially the property of U.S. citizens in Mexico. On
the other hand, Obreg6n--like Carranza--considered that

he had or would fulfill Mexico's obligations under inter-
national law. ObregOn'S interpretation of Mexico's rights
and duties under international law fell upon deaf ears

for over two years.

The State Department's policy formulated, the next
step was a means for its implementation. Fletcher had
suggested as a prerequisite for recognition that the
Obreg6n government repeal the Carranza decrees of 1918 or
that the Mexican Supreme Court render a decision on Article
27.16 Hughes dismissed Fletcher's first suggestion as
not being a preventive for the reissuing of similar exe-
cutive decrees, and was dubious of the second suggestion

which he considered could be a dangerous precedent if the

 

16See above, footnote l4.

-80-

decision was not in favor of the united States: Instead,
Hughes had his own proposal of a guarantee for the pro-
tection of the life and property Of American citizens in
Mexico in the form of a treaty. This treaty served a
twofold purpose by combining a recognition of the valid
rights of American citizens in Mexico (as interpreted
by the Uhited States) with the diplomatic recognition of
the ObregOn government. unwilling to accept only a prom—
ise contained in a diplomatic note (as had been the proce-
dure in Carranza's recognition), Hughes had a form which
was binding on Mexico. According to Article 133 of the
Mexican Constitution a treaty receiving the approval of
the Senate became a "supreme law" of the land. A treaty
in Hughes's estimation would protect American citizens
against any further interpretation of Article 27. Upon
the signing of the treaty diplomatic recognition was
simultaneously accorded to ObregOn.

After consulting with Harding, Hughes had drawn up
a draft of a proposed Treaty of Amity and Commerce between
the united States and Mexico which was presented to Obreg6n
on May 27th. The treaty17 consisted of eighteen articles,
seventeen of which dealt with the standard items found
in a treaty of this type on commerce and navigation, pro-

visions for claims, the settlement of boundary disputes,

 

17Found in For. Rels., 1921, 397-404.

/

-81-

and so forth. The most important and highly controver-

sial article was Article I.18

While it guaranteed recip-
rocal rights and privileges to the citizens of both
countries, the crux of the article was that it prohibited
any confiscation of property whether by constitutional
provisions, executive or legislative decrees.

The term "confiscation" was in reference to titles
of ownership acquired prior to the promulgation of the
Constitution on May 1, 1917. To further assure a Speci-
fied and unqualified meaning the article declared unequi-
vocably that not only the Constitution of 1917 but also
Carranza's executive decrees and the legislative decrees
of the various Mexican states were not to be applied
retroactively. However, Article I did permit expropria-

tion of property but only in the public welfare and upon

the prompt payment of a just compensation. For the united

 

18Often receiving undue importance was Article II
which provided for reciprocal religious liberty for the
citizens of both countries. It was actually a standard
departmental form found in treaties of this type. See
J. R. Baker Memorandum on the draft of a Commercial
Treaty, November 30, 1925, NA, 711.122/8.

There is no evidence that either the Catholic Church
or the Protestant Missionary Boards in Mexico exerted
strong pressure on the Department relative to the reli-
gious policy of the Mexican government. See Hughes Memor-
andum of an interview with Archbishop John Francis Bonzano,
the Apostolic Delegate to the united States, May 23, 1921,
LC, Hughes Papers; Charles P. Howland of the Foreign Pol-
icy Association to Hughes, April 20, 1921, NA, 812.00P
81/3.

 

f)

.0.

a)

-82-

States the article attempted to protect those American
citizens who had acquired property in Mexico from having
either the highest law of the land (the Constitution)
or any other laws or decrees being applied to them. In
effect, Hughes was requesting that an exception be made
in Mexican laws for American citizens. Article I of the
Treaty of Amity and Commerce essentially nullified the
Constitution of 1917 and the subsequent decrees. The
inclusion of the right of exPropriation was of no value
as long as the term "public welfare" and "just compensa—
tion“ remained undefined.

under the state system, sovereignty meant exclusive
jurisdiction or control within the boundaries of a state
including the right of domestic legislation.19 Even an
alien is subject to the laws Of the state within which
he is residing. under international law certain restric-
tions were placed upon state sovereignty for the general
welfare Of the international community. An alien, for
example, possessed a limited appeal for "denial of jus—
tice." In practice, states retained vast powers of juris—
diction with only minimal restrictions placed upon their
internal administration. Consequently, ObregOn was aghast
at Article I of the Treaty of Amity and Commerce which

severely restricted Mexico's internal jurisdiction by an

19See the discussion and summary of the whole con-
cept of sovereignty in Eagleton, pp. cit., PP. 87-88,
125-129.

 

-83-

American interpretation of international law. ObregOn was
soon to learn that his conception Of Mexico's Obligations
or duties and rights under international law differed
sharply from that of the united States.

In early June Summerlin explained to ObregOn the
purpose of the proposed treaty. The United States, he
said, in an attitude of friendship had decided to reach
a permanent understanding with Mexico on all major diSputed
points.20 To accomplish this aim the State Department
had drawn up the proposed treaty to be reciprocal in nature,
with no Special privileges for U.S. citizens in Mexico
except that they be treated similar to the status of
Mexican citizens in the united States. The Department,
of course, was speaking in general diplomatic terms. If
"reciprocal" were interpreted literally, ObregOn could
protest any potential confiscation or expropriation of
property of Mexican citizens within the united States
under its Constitution or any state legislation. In refer-
ence to the status of Mexican citizens within the united
States, there were several Specific occurrences in 1922
when the State Department was embarrassed by insults and
injuries to the lives and prOperty of Mexican citizens in

various states.21 This was in addition to the general

 

20Summerlin to State, June 3, 1921, For. Rels.,
1921, 404—406.

21

 

See below, Chapter VI.

-84-

discrimination towards Mexicans throughout the Southwest.

Obreg6h graciously declined Official comment on
the treaty, stating that he would have to consider his
domestic position. Within Mexico ObregOn faced a number
of problems which demanded his immediate attention. For
any program of reconstruction Obreg6n had to restore Mex-
ico's financial stabilization by reestablishing the mone-
tary system and credit and by restricting unnecessary
expenses. To accomplish this in part, the complete paci-
fication of Mexico and a stable government in control
were necessary to inspire confidence at home and abroad.
Among various means employed, ObregOn rid Mexico of her
bandits either by force or by the pact concluded with
Pancho Villa to take up farming. A majority of the Mex-
ican army, which when armed was a potential threat to
peace and was too costly to maintain in its entirety,
was demobilized and provided with land and farming equip-
ment for more constructive purposes.

Another serious and immediate problem with which
ObregOn had to contend was an increased agricultural prO-
duction. The decade of civil war had plagued Mexico with
a desperate food shortage. Despite the revolutionary
goal of agrarian reform, the Mexican peons needed to be
transformed into productive farmers for the whole nation,
not merely individual owners of prOperty. A balanced

agrarian policy was required to restore the productivity

-85-

of the soil as well as to sponsor the land redistribution
program. Of necessity ObregOn was forced to proceed cau-
tiously and gradually in the area Of agrarian reform to
prevent the entire disruption of Mexico's agricultural
economy.

A new potential source of political power had grown
up in Mexico. Article 123 of the Constitution of 1917
had given labor an elevated role in Mexican society, and
labor became encouraged to demand its legal rights. Labor
organizations increased rapidly in the early 1920's and
demanded legislation to make Article 123 effective, demon—
strating their power through numerous strikes. Embarrassed
by conflicting state labor laws and radical organizations,
ObregOn had to steer a middle course. He could scarcely
alienate his support of the labor movement by taking strong
repressive measures against strikes. The national labor
organization, the Confederaci6n Regional Obrera Mexicana
(CROM), had backed the Revolution of 1920 and continued
to support ObregOh. On the other hand he could hardly
afford to arouse any further the hostility of foreign
capital urgently needed in Mexico by not taking vigorous
action against labor's unwieldy power.

The serious petroleum controversy remained unsolved.
Realizing that petroleum—bearing lands and petroleum pro-
duction were an extremely valuable source of revenue,
Obregdn could neither effectively abrogate nor rigidly

enforce Article 27. One course would remove his government

-86-

from power and the other might bring foreign intervention.

These pressing domestic problems were interlinked
to the obtaining of diplomatic recognition abroad. What-
ever policy decisions or courses of action ObregOn under-
took, these directly or indirectly affected to some degree
his chances for recognition. NO matter how much they
were despised in Mexico, foreign interests could not be
ignored either for their assistance or for their protests
to their reSpective governments. A middle-of-the-road
policy would seem best suited for Obreg6n's interests.
Diplomatic recognition, eSpecially from the united States,
would be a moral triumph for Obreg6n and certainly an
asset to the stability Of his government. But Obreg6n
had to continuously consider a delicate political Situa-
tion.

‘With the proposed Treaty of Amity and Commerce pre-
sented by the United States, ObregOn realized that the
State Department's position on his recognition would remain
stringent. He had thought that his first official public
statement on foreign affairs in early April might have
sufficed for recognition.22 He had pointed out that his

government was in control, had the support of the Mexican

 

22None of the twelve points presented were essen-
tially novel Since they had been mentioned previously by
Obregon or by the de la Huerta government. Summerlin to
State, April 7,1921, For. Rels., 1921, 394- 396.

-87-

people, and was willing to fulfill its international obli-
gations-—all past U.S. prerequisites for diplomatic recog-
nition. Now he sought other means to convince and to
persuade the United States of the desirability of his

recognition.
III

In the late spring and early summer of 1921 the
Mexican Minister of Foreign Relations Alberto J. Pani
exchanged formal notes with the State Department. In
these notes an effort was made to present every type of
argument conceivable for ObregOh's recognition.23 On
the basis of legality, it was argued, ObregOn had been
elected constitutionally in a popular election,24 and
his government had already been recognized by twenty-seven

25

countries. Because of Mexico's geographical proximity

 

23Summerlin forwarded the notes to the Department.
Summerlin to State, June 4, 1921, NA, 711.1211/4; June 10,

24The emphasis on this point was undoubtedly a
lesson learned from the Wilson administration.

25The list of countries read as follows: in Europe--
Czechoslovakia, Finland, France, Georgia, Germany, Italy,
Lithuania, the Netherlands, Poland, Spain; in Latin America-—
Argentina, Bolivia, Brazil, Colombia, Costa Rica, Chile,
Ecuador, El Salvador, Guatemala, Honduras, Nicaragua,
Panama, Paraguay, Peru, Uruguay; in the Far East--China
and Japan.

There were two errors in this list. France and
Poland did not recognize ObregOn until 1923. In 1922
Norway, Sweden and Denmark recognized Obreg6n.

-88-

to the United States for both commerce and travel, it

was senseless to delay recognition. Numerous American

business conventions and chambers of commerce who had

visited Mexico, and several U.S. state legislatures, had

passed resolutions advocating ObregOn's recognition.
Because Mexico for over a hundred years had been

a state recognizable in international law, Pani continued,

to Sign a treaty prior to recognition would give that

recognition a conditional character and thereby injure

Mexico's sovereignty and dignity. Moreover the Treaty

of Amity and Commerce prOposed by the united States was

Objectionable in its present form Since it contained stip—

ulations in Articles I and II which were Opposed to certain

26

precepts of the Constitution of 1917. As President,

ObregOn was bound to comply with and to enforce the high-
est law of the land. If Obregéh did accept this treaty,27
the Mexican Senate would probably reject it when it was

submitted to them for their approval.28 If by chance the

Senate did ratify the treaty, the wording of Article 15

 

26For example, Article 27; Article 3, Section I, and
Article 24 which dealt with religion.

27By Article 89, Section X, Obreg6n had the author-
ity to direct diplomatic negotiations and to make treaties
with foreign powers.

28Senate approval Of treaties as provided for in
Article 133.

-89-

of the Constitution might be used to overrule their
approval.29 Pani's entire argument was reducible to the
principle that the Constitution of 1917 was the supreme
law of the land and that any number of its provisions could
be utilized to reject the Treaty of Amity and Commerce.30
Following the formal notes, Pani elaborated upon
the personal position of the ObregOn government.31 Obre-
gOn, he said, was "firmly determined" to satisfy the just
demands of all foreign governments. However, he could
hardly afford to grant such demands under the obvious
appearance of foreign pressure. For political reasons
ObregOn had to retain a certain degree of freedom of action.
In the Treaty of Amity and Commerce proposed by the united
States only two articles were objectionable. Article I,
which dealt with political matters as Article 27 (of the

Constitution) and the procedure of claims, and Article

II, which was concerned with religion, could not be made

 

29Article 15: ". . . Nor shall any agreement or
treaty be entered into which restricts or modifies the
guarantees and rights which this Constitution grants to
the individual and to the citizen."

30The Mexico City press and the Mexican Congress
in general supported Obregon's position on the treaty with
similar arguments. Summerlin to State, June 9, 10, 1921,
NA, 711.1211/10, ll.

31Summerlin relayed the message to the Department.
Summerlin to State, June 5, 10, 1921, NA, 711.1211/5, 12:
June 7, 9, 10, 1921, For. Rels., 1921, 408-418.

-90-

consistent with ObregOn's public statements. Pani intim-
ated that, if the united States withdrew this treaty as

a condition for recognition, ObregOn would utilize his
freedom of action to accomplish the same ends as the U.S.
policy demanded.

Pani Specifically emphasized that both the execu—
tive and the legislative32 branches of the Mexican govern-
ment favored the principle Of "non—retroactivity" in the
Constitution, and that a proposed organic petroleum law
regulating Article 27 was under study in the Chamber of
Deputies.33 With complete assurance Pani added that the
Mexican Supreme Court could hardly fail to align itself
with the two other branches of the government. If these
three brancheS--executive, legislative, and judicial--
simultaneously and cordially undertook action on the prin—
ciple of "non-retroactivity," ObregOn could appropriately
point to the complete unity Of his government. Only in
that way, Pani continued, could Obreg6n logically argue

that his government was speaking for the Mexican Nation

 

32Pani referred to the applause given in the Chamber
of Deputies to a Speech which advocated the principle
of non-retroactivity in the Constitution of 1917. This
was an indication, he said, that the principle had been
supported.

33Summerlin mentioned that the Mexico City press
reported that the Chamber of Deputies had rejected the
proposal of permitting the executive branch extraordinary
powers in matters of petroleum. Summerlin to State,
June 15, 1921, NA, 711.1211/16.

-91-
as a whole.34 If the united States did not wish to recog-
nize Obregén as an individual, it could scarcely deny
recognition to the Mexican Nation:

On the matter of claims, Pani mentioned that a bill
providing for a mixed claims commission was being prepared
by ObregOn to be presented soon to the Mexican Congress.
Because the Obregén government permitted religious tolera-
tion and had no problems on religious matters, it wished
to avoid any potential controversy which might possibly
arise from the question of reciprocal religious liberty.

Pani concluded his prepared brief by stressing that Obregén's
acceptance of the Treaty of Amity and Commerce would cause
a revolution.

The State Department's reply to the diplomatic notes
Of the Mexican Foreign Office was released to the press
in an official statement on the evening of June 7th.35
Based upon the policy suggested at the Department's confer—
ence of April 27th, this statement became the official
answer to any queries concerning U.S.-Mexican relations.
Hughes obviously was not convinced of the logic in ObregOn'S

rejection of the proposed Treaty of Amity and Commerce

 

34If the three branches of the Mexican government
acted in unison, criticism of foreign pressure exerted
upon any decision made could not be directed against any
Specific branch of the government.

35Hughes to Summerlin, June 8, 1921, For. Rels.,
1921, 406-407.

-92-

for he stressed again the necessity of a guarantee before
recognition.

Hughes emphasized that the fundamental question
between the united States and Mexico was "the safeguard—
ing of property rights against confiscation." The fear
of the Department was that valid titles to private pro-
perty acquired by American citizens in Mexico under legis-
lation existing prior to the promulgation of the Constitu—
tion on May 1, 1917, would not be respected. Ironically
Hughes acknowledged the right of Mexico as a sovereign
nation to formulate its own domestic laws and policies
while Simultaneously upholding the sanctity of private
property as a universal standard. Yet in the united States
there were numerous examples since the American Revolu-
tion that private property had not always been held in-
violable, for example, in reference to debts, slaves,
distilleries, Confederate bonds, and so forth. Hughes
was attempting in another instance to impose a universal
principle upon a sovereign nation when his own country
as a sovereign nation had not unswervingly held to that
principle. A further example of Hughes's theoretical
application of law was over the concept Of confiscation.
Hughes was apprehensive that in the enforcement of the
Constitution of 1917 and the 1918 decrees the Obregén
government appeared to be following a confiscatory policy

by the expropriation of property of U.S. citizens without

-93-

compensation. Hughes did not Specifically define such
confiscation nor enumerate examples of expropriation.

Nor was there any reference to Article 27, paragraph II,
or Article 27, Section VI, paragraph II, of the Constitu-
tion on the expropriation of prOperty for public use sub—
ject to an indemnity or compensation. Hughes seemed to
be restating a general principle in legal brief but with-
out the evidence.

On the specific matter of recognition Hughes main-
tained that the united States was in no way denying
recognition to any particular Mexican government. Rather,
the united States had been insisting upon assurances from
the ObregOn government of its willingness to perform its
international obligations, especially to protect the lives
and valid property rights of American citizens, and of
guarantees of a non-confiscatory application of the Con-

36 These essential assurances and

stitution of 1917.
guarantees could be satisfactorily met in the Treaty of
Amity and Commerce. In short, Hughes made the question

of recognition dependent upon the negotiation of this

 

36Whenever questioned about the Department's pre-

requisites for diplomatic recognition, Hughes referred
queries to C. C. Hyde, International Law . . ., I, 66-

74. The ability of a new government to perform its inter-
national obligations was a major point emphasized by

Hyde. In February, 1923, Hyde became chief legal coun-
sel for the Department.

-94-

treaty.

While formal notes were being exchanged between
the two governments, ObregOn was kept informed of devel-
opments and Opinions in washington during the summer of
1921 by several personal and unofficial representatives.
ObregOn'S legal advisor in Washington, Myron M. Parker,
a New York City attorney Byron S. Butcher, and free lance
writer Robert Hammond Murray, frequently presented memor-
anda to the State Department on the subject of Obregén's
recognition. From their interviews with Officials of
the Department}.7 they informed ObregOn that the Harding
administration was generally confident ObregOn could ful-
fill his promises, but in view of its previous diplomatic
experience with Mexico the united States demanded some
kind Of protocol.38 ObregOn was also advised that one
of the State Department's major fears was a continuance

of the radical phase of the Revolution.39

 

37The officials were Under Secretary Fletcher,
chief legal counselors J. R. Baker and F. K. Nielson in
Washington, and Chargé Summerlin in Mexico.

38Myron M. Parker to Obregén, March 1, 1921, AGN,
104-R1-E-9 Pg 16.

39Byron S. Butcher to Obregén, May 22, 1921, AGN,
104-R1-E-9 Pq l6. Butcher attempted to relieve Obregén's
anxiety by mentioning that any final decision on recognition
would come from the State Department, not from Secretary
of Interior Fall.

-95-

ObregOn's most confidential agent in Washington
during 1921 was Elmer Dover. Dover was actually a per—
sonal friend of both Presidents, and played a dual role.
He was in the pay of the Obregén government as an official
agent while simultaneously acting as a Special represen—
tative of President Harding to Obregén.40 Apparently
both ObregOn and Harding viewed Dover's personal role as
intermediary Similar to that of George Creel's efforts
toward negotiations in October, 1920. Dover had a number
of interviews with Harding and several with Hughes. Dover
noticed that his best interviews were alone with Harding
who seemed satisfied with ObregOn's public statements and
inclined towards the early resumption of formal diploma-

41 On the matter

tic relations between the two countries.
of procedure, Harding favored personal negotiations be—
tween ObregOn and himself; Hughes urged formal negotia-

tions between the two governments. Displeased with the

numerous individuals who purported to act as personal

 

4OWhether Harding was completely aware of this dual

role iS debatable. Harding appeared to have trusted Dover
whom he later appointed Assistant Secretary of the Trea-
sury in April, 1922. Dover was prgbably Harding's only
authorized representative to Obregon though other Americans
would claim to speak for Harding. Refer to the miscel-
laneous data on Mexico in HardingpPpperS (Box 167): see
also AGN, 104—R1-D Pq 15-1, on Dover.

 

41Elmer Dover to ObregOn, May 11, 1921, AGN, 104-
Rl-D Pq 15-1.

-95-

representatives of the Obregon government, Hughes demanded
for the sake of clarity that all matters Of state be con-
ducted through the regular and Official channels of the
State Department.42

When the opportunity arose, Obregén in recalling
one of Dover's notes wrote a personal letter to Harding.43
Ostensibly a reply to Hughes's Official statement of June 7th
on U.S. policy towards Mexico, the letter was a direct
appeal to Harding. ObregOn attempted in a long philosoph-
ical argument to elaborate upon the distinction between
the moral and legal entities, "the American Government"
and "the Mexican Government," and the personalities pre-
siding over these governments. His argument was that a
change in the personalities did not break the moral and
legal continuity of the concept of the "American Govern—
ment" and the "Mexican Government." In essense, govern—
ments as the agency of states persisted as long as the
state did. The personnel of the particular administra-
tion changed and the agency took different forms, but the

concept of government retained its continuity until the

state was conquered or absorbed.

 

42Hughes Memorandum of an interview with Elmer Dover,

May 4, 1921, LC, Hughes Papers (Box 176).

 

43ObregOn to Harding, June 11, 1921, For. Rels.,
1921, 416-419.

 

-97-

Two weeks later ObregOn followed up this letter
with an offer to satisfy the United States as well as to
retain domestic confidence by suggesting an incentive for
recognition and an alternative to the Treaty Of Amity and
Commerce. Elmer Dover was despatched to washington with
a prepared statement of Obregén's position, along with

44 In the first instruction

two additional instructions.
Dover was to mention that Since a treaty Signed prior to
recognition probably would not be ratified, Obregén was
willing to write a personal letter to Harding which would
bind Obregén as a matter of honor.

What Obregén was actually suggesting was an executive
agreement between Harding and himself. Such an agreement
by being directed to the head of state would result in
quicker and more favorable action being taken than to wait
for the approval of the Senate in both countries. For
Obregén this type Of agreement would avoid complications
if the legislative and the judicial branches should fail
to act in unison with the executive. Moreover Obregén
could circumvent the State Department which was ill re-
garded in Mexico. Since Harding in temperament and policy
could not be compared to woOdrow‘Wilson, an executive

agreement would not appear injurious to the dignity Of

 

44Hughes Memorandum of an interview with Elmer Dover,
June 23, 1921, LC, Hughes Papers (Box 176).

—98—

the Mexican Nation and would seem less binding upon Mex—
ico. By the successful negotiation of an executive agree-
ment which resulted in recognition, Obregon, already a
popular figure, would increase his political image and
prestige in Mexico. Bound by only his honor, Obregon
could utilize his freedom of action to satisfy both the
just demands of the united States and to carry on the
goals of the Mexican Revolution. Only through a moderate,
long-term policy could Obregén achieve the best national
interest and welfare of Mexico and retain his political
power. If Harding at any time discovered a breach of
faith on ObregOn's part, he could always break diplomatic
relations with Mexico.

The second instruction was to be a casual remark
made by Dover that the Mexican Supreme Court was prepared
to give a decision on Article 27 which would declare its
provisions to be non-retroactive. Obregén probably told
Dover to mention this remark in an impromptu manner apart
from the prepared statement so that it would not be bind-
ing in writing. AS Dover explained, the Court had so far
refrained from rendering a decision45 to avoid the appear-

ance of appeasement to the united States for Obregén's

 

45That the Court was actually prepared to render

a decision was probable. See the lengthy memorandum by
three Justices of the Supreme Court on the study of the
amparos filed against the Carranza decrees of 1918,
June 14, 1921, AGN, 104-P1-P-13 Pg 15.

-gg-

recognition. AS soon as recognition was granted, the
decision was to be released.

The State Department, however, remained unimpressed
with Obregén's alternatives. A month later it prepared
an answer to these alternatives and to ObregOn's letter
of June 11th in an informal letter from Harding to ObregOn.
Harding's reply was a tightly organized and concise letter
which reflected his affability but Hughes's thinking.46
Reemphasizing that U.S. policy was based solely upon a
matter of principle, the letter reasserted the necessity
for the United States of positive assurances from the
ObregOn government in the fulfillment of its duty to pro-
tect the interests of American citizens in Mexico.
Obregén's public statements, the letter continued, were
considered to be insufficient by themselves, and the
legislative and the judicial branches of the Mexican
government had not yet acted upon a non-retroactive and
non-confiscatory regulation of Article 27. Though Harding
(and Hughes) realized the beneficial effect of the three
branches acting in unity, the united States still sought
a binding commitment which it was thought would more
quickly and effectively remove the causes of friction

between the two countries.

 

46Fletcher dispatched the letter to Summerlin,
July 21, 1921, For. Rels., 1921, 419-423.

-100-

Since the united States Sincerely desired Mexico's
friendship, Harding continued, the important question to
be decided on was the manner in which official diploma-
tic relations might be renewed. For the United States
a simple solution was its proposed Treaty of Amity and
Commerce which the Department did not consider to be in
violation of Mexican constitutional law. To accommodate
Obregén in the negotiation of this treaty, Harding was
willing to dispatch a Special commissioner to Mexico as
that formal diplomatic relations might be resumed more
rapidly. This insertion into the letter of a Special com-
missioner was requested by Harding to avoid the impres-
sion that Obregén was meekly submitting to the dictates
of the united States.47

Though containing Hughes's policy, Harding's letter
was written in a considerably more mollifying tone than
Hughes's public statement of June 7th. Harding and Hughes
appeared to have been fairly satisfied with the improve-
ment in the Mexican Situation by mid-1921, and both were
desirous of settling this controversy carried over from
a previous administration. As a chief executive and a
politician himself, Harding seemed to be rather keenly

sensitive to Obregén's political plight. By this time the

 

47Harding to Hughes, July 21, 1921, Harding Papers,
(Box 167).

-101-

State Department seemed satisfied that lives of U.S. citi-
zens were no longer in immediate danger in Mexico. The
emphasis over the next two years was on the protection
of the interests and prOperty of U.S. citizens in Mexico.
Nonetheless the essential element Of Hughes's policy,
the Treaty of Amity and Commerce, remained steadfast.
Finding the State Department persistent and deter-
mined in its position on the treaty, ObregOn decided to
make his final bid for recognition during 1921. Since
the Department had rejected his appeal for an executive
agreement, Obregén had to use a second recourse—-the
announcement of a constitutional interpretation by the
Mexican Supreme Court on Article 27. In a belated reply
to Harding's letter of July let Obregén announced that
definite steps had been taken to increase the confidence
of foreign governments in his administration.48 He remarked
on a prOposed bill before the Mexican Congress to provide
for a mixed claims commission and on the petroleum com-
mittee of the Chamber of Deputies in Operation since
January to study the question of a non-retroactive and
non-confiscatory application of Article 27. One further
step was the rendering of a decision on the amparo cases
filed since December, 1918, by the various foreign Oil

companies in Mexico.

 

48
26098.

Obregon to Harding, August 18, 1921, NA, 812.00/

-102-

Elmer Dover had previously mentioned to the State
Department in June that the Mexican Supreme Court was
prepared to render a decision but had refrained from doing
so to avoid a misconception between the decision and recog-

nition. In early August Excelsior, a leading Mexico City

 

newspaper and critic of the Obregdn government, reported

that Obregén had held a series of conferences with the

Justices of the Supreme Court.49 Although he later em-

phatically denied ever pressuring the Court to give a

decision favorable to the American Oil companies in Mex-

50 Obregdn undoubtedly advised the Supreme Court of

51

ico,

his political situation.
On August 30, 1921, the Mexican Supreme Court handed

down a decision in the amparo proceedings brought by the

52

Texas Company of Mexico in 1918. The case involved the

 

49Summerlin to State, August 6, 1921, NA, 812.6363/

926.

50ObregOn to Dover, September 23, 1921, AGN, 104-
Rl-D Pq 15-1.

51See the letter of Associate Justice Alberto M.
Gonzalez to Obregén, September 27, 1921, explaining the
vote of the majority of the Court on the decision (three
dissenting Opinions) and stressing the Court's "patriotic"
effort. AGN, 73l-A-ll (3).

52The decision on the case was not written and filed
until September 26th. The delay was caused by a lack of
agreement on the actual wording of the document because
each member of the Court produced a separate opinion ex-
plaining his vote. Summerlin to State, September 14, 1921,
NA, 812.6363/978. Summerlin forwarded the decision when
it had finally been prepared. Summerlin to State, September 27,
1921, For. Rels., 1921, 463-472.

—103—

petroleum rights of a piece of land owned by a Mexican
who had transferred it to The Texas Company of Mexico for
the exploration and the exploitation of the petroleum
deposits. The Texas Company refused to comply with the
petroleum decrees of 1918, and a Mexican citizen had de-
nounced (or filed claim to) the property and had Obtained
a concession from the Mexican government to exploit the
petroleum deposits. When The Texas Company challenged
this denouncement, the lower courts upheld the action
taken by the Mexican government. The Texas Company then
appealed to the Supreme Court primarily on the basis of
Article 14 of the Constitution of 1917 which stated that
"no law shall be given retroactive effect to the detri—
ment of any person whatsoever.” The resulting decision
was in favor of The Texas Company, and its petition for
an amparo was granted on the basis of the violation of
guarantees in regard to the stipulation of non-retroactivity
provided for in Article 14 of the Mexican Constitution.
From the context of the decision two important points
were derived. The first concerned retroactive application
Of the provisions of Article 27 relating to petroleum.
Paragraph four53 of Article 27 referring to petroleum was
decided to be neither retroactive in letter nor in spirit

Since it did not "damage former rights legitimately acquired"

 

53Refer to the Appendix of this study.

-104-

prior to the promulgation Of the Constitution on May 1,
1917. The second point dealt with the theory of acquired
rights, also known as the doctrine of "positive acts.“

If the owner Of the surface land had performed some "posi-
tive acts" declaring his intention to explore and to ex-
ploit subsoil mineral deposits, for example, petroleum,
then the rights granted to the owner of the surface under
the mining codes of 1884, 1892, and 1909, became "vested"
or acquired rights not subject to denouncement54 by the
1918 decrees. The implication was that Article 27 applied
only to property on which no "positive acts" such as the
erecting of drilling equipment, the laying of pipe lines,
or the construction of storage tanks, had been undertaken
to reduce the subsoil petroleum to the actual possession
of the surface owner. It should be noted that the con-
cept of the owner of the surface land not actually possess—
ing the minerals beneath the soil until these had been

brought to the surface was the ruling in several state

and Supreme Court cases in the united States.55 Though

 

54See above, Chapter I, p. 18.

55Refer to international lawyer Antonio GOmez Robledo,
The Bucareli Agreements and International Law (Mexico:
National university of Mexico Press, 1940), pp. 14-15,
for examples of U.S. court decisions.and the legal litera-
ture on the subject. In his analysis G6mez Robledo found
several U.S. Supreme Court decisions which not only con-
firmed (local) state sovereignty over subsoil minerals,
but also asserted that the superior power inherent in a
state could regulate these minerals to the extent of
rescinding any right of possession to them by the surface
owner. A later Solicitor to the State Department, J. Rueben

-105-

these cases were not cited in the decision, the Mexican
Supreme Court was surely aware of them.56
Clothed in legal terminology and cautiously worded,
the decision was not a clear-cut case. Although the Court
made a distinction between subsoil rights acquired prior
and subsequent to May 1, 1917, it had avoided a precise
definition of the phrases I'legally acquired rights" and
"positive acts." The Court had given a constitutional
interpretation, but a very limited and Specific one. It
was precisely on this point that the State Department
took issue. The Department maintained that in the Mexican
legal tradition Supreme Court decisions were not judicial

precedents as under the Anglo-American legal system but

only legal judgments on particular points in dispute.

 

Clark, quoted English and American law (including court
decisions) to Show that the principle of sovereignty over
land or property contained within the opening paragraph
of Article 27 and paragraph 4 of the same article was not
novel in Mexico. In view of American law he discovered
no "well—founded objection" against these provisions of
the Constitution on the grounds of any absolute right of
title to land or property. In the final analysis the
Crown in English law and state governments in American
law were the vested source of sovereignty (eminent domain)
over surface land and its contents, a principle Similar
in essence to Article 27. Clark, "The Oil Settlement
With Mexico," Foreign Affairs, VI (July, 1928), 605.
Refer also J. P. Chamberlain, "Property Rights under The
New Mexican Constitution," Political Science Quarterly,
XXXII, No. 3 (September, 1917), 370.

56One Associate Justice, Alberto M. Gonzalez, had
studied judicial procedure and constitutional law in the
united States.

-106-

The same Supreme Court or a different one could reverse
the initial decision on other Similar cases in the future.
Once again the Department inadvertently failed to
perceive the speciousness of its own argument. NO court
decision was ever strictly or absolutely binding, and the
constitutional history of the United States contained
numerous examples Of reversals. AS in other instances,
Mexico, not the united States, was the country involved.
On a technical legal point, the Obregén government
did argue on a judicial precedent. under Mexican law
five consecutive decisions without an intervening dissent
or reversal by a court could establish the form Of a pre-
cedent to be applied in future cases.57 The basic ruling
of the Supreme Court on The Texas Company amparo case was
found in four similar decisions in November, 1921, Feb-
ruary, 1922, and May, 1922, to two other American oil com-
panies in Mexico, one of which was a subsidiary of Edward
L. Doheny's interests in Mexico. By mid-1922 the ObregOn
government pointed to these five consecutive decisions
by the Supreme Court which it claimed established a prece-
dent. The Department merely rejected these decisions on
the same line of reasoning as it used against The Texas

Company amparo case.

 

57Summerlin to State, September 14, 1921, NA, 812.6363/
978: "Judicial Precedent in Mexican Law," Michigan Law
Review, XXV, No. 1 (November, 1926), 62-65.

-107-

The State Department gave what it considered care-
ful scrutiny to the August, 1921, decision Of the Mexican
Supreme Court. In a brief prepared on the decision, legal
advisor J. R. Baker maintained that the legally acquired
rights of American citizens in regard to petroleum had

not yet been properly safeguarded.58

The Mexican Supreme
Court demanded some Special act indicating the intention
of the owner of a piece of land to have desired to acquire
a right to the subsoil petroleum. Since the intention as
well as the "positive acts" had to be declared prior to
the promulgation of the Constitution, the decision in
Baker's estimation was still retroactive.

In reporting the Department's evaluation of The
Texas Company amparo decision, under Secretary Fletcher
expressed his disappointment to Harding that the decision
had not unconditionally declared Article 27 to be non-
retroactive. It was Specifically limited to petroleum-
bearing lands, he insisted, and had no direct relation
to agricultural lands, church property and other real

estate held by American citizens or organizations in

Mexico.59 In Fletcher's mind as in Hughes's, the primary

 

58Fletcher concurred in the brief sent him by Baker.
Fletcher to Baker, October 24, 1921, NA, 812.6363/1032.

59In Hughes's absence, Fletcher handled the Depart-
ment's report to Harding. Fletcher to Harding, November 14,
1921, NA, 812.6363/1028c.

-108-

difficulty with Mexico was not one of approach as Harding
had indicated, but "rather one of fundamental differences
with respect to the inviolability of private property."
Fletcher insinuated that the Obregdn seemed bent upon
initiating an identical policy of "Bolshevik Russia" on
prOperty rights. Without definite assurances from the
ObregOn government prior to recognition, Fletcher feared
there would be scant opportunity to obtain them afterward.

The oil companies in Mexico were also apprehensive
about the Supreme Court decision. They had acquired ex-
tensive quantities of reserve land for future exploitation
when their existing holdings were exhausted. This land
remained in a state of uncertainty for the companies be-
cause they could not always present Specific evidence to
Show that this land had been acquired for the purpose of
the exploitation of the subsoil petroleum.

When ObregOn delivered his annual address to Congress
on September 2nd (at the close Of his first fiscal year),
he had not yet received recognition from the united States.
During the nine months he had been in office, serious
efforts had been made through both official channels and
informal letters to reach a satisfactory settlement which
would resume formal diplomatic relations between the two
countries. In his address to Congress, however, ObregOn
presented an Optimistic picture of his domestic achieve-

ments and efforts on the diplomatic scene to obtain

-109-

recognition.60 His appeal was specifically directed to
the Mexican Congress and the Mexican people to prepare
them psychologically for the proposed line of action
Obregon had suggested to the State Department both Offi-
cially and informally.

His domestic program, as it was presented, emphasized
that peace had been restored in Mexico, that all levels
of government were functioning, business and industry re-
vived, banks reOpened, the army reduced in size, and land
distribution in progress. On the foreign policy level
Obregén informed the Congress that his government had
given assurances that Mexico would fulfill its interna-
tional Obligations. Damages arising from the Revolution
were to be settled through mixed claims commission. The
executive and the legislative branch of the Mexican govern-
ment had been joined by the Supreme Court in its recent
decision to provide for a non—retroactive interpretation
of Article 27, "thus affording a noble example of govern—
mental solidarity." Such voluntary action by the ObregOn
government made the Treaty of Amity and Commerce proposed

by the united States unnecessary. The ObregOn government

 

60The address is available in the printed corres-
pondence, "The United States and Mexico: Notes and
Official Statements Regarding the Recognition Of Mexico
. . ." International Conciliation, No. 187 (June, 1923),
16-22.

-110-

was made to appear patriotic in its rejection of this
treaty while Simultaneously Shown to have taken the ini-
tiative in attempting to satisfy the requirements of the
united States for diplomatic recognition.

ObregOn'S measures to obtain recognition during
1921, and continuing into 1922, were not merely restricted
to formal notes and personal letters. He also relied
upon an extensive publicity campaign within the united
States to influence the American public. On the surface
his propaganda program might have seemed to have been more

successful in 1921 than his formal and informal diplomacy.

CHAPTER IV

"A PRACTICAL BUSINESS MAN ..."

When an editorial in the New YOrk Times made a

 

reference to Alvaro ObregOn as "a practical business man
of the conservative type,"1 it reflected a changing sen-
timent by late autumn, 1920, among portions of the Amer—
ican public. Tension over conditions within Mexico had
been gradually diminishing Since Carranza's overthrow in
.May. The return of some degree of peace and security with
less harassment to American lives and property by Mexican
bandits and governmental pronouncements had relieved the
united States.

ObregOn represented the antithesis of Carranza.
He was viewed as the prototype of a new ruling class
within Mexico. From the energetic support he had received
at the polls, ObregOn appeared to be a "man of the peOple"
as well as a skillful politician. His performance as
the leader of the Constitutionalist Army during the civil
war had proved him to be a capable military leader well

respected by the army. On his farm in Sonora he was popular

 

1New York Times, November 20, 1920, p. 12; see also
editorials for October 9, p. 14: December 3, p. 14.

 

-111-

-112-

with the peons and was thought to be a shrewd business
man. Compared to the traits of narrowmindedness and sus—
piciousness attributed to Carranza, ObregOn repeatedly
received from all those who came into contact with him
compliments of common sense, good judgment, honor, inte-
grity, sincerity, tact and resolution. Reflecting the
characteristics ascribed to the new revolutionary genera-
tion--youth, education, progressive thinking, a sense of
duty and mission--Obre96n was represented as the man most
likely and able to work out the problems of reconstruc-
tion within Mexico.

Obregén was no stranger to the united States. During
1918 he had visited and toured the united States at the
expense of the Wilson administration. At that time the
visit was a propaganda measure by the united States to
counteract a pro-German sympathy in the Carranza government.
ObregOn's American-educated wife was an asset at Official
functions Since she could speak English. During his tour
of the united States in the autumn Of 1920, ObregOn stressed
the theme of Mexico's transformation from disorder to a
new era of peace, stability and prosperity.

The first reaction to a change occurring within
Mexico in late 1919 and early 1920 came from U.S. business
organizations and commercial groups. During 1919 Carranza
for political and economic reasons had invited several

excursions of American manufacturers, exporters, bankers

-ll3-

and chambers of commerce2 from major U.S. cities3 on an
officially guided tour of Mexico. The excursions were
intended to give an Optimistic impression of increased
Opportunities for trade and commerce in Mexico. Several
American business men wrote books and articles depicting
Mexico's unlimited natural resources and the opportunities
to develop this natural market for the united States.4

The real stimulus for the interest of American busi-
ness in Mexico began in the autumn of 1920. Those states
which had continuously petitioned washington during 1919
for action against Mexico--Texas, New Mexico, and Arizona--
became the nucleus of the changing attitude. Hundreds of

representatives from local chambers of commerce, merchant

organizations, and banks within these states were conducted

 

2A commercial conference sponsored by the American
Chamber of Commerce in Mexico and held in Mexico City
in February, 1920, was reported to have had present five
hundred members representing fifty-seven U.S. cities and
twenty-seven Mexican cities. Mexican Review, February,
1920, p.34.

3A partial list would include Boston, New YOrk,
Philadelphia, Chicago, St. Louis, Cincinnati, New Orleans,
San Francisco: in Tean-—Da11as, El Paso, Houston, Laredo,
San Antonio, and others. In a number of these cities
Mexican merchants had been exhibiting their major products
since 1918.

4For example, Philip H. Middleton, Industrial Mexico:
1919 Facts and Figures (New YOrk: Dodd, Mead and Co., 1919);
Edward Dwight Trowbridge, “Another Picture of Mexico,"
Outlook, September 10, 1919, pp. 56-57: ”Mexican Events
warrant Belief That Better Times Are At Hand," The Americas
(published by the National City Bank of New YOrk), May,
1920, PP. 1-5.

-114-

on additional excursions throughout Mexico. The reports
of these groups which were published in the press or sent
to the State Department expressed a growing confidence
in Mexico's future for trade and travel.5
With their large Mexican population and their prox-
imity to the border Of northern Mexico these states were
a natural fertile ground for creating an atmosphere of
friendliness and good will. Obregén's first visit to the
united States as President-elect of Mexico was a tour of
Texas. Wherever he went ObregOn was welcomed by large
crowds.6 Among the dinner guests at receptions for ObregOn
were the Governors of the states of Texas, New Mexico and
Arizona, who had formerly recommended that strong measures
be taken against Mexico. So effective was the changing
attitude in the American Southwest and in California toward
renewed hope in Mexico and sympathy for Obregén's aspira-
tions that these states led by Texas were the first to
request Obregon's recognition. Beginning in autumn, 1920,
until early 1923 dozens of resolutions from southwestern
chambers of commerce, business organizations, Protestant

religious societies, and Mexican-American associations

flooded the State Department. Resolutions from the south-

 

5For a report of some of these excursions in 1920
and 1921, see Harding Papers, Box 42 and 478.

6

 

New YOrk Times, October 8, 1920, p. 19; October 18,
p. 1.

-115—

western state legislatures and state representatives and
the governors of these states were more frequent in a three
year period than were those from the other western and
mid-western states. In general these resolutions pointed
to the cordiality along the U.S.-Mexican border, the suc-
cessful achievements and remarkable aspirations of the
ObregOn government and Mexico's desire for friendship
with the united States, and often repeated Obregdn's own
arguments for recognition.7

During 1921 the series of excursions to Mexico in—
creased so rapidly8 that an American firm, the Mexico—
American Excursion Co., was contracted by ObregOn to con-

duct them.9

In 1921 Mexico City was also the site of
various international commercial congresses. The results
of the excursions proved advantageous to Mexico. Comments
by U.S. mining, engineering, chemical and railway equip-

ment firms and other businesses pointed to lucrative trade

opportunities in Mexico for all kinds of American products

 

7These resolutions may be found in the National

Archives, Decimal File Group 812.00/ for 1920 through
1923, and in AGN, 104-R1-E-2 Pq 15-1. Occasionally these
resolutions were printed in the press, magazines and in
the (U.S.) Congressional Record.

8On a reciprocal basis the Confederation of Mexican
Chambers of Commerce visited the united States during
April, 1921.

9Alater company supposedly transported over one
thousand people on excursions. Data submitted by commer-
cial agent, Mauricio Carranza, AGN, lO4-Rl-E-l Pq 15-1.

—116-

whether of food, textiles, replacement parts, or agricul-
tural and industrial equipment. Compared to postwar Europe,
the financial and potential economic recovery of Mexico

was viewed as most auspicious.lo

Business and commercial organizations were not among
the only groups which reflected a change in thinking about
Mexico. Cultural and religious groups as well as liberal
periodicals and other magazines and newspapers presented
a reevaluation Of Mexico with the progress being made
under ObregOn and pointed out the obstacles which his
government faced.

A proposed cultural exchange of Mexican and American
students Sponsored by the American Chamber of Commerce of
Mexico finally received support by early 1921. Over thirty
private and state colleges and universities in the united
States expressed interest and apparently participated in
the plan to train and to educate Mexican youths.ll In
its bulletin the Foreign Policy Association emphasized the
necessity for the united States to resolve its difficul-

ties with a weaker nation such as Mexico without unduly

 

10Refer to the report of the U.S. Bureau of Foreign
and Domestic Commerce, Thomas R. Taylor and Bernard H.
Noll, "Mexico as a Field for American Trade EXpanSion,"
Annals, XCIV (March, 1921), 76-80. See also, "Our New
Market In Mexico," §ystemz The Magazine of Business,
February, 1921, pp. l94ff: "The Tide Of Affairs," Century
Magazine, July, 1921, pp. 472-474; "The Problem of Business
with Mexico,” Weekly Review, July 23, 1921, PP- 76-77.

11

 

New York Times, February 26, 1921, p. 10.

-ll7-

wounding the latter's sensitivity or interfering in its
domestic affairs.12
With ObregOn'S reconstruction program the Protestant
Churches with missionary branches in Mexico welcomed the
opportunity for increased missionary work and advocated
friendship and cooperation between the two countries.13
The liberal magazines, the Nation and the New Republic,
sharply criticized the non-recognition policy Of the united
States as an Obstacle to Mexico's peaceful and stable
develOpment. Staunchly defending ObregOn's position, these
magazines made insinuations of an alleged conSpiracy con-
ducted by Secretary of Interior Fall, American oil inter-
ests and wall Street bankers to dominate the Mexican policy

of the Harding administration.l4

 

12Charles P. Howland of the Foreign Policy.Associa-
tion sent a brief to Hughes entitled “In the Matter of the
Settlement of Disputed Questions Between Mexico and the
United States," April 20, 1921, NA, 812.00P8l/13.

13William A. Ross, Sunrise in Aztec Land (Richmond,
Va.: Presbyterian Committee of Publication, 1922): George
B. Winton, "The Mexican Revolution and Missions," Missionary
Review of the WOrld, August, 1920, pp. 693-695: William
Patterson Thirkfield, "Our Chance Next Door: The Oppor-
tunity That Offers After Revolution For Reconstruction
In Mexico,” Outlook, January 12, 1921, pp. 57-60.

l4Paul Hanna, "Relations with the united States,"
Nation, April 27, 1921, pp. 614-617; John Kenneth Turner,
"Why the Obregdh Government Has Not Been Recognized?",
Nation, June 1, 1921, pp. 783-785; "Bullying Mexico,"
Nation, June 22, 1921, p. 864: "Our Menace to Mexico,"
Nation, July 20, 1921, p. 60: "Mexico: Prosperity First,"
New Republic, June 22, 1921, pp. 95—96: "The Real Issue
With Mexico," New Rppublic, July 13, 1921, pp. 182-183:
"ObregOn's Opportunity," New Rppublic, August 3, 1921,

 

 

-118-

Other magazines indicated that American business,
while anxious for ObregOn's success, was reluctant to
offer the trade, investment, loans and credit necessary
for Mexico's reconstruction as long as ObregOn remained

15

unrecognized. Despite the New York Times' defense of

 

the State Department's policy as "unassailable" and "un—

impeachable in logic,"16

by early fall17 Showed a favorable reaction to the concil-

a survey of newspaper opinion

iatory measures undertaken by the Obreg6n government to
satisfy the demands of the united States for diplomatic
recognition.

To some extent this changing sentiment was the result
of ObregOn's propaganda campaign in the united States for
recognition. His appeal was directed to the U.S. Congress,
to business and educators, and to the U.S. public in gen-

eral. The technique was to utilize writers, speakers,

 

pp. 255-256; Frederick Starr, "ObregOn in Mexico," Npg_
Republic, November 2, 1921, pp. 293-295. Refer to the
Library of Congress for a series of privately printed
pamphlets denouncing the anti-Mexican propaganda Of the
American oil companies in Mexico.

lsgppset, the Pacific Monthly, March and August,
1921, p. 15; 6: pystem, the Mpgazine of Business, October,
1921, p. 401ff.

16New YOrk Times, February 1, 1921, p. 10: May 24,
p. 14: June 9, p. 14: June 28, p. 14: January 26, 1922,
p. 16.

l7Literary_Digest, September 17, 1921, pp. 11-12.

-ll9-

and literature. ObregOn employed a well known English
journalist Dr. Emile J. Dillon as his publicity writer.
Dillon portrayed ObregOn as the statesman of a new moral
order in the world, a man above political conflicts and
party interests whose role was hampered by the insecurity
of lacking recognition from the United States.18 Over a
two year period an ex-Senator from Arizona, J. L. Schleimer,
was a paid lecturer to address state legislatures in the
United States on the subject of ObregOn'S recognition.19
A close admirer of ObregOn, Schleimer began addressing the
state legislatures in the spring of 1921. AS shown by
his correspondence with ObregOn, Schleimer's plan was
originally to address the legislatures of primarily indus-
trial states and those with a large constituency. Appar-

ently a very gifted speaker, he was directly reSponSible

for influencing nearly twenty—three state legislatures

 

18E. J. Dillon, "Alvaro ObregOn: As Military Leader,"
Saturday Evenipg Post, November 20, 1920, pp. l4ff; Mexico
on the Verge (New York: George H. Doran Company, 1921):
"Mexico Revisited," Contemporary Review (London), November,
1921, 607-616: "Mexico and WOrld Reconstruction,"[Quarterly
Review (London), July, 1922, 145-162: President Obrngn,
a world reformer (Boston: Small, Maynard and Co., 1923:
London: Hutchinson and Co., 1923).

19The State Department was aware of Schleimer's
activities. Summerlin to State, August 17, 1921: April 7,
1923, NA, 812.00/25153, 26307.

 

 

-120—
in the Mid-west, the West and the South20 to send resolu-
tions to washington petitioning for the recognition of

21 At least one other Senator,

the Obregén government.
John Smith (R,.Mich.), assisted him.

The Financial Agency of the Mexican Government in
New York City during the early 1920's was under the direc—
tion of ObregOn'S most trusted aide, Manuel Vargas. The
agency served both as a clearing house for propaganda
funds and expenses of the Mexican consulates in the united
States and as a valuable source of information concerning
the activities of those Americans engaged in propaganda
work.22 Vargas was convinced of the usefulness of propa-
ganda in the united States. Whether or not a considerable
majority of the American public was ignorant of conditions

within Mexico or merely under the influence of adverse

propaganda, Vargas reasoned that Americans were always

 

20Whether Schleimer campaigned or was successful
in the eastern states is doubtful Since there were no
recorded resolutions in the State Department archives
from these states.

21The states for which resolutions exist in the
State Department archives were Maryland, Kentucky, Vir-
ginia, Michigan, Indiana, Illinois, Wisconsin, Minnesota,
Nebraska, Kansas, Oklahoma, Colorado, North and South
Dakota, Nevada, Montana, wyoming, Oregon, Louisiana, Texas,
New Mexico, Arizona, California. NA, Decimal File Group
812.00/; AGN, lO4-R1-E6 Pq 15-1.

The majority of these resolutions attributed their
origin to an address by Schleimer in the state legislature.

22See the reports of Manuel Vargas to Obregén, April 4,
May 4, 1921, AGN, 242-A-l-D.

-121-

impressed by stability and favorable statistics. These
were the points which he stressed in his prOpaganda work.
One example of Vargas's Operations was the contract

made with the New York Commercial, a leading and highly

 

accredited business magazine. For the payment of Six
thousand dollars, thirty-seven thousand COpieS of a twenty-
five page illustrated and editorialized supplement to the
magazine were to be printed.23 The supplement's summary
of the resources and recent develOpments within Mexico
was to impress upon the reader that diplomatic recognition
would solidify Mexico's progress.

Until January, 1922, the ObregOn government Sponsored
a monthly prOpagandist magazine in the United States,

the Mexican Review. Begun by Carranza in 1916, the maga-

 

zine offered feature articles on Mexican life and current
conditions as well as Official statements, statistics,

and proposed legislation by the Mexican government. Issues
were usually donated to large libraries and to leading
colleges and universities. A final service performed by
Vargas was his personal contacts. He was responsible for
introducing Obregén to the prominent American business

men with large investments in Mexico. He likewise kept

Obregén in touch with the press.

 

23Vargas to Obregén, April 7, 1921, AGN, 242-Al-D.

-122-

Obregon often received requests for feature stories
from professional news agencies and for interviews from
newspapers in the united States. In such cases he was
always quick to reply with an explanation of his position
on the Treaty of Amity and Commerce and with a repetition
of his promises to fulfill Mexico's international obliga-
tions.24 In 1921 the most widely quoted interview was
ObregOn's reply to the New YOrk werld printed in that
paper on June 27th.

Propaganda activities cost Mexico a considerable
sum. Each of the non-Mexicans employed by Obregén received
extravagant salaries ranging from several thousand to
seventy-five thousand dollars in payment for their ser-
vices. The U. S. Consul General in Mexico reported in
1923 that the Mexican Foreign Office alone had Spent nearly
two million dollars on propaganda.25 Other Departments
of the Mexican government had Spent a considerably lesser
amount.

'Within the United States changing sentiment toward

ObregOn and his propaganda was not left unchallenged.

From 1921 through 1923 several organizations which Opposed

 

24For example, K. A. Bickel, General News Manager
of united Press International, to Obregén, May 24, 1921:
Obregén to Bickel, May 25, 1921, AGN, 104-R1-E-5 Pq 15-1.

25Claude I. Dawson to State, January 29, 1923, NA,
812.20211/2. See also AGN, lO4—Rl-D Pq 15-1; 104-Rl-S-6
Pq 16: lO4-Rl-E-8 Pq l6; 242-Al—M.

-123-

ObregOn's recognition were active in disseminating their
own propaganda to the U. S. press and magazines as well

as in sending memoranda to the State Department. The

most highly organized lobbying group, the National Asso-
ciation for the Protection of American Rights in Mexico,
together with its main subsidiarieS--the Association of the
Producers of Petroleum in Mexico and the American Petroleum
Institute--continuously protested against the various
measures undertaken by the ObregOn government as inadequate
to fully protect the property rights Of foreigners.

Since the prOpaganda of the National Association
appeared in some opinion to be SO exclusively directed
toward the petroleum question in Mexico, other American
property interests in Mexico formed their own organiza-
tion. Alleging that over ninety-five percent of the members
of the National Association had no voice in the organiza-
tion, the American Association of Mexico was founded in
1921 to represent the rights of the small American investor
in Mexico. Essentially endorsing those conditions for
recognition which were reminiscent of the Fall subcommittee
report and Hughes's June 7th press release, the association
recommended that the United States retain a strong policy

to make ObregOn realize the seriousness of the Situation.26

 

26New YOrk Times, February 14, 1921, p. 13. Memorandum
transmitted to Hughes by the American Association of Mexico,
April 16, 1921, NA, 812.00/25427. Like the National Associa-
tion, this organization published a monthly bulletin.

 

-124-

The same year another organization, the Association
of American Owners of Lands in Mexico, was formed Speci-
fically to advocate the principle of protection to Ameri—
can property rights in Mexico (exclusive Of the American
oil interests). Like the other organizations, this asso-
ciation sent memoranda on its position to the State Depart—
ment.27 Throughout 1921 the Department did make diplomatic
protests against a proposed agrarian law in the Mexican
Federal Congress and on several proposed state agrarian
laws. This legislation, the Department contended, involved
an arbitrary procedure of expropriation and failed to pro-
vide sufficient compensation or a satisfactory manner of
payment. until the Bucareli Conference in 1923, however,
the State Department seemed to regard the agrarian matter
as a secondary and minor issue compared to the other prob-
lems it encountered with Mexico.

The final organization to defend U. S. property rights
in Mexico was the International Association for the Advance-
ment of Religious and Political Liberty begun in New YOrk
in 1922. Its Executive Secretary,‘Wilbur Bates, was the
most polemical writer among all of the organizations dis-

approving of any recognition to ObregOn.2

 

27William D. Kerr to Hughes, July 16, 1921, NA, 711.12/

346; Malcohn C. Little, The Land Laws of Mexico (Los Angeles:
.Association Of American Owners of Lands in Mexico, 1921).

28Bates had an Obsession about a "Bolshevik" govern-
ment in Mexico. Bates to Hughes, March 13, 1922, NA,
711.12/442; March 30, 1922, NA, 812.00/26012.

 

—125-

In addition to the propaganda of these organizations,
a series of purported scholarly and impartial studies on
Mexico had been compiled and published under the auSpices
of the Doheny Research Foundation. The Foundation had
been created by Edward L. Doheny, one of the first Ameri—
can investors in the Mexican oil fields at the turn Of
the century. Its purpose was to provide a collection of
basic historical and statistical data on the background
of the problems of Mexico for the evaluationand recommen—
dations of scholars.29 The men selected to conduct this
research were for the most part recognized scholars in
the area of Latin American studies. From their efforts
five books were published in 1920 and 1921 based primarily

upon the source material furnished by the Foundation.30

 

29A partial list of the specialists and journalists

in the area of Latin America represented on the Doheny
Commission may be found in U.S., Senate, Investigation of
Mexican Affairs, I, 272-274. Doheny maintained that these
men whom he had not met worked independently and were not
influenced in any way to advocate intervention in Mexico.
However Rev. George B.‘Winton, a representative of one of
the Protestant missionary boards for Latin America, testi-
fied that he had formerly been a member of a committee
sponsored by Doheny's Foundation to work on Mexican finances.
When Winton (and apparently the committee) had not behaved
as Doheny wished, Doheny suspended payment on the project
and the committee was dissolved. Investigation of Mexican
Affairs, I, 159-189.
30The five books were: ‘Walter F. McCaleb (Columbia
university), Present and Past Banking in Mexico (New YOrk:
Harper & Brothers, 1920) and The Public Finances of Mexico
(New York: Harper & Brothers, 1921): Chester Lloyd Jones
(University of Wisconsin), Mexico And Its Reconstruction
(New YOrk: D. Appleton & Co., 1921): Wallace Thompson

 

-126-

The overall focus of these books was on the Porfirio
Diaz period (1876-1911) of peace and stability in Mexico,
during which time foreign capital and investment were
welcomed. Compared to the economic development and the
so-called "civilizing" progress made in Mexico by Diaz,
the Mexican Revolution of 1910 was viewed by the authors
as a disruptive force in Mexico. Arguing from their basic
premise, their solution to Mexico's recent problems caused
by the Revolution--directly or indirectly implied in a
return to a form of paternalistic government similar to
that of DIaz'--was partially correct. The assumptions
by these authors, however, failed to consider the impact
of the Revolution upon Mexican society and why Mexico could
not make a complete reversal to the pre-revolutionary

generation.

II

In washington the State Department was well aware

of, if not disgusted with, the organized propaganda which

 

(journalist), The People Of Mexico: Who They Are and How
Theprive (New York: Harper & Brothers, 1921); Robert G.
Cleland (ed.) (Occidential College), The Mexican Year Book:
The Standard Authority on Mexico, 1929/21 (Los Angeles:
Mexican Year Book Publishing Co., 1922). See also Cleland's
sequel compendium, The Mexican Year Book: The Standard
Authority on Mexico, 1922/24 (Los Angeles: Times-Mirror
Press, 1924).

 

 

 

-127-

beseiged the capital for nearly two years. U.S. and
Mexican citizens, the Mexican press, and foreign embassies
offered thoughtful as well as humorous advice, malicious
gossip, and innumerable suggestions concerning conditions
in Mexico and on the recognition of the ObregOn govern-
ment. On one occasion Fletcher had remarked to Hughes in
a sarcastic vein that some Mexican propaganda might well
be balanced "by a little American prOpaganda at the White
House."31 Harding once humorously remarked that one could
Obtain almost any type of report one wished on Mexico.32
Zach Lamar Cobb, a former customs collector at El
Paso, Texas, who had urged strong action against Carranza
in 1919, had Since become an attorney for the de la Huerta
government. During 1920-1921 he frequently wrote to the
Department on ObregOn's behalf, expressing his confidence
in ObregOn'S performance for which he deserved recognition.
Colonel Harvey W. Miller (Acting Military Attache for
the U.S. Embassy in Mexico City during the early 1920's),
ex-Governor w. P. Hobby of Texas and Governor Philip Camp-

bell Of Arizona--all of whom had become friends of ObregOn-—

 

31Fletcher Memorandum attached to letter Of Attorney
Frederic N. watriss to Fletcher, June 23, 1921, NA, 812.00/
25418.

32Harding to Attorney General Harry M. Daugherty,
March 29, 1922, Harding Papers (Box 167).

-128-

expressed a similar message.33 Private citizens from all
walks of life passed on to the State Department numerous
rumors of agents and counter-agents, alleged conversations,
attempted top-level meetings, threats of "Bolshevism" in
Mexico, character assassinations,34 and Often volunteered
to act as intermediaries between Mexico and the United
States.35

Almost daily the press of Mexico City published
some rumor of recognition, on several occasions alleging
that it had been accorded. Usually the reported announce—
ment occurred at a very convenient psychological moment:

for example, when there was a hint of recognition in Sep-

tember, 1921, as a Centennial birthday present for the

 

33At least one U.S. Consul in Mexico, C. H. Donaldson
at Torreon, Coahuila, had favored Obregon's recognition.
Consul General C. I. Dawson to State, May 9, 1923, NA,
123D7ll/l43.

34These letters as well as comments in the U.S. and
Mexican press and magazines often severely criticized
Fletcher, Fall and Harding. On the other hand Hughes was
generally represented in 1921 as a just, honest and up-
right statesman--the public image Hughes himself wished
to portray.

35Two individuals, though Sincere in motivation,
were considered especially obnoxious by both governments.
Juan Federico Philippi and J. P. Withers had both written
to WOodrow Wilson and to the State Department during 1920.
The following year they wrote letters even more frequently
to the Department and also to ObregOn. The Department
passed off Withers as a "dangerous busy-body," and referred
to Philippi as a "crank." Obre96n informed Withers to
discontinue his correspondence with the Mexican government,
and described Philippi as a "'poor crazy nut.'"

-129-

Mexican Nation. Some of the leading daily papers of
Mexico City as El Democrata, E_l M, and El Heraldo pip
Mexico, were reputed to have the support, or to be under
the Official control, of the Obregén government. These
papers generally expressed the most hostile anti-American
attitude and continually praised ObregOn's accomplishments.

Other papers as El Universal, Excelsior, and Omega were

 

 

more independent and often critical of the Obregén govern-

ment. For example, Excelsior represented a conservative

 

Opinion. Least antagonistic to the position of the United
States, it placed greater responsibility upon Mexico to
meet the reasonable demands of the united States. While
several Of these papers may or may not have supported
ObregOn, in their overall national sentiment they were
patriotic. Rejection by the United States of proposals
made by the Obregon government often produced dramatic
headlines in the Mexico City press defending ObregOn's

. . 36
pOSition.

 

36For example, title page and editorial comment was
expressed as follows: "The American Functionaries Who
Insist upon the Signing of a Treaty as a Condition Prece-
dent to Recognition Will Have to Desist from their Purpose,"
October 5, 1921: "The Government of Mexico Has Nothing
to Propose to the White House In Order to be Recognized,"
February 21, 1922; "Mexico Will Sign No Treaty Before Re-
ceiving Recognition," March 21, 1922; "Resumption of Dip-
lomatic Relations With the united States Each Day More
Likely," "The Government of President Obregén is Now Nearer
than ever to Recognition," "Without Depreciation of the
National Honor, Mexico Will Be Recognized," "Slowly but
Steadily the American Government Has Been Doing Justice to
Mexico," all August 9, 1922. See Summerlin's translations
of headlines and editorials in his reports to the State
Department, NA, Decimal File Groups 711.12/ and 812.00/.

-l30-

ObregOn realized the propaganda value of the press
at home and abroad. Whether or not ObregOn directly con-
trolled or manipulated various newspapers, the press did
offer him an opportunity to present preliminary announce-
ment of Shifts in policy and active support to proposals
which his government was presently encouraging. Even Obre-
gOn's neWSpaper critics frequently aided his cause by their
arguments about the political instability and scarcity of
foreign capital in Mexico which resulted from the non-
recognition policy Of the united States. washington re-
mained highly dubious of the veracity of the Mexican press.
AS Chief of the Division of Mexican Affairs Matthew E.
Hanna remarked with some justification, the Mexican press
had been “especially facile in distorting facts until they
give the particular impression which it is desired to
convey."37

The question of ObregOn's recognition had become
as early as the Spring of 1921 more than a mere concern
of the united States. Other foreign governments were
inquiring of the united States for an anticipated date

38

for recognition. The embassies Of Austria and Sweden,

 

37Hanna to Hughes, April 25, 1922, NA, 812.00/26027.

38ObregOn had listed twenty-six countries-—mostly
in Latin America, some in Europe and a few in Asia—-which
he claimed had already recognized his government. (See
above, Chapter III, footnote 25). The State Department
accepted this information at face value since it was de-
rived solely from the Mexican government and the Depart-

ment could not attest to its accuracy. U.S., Congressional
Record, 67th Cong., 2d Sess., March 25, 1922, 4536.

—131-

for example, had confided to the State Department that
domestic pressure within their countries had become too
strong to delay Obregon's recognition indefinitely.

The problem facing the Department in 1921 was how
to request foreign governments to refrain from granting
recognition to Obregdn before the United States did. Acts
of recognition by foreign governments would obviously
impair the full effect of the policy which the Department
was attempting to impress upon Mexico. In its estimate,
recognition by foreign governments would tend to both
discourage ObregOn from fully complying with Mexico's
international obligations (as viewed by the United States)
and would be a useful prOpaganda tool to boost his poli-
tical position in respect to the United States. Finan-
cially the ObregOn government could be able to obtain some
degree of credit, trade and investment from those coun-
tries which recognized it.

While the Department could not forcibly restrain
foreign governments from the legal act of recognition,
it used moral suasion to persuade as many governments
as possible to cooperate with the United States. Of great-
est concern were the two major powers of Europe—-Great
Britain and France39--which by the early months of 1921

had not yet recognized ObregOn. Recognition from these

 

39Since late 1919 both countries had retained only
a legation staff in Mexico under a Charge dPAffaireS.

-132-

two European powers would leave the united States isolated
as the only major power in the world which had not recog—
nized the ObregOn government.

Both Great Britain and France had claims for damages
to the life and property of their respective nationals
and claims on the suSpension of Mexico's debt payments to
British and French bondholders. The French government
was particularly concerned with the heavy French invest-
ments in Mexican banks and in the Mexican National Rail-
ways. Considerable pressure by French citizens had goaded
the French government to contemplate the matter of recog-
nition. In consultation with the Wilson administration,
however, the French government was persuaded to delay
action.40 When ObregOn later permitted certain Mexican
banks where French capital was invested to resume opera-
tions, one of the primary anxieties of the French govern-
ment was lessened.

The Harding administration acknowledged the exist-
ence of pressure upon foreign governments to recognize
ObregOn. After its press release of June 7th, the State
Department unsuccessfully attempted to obtain a united
front against Mexico by requesting as many countries as

possible to make a public announcement in support of the

 

40Under Secretary N. H. Davis Memorandum of a con-
ference between Colby, Davis and the French Ambassador,
February 10, 1921, NA, 812.00/27397.

-133—

U.S. policy.41 The British government was more willing

to cooperate with the united States, and agreed to induce
France to join the other two on the matter Of a common
policy toward Obregon's recognition.42 Through diploma-
tic persuasion France, and later Belgium and Cuba which
were likewise facing domestic pressure, agreed by November

43 Nonetheless domes-

to tacitly support the united States.
tic pressure upon these governments did not cease, and

the State Department received occasional notes to this
effect.

Because of its cooperation with the United States,
domestic pressure and propaganda for ObregOn's recognition
were particularly noticeable in Great Britain. The subject
became a frequent matter of debate in the House of Commons.
In addition to the Mexican consular agents and the Finan-

cial Agency of the Mexican government in London, ObregOn

had also employed several personal agents and sympathizers

 

41Fletcher (for Hughes) to Summerlin, August 4,
1921, NA, 711.12/350a.

42Hughes Memorandum of an interview with the British
Ambassador, October 17, 1921, NA, 811F8123/66-1/2.

43The Department's position was reportedly strength-
ened in the early months of 1922 when it was learned that
Spain had unconditionally recognized the Obregén govern-
ment. A controversy later arose over the expropriation
of property belonging to Spanish citizens in Mexico which
Hughes interpreted as confiscation by the Obregén govern-
ment. Whatever the details, the Spanish government was
allegedly placed in an awkward position because it had
unconditionally recognized Obregén. Hughes to Harding,
.March 25, 1922, NA, 812.00/25494.

-134-

in England to influence British commercial groups, exporters,

and financiers.44 One sympathizer, E. J. Bray (the Euro-

pean representative of the National Railways of Mexico),

had worked in 1919 for the renewal of official diplomatic

relations between the British government and Carranza.

He was active again in 1922 on behalf of Obregon's recog-

nition. Bray apparently held the confidence of the British

Foreign Office because he nearly successfully had the

Chargé of the British legation in Mexico City recalled

on the basis of complaints f'romObrechn.45
A pressure of a different sort for the Department

came from the fifteen states of Central and South America

which had already recognized Obregon by the Spring of 1921.46

Criticism by the diplomatic staff Of these countries,

especially Argentina and Chile, was pertinently directed

against the American policy. A Chilean Minister argued

that non-recognition of Obregén was an act of diplomatic

47

impropriety. The Argentine Minister to Mexico had urged

 

44See AGN, 242-A2-F; lO4-R1-I-2 Pq l6: lO4—R1-Bl

Pq 15-1.

45Bray's reports to Obregén in 1922, AGN, lO4—Rl-
I-2 Pq l6: Summerlin to Hanna, April 22, 1922, NA, 711.12/
432. H.A.C. Cummins, who had made himself quite obnoxious
to Obregén, was finally declared persona non grata in June,
1924, and he was recalled by his government.

46Cuba, the Dominican Republic, Haiti and Venezuela
had not recognized Obregén.

47U.S. Chargé d'Affaires ad interim of Costa Rica
to State, October 3, 1921, NA, 711.12/365: Hanna Memorandum
to Hughes, April 7, 1922, NA, 812.00/26097.

 

-135-

Obregdn to continue to refrain from signing the Treaty

of Amity and Commerce prior to recognition, because sign-

ing this treaty would create a precedent which the united

States could employ throughout Latin America.48
In addition to these comments from diplomatic sources

were opinions expressed by the educated elite within Latin

America. The former Director of the Pan American union,

John Barnett, had sent out a questionnaire in January,

1922, to approximately two hundred leading statesmen,

writers, and editors in Central and South America. Barnett's

aim was to obtain a frank opinion about the image of the

United States in Latin America and what the united States

might do to promote a Pan American friendship and solidar-

ity. Though he was collecting this data for the purpose

of scholarly publication, the answers were so crucial in

his opinion to the problem of Mexico that Barnett decided

that the State Department and Harding should be made aware

Of them.49 Of the one hundred sixty-one replies Barnett

had received by mid—March, 1922, one hundred forty-one

of them stressed the necessity of the immediate recognition

of the Obregén government with concessions if required:

but at least recognition, and in accordance with the dignity

 

48Summerlin to State, October 12, 1921, NA, 711.12/366.

49John Barnett to State Department, March 20, 1922,
NA, 812.00/25508.

-l36-

and sovereignty of both countries involved. Barnett's
findings were confirmed, he discovered, by his contacts
with representative Americans in thirty-two states who
had desired the rapid renewal of diplomatic relations with
Mexico.

Harding was convinced that Barnett's findings correctly
portrayed the sentiment of the Latin American countries.50
In the Mexico City press Barnett's questionnaire, the
results of his survey and Harding's reply to Barnett received

51 To Hughes, however, representative

large headlines.
Opinion throughout Latin America had been frequently and
correctly informed Of the position of the United States,
and most of this opinion, he asserted, was in favor of
the U.S. point of view. Hughes dismissed Barnett's ques-
tionnaire as merely propaganda.52

Of a more serious nature and receiving greater atten-
tion from the State Department were the reports in the
press and from official dispatches of the rising influence

53

of “Bolshevism" in Mexico and of conspiratory activities

 

50Harding to Hughes, March 21, 1922, NA, 812.00/25494.

SlSummerlin to State, March 24, 1922, NA, 711.12/420.

52Hughes's reply to Harding, March 21, 1922, NA,
812.00/25494.

53The term "Bolshevik" rather than "Communist" was
used in the early 1920's to refer to the Bolshevik take-
over of power in Russia in November, 1917. Members of the
Third or Communist International (also referred to as
Bolsheviks) were active in Mexico during the 1920's.

-137-

against the ObregOn government. In 1920 rumors had Spread
of supposedly "Bolshevik" tendencies within de la Huerta's
cabinet. During Obregén's administration occasional men-
tion was made of so-called "Bolshevik" supporters among

his cabinet, eSpecially General Calles and General Alvarado,

55 Obregén himself was often

and among the labor movement.
viewed as a well-intentioned.Mexican patriot but was misled
by those (unidentified) "Bolshevik" traitors who were
making him a figurehead.

Anticipating this reaction, ObregOn in the Spring
of 1921 was supposed to have declared persona non_grata
in Mexico several (unidentified) foreigners who were ex-
pounding on "radical" ideas. On the other hand, ObregOn
did utilize the term "Bolshevism" as an advantageous propa—
gandist technique. Remarking to Colonel Miller (the Acting
Military Attaché of the U.S. Embassy in Mexico City) on
the increase of "Bolshevik" sentiment in Mexico, ObregOn
informed him that without diplomatic recognition from the
United States his government would be unable to consoli—

date its position. If his government fell for lack of

 

54See above, Chapter III, footnote 12.

55New York Times, April 3, 1921, p. 7; May 18, p. 19.
The N. Y. Times considered a “Bolshevik” tendency to be a
very real potential danger because ObregOn was forced
politically to appease his "radical" supporters. N. Y.
Times, May 19, 1921, p. 14; December 23, p. 12. See also
.Albert‘W. Fox, "ObregOn Losing Hold," washington Post,
March 28, 1921, p. 1.

54

-l38-

recognition, the united States was largely responsible
for any increase or the take-over of "Bolshevism" in
Mexico.56 ObregOn may have deliberately chosen Colonel
Miller who as a personal friend would have more credul-
ously transmitted this conversation to the State Depart-
ment. Because of the campaign program to restore peace
and security in Mexico, neither ObregOn nor the Foreign
Office explicitly mentioned "Bolshevism" as a threat in
their correspondence with the State Department. Indirect
reference instead to a "Red scare“ in Mexico would usually
be made by some "unidentified highly placed official of
the Mexican government."57
The State Department, which had not accorded dip-
lomatic recognition to the government in Soviet Russia,
did identify a Similarity of problems in the granting
of recognition to both the Russian and the Mexican gov-

ernments. Though only one direct reference was ever made

in the Department to a comparison of the attitude and the

 

56The oral conyersation was reported to the Depart-
ment by Acting Charge dfiAffaires in Mexico, Matthew H.
Hanna, May 18, 1921, NA, 812.00/24991.

57As mentioned in the New York Times, November 13,
1920, p. l.

-l39-

diplomatic impassé in both Soviet Russia and Mexico,58
the implication of an arbitrary confiscation of property
and of the inadequate protection to the lives of U.S.
citizens was associated in the mind of the Department with
both countries.

The reports from the U.S. Chargé dPAffaires in Mexico
George Summerlin and from the U.S. Consul General in Mexico
City Claude I. Dawson, which often dwelt on "radicalism"
(without Specifically defining it) and on anti-American
sentiment in Mexico, merely heightened this suspicion.
Summerlin and Dawson,59 antagonistic to Obregén as their
reports revealed, Claimed that their information had been
obtained from reliable sources. Although some of their
information was accurate and penetrating, a considerable
portion presented only interesting sidelights. Dawson's

reports were usually written in such a frantic and highly

 

58Hanna Memorandum to State, April 24, 1922, NA,
812.00/26097. However Hanna cautioned that, Since the
Mexican press utilized Hughes's statements at press con-
ferences as propaganda, it was advisable to make no mention
of the Department's association of recognition for both
Mexico and Russia. Hughes apparently concurred on this
point. See also Zach L. Cobb's letter to Assistant Secre—
tary of State Leland Harrison on May 4, 1922, notifying
the Department of the careful observance by Mexican poli-
ticians and the press of the domestic policies of Soviet
Russia and the attitude of the EurOpean powers and the
united States toward Russia's recognition. NA, 812.00/
25808.

59Both men had served in these same positions when
Carranza was President of Mexico. Their attitude tgward
Carranza bore resemblance to their dislike Of Obregon.

-140-

credulous tone that they were undoubtedly regarded as some-
what exaggerated and were never seriously considered.

The Director of the U.S. Consular Service, W} J. Carr,

once advised Hanna of the Division of Mexican Affairs that
Dawson's reports on political conditions in Mexico sur-
passed the duties and obligations of his post in Mexico.60
Because of Summerlin's position as the Chief Official
source for the Department of information on Mexico, his
regular dispatches were the basis for the policy reports
of the Division Of Mexican Affairs. In his personal let-
ters to Hanna, Summerlin advised Of the continued need
for the united States to adhere to its "sound policy“
which would eventually be triumphant regardless of the

61 Like Fletcher before him, Summerlin had

time Spent.
learned little of Mexico during his past five years.

For nearly three years the Department had received
letters, memoranda and visits from various factions in
Mexico suggesting the dismissal or the overthrow Of the
ObregOn government. Each faction, of course, claimed the
support Of the majority of the Mexican people. Since late

1920 certain Mexican conservatives had expressed their

Opposition to what was termed the extremist policy of the

 

6OAttaChed Memorandum from w; J. Carr to Hanna,

June 28, 1922, NA, 812.00/25671.

61Hanna to Hughes, April 11, 1922; October 27, 1922,
NA, 812.00/26097, 812.6363/1253.

-l4l-

Carranza government and of the later Sonora group (de

la Huerta, Obregon, and Calles) toward the Revolution of
1910.62 Though these individuals did not imply a complete
return to the policy of the Diaz era, they did desire to
restore the Constitution of l857-—with necessary amendments--
and to provide some beneficial application of the goals

of the Revolution. Seeking a rapproachment with the united
States, they reiterated the usual ambiguous phrases of
respect for legitimate American interests and legally
acquired rights. Some letters written by Mexican citizens
were probably Sincere in expressing a lack of confidence

in the Obregén government. Summerlin reported that a
supposedly Close friend of ObregOn thought it best for
Mexico to either accept the Treaty of Amity and Commerce

or to request Obregén's resignation so that another Presi-
dent might be elected to consent to the valid demands of
the united States.63 There were even some suggestions,
particularly among various American oil companies in Mex-

ico, that the united States directly support, or at least

 

2Jorge Vera-Estahol, author of Carranza and His
Bolshevik Regime (Los Angeles: Wayside Press, 1920),
initially supported ObregOn in 1919-1920. Consult also
Essay On the Reconstruction of Mexico, a series of articles
written in early 1920 on the Carranza government and on
Provisional President Adolfo de la Huerta by a group of
educated and professional Mexicans in exile in the united
States.

63Summerlin to Fletcher, July 8, 1921, NA, 812.00/
25084-1/2. Summerlin considered that the lawyer Eduardo
Mestre G. was Sincere.

 

-l42-

acquiesce in, a coup against the Obregon government so
that a group friendlier to the united States could acquire
power. Hughes however refused to discuss the subject.64

In late 1921 and throughout 1922 the existence of
revolutionary groups along the U.S.-Mexican border, eSpec—
ially in southern Texas and in the southern part of the
state of California, had created a definite problem of
the violation of the neutrality laws of the United States.
Since 1920 the State Department had requested the Attorney
General's Office to take necessary precautions to present
such violations. A strict legalist, Hughes would permit
no such infractions. Unsubstantiated rumors of secret
meetings, hideouts, smuggled weapons and ammunition and
potential raids-—along the nearly 1,614 mile border between
the united States and Mexico--made the strict control of
these activities difficult. However, the U.S. Army patrol
along the border, Special agents of the Bureau of Investi-
gation of the Department of Justice, and secret agents of
the Mexican government were usually able to keep a fairly
close watch on suspected conSpirators, to arrest the minor
leaders and to confiscate stored weapons and ammunition.

In Congress Representative Thomas Connally (D, Tex.)

introduced a resolution (H. Res. 273) on January 26, 1922,

 

4See Hughes's interview with Manuel Calero, a lawyer
of the Huasteca Petroleum Company (an Edward L. Doheny
interest), June 29, 1921, LC, Hughes Papers (Box 176, No.
90).

-l43-

for the investigation of the activities of certain Ameri-
can interests in Mexico which he charged with the instiga—
tion of rebellion against the Obreg6n government. The
National Association for the Protection of American Rights
in Mexico and the American Owners of Land in Mexico were
specifically mentioned, though the American oil companies
in Mexico were also clearly implied.65 Nevertheless this
resolution was shelved along with the resolution (H. Res.
280) of Representative John Benham (R, Ind.) on February 6,
1922, for an investigation of Obregon's prOpaganda in the
united States.

While the rumors of revolutionary activities along
the border received wideSpread coverage in the press,
reports from the special agents of the Department of Jus—
tice pointed out that these activities were exaggerated

66 The

by the Mexican government for propaganda purposes.
U.S. and Mexican press dispatches were normally taken
from information released by Mexican consuls or Mexican

secret service agents along the border who were deliberately

 

65According to the Mexican Minister of Foreign
Affairs, the Mexican revolutionists were receiving a con-
siderable amount of money and military supplies from Ameri-
can oil men in.Mexico. Alberto J. Pani to Torreblanca
(Obreg6n's personal secretary), March 28, 1922, AGN, lO4-
Pl-P—3 Pq 15.

66See the reports made in 1922 by Special Agent of
the Department of Justice, Gus T. Jones, to Attorney General
Harry M. Daugherty. These reports may be found in LC,
Pershing Papers (Box 178). General John J. Pershing was
Chief of Staff of the U. S. Army from 1921 through 1924.
Jones's reports were confirmed by other agents. See Harding

Papers (Box 167).

-144-

paid to manufacture evidence. According to the investiga-
tory reports the Mexican Consular Service in the American
Southwest and in New YOrk City, composed of Special agents
rather than the usual consular officials, Operated a vast
intelligence and propaganda front. The revolutionary bands
themselves were actually small, unorganized, and had al—
ready been infiltrated by Mexican secret agents. The con—
clusion reached by the agents of the Bureau of Investiga—
tion was that the situation along the border was well
under control.67
Confronted with such abundant propaganda either for
or against Obregon's recognition, the State Department
seemed unimpressed and remained dogmatic in its policy.
According to Hughes, a considerable number of persons of
some importance had "diametrically opposed" views concern-

ing recognition and conditions in Mexico.68 These indivi-

duals, he pointed out, possessed vast property interests

 

67If the Special agents of the Obregon government
were exaggerating conditions along the border as a propa-
ganda device, Obregon had access to the intelligence reports
of the U. S. Army and of the Department of Justice for a
close check upon any real activity of Mexican revolution-
aries in the American Southwest. Refer to the report for
the U. S. Army made at San Antonio, Texas, December 24-27,
1921, sent to Obregon by Mexican Consul E. D. Ruiz; the
report of an agent of the Department of Justice on April 26,
1922; AGN, 104-Rl-L. In addition to these intelligence
reports Obregon received c0pies or originals of personal
letters and telegrams which were carefully forwarded to
Mexico City. Obregon had a proficiency for gaining sym—
pathizers from all walks of life.

68Hughes to Secretary of Commerce Herbert Hoover,
May 28, 1921, NA, 812.00/25010-1/2.

-145-

in Mexico and had been acquainted with the conditions within
the country for many years. With the diversity of opinion
on Mexico and until all the data had been carefully evalu-
ated, Hughes had recommended that the Department determine

a policy which would tend to ”conserve" the interests of

the united States.69 That policy materialized in Hughes's

press release of June 7th,70 which Hughes saw no justifica—
tion to alter in the closing months of 1921.

It was soon evident to the Department that some
individuals and groups within the United States and abroad
were not convinced of the sincerity of its policy. In a
few instances Hughes himself apparently was eanperated
by the continuous flow of letters and memoranda to the
Department. In one case Hughes painstakingly replied to
Representative John N. Garner (D, Tex.) that the purpose
of the prOposed Treaty of Amity and Commerce was merely to
seek a "common ground of a clear understanding'I between

71 In his estimation the treaty was

the two countries.
not an ultimatum but an effort to insure to American citi-
zens in Mexico the security and protection which they were

justly entitled to receive under international law.

 

69Ibid.

70See above, Chapter III, pp. 91-93.

71Hughes to Garner, August 13, 1921, NA, 812.00/25133.

-l46-

Noting the rapidly changing attitude on the part
of many American interests in Mexico who had previously
been opposed to recognition, Harding concurred in Hughes's
presentation of the Department's policy as the best pos-
sible analysis under the circumstances.72 Those indivi-
duals with quick and Simple solutions regarding Mexico,
he later commented, knew little of the actual complexities

involved.73

Though not always tactful, the united States
in Harding's opinion had made every effort to reach an
understanding with Mexico.

In Mexico City Obregon despite his calculated prOpa-
ganda program was sometimes bewildered and irritated like
Washington over unintentional circumstances. Obregon as
Harding was often embarrassed by sincere Americans who
purported to be representatives of his government, but
lacked any official credentials or even his knowledge.

In addition to letters of praise and sympathy Obregon
suffered from a Similar variety of advice, recommendations,
plans for recognition, and suggestions for publicity cam-
paigns. For two years a number of Americans continually

assured Obregon of immediate recognition because of their

alleged influence or connection within the Republican

 

72Harding to Fletcher, November 19, 1921, NA, 812.6363/
1042-1/2.

73Harding to Attorney General Daugherty, April 6,
1922, Harding Papers (Box 167).

-l47-

Party, in Congress or in the Harding administration. If
Obregon derived any value from this abundant triteness,

it might have been some limited gauge of his pOpularity

in the united States.

By the early months of 1922, however, Washington
had become increasingly suspicious of any propaganda or
reports concerning Mexico. The deadlock in relations
between the united States and Mexico appeared to be fore-
cast for a considerable time in the future. In the mean—
time Obregon was active in attempting to solve another
pressing difficulty—-the question of Mexico's finances

and its foreign debt.

CHAPTER V

PETROLEUM AND THE FOREIGN DEBT

Recurring themes which had plagued Mexico since
its independence in the early nineteenth century had been
domestic political strife and corruption in government.
Frequent revolts had necessitated the maintenance of large
armies on the part of contending leaders, which in turn
occasionally led to intervention by European powers.
These revolts not only left economic instability within
the country but the national treasury too often became
the personal property of the particular faction in power
at the time. Tax receipts from a primarily agricultural
nation were inadequate to meet the demand for revenue.
To buttress Mexico's depleted financial resources nearly
every government in power since 1821 had been forced to
seek loans abroad from banking houses1 on the strength of

Mexico's custom duties2 as collateral.

 

1The bonds or securities were usually obtained by
the floating or the selling of bonds attached to the
government in question by banking houses within their
respective countries.

2Since Mexico depended upon an export economy of

raw materials, the greater portion of the governmental
revenue was derived from the export and import duties.

-l48-

-149—

Domestic turmoil, military coups, and foreign inter-
vention, however, usually disrupted the collection of the
custom duties--the major source of governmental revenue
as well as the security for loans. Inevitably most Mex-
ican governments were unable to meet the regular payments
on the debt, which led to an arrears of the interests and
then to a defaulting on the principals of the loans. The
common procedure was thereby to obtain a new loan with
a funding of the previous debt. Rather than eliminating
Mexico's indebtedness, each government had merely consoli—

3 The one exception to this inces-

dated and increased it.
sant theme was the Porfirio Diaz period.

With the decade of revolution Mexico's financial
system ceased to function.4 The Revolution had interrupted
the normal channels of business and commerce. Banking
and credit facilities and the use of metallic money were
abandoned. The paper currency issued rapidly depreciated
in value with the high inflation. The payment of the in-
terest on the debt owed the foreign bondholders had been

suspended since 1912.5

 

3Edgar‘W. Turlington, Mexico and her Foreign Creditors
(New YOrk: Columbia university Press, 1930), has provided
an excellent analysis of the background of Mexico's foreign
debt in Chapters 1-6 inclusive. Refer also to Thomas R.
Lill, National Debt of Mexico: History and Present Status
(New YOrk: By the author, 1919).

 

4Turlington, op. cit., Chapters 7 & 8.

51bid.

-150-

When Obregon took office in December, 1920, it was
quickly apparent that his program of reconstruction as
well as the operating expenses of his government depended
upon the financial conditions of the country. In the
early months of 1921 Mexico's domestic capital reserves
were inadequate. Mexico's banking facilities were recover-
ing slowly. Credit depended upon confidence both in the
government and in the economy. To inaugurate a thorough
program of reconstruction, then, required extensive funds
which were not accessible in Mexico. A foreign loan,
accompanied by an appeal for widespread investment in
Mexico, was undoubtedly the quickest means of obtaining
the needed capital. Such a loan was difficult enough to
secure on the basis of Mexico's prior financial record
without the addition of numerous obstacles posed by the
Revolution. Furthermore the absence of diplomatic recog—
nition complicated the financial situation for Obregon.
The leading banking and investment firms of Europe and
of the United States6 which would make a loan to foreign
governments were generally reluctant to risk loans even
at high interest rates to any government which lacked
diplomatic recognition. Though diplomatic recognition
theoretically implied no guarantee of a country's finan-

cial health, it was a legal accreditation of a government

 

6Obreg6n's potential source of a loan was limited by
World War I. Primarily due to the war the united States
had preempted Europe's prior role as the world's banker.

—151-

within the community of nations. Banking and investment
firms were guided by the potential risk of their investment,
and recognized governments appeared on the surface at

least to possess a more secure footing.

Obregon was aware that the financial pressures fac-
ing his government were indirectly connected with diploma-
tic recognition, particularly with reference to the united
States. The general policy formulated by the State De-
partment had maintained that a government to be recognized
respect its international obligations. One of these out-
standing obligations which both the United States and
Obregon were in agreement was Mexico's foreign debt.

Since 1920 Obregon had publicly associated the foreign

debt with the fulfillment of Mexico's international ob-
ligations. If Obregon concluded a satisfactory arrange—
ment with Mexico's foreign creditors, then perhaps he had

a better bargaining position both for recognition and for

a substantial loan.7

To resume the payment on the foreign debt Obregon
needed capital. Revenue from Mexico's agricultural pro-
ducts, from inheritance and land taxes proved to be in-
sufficient. Some austerity measures as reducing the army

and keeping the expenses of the government to a minimum

 

7Most of the bonds by 1921-1922 were in the possession
of banking houses.

-152-

were Short-run efforts. Mexico's mining industry suffered
from a sharp drOp in prices during the postwar depression
from 1920 through 1922. Mexico's only industry which
appeared to be in a booming stage was the petroleum in-
dustry.

An extensive report made in early 1921 by the Tech-
nical Commission on Petroleum of the Ministry of Industry,
Commerce and Labor investigated the existing and poten-
tial oil-bearing regions of the country, the petroleum
companies operating in Mexico, the percentage of actual
production, and the overall valuation of the petroleum
industry.8 Granting that the greater majority of oil
fields had not yet been explored, the report concluded
that there was a total of 367 producing oil wells by
January 31, 1921, with a potential daily production of
approximately 2.6 billion barrels; by April 20, 1921,
there were 395 producing wells with a daily capacity of
3,717,495 barrels, or an average of 9,417 barrels per
well.9 On the basis of the statistics presented in the

report Mexico ranked second only to the united States

 

8Report of the Technical Commission on Petroleum,
AGN, lO4-Pl-P-22.

9These statistics represented maximum figures. Since
this report and others were usually dependent upon the
figures of the petroleum companies, the figures should be
regarded as estimates.

-153-

in the production of petroleum, furnishing twenty-three
percent of the total world output.

The rapid increase in production within the past
half-dozen years, which the report did not elaborate on,
was due partly to the demands of WOrld war I and in part
to the desire of the foreign oil companies to exploit as
much petroleum as possible before further restrictive
decrees were passed by the Carranza government. Moreover
the physical prOperty of the Mexican petroleum deposits
made the oil gush forth with little, if any, pumping whereby
the wells seemed inexhaustible and profits considerably
more tempting.

On the basis of the Commission's report, however,
only 7.7 percent of the petroleum production in Mexico
was found to be used for domestic consumption. The greater
percentage of production was being exported by oil companies
which were primarily foreign-owned or controlled. Until
1912 these companies had paid no substantial tax on the
petroleum refined or exported, and the taxes imposed after
that year were disproportionate to the petroleum production
in Mexico. The conclusion of the report reaffirmed that
the valuation as well as the development of the petroleum
industry in Mexico, which had tripled within the first

10

decade of its growth and had doubled by 1920, had not

 

10See above, Chapter I, footnote 14, for the statis-
tics of production from 1901-1920.

-154-

proportionately benefited Mexico. Petroleum then was
Mexico's most valuable natural resource as well as a
potential source of revenue.

The significance which this report impressed upon
ObregSn can be best understood in view of a so-called
threatened petroleum crisis in the world beginning about

1919 and lasting into the early 1920's.11

Since the war
the wideSpread uses of petroleum as a fuel supply had
become increasingly evident in the merchant marine, in
industry, transportation, and on the farm as well. Con-
siderable pessimism developed by 1919 over the adequacy
of future oil reserves in the United States. Alarming
estimates, regarded as reliable by petroleum experts of
the Fuel Administration of the united States Geological
Survey and of the United States Bureau of Mines, forecast
the exhaustion of all available domestic reserves within

12

one or two decades. With an inevitable increased con-

 

11The "oil scare" became the tOpic between 1920 and
1923 of numerous monographs, articles, pamphlets and scien-
tific journalists by geologists, journalists, the National
Association for the Protection of American Rights in Mexico,
the American Petroleum Institute and other groups. After
1924 public interest of Americans in overseas oil resources
waned as new oil fields were discovered in the united
States. The best brief study of the controversy is Herbert
Feis, Petroleum And American Foreign Policy (Stanford, Calif.:
Food Research Institute, Stanford university, 1944), pp.
3-10.

12In December, 1919, and during the early months of
1920 these officials besieged the State Department with
their warnings. See NA, Decimal File Group No. 812.6363/
for those dates.

 

~155—

sumption of petroleum, these experts recommended that
the united States government secure sufficient petroleum
resources for its own domestic use by encouraging and
protecting American oil companies abroad. The fear Spread
that other countries, especially Great Britain and the
Netherlands, were seeking to acquire exclusive commercial
and political control over the most promising foreign
sources of petroleum production in the world. As a result
of several investigations13 the evidence revealed an attempt
by the British and the Dutch governments to monopolize oil
fields in the Middle East, the East Indies, and in northern
South America (Colombia and Venezuela), and thereby to
exclude American oil companies. With its estimated unlimited
petroleum reserves Mexico was usually emphasized in these
investigations as the nearest and most natural petroleum
supply for the united States.

Mexico did not become directly involved in the scramble

14

for the division of the oil fields of the world. Accord-

 

l3Acting Secretary of State Frank A. Polk to Woodrow
Wilson, May 14, 1920, For. Rels., 1920, 351-369; "Foreign
Ownership in the Petroleum Industry," Annual Report of the
Federal Trade Commission for the Fiscal Year Ended June 30,
1923 Oflashington, D.C.: Government Printing Office, 1923).

 

14When requested in 1924 to provide information con-
cerning the securing of oil concessions for U.S. companies
abroad, the State Department replied that no effort in
this respect had been made in Mexico Since March 4, 1921.
R. C. Tanis, Chief of the Division of Mexican Affairs, to
under Secretary Leland Harrison, March 20, 1924, NA, 812.6363/
356.

-156-

ing to a report by the Latin American Division of the Bureau
of Foreign and Domestic Commerce two-thirds of the pro-
ducing wells within Mexico by the early summer of 1920
were owned and operated by American companies.15 The
total investment of American capital in Mexico's oil fields
was seventy percent. British and Dutch capital held ap-
proximately twenty-seven percent, while Mexican and Spanish
capital netted a mere three percent. Of the total petrol-
eum eXports from Mexico in June, 1920, seventy-one percent
were shipped to the united States while four percent went
to Great Britain. The remaining twenty—five percent was
consumed in Mexico or shipped elsewhere to Europe or to
South America. Though numerous new companies were estab—
lished in Mexico, American investment in petroleum during
the early 1920's remained predominant.l6
On June 7, 1921, Obregon startled the foreign oil
companies in Mexico by announcing a decree, to become

effective on July lst, which established a specific and

indiscriminate export tax of twenty-five percent on all

 

15U.S., Bureau of Foreign and Domestic Commerce,
"The Petroleum Industry in Mexico," Commerce Reports (Daily
Consular and Trade Reports), September 13, 1920, 1213-1231.
This report estimated that only twelve percent of Mexico's
potential capacity was being exploited.

16Leonard M. Fanning, American Oil Operations Abroad
(New York: McGraw-Hill Book Company, Inc., 1947), p. 27,
listed over twenty-five American companies active in petrol-
eum production in Mexico during the early 1920's.

 

-lS7-

petroleum and petroleum products. Graduated rates were
set for refined gas, crude and refined kerosene, and lub-
ricants. The avowed purposes of the decree were to obtain
revenue both for the operating expenses of the Mexican
government and for the renewal of the interest payments

on the foreign debt.17

To ObregOn the application of

this petroleum tax on Mexico's most valuable and most pro-
ductive natural resource seemed a sound and reasonable
measure. The Mexican government would have a considerable
and an immediate source of revenue with the burden of
taxation placed upon those who were obtaining the greater
proportion of profits from Mexico's natural resources.
‘With the revenue obtained from the tax, payment on the
foreign debt could be resumed to satisfy Mexico's foreign
creditors as well as to reestablish Mexico's credit in the
financial world. In short, the oil companies in Mexico
would assist in the payment of Mexico's foreign debt.

As later events revealed, Obregon's insistence on exten-
sive publicity of the application of this tax to the foreign

debt18 was in part an attempt to open negotiations with

 

l7Summerlin to State, June 8, 1921, For. Rels.,
1921, 447-448.

18Obregon to Manuel Tellez, the Mexican Charge d'
Affaires in washington, June 11, 1921, AGN, lO4-Pl-P-13
Pg 15. See also E. J. Dillon, "Taxation or Confiscation
in Mexico," Nation, August 3, 1921, pp. 117-119. As
Obregon's chief publicity agent, Dillon presented the
semi-official viewpoint for the American public.

-158-

the oil companies who naturally protested this tax.

The decree of June 7th was also designed to preserve
Mexico's natural resources19 in view of the world's "oil
scare" by curbing the excessive and wasteful exploitation
of petroleum. Extensive drilling and the force of the
oil gushers' volume had rapidly depleted the oil beds
under some of Mexico's well known producing wells. Salt
water from the Gulf then appeared in the shafts.20 Though
Mexico's potential oil fields had not yet been explored,

a report by a respectable American mining engineer in
February, 1921, had warned that the producing petroleum
reserves of Mexico would be exhausted within a few months
to less than two years.21 Although later proved to be
erroneous, his estimate initially began a rush by the oil
companies to drill new wells. Obreg6n likewise acted on
the faith of this report in an effort to conserve Mexico's
most valuable and taxable natural resource. Moreover

many of the oil companies were not careful in catching

all the oil flow from the gushers. A considerable amount

 

19The power to levy a tax on petroleum reasserted
in this decree the authority of the federal government to
protect Mexico's natural resources which belonged by direct
ownership to the Mexican Nation. This decree was in effect
an application of Article 27 of the Constitution of 1917.

20Secretary of Commerce Herbert Hoover to Hughes,
May 13, 1921, NA, 812.6363/880.

lebid.

-159-

of crude petroleum was lost on the ground. To guard
against this laxity the decree placed a heavy tax penalty
on the waste of crude petroleum.

Obregén's decree served a further end by forestall-
ing debate in the united States relative to the creation
of an import tax on Mexican petroleum.22 In the Spring
of 1921 as part of the general debate in Congress on tariff
policy a proposal was made which imposed a tariff of $1.50
per barrel on the importation of crude oil into the united
States. The proposal was sponsored by the large and the
small independent oil producers in the United States who
represented nearly twenty thousand companies in the central
and southwestern states. Claiming to have owned and oper-
ated almost eighty-two percent of the petroleum production
in the United States, these producers charged that the
subsidiaries of the Standard Oil Company (of New YOrk
and of New Jersey) in Mexico and the Edward L. Doheny

petroleum interests in Mexico were shipping eighty percent

 

22This aim was disclosed in official bulletins of
the Mexican government. See Harold E. Davis, "Mexican
Petroleum Taxes," Hispanic American Historical Review,
XII, No. 4 (November, 1932), 413-414.

By the dozens of letters which Obregon received from
the independent oil producers in the United States during
the summer of 1921 in defense of Mexico's export tax,
it appeared that Obregfin was well informed of the proposed
debate. Most of these letters gave information on condi-
tions in the oil fields and stressed the financial bene-
fits to the Mexican government by the tax. AGN, lO4-Pl—
P-3 Pq 15; lO4-Pl-P-13 Pq 15; lO4-Pl-P-14: lO4-Pl-P-ll
Pq 15.

 

-l60—

of the petroleum from Mexico duty free into the united

States.23 This cheaply derived, non-taxable Mexican crude

oil24 flooded the American market, they asserted, and
virtually eliminated competition for the independent oil
producers. In certain states sixty percent of normal
production was discontinued and thousands of men in the
oil fields were unemployed. The price of domestic crude
oil, having dropped since January, 1921, from $3.50 a
barrel to less than $1.00 a barrel, went far below the
cost of production and forced many companies to declare
bankruptcy. In turn Standard Oil and other stable petrol-
eum firms were purchasing these companies and their pro-
perty at a fraction of the original cost and outlay.

While debate on the proposed tariff continued,25

 

23Telegrams and resolutions from varhaus state and
interstate independent oil producers associations were
read in Congress and commented on by Congressmen from the
afflicted states. Cong. Record, 67th Cong., lst Sess.,
July 14, 1921, 3819-3823; July 16, 3945; July 18, 3986-
3987, 3999-4000, 4009-4010; August 23, 5528-5531. Only
the independent oil producers associations of California
opposed the tariff on Mexican oil as unnecessary. Cong.
Record, 67th Cong., lst Sess., July 16, 1921, 3945-3947.
Refer also to a statement from the Mexican Financial Office
on oil production in Mexico, Nation, August 3, 1921, pp.
134-135.

24The crude oil in the United States was generally
superior in quality, being a high-grade oil suitable for
delicate refining. Mexican crude was a heavy oil suitable
primarily as a fuel oil.

25Mexico's export tax on petroleum and the decision
in July by many of the large American oil companies in
Mexico to suspend shipment of petroleum from Mexico less-
ened the need for this tariff, and the proposal died.

-l6l-

the large American oil companies in Mexico (which had
understandably opposed the proposed tariff in the united
States) announced that the Mexican export tax of $.35
per barrel placed too great a financial burden upon most
of the petroleum industry in Mexico. Since the tax in
their estimation consumed the profit on each barrel of
oil and thereby caused the producer to operate his busi-
ness at a considerable loss, the large American oil com-
panies were "forced" to suspend their shipments of crude

26

oil beginning July lst. Drilling would be continued only

where damage to equipment would otherwise result and until
reserve storage Space was filled.27
Rumors of labor unrest and agitation resulting from
the unemployment28 created by the shutdown of the oil
companies brought exaggerated fears of reprisals against
American citizens and their property. Claude I. Dawson,

then Consul at Tampico which was one of two principal

oil regions in Mexico, requested emergency precautions

 

26Although the impression given was that each com-
pany acted independently, the companies that undertook
concerted action were members of the Association of Pro-
ducers of Petroleum in Mexico.

27Frederic N. watriss, general legal representative
for the oil companies in Mexico, to under Secretary
Fletcher, July 7, 1921, For. Rels., 1921, 449. See also
New York Times, July 2, 1921, p. 1; July 4, p. 17; July 6,
p. l; 10; July 7, p. 10.

28Figures of twenty-five thousand or more were quoted
in the New York Times. See above, footnote 27.

-l62-

be taken to protect American life and property.29 Though
several cruisers were dispatched to Tampico on July 2nd,
no incidents were reported and the vessels were ordered
to leave on July 8th.30 Both Hughes and Fletcher were
apprehensive at the prolongation of U.S. vessels in Mex-
ican waters on the basis of only anticipated violence.
Hughes feared that by retaining the vessels a situation
might be provoked to draw the United States into an un-
necessary intervention. Fletcher warned of the propaganda
which would link the Department's policy to the demands
of the American oil interests.31
Throughout July and August press dispatches mentioned
that petroleum exports by many companies in Mexico had
ceased. Meanwhile the large American oil companies in
Mexico quickly discovered that withholding shipment of
petroleum as a protest to the payment of the export tax
did not force Obreg6n to retreat as they had anticipated.
By August lst their representatives were holding confer-

ences with the State Department. Conscious of the diffi-

culties at Tampico the previous month Hughes and Fletcher

 

29Dawson to State, June 30, 1921, For. Rels., 1921,
448. Dawson was usually susceptible to rumors and to
an exaggerated version of actual conditions.

3OHughes had recommended that the vessels be with-
drawn. Hughes to Harding, July 8, 1921, Harding Papers
(Box 42).

31Robert H. Murray's letter to Byron S. Butcher,
forwarded to Obreg6n, July 14, 1921, AGN, 104-Rl-E8 Pg 15.

 

-l63-

were anxious to avoid a connection between the overall

policy of the Department and the Specific complaint of

the oil companies on the export tax.32 To prevent any

misunderstanding of the Department's policy, Hughes informed

the oil representatives that he did not wish to make a

formal diplomatic protest at the time on what he regarded

to be a non-political issue.33
The representatives of the oil companies were asked

whether they were willing to consider a satisfactory ad-

justment of the tax question.34 Receiving a favorable

35

reply, the State Department inquired of Obregén whether

he would directly negotiate with a committee represent-
ing the American oil companies concerned “on the distinct
understanding that no sacrifice of principle by either

36

side would be involved.“ Obregon affirmatively replied

 

32The State Department was already suspicious of

the activities of the American oil companies in Mexico.
See below, footnote 53.

33Hughes to Summerlin, August 6, 1921, For. Rels.,
1921, 452.

34Fletcher to Frederic N. Watriss, August 3, 1921,
For. Rels., 1921, 451.

35watriss had Sheepishly requested the Department
to broach the subject of negotiations to the Obregon govern—
ment so that it would appear that Obregon initially sought
a conference. watriss to Fletcher, August 5, 1921, For.
Rels., 1921, 451-452.

36Hughes to Summerlin, August 6, 1921, For. Rels.,
1921, 452.

 

 

-l64-

"with pleasure." The only restrictions which the State
Department placed upon the negotiations was that the newly
organized Committee of Oil Executives was to disregard
any discussion of a loan to Obregon (which was considered
beyond the purpose of their visit) and to avoid any implica-
tion of a tie with the Department. Fletcher specifically
emphasized that this committee was to be a business group,
not representatives of the State Department.37

From August 29th through September 3rd a series
of conferences were held in Mexico City between the pres-
idents of five major American oil companies in Mexico38
and the Mexican Minister of Finance Adolfo de la Huerta.
By the end of the conferences the five presidents had
agreed to guarantee the Mexican government an adequate
financial compensation from the petroleum production in

return for a reasonable share of profits.39 Upon resump—

tion of normal operations the oil companies were to pay

 

37Memorandum of Attorney H. N. Branch of an interview
with under Secretary Fletcher, August 24, 1921, Committee
of Oil Executives: Documents on ConferencesL_August-
September, 1921, NA, 812.6363/1231.

38The five presidents and their companies were:
W. C. Teagle of Standard Oil of New Jersey: Harry F.
Sinclair of Sinclair Consolidated Oil Corporation;
Edward L. Doheny of the Mexican Petroleum Company; Amos L.
Beaty of The Texas Company; and J. W. Van Dyke of the
Atlantic Refining Company. All were members of the Asso-
ciation of Producers of Petroleum in Mexico.

39See above, footnote 37, for the minutes of the
meetings.

 

 

-l65-

a specified production tax on the twenty—fifth of each
month for the petroleum produced the preceding month.
The export tax created by the June 7th decree was tempor-
arily suspended for a period of four months (until Decem-
ber 25th).4O

What had not been revealed publicly nor to the State
Department was the proposition advanced by the Obregén
government. The American oil producers at the conference
were told to organize a syndicate of bankers to buy up
on the open market a large amount of the foreign bonds
charged to Mexico. Because of the nearly ten year default-
ing on the payment of the interest due on the foreign
debt, Mexican bonds had depreciated on the open market to
only forty percent of their par value. The oil companies
involved were to turn in these depreciated bonds to the
Obregon government which would accept them at their par
value in lieu of full payment of the required production

taxes.41 In this way, as Thomas Lamont of the International

42

Committee of Bankers later explained it to the State

 

40Other details may be found in Summerlin to State,
September 8, 1921, For. Rels., 1921, 457-459.

41Turlington, op. cit., p. 283.

42This committee was an organizatial established
in 1919 to protect the interests of the foreign holders
of the outstanding securities and bonds attached to
Mexico's debt. See below, pp. 173-175.

—l66-

Department, the Obregon government was in reality reduc-

ing the petroleum production taxes for the companies at

least sixty percent and purchasing Mexico's outstanding

bonds at market prices--thereby reducing the foreign

debt.43
The undisclosed clause of the agreement reached in

September was uncovered when the value of the Mexican

bonds on the open market suddenly began to rise during

the month of September, and the Obregon government announced

that receipts of 2.5 million pesos from the petroleum

taxes had been deposited in the National Bank of Mexico

to begin the retirement of the foreign debt.44
When the International Committee of Bankers learned

of this clause in the September agreement, of which the

Committee of Oil Executives had purposely neglected to

inform them, it immediately demanded the cancellation

of that portion of the agreement between the Obregon

government and the oil companies involved. The Interna-

tional Committee condemned the agreement on both ethical

and semi-legal grounds. Not only was the Obregon govern-

ment breaking faith with its creditors, but the export tax

of June 7th had originally been designed as part of the

 

43Thomas W. Lamont to Hughes, September 23, 1921,
NA, 812.51/794.

44Davis, "Mexican Petroleum Taxes," 417.

-l67-

revenues pledged to the payment of the foreign debt.

The International Committee was not protecting the inter-
ests of its clients (for which it had been originally
formed) if it permitted the purchasing of bonds at low
rates when they were initially sold at par or near value.45
The terms in the bonds themselves stipulated that they
were to be redeemed at par value.

By the end of October the clever and shrewd scheme
of the Obregon government to have the largest American
oil companies in Mexico, who held the majority of the
petroleum production in the country, indirectly pay off
a considerable portion of Mexico's foreign debt failed
to materialize. If the payment in Mexican bonds had been
allowed to continue, Obregon would have reduced the foreign
debt but at the ultimate expense of the foreign bondholders.
Though the Obregon government admitted and defended this
procedure of purchasing Mexico's own bonds at market

prices,46 the oil companies involved returned to cash

payments for their taxes.

 

45Turlington, 0p. cit., pp. 283—284; New YOrk Times,
October 25, 1921, p. 33.

46New YOrk Times, October 29, 1921, p. 33. Lamont
reported that the failure of any negotiations on Mexico's
foreign debt in October, 1921, and later in February,
1922, was due to the insistence of the Mexican Minister
of Finance Adolfo de la Huerta on this very point. Summerlin
to State, October 21, 1921, NA,812.51/66l; Lamont to Fletcher,
February 21, 1922, NA, 812.51/719.

-l68-

In Spite of its partial failure, the export tax in
the June 7th decree was a well-conceived maneuver to ob-
tain for Mexico a favorable settlement of its foreign

debt47

and to reassert the hegemony of the Mexican Nation
over its natural resources. Although the export tax applied
to all oil companies, the Obregon government was attempt-
ing to bring only the large American oil companies into
negotiations either by force of circumstances or through

48 The task was not difficult since the Associa-

cupidity.
tion of Producers of Petroleum in Mexico were already

faced with the possibility of an import tax in the United

 

47Davis, pp. cit., 412.

 

48Having been requested by the independent oil pro-
ducers to raise the export tax to $.50 or higher per barrel,
Obregon replied that he did not wish to create an impres-
sion of hostility on the part of his government. Obregon
to American oil producer J. W: Link, June 28, 1921, AGN,
104-P1-P-13 Pq 15. This reply as well as others revealed
that Obregon was interested only in the large American
companies in Mexico. See the offer of "reciprocal advan-
tages” made initially in July to Edward L. Doheny's
Huasteca Petroleum Company, later to the subsidiaries of
Standard Oil of New YOrk and of New Jersey, by S. Valen-
zuela of the Department of Petroleum of the Ministry of
Industry, Commerce and Labor. Valenzuela to J. A" Brown
(Standard Oil), December 28, 1921; February, 1922, AGN,
lO4—Pl-P-12 Pq 15; 104-Pl-H Pq 14.

The two largest British companies, who had not been
invited to the conferences in August, considered their
interests affected by the agreement between the Mexican
government and the American oil companies. Obregon replied
that the formal agreement of September, 1921, extended to
all the oil companies in Mexico. S.W}A, Deterding, General
Manager of Royal Dutch Shell, to Obregon, December 16,

23, 1921, AGN, 104-P1-P—15.

-l69-

States. But the compelling argument was that the Mexican
export tax of June 7th49 was based both on volume and on
the average valuation of oil on the price quotations of
the New York market, which were remarkably high at the

time.50

In either case the hitherto clear profits of the
oil companies would decline.

The reaction of the oil companies had been made to
impress the Mexican government that they would suSpend

51

exportation rather than pay the tax. According to

Obregon's confidential agent in the oil fields of Tampico52
they hurriedly emptied their storage tanks in late June
by fleets of oil tankers. Since the empty tanks had the
capacity to store two months' production, the companies
would not have to close down their wells. This procedure
gave the surface appearance of two months' inactivity and
a legitimate justification for laying off many employees.

The companies continued drilling throughout the summer.

An investigation conducted by the U.S. war Department

 

49The Association had received a preview copy of the
June 7th decree by May 24th for their consideration. H. N.
Branch to Hughes, June 2, 1921, For. Rels., 1921, 447.

50

 

Cleland, The Mexican Year Book, 1920/21, pp. 299-

 

300.

51See above, footnote 27.

52Vladimir E. Dillon, "Report on the Oil Situation
During the Past Three Months,“ September, 1921, AGN, 104-
Pl-T-l Pq 15-1.

—l70-

during July and August in the oil fields of Tampico con-
firmed other discrepancies.53 In July the Huasteca Petrol—
eum Company, one subsidiary of Edward L. Doheny's Mexican
Petroleum Company, was financing rebel bands, provoking
disorders and labor unrest and spreading "Bolshevik" pro-

paganda in the Tampico oil fields.54

Doheny's Mexican
Petroleum Company and the subsidiaries of Standard Oil
played upon the "salt water" scare in the oil wells by
drilling wells where salt water was known to be located
or by using special pressure valves to force salt water

to the surface.55 The news of salt water in the oil wells

 

S3Major Joseph F. Cheston, appointed one of several
special agents of the war Department in the Tampico region,
mentioned in his report that an investigation on the activi—
ties of certain oil companies in Mexico had been ordered
by the State Department. His briefing was provided by
the Consul at Tampico (probably Dawson). Cheston forwarded
to Obregon in November a copy of his confidential report
of August 15th to the Chief of Staff in Washington. AGN,
104, Pl-P-ll. This was only one of several confidential
reports of this nature found in the Archivo General de
la Nacion (Obregon-Calles).

54Accounts by independent American oil companies
in Mexico and by officials of the Obregén government con—
sidered Doheny's Huasteca Petroleum Company to be the most
antagonistic and aggressive of all the American-controlled
oil companies in Mexico. For example, Huasteca often delayed
other smaller companies from drilling new wells by buying
up all the available pipe line connections in Mexico or by
siphoning oil from the oil beds of petroleum companies
adjacent to its properties. V. E. Dillon to Obregon,

July 23, 1922, AGN, lO4-Pl-T-l Pq 15-1; lO4-Pl-C Pq l4:
104-P1-P-12 Pq 15; 104-Pl-H Pq 14.

55In a report several months earlier to the stock-
holders of his companies in Mexico, Doheny had emphatically
denied rumors of the possibility of salt water invasion
in the oil wells of his companies. New YOrk Times,
April 7, 1921, p. 29.

-l7l-

tended to momentarily lower the price valuation of petrol-
eum on the New YOrk market.

Dismayed to learn that the June 7th decree was not
rescinded and that their storage tanks would be filled by
the end of August,56 those oil companies which had “sus-
pended" operations were especially anxious in the early
part of August to seek a settlement. The lure of future
profits, the stake in their investment and the desire to
exploit new oil fields57 brought the companies to a fur-
ther conciliatory position.58

The years 1921 and to an extent 1922 were the peak
years of petroleum production in Mexico. New petroleum

fields drilled during October and November of 1921 by

Doheny's interests, the Standard Oil subsidiaries, and

 

56V. E. Dillon to Obregon, September, 1921; October 7,
1921, AGN, 104-Pl—T-l Pq 15-1.

57Several American oil companies as well as the prin-
cipal British firms in Mexico, who were independent of
the Association of Producers of Petroleum in Mexico, usu-
ally or always complied with the legislation of the Mexican
government. These companies could easily obtain drilling
permits for new oil fields and other advantages. The
Financial Agency of the Mexican government in New YOrk
City had released statistics to show that the independent
American oil companies since July lst had increased their
exports and had drilled over 125 new wells. New YOrk
Times, July 28, 1921, p. 21.

58The world "oil scare," the fear of a British-Dutch
world petroleum monopoly, and the U.S. treaty with Colombia
ratified in April, 1921, (which opened up the Colombian
oil reserves), undoubtedly had some bearing on their deci-
sion, too.

 

-l72-

El Aguila (the principal British firm) brought in daily
outputs of sixty to seventy-five thousand barrels apiece.59
Doheny's Mexican Petroleum Company alone exported 3.8
million barrels in October.60 Crude and refined petroleum
production in 1921 reached its highest output to that time
with 193,397,582 barrels.61 This output and the nearly
corresponding ratio during 1922 temporarily ended the fear
of the exhaustion of Mexico's petroleum resources and

62

created an optimistic outlook for the future. When the

 

59New YOrk Times, October 23, 1921, VIII, p. 7;
November 15, p. 32; November 16, p. 6; November 23, p. 26;
V. E. Dillon to Obregdn, November 14, 1921, AGN, 104—Pl-
T-l Pq 15-1. Dillon reported that oil exports in November
were 17,571,011 barrels—-the second highest for 1921, most
of which came from the newly drilled oil fields. Dillon
to Obreg6n, December 14, 1921, AGN, 104-P1-T—l Pq 16-1.

60

 

New York Times, November 17, 1921, p. 28.

 

61Merrill Rippy, “The Mexican Oil Industry," Essays
in Mexican History, ed. Thomas E. Cotner, and Carlos E.
Castaneda (Austin: University of Texas Press, 1958), p.
254.

62A publicity book put out in 1922 by a Doheny sub-
sidiary, the Pan American Petroleum and Transport Co.,
contained estimates that within the united States over
250,000 oil wells averaged less than five barrels per day
while three hundred wells in Mexico (1920) averaged 1800
barrels per day. J. W; Archer (ed.), Mexican Petroleum;
Description of Properties of the Pan American Petroleum
and Transport Company and Principal Subsidiaries (New
York: Pan American Petroleum and Transport Company, 1922),
p. 231. Despite the apparent exaggeration of these sta—
tistics, Mexican wells in the early 1920's did have a greater
productivity on the whole than those in the United States.

According to Doheny's annual stockholder report in
June, 1922, his companies showed a net profit within one
year of $12,540,684.00. The price of his companies' stock
on the Open market rose to $8.50 in one day to make a total
rise of $53.00 a share within one week. New YOrk Times,
June 22, 1922, p. 23; June 23, p. l.

 

 

-l73-

occasion arose, the oil companies were in a more amenable
mood to discuss an export tax with the Mexican government

in the spring of 1922.

II

The settlement of Mexico's foreign debt had become
the subject of serious consideration by her creditors.
Since 1915 several unsuccessful attempts had been under-
taken to consolidate into one group the leading foreign
banking firms holding the security bonds againstMexico.63
AS events in Europe neared the armistice in November,
1918, pressure was being put upon the French and the
British banking houses in particular, who held the largest
share of Mexican securities, to present legitimate claims
against the Mexican government for payment. Fearing that
the banking houses of Europe might decide to act immedi-
ately without regard to the interests of American banking
firms, Thomas W. Lamont of the banking house of J. P. Morgan
and Company renewed the effort to establish a banking

64

consortium on Mexico. Upon receiving Lamont's proposal,

 

63Turlington, pp. cit., p. 269.

 

64Lamont to Legal Counselor for the State Department,

Frank L. Polk, November 18, 1918, NA, 812.51/547; Lamont
to Acting Secretary of State Frank L. Polk, December 13,
1918, For. Rels., 1919, 645—646.

 

-l74—

the State Department replied that it had no objection to
the formation of an "International Committee of Bankers"
designed to protect the legitimate interests of Mexico's
foreign creditors. Its only stipulation was that the

American bankers maintain the leadership of the prOposed

committee.65

Though American possession of Mexican secur-
ities was considerably less than that of the French and
the British banking houses, Lamont was able to convince
the latter to permit U.S. banking firms to exert a pre-
dominant position on all questions of major policy.

The International Committee of Bankers on Mexico,
officially organized on February 23, 1919, was unable to
take any action as U.S.-Mexican relations reached a criti-
cal point in the latter part of the year. Not until the
autumn of 1920 was it possible for the Committee to achieve

66 In addition to the main steer-

any structured program.
ing committee composed of ten American bankers and five
each for the French and the British, representatives of

Dutch, Swiss and later Belgian and German bankers were

invited to participate. A special committee was created

 

65Acting Secretary of State Frank L. Polk to J. P.
Morgan and Company, January 7, 1919, NA, 812.51/549.

66Lamont to under Secretary of State N. H. Davis,
September 28, 1920, For. Rels., 1920, 230-232. Lamont was
the Alternate Chairman of the Committee; J. P. Morgan the
Chairman. Other members of the Committee and its various
sub-committees are found in For. Rels., 1920, 231-232.

 

 

-l75-

to handle particular interests as railroads and industries
which had claims against Mexico. Since the united States
had not recognized the de la Huerta government, however,
the State Department discouraged any preliminary negotia-
tions with that government which might be politically
misconstrued, and advised against the granting of a loan.67
As early as February, 1921, Obregén had reopened
discussion with the International Committee and with var—
ious banking firms in New YOrk on an agreement between
Mexico and her foreign creditors. Lamont as the spokes—
man for the International Committee was hesitant to act
without the explicit approval of the State Department.
From his frequent visits to the Department it appeared
that Lamont wished to have any negotiations on Mexico's
foreign debt officially sanctioned.68 Because the recently
inaugurated Obregon government had not been recognized
by the Wilson administration, the Committee was concerned
about the security of any agreement with Obregén.69 More-

over the reputation of foreign and eSpecially American

bankers in Latin America as a whole was badly scarred,

 

67Acting Secretary of State N. H. Davis to'WOodrow
Wilson, November 2, 1920, Wilson to Davis, November 3,
1920, NA, 812.51/598a; Davis to Summerlin, June 23, 1920,
NA, 812.51/583.

68Turlington, pp. cit., p. 282.

 

69Lamont to under Secretary Fletcher, February 21,
1921, NA, 812.51/719.

-l76-

and the Committee wished to have both the backing and the
support of the united States to demonstrate that no illegal
or intimidating transaction was being forced upon the

70 As the Harding administration came

Obregon government.
into office, Lamont was more than willing to cooperate
with the State Department and notified Obregon that any
conference on Mexico's foreign debt was dependent upon
Obregon's ability to meet the requirements of the State
Department for recognition.71
Hughes had insisted upon a clear division between
the political and legal matter of diplomatic recognition
and on an economic issue as Mexico's foreign debt. The
Department's policy, as he explained it to Harding, was
based on the nonretroactive application of Article 27.
Security for property rights and for interests legitimately
acquired in Mexico was the gippquaup p for the establish-
ment of official relations between the two countries.72
While requesting that Mexico respect its international
obligations, the Department had not specifically or uncon—
ditionally demanded prior to recognition the immediate

payment of the foreign debt nor the settlement of claims

arising from the Revolution. The latter points should

 

70Ibid.

71Lamont's letters corresponded to the Department's
policy of June 7th.’ Lamont to Hughes, June 27, 1921, NA,
812.51/726.

72Hughes to Harding, March 25, 1922, NA, 812.00/25494.

-l77-

be resolved, Hughes continued, but by those individuals
concerned.

In reality there was not the clear-cut division
between the political and legal matter as viewed by Hughes,
and the economic or non-political issue. In the early
1920's as trade and investment Opportunities in Latin
America were being emphasized, the visits to Mexico by
American bankers and business men for the purpose of dis-
cussing loans and investments seemed to undermine the
Department's policy Of non-recognition.73 In September,
1921, Harding announced that the united States expected
to be consulted in advance of any proposed loans to Obregén.
under Secretary Fletcher advised Charge Summerlin in Mex-
ico that the State Department would not approve any loan
by American bankers to a government which was not recog-
nized by the united States.74

A general Policy on loans and investments by Ameri-

can bankers and investors to foreign countries was devised

in a Circular of the State Department in March, 1922.

 

73DeSpite its lack of recognition, in 1921 the Obre-
gOn government received credit of $2.5 million dollars
(with the Option of an additional $2.5 million) from the
Baldwin Locomotive'WOrks in Philadelphia, Pennsylvania.
The credit was extended for the purchase of new locomotives.
Turlington, pp. cit., p. 173.

74Fletcher to Summerlin, September 9, 1921, NA,
812.00/25169A.

 

-l78-

According to the Circular the Department was to examine
these loans to determine whether or not they possibly
conflicted with the current U.S. policy toward a particular
country.75 In its usual legalistic fashion the Depart-
ment stressed that its examination of loans and investments
was in no way an evaluation of the soundness, trustworth-
iness or liability of the private negotiation, nor would
the Department assume any responsibility for such a trans-
action. As Hughes informed Harding, the Department was
taking an "entirely impartial position," for example, in
regard to investments by American bankers in Mexico.76
Despite its legalistic position and attempted "ob—
jectivity," the Department had cemented rather than di-
vorced the legal and political issue of diplomatic recog-
nition from the economic or non-political issues of loans

and Mexico's foreign debt.77 The Department's policy

 

75For a more complete explanation (though the policy

was not limited to Latin America) consult Charles Evans
Hughes, Our Relations to the Nations of the Western Hemi-

sphere, pp. 54-73.

76Hughes to Harding, March 25, 1922, NA, 812.00/25494.

7Perhaps the Chief of the Division of Mexican
Affairs, Matthew E. Hanna, made the most realistic assess-
ment during Harding's administration of the relationship
between political and economic issues in foreign policy.
When de la Huerta was in negotiations with the bankers in
New York, Hanna thought that the Department "should remain
neutral" only on certain details in the negotiations.
Hanna implied that the Department had a reasonable interest
in this non-political issue which could not be separated
from its policy stand. Hanna notation on letter from
Summerlin to Hanna, May 15, 1922, NA, 812.51/747.

-l79-

contained in the Circular of March, 1922, was hardly the
impartial one that Hughes maintained. While it could
not physically prevent private loans to an unrecognized
government, the Department could and did exert a strong
moral pressure. Since loans conflicted with its policy
toward Mexico, the State Department used economic pressure
against ObregOn as a part of its so—called "political"
policy. The implications of the latest policy of the
State Department were not neglected as the Mexican Minister
of Finance Adolfo de la Huerta met with the International
Committee of Bankers in New York City during the Spring
and early summer of 1922.

Previous efforts during the fall of 1921 and the
early months of 1922 on an agreement between Mexico and
the International Committee of Bankers had proved futile.78
For ObregOn as well as a growing number of American bankers
and business men, a settlement of Mexico's financial dif-
ficulties was being viewed as an initial step in hasten-
ing diplomatic recognition from the united States. In
March, l922--perhaps in partial consequence to the State
Department's circular of the same month--Obregén suggested

that the de la Huerta might proceed to New YOrk City79

 

78See above, footnote 46.

79The chairmanship Of the Committee, held by J. P.
Morgan and Company, was in New York.

-180—

to negotiate with the International Committee of Bankers
on the consolidation of Mexico's foreign debt and on an

agreement concerning the debts of the Mexican railroads80

and loans contracted by the Porfirio Diaz government.81
Late in May de la Huerta was duly authorized to represent
the ObregOn government in a series of conferences with
the International Committee to begin the first week of
June.

Prior to his departure de la Huerta had secured
from the large American oil companies in Mexico an arrange-
ment for the collateral which was to be applied toward
payment of the foreign debt. Force of circumstances again
played to Obregén's advantage. The oil companies were
apprehensive at the forthcoming negotiations with the
International Committee which they realized would undoubtedly
involve petroleum taxes. Since the controversial clause
of the agreement of the previous summer had been discarded,
they wished to Obtain some guarantee of security for them—

selves. Essentially they desired a reasonable and a per-

 

80The Mexican Minister of Finance under Diaz, Liman-
tour, had purchased in 1903 controlling interest in three
of the four large railway systems of Mexico to prevent a
merger of two rival American interests into one American-
owned railroad monopoly. In 1909 he consolidated two of
the purchased railway systems into the Mexican National
Railways. Turlington, op. cit., pp. 238-240.

81In particular, a loan obtained for the develOpment
of agricultural and irrigation projects in Mexico. During
1907-1909 the securities sold were known as Caja de Prés-
tamos Bonds. Turlington, pp. 241-242.

-181-

manent commitment on the payment of export taxes and on
the future exploration and exploitation of petroleum in

Mexico.82

For ten days the Committee of Oil Executives83 met
in Mexico City with de la Huerta. The agreement reached,
which was to continue during the remainder of Obregén's
administration, provided that the criterion of valuation
for the petroleum export taxes was the actual selling price
of petroleum on the New YOrk market. In return the ObregOn
administration continued the advantageous arrangement for
the Oil companies made in the controversial clause of the
agreement of September 3, 1921, whereby the petroleum

84 under this

export taxes would be the bond market value.
favorable settlement the companies paid in cash, however,
rather than in the outstanding Mexican bonds.

With the new agreement from the Oil companies in
hand, de la Huerta arrived in New York for the opening

conference on June 2nd with Mexico's foreign creditors.

As briefed by Obregén, de la Huerta was to obtain as

 

82Hanna to Hughes, March 30, 1922, NA, 812.6363/1232.

83See above, footnote 38 for the Committee representa-
tives. The conference lasted from April 24th through
May 3rd. In reporting on the conference, W; C. Teagle
(President of Standard Oil of New Jersey) informed the
State Department that nothing prejudicial to its position
on Mexico was discussed. Teagle to Hughes, May 11, 1922,
For. Rels., 1922, 693-695.

84See above, p. 165.

—182-

satisfactory an arrangement as possible commensurate with
Mexico's dignity as a nation and within its economic poten-
tiality, and consistent, of course, with Obregon's poli-

85 In Mexico's financial straits de la

tical position.
Huerta had to achieve the consolidation and eventual redemp-
tion Of the foreign debt within the country's expected
capacity to pay. Since the export tax on petroleum had
been designated for the foreign debt, on the basis of the
recent petroleum production in Mexico de la Huerta was
able to offer a very Optimistic appraisal of the present
as well as the future estimated income from this tax.

By the end of the first week of talks, de la Huerta
reported to ObregOn that basic agreement had been reached

86 One of the ser-

on the major outline of Mexico's debt.
ious points in diSpute had been the loans obtained by the
Victoriano Huerta government. Huerta was regarded as

the usurper of the Revolution begun by Madero in 1910,
and Carranza's rebellion in 1913 had been the restoration
of the Revolution. All of the prominent men in the Mex-

ican government in the 1920's had sided with Carranza in

the struggle against Huerta. Mexico could scarcely be

 

85Official Documents Relating to the Agreement de
la Huerta-Lamont (Mexico: Imprenta de la Secretaria de
Relaciones Exteriores, 1924), pp. 7-8. Obregon's and de
la Huerta's correspondence between June 6th and July 5th
was compiled in this pamphlet.

86Ibid.. pp. loell.

-183-

expected to permit the recognition of debts incurred by
this traitorous Huerta government. In short, the accep-
tance of these debts would mean the overthrow of the
Obregon government. A compromise was reached whereby one
particular bond issue floated by the American banker

John W. de Kay, which was used to purchase weapons and
ammunition for Huerta, was excluded from the agreement.87
Other loans contracted by the Diaz, Madero and Carranza
governments were acknowledged. The Mexican government was
to assume all outstanding obligations of the Mexican Na-

88 Though the railways were to be returned

tional Railways.
to private management, the Mexican government remained
the majority stockholder (fifty-one percent) and could
appoint the majority of the Board of Directors.89
Once the preliminaries of the negotiations on the
debt had been discussed, de la Huerta broached the second
purpose of his visit to New YOrk City--the necessity of

a loan. Obregén had pressed the matter of a new loan

because his administration's budget was showing a deficit

 

87Turlington, p. 290. The other bond issues during
Huerta's administration were accepted.

88The anticipated income from the railways was ex-
pected to cover amply the claims against the system.

89Fred W} Powell, The Railways of Mexico (Boston:
The Stratford Co., 1921), pp. 25-35. Refer also to Howland,
Survey of American Foreign Relations, IV, 175.

—l84-

of nearly three million pesos per month on current Opera-
ting expenses.90 Moreover the reconstruction program lay

dormant without available funds.91

By June 13th, however,
the banking houses in following the recommended policy

of the State Department regarding foreign loans had re-
fused to discuss any possibility of new loans until after
the ObregOn government had been recognized by the united
States.

De la Huerta, on the other hand, seemed very con-
fident that once an agreement on Mexico's prior debt had
been signed there would be no substantial difficulty in
obtaining a new loan from the various banking houses.92
De la Huerta apparently considered that arrangements on
Mexico's foreign debt had been postponed too often in the
past. Although the bankers had been demanding, Mexico
might not have a similar Opportunity to achieve a settle-
ment in the future. Mexico's petroleum reserves which
were the security for the payment of the foreign debt had

been at their height of production within the past nine

months. The time was ripe for a definite settlement with

 

90Official Documents . . . de la Huerta-Lamont,
op. cit., pp. 16-17.

91Ironically there always seemed to be sufficient
funds allocated for the prOpaganda program abroad for
recognition.

92Official Documents . . . op. cit., p. 45.

-185-

Mexico's foreign creditors. ‘With such a settlement Mexico
would also be fulfilling her international obligations,
a point prescribed in the past U.S. policy for diplomatic
recognition. In his appraisal of the situation de la
Huerta presumed that he was in a good bargaining position
for diplomatic recognition from the United States. And
once Obreg6n had been recognized, there could exist no
obstacles to the easy access of loans from the bankers.
Consequently on June 16th de la Huerta signed what
became known as the Lamont-de la Huerta Agreement. Sub-
ject to Obregén's signature, the agreement provided that
the Mexican government recognize a debt of approximately
one billion pesos (half a billion dollars) in bonds and
securities which were mainly issued prior to the Revolu—
tion Of 1910, and in addition accept the railway debt of
over half a billion pesos (a quarter of a billion dollars).93
The Mexican government further acknowledged interest ar-
rears of four hundred million pesos and agreed to pay Off
this back interest over a four year period beginning in
1928. Regular interest payments on the entire debt were
to be resumed on January 1, 1923, with thirty million

pesos due that year. Over the next four years interest

 

93The full text of the agreement is found in Turling-
ton, Appendix VII, pp. 379-386. This agreement did not
include other obligations of the Mexican government as
personal claims, the agrarian debt, and so fofth.

-186-

payments were to increase by five million pesos each year.
The payment of the interest in full in addition to that
interest in arrears accumulated up to January 2, 1923,
would begin to be paid on January 1, 1928. To assure
security of payment the Mexican government agreed to turn
over to the International Committee of Bankers between
1923 and 1927 the export taxes on petroleum, and proceeds
of a ten percent tax levied on the gross revenues of the
Mexican railway system. There would be no foreclosure
on the Mexican National Railways provided that these were
returned to private management.94
This agreement, to take effect in December, 1922,
was a limited and delicate compromise.95 During the decade
that payment on the foreign debt had been suspended, Mexico
had been relieved of this pressure. She would now be
expected to enact a very strict and closely regulated
budget to meet her obligations. By the same token the
holders Of Mexican bonds, while undoubtedly elated over
the resumption of payment, still faced a sacrifice with
the gradual and long-term repayment of the Mexican debt.

De la Huerta urged ObregOn to immediately ratify

the June 16th agreement. To soothe ObregOn's doubts about

 

94Up to this time the National Railways, which had
been taken over by the Carranza government, continued to
be operated by a department within the Mexican government.

95Turlington, op. cit., p. 291.

-187-

Mexico's financial capacity to comply with the agreement,
de la Huerta pointed to the petroleum export taxes for
1923 which were estimated at twenty-four million pesos.96
The ten percent from the railway systems' gross receipts
would make up the difference for the thirty million deposit
required for that year. De la Huerta also reminded ObregOn
that the oil companies in Mexico were required to pay the
Mexican government the sum of twenty million pesos for
petroleum "exploitation rights" in 1923. In 1924 he pre-
dicted that the petroleum export taxes and the railway
system receipts would increase as petroleum production and
business were expanded. AS the days passed, de la Huerta's
initial overconfidence gradually turned to impatience and
irritability at ObregOn'S indecision.

ObregOn did not doubt the word of his Finance Minister,
and he sincerely desired a settlement on the foreign debt.
But by the first of July he still expressed hesitation
over Mexico's capacity to meet the terms of the agreement

97

esPecially without new loans. ObregOn was concerned too

 

96Official Documents . . ., Op. cit., pp. 27-28.

97The acquiring Of new loans to assist in the initial
renewal of the payment Of the foreign debt was a Short-
run measure only. In reality, it would not reduce but
rather contribute to the debt. De la Huerta was positive
that Mexico could meet her obligations on the strength of
taxation alone. Loans could be used for the Operating
expenses of the government as well as for the reconstruc-
tion program.

-188-

with the clause in the agreement Obliging the Mexican
government to return the Mexican railways to private man-
agement in the same condition as the Carranza government

had taken them over.98

Because the Mexican railroads had
been badly damaged by the Revolution, compliance with
this provision involved expenditure of large sums of
money. Before he Signed the agreement, ObregOn thought
it to be advisable to have the suggestions of his cabinet
and eventually the approval of the Mexican Congress.
Instead of returning to Mexico City as Obregon had
advised, de la Huerta remained in New York City to have
conferences with the representatives of the American Oil
companies in Mexico and then to proceed to washington for
informal interviews with President Harding, Secretary of
State Hughes and a number of Senators. De la Huerta un—
doubtedly considered that he had in a sense disappointed
Obregon--not so much by the terms of the agreement reached
in New York City but by the failure to obtain a loan.
Because ObregOn had been so insistent on the necessity of
a loan, de la Huerta wished to reassure and to convince
ObregOn that a loan was possible. At the same time it

appeared that de la Huerta had also considered making a

further effort on behalf of Obregén's recognition. Though

 

98Dulles, Yesterday in Mexico . . ., pp. 152-153.

-189-

de la Huerta acted independently and unofficially, he did
notify ObregOn of his intentions. Obregdn reluctantly
approved de la Huerta's perseverance.

In a conference with representatives Of the leading
American Oil companies in Mexico de la Huerta requested
a loan of twenty-five million pesos. The form of the loan
was to be an advance of the petroleum export taxes for

99 The oil representatives who

each company involved.
wanted reciprocal advantages were favorable to the idea

of a loan, but desired not to take any action without the
sanction Of the State Department. Both Hughes, and Hanna
of the Division of Mexican Affairs, were in agreement
that, since the outstanding issues between the two coun—
tries on Article 27 and on the negotiation Of a treaty
had not been settled, the United States was in no position

100 In accordance with its statement

101

to recognize Obregén.
of March 3rd on foreign loans the State Department could
thereby not approve of a loan to the unrecognized Obregén

government. If the oil companies wished to make a loan

to this government, they did so at their own financial

 

99Hanna to Hughes, July 10, 1922, NA, 812.6363/1227.

100Memorandum of a conference between Hughes and
H. N. Branch, legal representative of the American oil
companies in Mexico, July 11, 1922, NA, 812.6363/1228.
Hanna to Hughes, July 14, 1922, NA, 812.51/901.

101See above, p. 178.

-l90-

risk (which they would essentially have to do regardless
of the circumstances). To the relief of the State Depart-
ment and the International Committee of Bankers, the oil
representatives declined the loan requested by de la
Huerta.102

From New YOrk de la Huerta proceeded to Washington

103 His purpose was

for informal and unofficial talks.
to discuss the ultimate Obstacle to the acquisition of

a loan--the non-recognition of the ObregOn government.
Following a brief audience with Harding, de la Huerta con—
ferred with Hughes on July 18th.104 De la Huerta presented
a plan for diplomatic recognition. Hughes was to send

a letter to Obregén to invite his correspondence. This
letter would constitute direct and immediate recognition;

in return Obregén would send a reply letter to Hughes as

a written pledge of enacting the requirements of the United

 

102Hanna feared that a loan might be used as propa-
ganda to embarrass the Department's position. Hanna to
Hughes, July 14, 1922, NA, 812.51/901.

103De la Huerta had broached the subject of a con-
ference with Harding and with Hughes in the first part of
June through Elmer Dover of the Treasury Department (a
former Obregén agent). Dover to Harding, June 13, 1922,
Hardipg Papers (Box 167). The reply was positive though
the Department had received word from the Mexican Foreign
Office that de la Huerta had not been commissioned for
this task. Hughes to Harding, July 12, 1922, Harding
Papers (Box 167).

104Hanna's Memorandum of a conference between Hughes
and de la Huerta, July 18, 1922, For. Rels., 1922, 670—
673.

-19l-

States. Unimpressed, Hughes merely interpreted de la
Huerta's proposal and his other viewpoints as a reitera-
tion of ObregOn's Official position.105
Meeting with no success at the State Department,
and encouraged by the favorable accounts in some U.S.
newspapers and magazines on the Lamont-de la Huerta Agree—
ment,106 de la Huerta held a conference with several Sen-
ators, mostly from the Southwest. The result was an un-
successful proposal for a joint commission to negotiate
on an arrangement for Obregdn's recognition.107
Throughout the month of July de la Huerta continued
his urgent requests for ObregOn's signature to the Agree—
ment of June 16th. From their correspondence it seemed
that ObregOn's indecision put de la Huerta in an embarrass-

108

ing position. De la Huerta kept emphasizing to ObregOn

 

105Hughes to Summerlin, July 21, 1922. NA: 711.12/450a.

106The agreement was viewed as removing an obstacle
to successful business enterprise in Mexico, the reestab-
lishment of credit, and a step toward early diplomatic
recognition. See the synopsis of press accounts in the
Literary Digest, July 1, 1922, p. 16; New York Times,
June 17, 1922, p. 12; refer also to Nation, July 5, 1922,
p. 5; June 28, pp. 764-765. Less optimistic was Independent,
July 8, 1922, PP- 572-573.

107

 

 

Hanna to Hughes, July 29, 1922, NA, 812.00/26031.

108The pamphlet Official Documents Relating to the
Agreement de la Huerta-Lamont revealed a growing strain
in the relationship between de la Huerta and ObregOn. De
la Huerta showed a certain fluctuation of emotionalism
and Optimism; Obregén the experienced statesman, more
reserve and caution.

These printed documents were released in May, 1924,
after the de la Huerta revolt against ObregOn in December,

~192-

the word "asegurado" (assured), that a loan would be made

109 Obregdn remained skep-

after the agreement was signed.
tical of the good faith and sincerity of the International
Committee Of Bankers which acting as a group was protect-
ing its own interests.110

ObregOn's illness in July and some dissension within

his cabinet111

over the Lamont—de la Huerta Agreement
delayed the eventual signing. Whether partially accept-
ing the assurances of his Minister of Finance on a forth-
coming loan, or foreseeing potential political advantages
for seeking recognition from the United States, Obregén

signed the Lamont-de la Huerta Agreement on August 8th.

His signature rested upon a certain risk, for compliance

 

1923. See above, Chapter VIII. While the contents of
the documents portrayed a fairly accurate picture, the
documents were a carefully edited selection which put the
overall burden Of the Agreement of June 16th directly on
de la Huerta. As ObregOn would later charge, the Lamont-
de la Huerta Agreement placed a heavier burden upon the
Mexican government than it could bear without the loans
which never materialized.

109Official Documents . . ., pp. cit., pp. 47—54.

 

llOIbid.I PP. 54-55.

111While in favor of the Agreement to demonstrate
Mexico's good faith toward her creditors, Minister of
Foreign Relations Alberto J. Pani considered some of its
terms as serious and unnecessary defects which far surpassed
Mexico's capabilities. Pani was later asked to relinguish
his opposition to the agreement. Alberto J. Pani, Mi
Contribucién a1 Nuevo Regimen (1910-1933) (Mexico: Edi-
torial ”Cvltvra,‘ 1936), pp. 281-283.

—193-

with the terms of the agreement was considerably dependent

. , 112
upon Mecho s petroleum reserves.

While petroleum
production was still in its peak in 1922, especially in

the newly explored fields, there were occasional warnings
of depleted wells or those which had reached salt water.113
How long Mexico's seemingly unlimited natural resources of
petroleum would last at the present rate of output was
Open to speculation. If recognition by the united States
did not follow shortly, Obregén would be without the loans
he considered necessary to keep his government function-
ing and committed to its international obligations on the

foreign debt.114

 

112It should be noted that petroleum production
provided only thirty-one percent of the total revenue for
the Mexican government. U.S., Bureau of Foreign and Domes-
tic Commerce, “Mexico,” Supplement to Commerce Reports,
Trade and Economic Review for 1922, NO. 42, p. 10.

113Foreign Minister Pani explained to General Calles,
the head of the Cabinet, that a loss in petroleum produc—
tion meant a corresponding loss in revenue for the Mexican
government. Pani to Calles, August 14, 1922, AGN, 104-
Pl—T-l Pq 15-1.

Over a period of ten months in 1922 petroleum pro-
duction in Mexico had gradually declined from its 1921
level, with a consistent loss registered since July. ‘Ngg
YOrk Times, November 20, 1922, p. 4. The total production
for 1922 was 182,278,457 barrels, a decrease of 11,119,125
barrels from the total of the previous year. Summerlin
to State, April 5, 1923, For. Rels., 1923, 526.

114When questioned in the Mexican Senate on the Agree—
ment of June 16th, de la Huerta in effect admitted that
without continued petroleum production, improved economic
conditions in the country and subsequent diplomatic recog-
nition from the United States, the Obregén government
could not be able to make the necessary payments. Hanna
to Hughes, October 3, 1922, NA, 812.51/908.

—194-

Notifying de la Huerta that the Agreement had been
found acceptable to the Cabinet, ObregOn considered that
it was likewise the reSponsibility of the Mexican Nation
and should thereby be ratified by the Mexican Congress.
In his annual address to the Mexican Congress on September
lst, ObregOn upheld the Agreement as an example of the
step which the Mexican government had undertaken toward
fulfilling its international Obligations. On September 16th
the Lamont-de la Huerta Agreement was approved by the Mex-

115 and ratified by both houses of Congress.

ican Senate
The Agreement was officially promulgated by an executive
decree on September 29th.

Thomas Lamont found the agreement of June 16th in
accord with Mexico's sovereignty and satisfactory to her

creditors.116

The implementation of the Agreement remained
a question to be solved. As Minister of Finance, de la
Huerta had played a key role both in the negotiations

with the Oil companies in the September 3, 1921, agreement
and later in the March, 1922, settlement and in the nego-
tiations with the International Committee of Bankers. His

task had been to find some honorable means for the Mexican

government to seek an arrangement with its creditors. SO

 

115AS provided for in Article 76, paragraph I of
the Constitution of 1917.

116Lamont to Hughes, June 19, 1922, NA, 812.51/914.

-195-

well pleased with the agreement reached in June and so
eager for its approval, de la Huerta may have deceived
himself by mistaking sympathetic words of a loan from
the bankers for promises. Desiring the permanent settle—
ment of Mexico's foreign debt, he seemed to have believed
that the agreement would automatically work out. Nonethe-
less, his anticipated hOpes for a loan from the bankers
once the agreement was ratified were not fulfilled. De
la Huerta had brought back to Mexico an agreement which
might mortgage Mexico's future in its capacity to pay,
and.which did become part Of the political turmoil in
Mexico by November, 1923.117
One factor, perhaps, was in his favor. The Lamont-
de la Huerta Agreement was one more example which Obregon
could point to as fulfilling its international Obligations.
While this agreement was strictly a private negotiation
and did not in itself bring diplomatic recognition from
the united States, it did provide one further piece of
ammunition in the arsenal of the opponents of the State
Department's policy toward Mexico. The Opponents were

becoming stronger and more annoying during 1922 as the

 

ll7The Lamont—de la Huerta Agreement remained in
effect about one year. With the de la Huerta rebellion
in December, 1923, the ObregOn government could no longer
meet the terms of the agreement, and it was temporarily
suspended. A new agreement concluded by Lamont and
Alberto J. Pani became effective in 1925.

-196-

Department's hard-line policy was forced further on the
defensive. Eventually by the autumn of 1922 signs of a
change of attitude became increasingly evident in the

State Department toward the possibility of a compromise.

CHAPTER VI

TOWARD A SOFTENING LINE AND COMPROMISE

In the early months of 1922 the prospect for Obregén's
recognition appeared somewhat more pessimistic than in
the previous autumn. Reports received in the State De-
partment apprehensively warned that there seemed to be
growing discontent in Mexico with the ObregOn government.l
Bandits and revolutionary bands were becoming more active,
labor unions with their rapidly increasing membership were
demanding the immediate implementation of Article 123 of
the Constitution of 1917, and strikes among industrial and
railway workers were more frequent.2 Burdened with a

high cost of living and low wages, Mexico was also entering

 

1The Department Officially requested all its con-
sular officers in Mexico to relay reliable data on condi-
tions in each consular district. State Department to all
U. S. consular Officers in Mexico, April 14, 1922, NA,
812.00/25536a.

2As Chief of the Division of Mexican Affairs,
Matthew E. Hanna presented a twelve page memorandum to
Hughes based on reports received from various U. S. con-
sular Officers in Mexico. Hanna to Hughes, January 26,
1922, NA, 812.00/26021.

-197-

-198-

into a business recession.3 Wages for government employees
and schoolteachers were behind in payment.

In the countryside the agrarian reform program was
slow and cumbersome. The program itself was fairly selec-
tive to avoid the disruption of the whole agricultural
economy. Moreover an unusual drought had already begun
to cause a food crop chortage.4 Well operating and pro-
ductive lands were obviously not being expropriated. TO
the dismay of the recipients, the payment for lands which
were expropriated was made in long-term agrarian bonds.
For some time the Governors of various states had been
enacting agrarian and labor legislation which was politi-
cally embarrassing to the federal government in Mexico
City. Because of several resignations in his cabinet,

there was even rumor Of a lack of confidence in ObregOn.5

 

3One cause given for the recession was a too rapid
overexpansion program in certain areas of the economy which
led to a decrease in imports, then a decline in exports.
U.S., Bureau of Foreign and Domestic Commerce, "Mexico,"
Supplement to Commerce Rpports, Trade and Economic Review
for 1921, No. 20, pp. 1-15; "Mexico," Supplement . . .
for 1922, No. 42, pp. 1-32.

 

4Of ObregOn's four years in office, the year 1922
showed a definite decline from the previous year in the
agrarian reform program. During 1923 the land distribu—
tion total rose to a little more than the 1921 level, but
in 1924 it more than doubled itself. See the statistics
in Frank Tannenbaum, The Mexican Agrarian Revolution (New
York: The Macmillan Company, 1929), p. 329.

5According to John W; F. Dulles, these resignations
were primarily over matters of policy and disputes among
the members of the cabinet. Dulles, op. cit., pp. 100—128.

-199-

If the reports implied a decline in ObregOn's popu-
larity and prestige, if not power, no mention was made
of the fact that the absence of diplomatic recognition
was perhaps a contributing factor. The Chief of the Divi-
sion of Mexican Affairs concluded in his memorandum of
January 26th that the State Department had given careful
and sympathetic consideration to every gesture toward
recognition made by the Mexican government.6 But the
Department's policy, he added, was as basically sound as
when it had been formulated shortly after Harding took
office.7

While no agreement was reached between the two gov-
ernments during 1921, Minister of Foreign Relations
Alberto J. Pani did offer a possible opening into the dip-
lomatic impasse. Unnoticed in the conventional correspon-
dence between the two governments was a draft of a claims
convention proposed by Pani in his note of November 19,
1921. Although clothed in the usual formal diplomatic
language, upon closer examination it provided for an inter-
pretation which the ObregOn government hoped would con-
vince the United States of Obregén's sincere desire to

seek recognition on its terms.

 

6See above, footnote 2.

7A similar attitude was expressed by Charge Summerlin
in Mexico City. Hanna to Hughes, April 11, 1922, NA,
812.00/26097.

-200-

The whole question of the settlement of claims of
damages to the life and property of Americans, as well
as to other foreigners, had been dangling since 1913.
Carranza had presented to the united States and to other
governments concerned several proposals for a mixed claims
commission. This type of commission was a normal opera-
tion of international diplomacy for the settlement of
such claims. The Wilson administration by February, 1920,
was favorably diSposed toward these proposals but Carranza's
overthrow prevented any serious steps being undertaken.
Afterwards, ObregOn on several occasions announced his
intention to enter into negotiations with those governments
whose citizens had legitimate claims against Mexico. On
July 13, 1921, formal invitations were extended by Mexico

8

for a permanent mixed claims commission to be established

and operated under the normal procedures of international

10

law.9 Receiving no reply, the ObregOn government several

 

8In addition to the united States, thirteen countries
in Europe received invitations. By the eventual claims
conventions concluded in 1923-1924 only France, Great
Britain, Germany, Italy and Spain, besides the United
States, presented and received settlement of claims from
the Revolution. Abraham H. Feller, The Mexican Clahms
Commission, 1923-1934; A Study in the Law and Procedure of
International Tribunals (New York: The Macmillan Company,
1935), pp. 19-20, 23-24.

9The Mexican Embassy in Washington to the State
Department, July 13, 1921, For. Rels., 1921, 504-505.

10The European countries apparently awaited the recom—
mendation of the united States on the matter.

 

-201-

months later in one of its general memoranda to the State
Department on the matter of recognition included two ten-
tative prOposals on claims conventions.11
The first proposal provided for a special claims
convention to establish a commission composed of repre-
sentatives of both countries for the purpose of examining
claims of damages specifically resulting from the Revolu-
tion presented by American citizens against Mexico and
for awarding appropriate indemnities. In this convention
the time limits of the Revolution were fixed between
November 20, 1910, and May 31, 1920. In the Opinion of
the ObregOn government this proposal clearly demonstrated
its intention to remove Obstacles to cordial relations
between the two countries. Upon the joint signing of
the Special claims convention, Obregén would be "implicitly
recognized by the Government of the united States, and
relations being thus reestablished without impairment to

."12 ‘With this

the dignity and sovereignty of Mexico .
implicit recognition the ObregOn government could on the

basis of legal equality13 with the united States then

 

llThe memoranda and proposals were dispatched by
Summerlin to the Department, November 21, 1921, For. Rels.,
1921, 605-614.

12For. Rels.L 1921, 507.

 

13The legal equality Of states under international
law was Obtained by diplomatic recognition.

-202-

conclude a general claims convention. Another mixed com-
mission would be created to determine all pending claims
(exclusive of the revolutionary decade) of both American
and Mexican citizens against either country for injuries
since the previous general claims convention between the
united States and Mexico in 1868.

The signing of the Special claims convention which
implicitly recognized the Obregén government was its
counterproposal to the U.S. Treaty of Amity and Commerce.
The interpretation to be given to the convention showed
the willingness of the ObregOn government to make the
private compromise often concluded between contending
governments. The special claims convention would be
arranged and settled only to the benefit of the American
claimants, as Pani pointed out, and not according to the
principles of international law as would be announced.14
The terms "equity" and "magnanimity" in Article 2 Of the
convention were comprehensive enough in scope to cover
most alleged claims. The indemnities allotted for damages
were fairly generous.15 For example, by Article 5 an award

for a personal injury was not to exceed that which would

be conceded by the "most favorable law" in the united

 

l4For. Rels., 1921, 507.

 

15Specific time limits of payment for indemnities
would have to be graduated according to Mexico's finan-
cial capabilities.

—203-

States relating to accidents.
While it brought no immediate results, the proposed
draft of the special claims commission reopened a series
of informal and unofficial notes between Hughes and Pani
during the first half of 1922. Hughes wanted the proce-
dure involved in the special claims convention to be clar-
ified, and requested what explicit evidence of good faith
the Mexican government could offer towards its usage as
the instrument of recognition. Pani replied that the
united States was to sign the first claims convention
(the special claims convention) which implicitly recog-
nized ObregOn; immediately afterwards the second claims
convention (the general claims convention) would be signed.
After diplomatic recognition had been fully accorded by
the exchange of authorized representatives (ambassadors),
ObregOn would negotiate a treaty of amity and commerce as
proposed by the united States, provided that it contained
no clause fundamentally in Opposition to Mexican laws.16

Hughes seemed favorably inclined toward this procedure.

His only stipulation was the unremitting demand for the

 

l6Hughes note to Summerlin, January 25, 1922, For.
Rels., 1922, 639. Ironically for the State Department,
the basic structure and procedure of the two claims con-
ventions proposed by the ObregOn government would become
part of the eventual settlement between the United States
and Mexico in 1923.

l7Hughes's reply to Pani, Hughes to Summerlin, Feb—
ruary 4, 1922, For. Rels., 1922, 640, 646-652.

 

17

-204-

signing of the Treaty of Amity and Commerce as previously
drafted by the united States. In his estimation the sign-
ing of the claims conventions was futile unless the rights
of U. S. citizens acquired prior to the promulgation of
the Constitution of 1917 were properly safeguarded. If
the ObregOn government could give assurances contained in
the claims conventions, Hughes saw no logical reason why
it could not simultaneously provide assurances for the
adequate protection of American citizens and their property
rights in Mexico. Nor did there exist in Hughes's mind

at least any barrier to Obregén's immediate Signature on
the Treaty of Amity and Commerce,18 when according to the
Mexican Constitution the executive was empowered to make
treaties with foreign governments subject to the approval
of the Senate.

Over the next several months Pani sought to impress
upon the State Department that the problem for the Obregén
government involved more than the legal and technical details
in the Treaty of Amity and Commerce.19 The ObregOn govern-
ment was more than willing to accommodate the requirements

of the United States, but only upon terms acceptable to

 

 

18Hughes to Summerlin, April 15, 1922, For. Rels.,
1922, 651.
19

Pani's replies to the State Department, Summerlin
to State, February 9, 1922, For. Rels., 1922, 641—646;
May 5, 652-659; May 25, 660-669.

 

-205-

Mexico's dignity and sovereignty. As interpreted by
ObregOn, this statement meant anything which could not

be used by his political enemies as a pretext for the
overthrow of his government. ObregOn, argued Pani, could
scarcely ignore the domestic political situation and the
Mexican psychology. For these reasons the claims conven-
tions had been proposed as a substitute for the Treaty of
Amity and Commerce as the basis for renewing diplomatic
relations. ObregOn's emphasis was on the necessity of
"spontaneity" in the recognition Of his government. The
claims conventions as the basis for recognition and the
renewal of formal diplomatic relations would not give the
impression in Mexico (as would the treaty proposed by the
United States) of a recognition dictated by the united
States. The claims conventions would be an executive
agreement mutually entered into by both governments on

an equal basis. Though executive agreements were subject
to the approval of the Mexican Senate, they did not con-
vey the same hard-bound commitment as did a treaty. More-
over they technically bound only that government which
entered into the agreement. By this means ObregOn could
achieve diplomatic recognition on the least possible pol-
itical risk, while simultaneously taking into due consider-
ation the Mexican political psychology which the State
Department failed to appreciate.

By the end of July Hughes still maintained that

—206—

Mexico's internal conditions and ObregOn's assurances
were insufficient as a substitute for the Treaty of Amity
and Commerce.20 By this time, however, Hughes was willing
though reluctantly to at least acknowledge ObregOn'S pol—
itical Objections to the treaty. If the Treaty of Amity
and Commerce was unacceptable, Hughes opened to discussion
the particular form of assurances which ObregOn would
give against so-called confiscatory measures in Mexico.
Hughes still recalled that for Carranza's recognition

the Wilson administration had accepted broad promises
contained in a diplomatic note. After his recognition

the Wilson administration argued that these promises were
later supposedly disregarded or violated. To avoid what
he considered to have been an initial mistake, Hughes
demanded assurances to be given in a formal agreement
which bound the ObregOn government.

While the Mexican Foreign Office and the State De-
partment were exchanging diplomatic notes, the agitation
for Obregon's recognition was increasing in the united
States. By the spring of 1923 at least twenty-three states
had sent resolutions to Washington requesting Obregén's
recognition. Business organizations, chambers of commerce,

manufacturers and wholesalers, bankers and financiers--

 

0Hughes's note to Pani, Hughes to Summerlin,
July 28, 1922, For. RelspL_l922, 674-680.

—207-

all of which were doing business in Mexico (mainly from
New YOrk, the mid-West or the West coast)--complained
that their business relations with Mexico were handicapped

by ObregOn's non-recognition.21

A few prominent business
men as Chairman Elbert H. Gary of the U. S. Steel Corpor-
ation and President G. H. Gibson of the Chicago Steel Car
Company made complimentary comments in public addresses

and in the press about the accomplishments and progress

in Mexico which warranted ObregOn's recognition.22 En-
couraged by the resolutions passed by the Tri-State Associa-

tion of Credit Men representing Texas, Arizona and New

Mexico,23 credit associations in Indiana and Montana pressed

 

21Refer to the letters in NA, Decimal File Group
711.12/. ObregOn was also conscious of this sentiment
from the number of letters and the literature forwarded
by various American business men. AGN, 104-R1-E—l; 104-
R1-E-2; 104-R1—E-5; 104-R1-E9; 104-P1-P—8. A few American
companies which had suffered serious personal and prOperty
losses in Mexico actively supported the State Department's
firm policy. For example, Howard L. Oliver of the Oliver
Trading Company to the State Department, July 21, 1922,
NA, 7711.12/448.

22Judge Elbert Gary's comments rated a first page
spread in the Sunday feature section of the New YOrk
Journal-American (a W. R. Hearst newspaper) on March 31st
and on April 9th. Hanna to Hughes, April 10, 1922, NA,
812.00/26097; see the clippings in AGN, 104—R1-E-5 Pq
15-1.

23T. E. Blanchard to Hughes, February 24, 1922, NA,
711.12/393; March 10, 1922, NA, 711.12/406.

 

-208-
for Obregén's recognition.24
The American Federation of Labor, active in Mexico's
labor organizations, found no valid reason for delaying
recognition to a government which had maintained law and
order and respect to American life and property while simul—
taneously retaining the goals of the Revolution.25 State
Federations of Labor and Trade and Labor Councils expressed
a similar sentiment in numerous resolutions.26
In the press and periodicals were further arguments
on the irrationality of the continued non—recognition of

7

Obregén.2 The general sentiment of this portion of opinion

 

24How far the influence of propaganda for ObregOn's
recognition had progressed may be assessed by the fact
that several American rubber companies not located in the
Southwest had endorsed the resolution of the Tri-State
Association of Credit Men. See NA, Decimal File Group
711.12/ for 1922.

25Report of Proceedings of the 42nd Annual Convention
of the AFL, 1922 (Washington, D.C., 1922), Resolutions
No. 31, 103. AFL President Samuel Gompers reflected an
attitude similar to certain liberal periodicals by his
insinuation that the U.S. policy toward Mexico was dir—
ected by American capitalists and bankers. American
Federationist, March, 1922, 97-99.

26For example, those in the states of Massachusetts,
Pennsylvania, Indiana, Illinois, Wisconsin, Louisiana,
Texas, and California. AGN, 104-R1-E-15 Pq 16.

27See the survey of a majority of newspaper editorial
Opinion in the Literary Digest, April 8, 1922, p. 16.
Editorials in the New York Times were generally more con-
servative in agreeing with the overall policy of the State
Department; yet they praised ObregOn's achievements as a
step toward recognition. New York Times, January 26, 1922,
p. 16; February 26, II, p. 4; September 4, p. 12. Refer
also to the articles and editorial comments in Century

 

-209-

was that a government which had remained in power for over
a year without recognition, had given some degree of peace
and stability to the country, and had shown itself willing
to fulfill its international obligations, adequately satis-
fied basic requirements for diplomatic recognition. One
of the more active campaigners for Obregon's recognition
was the newspaper magnate William Randolph Hearst, who
visited Mexico in the fall of 1921.28 Over the next year

and a half the newsPapers and magazines controlled by his

syndicate,29 in addition to a series of articles written

 

Magazine, March, 1922, pp. 716-726; July, 1922, pp. 373-
384; Nation,.May 10, 1922, pp. 561-562; New Republic,

May 24, 1922, pp. 356-358; Illustrated WOrld, August, 1922,
pp. 819ff; Freeman, September 13, 1922, n.p.; Current
History, September, 1922, pp. 1010-1021; Sunset, the Pacific
Monthly, January, 1923, p. 52. The Pan American Magazine
devoted its October, 1922, issue to Mexico.

Of the major periodicals only the Independent, whose
articles were written by the Managing Editor of the Na-
tional Association for the Protection of American Rights
in Mexico and other similar organizations, reflected the
necessity of a continued non-recognition policy. Inde-
pendent, April 22, 1922, pp. 383-384; May 27, pp. 480-481;
September 16, pp. 119-120.

28A report from the Bureau of Investigation, Depart-
ment of Justice, revealed that Obregén had supposedly
contracted Hearst for the sum of $210,000 to publish propa-
ganda for the recognition of his government. Attorney
General H. M. Daugherty to Harding, February 23, 1922,
Harding Papers (Box 167).

29Refer to the list of neWSpapers, magazines and
news services owned by Hearst in John K. Winkler, W. R.
Hearst: An American Phenomenon (New York: Simon and
Schuster, 1928), p. 319.

 

 

 

 

—210-

by Hearst himself,3O

reflected a highly Optimistic attitude
toward conditions in Mexico and the desirability of recog-
nition for ObregOn.

Within the U.S. Congress ObregOn was Slowly gaining
more sympathy. Representatives Thomas Connally (D, Tex.),
Meyer London (D, N.Y.), and Carl Hayden (D, Ariz.) were
urging immediate recognition before the State Department's
policy forced the collapse of the most capable leader
Mexico was ever fortunate enough to have in Office.31
Some dissension was expressed by Representative Claude
Hudspeth (D, Tex.) who agreed wholeheartedly with the

32

Department's policy. In the Senate only William King

(D, Utah) presented an extensive argument against ObregOn's

. . 33
recognition.

 

30Four articles by Hearst were reprinted in a pamphlet
It is Time to Recognize the Present Stable Government of
Mexico (New York: Cosmopolitan Book Corporation, 1922);
In these articles Hearst attacked "schemes" by selfish
banking and oil interests against the ObregOn government.

31Cong. Record, 67th Cong., 2nd Sess., February 23,
1922, 2972-2976; April 6, 5125-5126. In his appraisal of
the ObregOn government the U.S. Consul at Ciudad Juarez,
Mexico, was doubtful whether "a more stable government under
any other leader [ObregOn] would be possible in Mexico."
John W} Dyer to State, February 24, 1922, NA, 711.12/394.
A similar sentiment had been expressed earlier by business
men who had visited Mexico. New YOrk Times, October 21,
1921, p. 23.

32Cong. Record, 67th Cong., 4th Sess., December 11,
1922, 323-327.
33Ibid., 67th Cong., lst Sess., August 15, 1921,
4989-4990; 67th Cong., 2nd Sess., April 21, 1922, 5795-
5813. King was defending the pleas of Mormons whose
extensive land holdings received during the Diaz regime
were being expropriated.

 

 

-211-

By early summer there were indications that the fre-
quent and harsh criticisms of the State Department's Mex-
ican policy had begun to thoroughly irritate Hughes. TO
Hughes, a jurist by profession and a man convinced of the
righteousness of his policy, the rumors and criticisms
seemed unjust and inaccurate--even deliberate falsehoods--
without the necessary facts and circumstances involved.

In answering queries and criticisms Hughes had usually
used the ambiguous expression: "a high official of the
State Department" commented on the situation. When chal-
lenged, however, by the liberal magazine Nation, Hughes
considered that he could no longer restrain his anonymity.
Managing editor Ernest Gruening had included in one issue
a listing of ten questions directed to the Secretary of
State. These questions in effect demanded that Hughes
make public all of the official and unofficial correspon-
dence with the Mexican government on the matter of recog-
nition, and with any other foreign countries involved.34

Hughes's reply, reprinted in the Nation,35 was a stinging

 

34Nation, May 24, 1922, pp. 614-615. This demand
had been mentioned earlier in the year by several jour-
nalists and Congressmen.

35Ibid.

-212—

retort of this proposal.36 In the national interest Hughes
had exercised proper discretion by not making the corres-
pondence public at the time. When it was published, Hughes
added, this correspondence would not be found inconsistent
with the announced policy or aims of the State Department.
Undaunted, the Nation persisted in unrelenting criticism
of the Department's policy toward Mexico.

Most irritating to Hughes was a scathing address
in the Senate on July 19th by Edwin F. Ladd (R, N.D.).37
Ladd's address was a compendium of all previous arguments
advanced in favor of ObregOn's recognition. Hughes regarded
the speech as a highly deceiving propaganda measure de-
signed to mislead the American public through misrepre-

38

sentation of facts and malicious accusations. In his

 

36Hughes had previously denied as false and inaccur-
ate the assumptions of an article in the Nation accusing
the State Department of using the non-recognition of the
ObregOn government as a scheme to advance its so-called
"imperialistic hegemony" in the Caribbean. See Henry G.
Alsberg, "Mexico: The Price of Recognition," Nation,
May 10, 1922, PP. 561-562.

37Cong. Record, 67th Cong., 2nd Sess., July 19, 1922,
10417-10426. A pamphlet based on the speech was published
in both English and Spanish.

 

38Hughes saw a possible link between Ladd's address
and de la Huerta's visit to Washington in July. De la
Huerta had met with Harding and Hughes on the day prior
to the address (and de la Huerta had visited several U.S.
Senators). Hanna Memorandum, July 28, 29, 1922, NA, 812.00/
26075. Hughes to Harding, July 24, 1922, Harding Papers
(Box 167).

-213-

former role as jurist in the New YOrk State Supreme Court
and the U.S. Supreme Court Hughes had been largely detached
from public criticism. As Secretary of State Hughes con-
sidered that he had been extremely patient and tolerant
in remaining silent on derisive statements against the
Department's policy. When these statements were being
made in the upper house Of Congress, Hughes informed
Harding that he could not restrain his self-composure.39
Fearing that silence in this instance would be misinter-
preted at home and abroad, Hughes delivered a sharp re-
buttal to Ladd's address in a press conference the follow-
ing day.

In part Hughes's reply might have been justified
by his contention about Ladd's address. Yet this speech
like the articles in the Nation were only a few of many
similar criticisms of the Department's non—recognition
policy. Hughes's annoyance at this criticism seemed more
readily noticeable by Summer, 1922. The Department as
a whole, of course, continued to be the subject of diverse
Opinions. But the criticisms were becoming increasingly
pointed to the chief Officer of the State Department--
the Secretary. The articles in the Nation and Ladd's

address clearly and hostilely delineated their subject.

 

39Hughes to Harding, July 24, 1922, Harding Papprs
(Box 167).

-214-

Not only were questions and criticisms being referred
to the "Secretary of State," but Hughes's name was now
commonplace. In 1921 Harding, Fletcher and Fall bore
the brunt of criticism, while Hughes was seldOm mentioned,
or if so, was portrayed as the honorable, upright custo-
dian of justice and righteousness. In 1922 Hughes's image
lost its luster and his name was smeared in the mire of
practical Political life.

Hughes by nature possessed a rigid self-control,
an emotional detachment, and an acute sensitivity to
criticism. Hughes's image of himself, which reflected
his puritanical background, consisted of what might be

40 In his self image

called a perfectionist personality.
he had elevated himself almost above the realities of life,
including politics. His idealized conception of himself
was vitalized by praise and respect. In light of his just
and honorable image of himself, external criticism was

41

obviously unfair, if not intolerable. Criticism, to

 

40Betty Glad has presented a penetrating insight
into Hughes's thought and personality based upon his
papers, the Opinions of his friends, relatives and asso—
ciates, and on the theoretical analysis of psychologists
and other scholars. See Betty Glad, Charles Evans Hughes
. . ., Chapter 7, "Puritanism and its Consequences.“

41In the evaluation of Betty Glad, Hughes's ". . .
rejection of all criticism, his determined political
innocence, his avoidance of emotional intimacy with others--
all these kept him from any serious questioning of the
image he claimed for himself." Glad, op. cit., p. 113.
According to John Chalmers Vinson, Hughes's tragedy lay

-215-

Hughes, implied perhaps a fallibility or a failure. When
Hughes told Harding he could no longer tolerate criticism
of the Department's policy, he was Speaking as much for
himself as for the Department. Hughes had been forced,
though very reluctantly, to step down from his pedestal
and to enter into the realm of reality, Of politics, by
replying to these unfair criticisms. Already the first
cracks in the marble image of himself began to show the
stress, strain and wear upon the surface, and to reveal

the anxiety within.42

That the Department's policy on
Obregon's recognition might have been too narrowly con—
strued, inconsistent, and out of sympathy with a growing
public sentiment meant its inner failure. To acknowledge
the policy's failure was to admit defeat. Hughes could
not, and did not want to, concede his fallibility. He
continued the facade of the Department's policy still in
anticipation of its successful justification.

While Hughes reaffirmed his policy, ObregOn remained

no closer to actual recognition than he had been when

Harding took office in March of the previous year. In

 

not in his irritation to criticism but in that "he could
not accept defeat." Vinson in Graebner (ed.), An uncertain
Tradition . . ., p. 131.

 

42Hughes showed considerable strain, and had numer-
ous periods of elation followed by depression. Glad,
loc. cit.

-216-

his second annual message to the Mexican Congress on Sep—
tember l, 1922, however, ObregOn presented an optimistic
front. To account for his non-recognition from the united
States, Obregén emphasized that his government still pre-
ferred to wait for recognition rather than to accept the
Treaty of Amity and Commerce proposed by the united States.43
Nonetheless he stressed the steps taken by his government
toward recognition within the last year such as the pro-
posal on the claims conventions and the Lamont-de la Huerta
Agreement. He pointed to the increasing sentiment for his
recognition among the American people. Implicitly plac-
ing the burden for the failure of his recognition on the
United States, ObregOn's concluding remarks did hint at
still another proposal on the part Of the Mexican govern-
ment to meet the requirements of the State Department for
recognition. The new substitute to provide the equivalent
guarantees for the Treaty of Amity and Commerce was a
petroleum law interpreting and regulating Article 27 of
the Mexican Constitution.

This legislation was the final compromise which
ObregOn could offer. All previous efforts--ObregOn's

personal assurances, the proposed claims conventions, the

 

43ObregOn's message to the Mexican Congress, Sep-
tember l, 1922, as translated in International Conciliation,
No. 187 (June, 1923), 22-29.

-217-

Lamont-de la Huerta Agreement, and the five decisions

of the Mexican Supreme Court44--had failed to produce
any fruitful results. Several times in his diplomatic
correspondence with the State Department in 1921 ObregOn
had Spoken of the unified purpose of the branches of his
government to meet the legitimate requirements of the
united States. By the summer of 1922 Obregén and the
Supreme Court, representing the executive and the judi-
cial branches, had undertaken Specific action. There
still remained the Mexican Congress to enact legislation

45

regulating Article 27. Since Hughes had continually

 

44 . . . . .

Upon recelVing COpleS of the four dec151ons ren-
dered by the Mexican Supreme Court earlier in the year,
the State Department found these decisions, which were
similar in wording to that on The Texas Company amparo
case in 1921, to neither create a precedent in law nor
to adequately safeguard to the satisfaction of the Depart-
ment all legitimate rights of American citizens in Mexico.
Press release of the State Department, August 10, 1922,
For. Rels., 1922, 680-681.

The Mexico City press likewise voiced criticism
that the five decisions of the Mexican Supreme Court had
not definitely settled the question of Article 27 and
non-retroactivity. Summerlin to State, August 11, 1922,
NA, 812. 6363/1175.

45ByArticle 73, Section X, of the Constitution of
1917 the Mexican Congress had the power to legislate on
“hydrocarbons." The Mexico City press, in particular
Excelsior and El universal, had pointed out that Article
27 was capable of two interpretations and recommended that
the Chamber Of Deputies provide a precise interpretation
of the article. New YOrk Times, June 28, 1921, p. 17.

 

 

 

-218-

referred to this point, ObregOn could assume that the
State Department still placed considerable weight upon
a precise and definitive interpretation and regulation
of Article 27.

Since 1918 the need had existed for some form of
congressional legislation to define the status of the
petroleum industry and its relationship to Article 27.
Carranza's proposed petroleum law submitted to Congress
on November 23, 1918, had failed to pass the Chamber of

46 After taking office, ObregOn had encouraged

Deputies.
the Chamber of Deputies, the Ministry of Industry, Commerce
and Labor, and several lawyers to make a technical and
legal study Of Article 27. A proposed draft of a petroleum
law was prepared by the Petroleum Committee of the Chamber
of Deputies in August, 1921, but no action was taken on
the bill.

Sometime in the early fall of 1922 Obregén had pre-
pared a lengthy address, which included a draft of a pro-
posed petroleum law, to be presented to the Chamber of

Deputies.47 The draft within the address was to be his

final compromise to the State Department, and its contents

 

46Ambassador Fletcher to State, December 3, 1918,
For. Rels., 1918, 772-783.

47The address was dated October, 1922, AGN, 104-
Pl-P-l3. Many of the provisions of this draft were sim-
ilar to that prepared by the Petroleum Committee of the
Chamber of Deputies in August, 1921.

-219-

show Obregon the politician and the statesman at his best
finesse. As explained in the address, the purpose of the
proposed petroleum legislation was to carry out the pro-
visions of Article 27 of the Constitution of 1917 while
encouraging at the same time the continued development

and progress of the petroleum industry in Mexico. ObregOn
reaffirmed that within the general aims Of the Revolution
the reasoning of the Constituent Assembly in December of
1916 on the matter of the hydrocarbons was sound. The
rapid growth of the petroleum industry in Mexico, however,
until Mexico had become by 1920 the second largest producer
Of Oil in the world had created a new set Of circumstances

which needed to be carefully evaluated.48

The petroleum
industry in Mexico as a source of revenue as well as for
employment was essential to the future prosperity of the
country. The crucial issue was that its initial develop-
ment had been undertaken by foreigners under legislation
existing prior to the Revolution which gave to the owner
of the surface land the right to ownership of the subsoil.
Article 27 had reasserted the ownership of the subsoil
mineral deposits, including petroleum, in the Mexican

Nation.

With the proposed legislation ObregOn was suggesting

 

48Carranza had become aware of this new setting
by proposing to the Mexican Congress in November, 1918,
a petroleum law to regulate Article 27.

-220-

a compromise between the principles contained in the Con-
stitution, which he as President was pledged to uphold,
and the expediency of appeasing the financially indispens-
able foreign owned petroleum industry in Mexico. Because
the export taxes from the industry had been applied to
the payment of the foreign debt, ObregOn could scarcely
enforce the strict application of Article 27. Based upon
the political and economic alternatives open to him,
ObregOn was attempting to secure a regulation of Article
27 sufficient for the minimal implementation of the Ar-
ticle but not seriously detrimental to hinder the Opera-
tions of the petroleum industry.49

The initial three articles of his proposed petroleum
law clearly expressed the principle of the sovereignty
of the Mexican Nation over the hydrocarbons. The remain-
ing articles, however, consisted of a precisely outlined
and detailed procedure for the granting of carefully
screened concessions by the federal government to the oil
companies for the exploitation of the subsoil. To settle
the disputed interpretation between the legislatiOn of

the Porfirio Diaz era and Article 27 of the Constitution

 

49Foreign Minister Pani had remarked to Summerlin
that the regulation of Article 27 through legislation
was the only possible alternative open to Obregén at the
time. He added that it would take nearly twenty years
before any attempt to amend Article 27 would be success-
ful. Summerlin to Hughes, October 6, 1922, NA, 812.6363/
1219.

 
  
   
      
   
  
  
   
  
  

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-221-

of 1917 on subsoil ownership ObregOn offered a further
advantage. The rights to the exploitation of the subsoil
deposits, acquired either through legislation existing
prior to the promulgation of the Constitution or through
compliance with the decrees of the Mexican government since
May 1, 1917, were to be reSpected. 'With the exception

of certain restrictions for the public interest those
individuals or companies which obtained ownership to land
in Mexico under the Diaz legislation retained that owner-
ship. The only stipulation which ObregOn placed upon this
ownership was in the legal title to the land. The Mexican
Nation was the proprietor of the subsoil; the individuals
or companies were the lessees or concessionaries.

ObregOn had gone as far as he politically dared
with the proposed petroleum law. He had satisfied the
principles of the Revolution contained in Article 27 by
reaffirming the legal ownership of the subsoil mineral
deposits by the Mexican Nation. In effect the oil com-
panies in Mexico were permitted the right to exploit the
subsoil mineral deposits as though they were technically
the owners of the land. They received full benefits of
the use of the land but rented rather than owned it. To
provide for the proper interpretation of the technical
points of the proposed law ObregOn had reserved this
reSponsibility to the executive branch. Article 14 of

the proposed law put the petroleum industry under "exclusive

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—222-

federal jurisdiction." Obregon was attempting to give
to himself and his cabinet a flexibility in dealing with
the oil companies which could not be done if the legis-
lature handled this interpretation. Because the petrol-
eum industry in Mexico had shown fluctuation in production,
Obregon did not wish to be bound to a fixed and precisely
regulated law which did not allow for unforeseen condi-
tions or circumstances. By having the executive branch
determine the ultimate meaning of the proposed petroleum
law, Obregon retained sufficient leeway in the necessity
of compromise in the future.

Obregon had inserted into the proposed law what the
Chamber of Deputies had denied him in July, 1921; that
is, the power to adjust Article 27 according to what the
Obregon government decided was in the best interest of
Mexico. Ever cautious of his domestic position, Obregon
realized that political expediency, even if in the long
run for the best interest of the country, would not always
coincide with Mexican nationalism.50 Anxious to have

this legislation passed,51 Obregon met with the President

 

50At a cabinet meeting in November on the proposed

petroleum law Obregon stated that the national interest
should supersede any strictly legal aspect of the law.
Memorandum of a Conference of the Council of Ministers,
November 14, 1922, AGN, lO4-Pl-P-l3 Pg 15.

51During 1921 Congress had been fairly independent
of Obregon, even though his party (Partido Liberal Con-
stitucionalista) composed the majority of Congress. Dulles,
op. cit., pp. 126-128. After the Congressional elections
in July, 1922, Obregon was supposed to control both houses

 

-223-

and several other members of the Chamber of Deputies in
early November on discussion of the regulation of Article
27.52

As Obregon's proposed legislation was pending, the
first public signs of a softening attitude on the part
of the State Department began to appear. In a speech
delivered in Boston, Massachusetts, on October 30th Hughes
touched on Mexico.53 In his usual legalism Hughes argued
that changes in governments or domestic legislation within
a country did not rescind the international duty to make
appropriate retribution for investments and property rights
lawfully acquired by citizens of other countries before
the changes were enacted. This was the problem facing
the united States in Mexico; a relatively simple problem,
Hughes added, within the scope of the Obregon government
to solve. However Hughes emphasized that the Department
was no longer insisting upon the particular form of assur-
ances such as the Treaty of Amity and Commerce. In view

of the State Department's experience with Mexico over the

past decade, Hughes merely required adequate assurances

 

of Congress with a large majority favorable to his poli—
cies. New YOrk Times, September 6, 1922, p. 14.

52Obregon to President of the Chamber of Deputies,
Lic. D. Salvador Franco Urias, November 5, 1922, AGN,
73l-A-ll (2).
53International Conciliation, No. 187 (June, 1923),
29.

-224-

for the safeguarding of American lives and property rights
within Mexico.

The expression of willingness by the State Depart-
ment to accept suggestions eventually would open up the
way for the beginnings of serious negotiations. The mild
softening attitude in October, 1922, may have been in
part an answer to public criticism of the Department's
policy.54 Hughes sincerely desired that relations between
the united States and Mexico be restored but primarily
on U.S. terms. Convinced of the legal soundness and right-
eousness of the Department's policy, Hughes could not
abandon his dogmatic approach to the solution of diploma-
tic problems. Without basically altering the substantive
principle set in the policy statement of June 7th, 1921,
Hughes endeavored to show his willingness to arrive at a
settlement with Mexico by compromising on the procedural
form.

In the meantime, if the Department's policy had
long since lost its rationale except for a very narrow
legality, several occurrences in the late fall of 1922
and in the early months of 1923 would embarrass the Depart-
ment and further belittle its policy not only in Mexico

but at home as well. By February of 1923 Hughes was

 

54See above, footnote 20. Hughes was publicly announc-
ing what he had previously stated in a note to the Obregon
government on July 28th.

—225-

earnestly seeking a definite and immediate settlement
with Mexico.

The first embarrassing incident for the Department
resulted from Obregon's proposed petroleum law. In late
September a draft of the proposed law to be submitted to
the Mexican Chamber of Deputies was sent to the Depart-
ment.55 Requested to evaluate the draft, the Department
legal counselor J. R. Baker advised that it failed to meet
the requirements of the Department and of the American

oil interests in Mexico.56

The principal barrier remained
the provision (of Article 27) that ownership of all sub—
soil deposits was vested in the Mexican Nation. If enacted,
this law in his opinion would be more detrimental to Ameri-
can rights in Mexico than the decisions of the Supreme
Court. Hughes notified Summerlin on October 9th that the
Department wished to protest to the Obregdn government
on the inadequacy of the proposed law.57
On October 12th de la Huerta presented a second

draft to Summerlin. In a conversation with Pani, Summerlin

was informed that any observations or comments from the

 

55Hanna Memorandum to Hughes, September 28, 1922,
NA, 812.6363/1212.

56Baker Memorandum to Hanna, September 28, 1922,
NA, 812.6363/1213.

57Hughes to Harding, November 20, 1922, Harding
Papers (Box 167).

-226-
State Department on the proposed law would be helpful.58
In reviewing the second draft Counselor Baker found no
change from his earlier evaluations. Receiving the ob—
jections from the oil companies on the proposed law,59
Hanna of the Mexican Affairs Division recommended that
the Department present its disapproval.60

When Summerlin presented the Department's objections

61 Pani and Obregon expressed surprise

to the proposed law,
at the origin of the draft handed them. Having not yet
submitted any draft of a proposed petroleum law to the
Chamber of Deputies,62 Obregon was indignant at this

"interference" by the united States in a domestic matter.

The reaction in Mexico was instantaneous. The publication

 

58Summerlin to State, October 12, 1922, For. Rels.,
1922, 700-701. At the end of the month Pani again told
Summerlin the Obregon government welcomed honest criticism
of the prOposed law. Hanna to Hughes, October 27, 1922,
For. Rels., 1922, 702.

59Summerlin had recommended that the legal represen-
tative of the Association of Producers of Petroleum in
Mexico examine the draft to point out important objections
which the State Department might otherwise have overlooked.
Hanna to Hughes, October 27, 1922, NA, 812.6363/1253.

60Attached note of Matthew E. Hanna to Under Secretary

William Phillips, November 11, 1922, NA, 812.6363/1248.
Fletcher had resigned his post as under Secretary in Jan-
uary, 1922, to become U.S. Ambassador to Belgium.

61Hughes telegram to Summerlin, November ll, 1922,
NA, 812.6363/1248.

621t was submitted on November 23rd.

 

 

 

 

-227-

of selective correspondence between the two governments

in the Mexican press, Obregon's address in the Chamber

of Deputies and his note to all other governments in Cen-

tral and South America revealed an alleged "attempt" on

the part of the united States to censor proposed Mexican

legislation. The Mexican Foreign Office denied knowledge

of a draft of the prOposed petroleum law ever being trans-

mitted to the Department or of requests for its comments

on such a draft.63
Hughes gave an official statement to the press on

November 18th in defense of the Department's action on

the prOposed law.64 Emphasizing that the united States

had no intention to interfere in Mexico's domestic concerns,

Hughes stated that the Department had understood that its

comments on the draft were invited.65

In conclusion Hughes
explicitly stated that had a petroleum law satisfactory to
the position of the Uhited States been presented, it would

have been tantamount to recognition.

 

63First Secretary of the Mexican Embassy in Washington,
Manuel Téllez to Hanna, November 23, 1922, For. Rels., 1922,
705-706.

 

64Hughes to Summerlin, November 20, 1922, For. Rels.,
1922, 703-705.

 

65Pani's invitation to Summerlin for comments by
the Department on the proposed petroleum law was verified
(according to Hughes) by other sources. Hughes to Harding,
November 20, 1922, Harding Papers (Box 167).

 

o
.
m.

r" r.

 

 

 

-228-

The incident appeared to be a planned maneuver by
the Obregon government. After his informal meeting on
November 5th with members of the Chamber of Deputies for
legislation regulating Article 27, Obregon may have anti-
cipated, as did happen, considerable opposition to his
prOposed draft.66 Though Obregon's proposed petroleum
law was a compromise, it could be interpreted in Mexico
as an appeasement to the American oil companies. Further-
more, since the proposed law potentially had a bearing on
recognition, the Obregon government had submitted several
drafts to the State Department for its approval. Obregon
was seeking every endeavor within his political limita-
tions to satisfy the demands of the united States on dip-
lomatic recognition--even by submitting proposed legisla-
tion to the State Department prior to its presentation
in the Chamber of Deputies.

To dispel fear that the prOposed law was dictated

by the American oil companies and to guard against intense

reaction to the State Department's examination of the

 

66The Chamber of Deputies delayed action on the
draft submitted on November 23rd. The sections particular-
ly criticized were those which gave the executive branch
discretionary powers over interpretation of the law and
the granting of concessions. Report of the Petroleum
Commission of the Chamber of Deputies, January 2, 1923,
AGN, lO4-Pl-P-13. The draft of the Obregon administration
went through numerous modifications. Discussion on the
proposed law waned as the conference between the United
States and Mexico opened in May, 1923.

-229-

draft, Obregon chose to work with Mexican nationalism

rather than against it.67

The publicized comments of the
State Department on the proposed legislation seemed less
detrimental to Mexico's national honor if it appeared
that the source of the draft was other than the Obregon
government. Within a reasonable time after the public
airing of the incident Obregon submitted the proposed
petroleum law to the Chamber of Deputies.

Hughes wished to avoid an unnecessary elaboration
of the incident. When the Obregon government closed the
incident on November 22nd, the State Department did like—
wise. At approximately the same time two other incidents
occurred which caused further embarrassment to the Depart—
ment's policy towards Mexico.

The Department had demanded the protection of Amer-
ican lives and property in Mexico while claiming recip-
rocal advantages for Mexicans in the United States. During
1922 as a result of an unemployment problem a number of
Mexican laborers in several states, especially in Illinois
and Texas, were beaten or murdered. The Obregon govern-
ment had filed protest on the failure to provide protec-

tion for Mexican citizens in the united States, but appar-

 

67During November and December, Obregon received
numerous letters from every part of Mexico as well as from
Central and South America in praise of his defense of
Mexico's sovereignty and dignity against purported inter-
ference by the United States. AGN, 731-A~ll(2).

-230-

ently the states involved had made little effort to remedy

the situation.68

The outbreak of violence in Texas during
November induced Hughes, already troubled with the inci—
dent over the proposed petroleum legislation, to urge
the Governor of that state to take adequate measures imme-
diately for the full protection of Mexican citizens.69
In October there arose the delicate question of
the enacting of legal claims against an unrecognized gov-
ernment. The Oliver Trading Company, an American corpora-
tion with a branch in Mexico, brought suit against the
Mexican government to recover a $1.2 million claim from
the Revolution.70 Through the State Court of New York
the firm demanded the attachment of all official prOperty
of the Mexican Consulate and of the Financial Agency of
the Mexican government in New YOrk City. In protest

Obregon temporarily closed the Mexican Consulate and ordered

the prohibition of all Mexican commerce with business

 

68See "Mexican Rights in the United States," Nation,
July 12, 1922. pp. 51-53.

69An editorial in the New York Times sarcastically
(and truthfully) pointed out that the United States would
not have tolerated such outrages against American citi—
zens in Mexico. The Mexican Chargé’d'Affaires in wash-
ington listed fifty to sixty Mexicans murdered in the
United States during 1922. New YOrk Times, November 18,
1922, p. 14.

 

70The case is covered in For. Rels., 1922, 709-717.

 

    
 
    
   
    
  
  
   
   
     
 
    
    
  
  
 

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-231-

firms in the state of New York.71 On the basis of diplom-
atic immunity the Obregon government contested the attach-
ment of its property.72

The incident basically involved the question of
the existence and the exercise of diplomatic rights and
immunities by a government unrecognized by the united
States.73 Hughes realized the undesirable effect of the
suit on the Mexican government, and before Obregon had
closed the Mexican Consulate in New York City, requested
the Oliver Trading Company through the Governor of the
state of New York to withdraw the attachment.74 Giving

his opinion on the case, Hughes made a distinction between

the Mexican state and the Mexican government. Although

 

71New York Times, November 1, 1922, p. 30; AGN,
73l-A-ll(2).

72

 

N. Y. Times, November 2, 1922, p. 29; November 4,
p. 3.

73The general subject became a topic of examination
for international lawyers. See Edwin Dickinson, "Inter-
national Recognition and the National Courts," Michigan
93w Review, XVIII, No. 6 (April, 1920), 531-535; XXI, No.
7 (May, 1923), 789-792. Other general problems related
to national courts and recognized governments may be found
in Dickinson, "The Unrecognized Government or State in
English and American Law," Michigan Law Review, XXII,
No. 1 (November, 1923), 29-45; XXII, No. 2 (December, 1923),
118-134; Edwin Borchard, "Can an unrecognized Government
Sue?', Yale Law Journal, XXXI, No. 5 (March, 1922), 534-
537; Quincy Wright, "Suits Brought By Foreign States With
Unrecognized Governments," American Journal of Interna-
tional Law, XVII, 1923, 742—746.

74Hughes to Governor of the State of New York,
October 27, 1922, For. Rels., 1922, 709-710.

 

 

—232-

the United States had not recognized the Obregon govern-
ment, it had recognized for years the Mexican state as
an "international person“ as the term was used in inter-

national law.75

By the middle of November the suit was
transferred to a federal court and was later dropped after
Obregon's recognition the following year.

By the early months of 1923 the diplomatic impassé
still existed,76 but there was a changed atmosphere within
the State Department. Within the past few months Hughes
had witnessed inconsistencies arise in the Department's
policy and narrow legalism. Hughes and the Department
had been embarrassed and ridiculed at home and abroad.

But Hughes, like Obregon, wished to alleviate the deli-
cate problem of the resumption 0f normal diplomatic rela—

tions by a means which would salvage some respect and

honor. Both men were seeking the right word or suggestion

 

75Acting Secretary of State William Phillips (for
Hughes) to Attorney General of the State of New York,
October 31, 1922, For. Rels., 1922, 715. Since 1921 the
Obregon government had been arguing on exactly this same
point as a basis for diplomatic recognition. See above,
Chapter III, p. 96.

The identical reasoning of Hughes was used in a
case of a similar nature the following spring. Hughes
to Attorney General of the State of Massachusetts, May 15,
1923, For. Rels., 1923, 571-572.

76On the grounds of lacking recognition from the
United States the Obregon government in January of 1923
declined to participate in the Fifth International Con-
ference of American States to be held in Santiago, Chile,
March 25th to May 23rd. New York Times, January 13, 1923,

p. 3.

-233-

to initiate negotiations. And such was provided by a
neutral party in the dispute, General J. A. Ryan, a per-
sonal friend of both Obregon and Harding.

General Ryan,77 a retired army general and currently
a representative of The Texas (Oil) Company, admired and
sympathized with Obregon. He sincerely desired an honor-
able solution to the dilemma between the two countries
which best provided for Mexico's development and benefited
the United States politically and economically. In an
interview with Hughes on February 27th, Ryan mentioned
that Obregdn had once suggested that the issues pending
between the United States and Mexico be submitted to dis—
cussion by a commission composed of representatives of
both countries.

The suggestion of a joint commission was not a novel
idea. It had previously been mentioned by various organi-
zations, congressmen and periodicals in the United States.
Mexican Affairs expert Matthew E. Hanna originally vetoed
this procedure because of the failure in his opinion of
similar commissions within the past decade. Success was

more probable, Hanna thought, along the lines of the

 

77Ryan was also a close friend of General John J.
PerShing, then Chief of Staff of the U.S. Army. Pershing
highly respected Ryan's personal observations on U.S.-
Mexican relations and his fair evaluation of Obregon's
domestic problems. See the Ryan-Pershing correspondence,
LC, Pershing Papers (Box 178).

-234-

Department's current policy.78 Hughes likewise supposedly
considered the procedure but feared it might have been

79 And so the idea of a joint commission

rejected earlier.
had been disregarded until Ryan mentioned it at the oppor-
tune psychological moment. Hughes seemed surprisingly
receptive to the suggestion, and found it to be accept-
able.80

By accepting the proposal of a joint commission
Hughes did not actually step backwards in his policy, but
rather stepped sideways. He neither altered nor reduced
the policy of adequate protection to the legitimate rights
of Americans in Mexico. In his note to Pani in July and
in his Boston speech in October Hughes no longer insisted
upon the Treaty of Amity and Commerce as the basis for
the assurances he required for Obregon's recognition.
The particular form of the "assurances" had been opened
to review. If the Obregon government could provide a
satisfactory means, the United States would consider and

might even adopt it.

A joint commission would be an airing of the issues

 

78Hanna Memorandum to Hughes, May 10, 1922, NA,

812.00/26097.
79Hughes to Summerlin, March 7, 1923, NA, 711.1211/
61a.

80The Henry C. Beerits Memorandum, "Relations With
Mexico," LC, Hughes Papers, Box 172, No. 37, p. 10.

 

-235-

pending between the two countries. Thus far, Hughes and
Obregon had been unable to reach a direct understanding,
and the deadlock seemed immutable. The whole atmosphere
of the diplomatic correspondence between the united States
and Mexico had grown stale and inflexible. The meeting

of delegates between the two countries would provide a
refreshing, if not a revitalizing, approach to the stale-
mate, and might hopefully terminate the Mexican problem.
Hughes could well reason that a joint commission involved
no sacrifice of principle or policy but was a procedural
means to seek the assurances he desired. Besides, the
meeting of such a commission was psychologically advan-
tageous. Within the past months the Department (and Hughes)
had suffered embarrassment and derision. Hughes could use
the joint commission to restore his somewhat badly tar-
nished image. The essence of a joint commission was the
meeting of delegates from the two contending sides to dis-
cuss controversial issues or problems. Applied to Mexico,
the American and the Mexican representatives would meet

on an equal basis to discuss pending issues. Their purpose
was to obtain a fair and honorable settlement of these
difficulties for both parties. Hughes could again rea-
son that he was being the impartial jurist in permitting
the arbitration of the disputed points between the two
countries. In his idealized self-image Hughes might once

again be regarded in the public eye as the paragon of

-236-

justice and righteousness.

That Hughes sincerely wanted the joint commission
to materialize was clearly evident since it took him only
six days to inform General Ryan (on March 5th) that Harding
was "favorably disposed" to the suggestion.81 Harding
was prepared, Hughes added, to name two representatives
for the United States to meet with two from Mexico. If
Obregon consented to participate, Hughes advised that
notice of the joint commission be given but that its meet-
ings remain closed to the public. The advantage of closed
meetings in Hughes's estimation was that the representa-
tives of either party could make tentative suggestions
and then withdraw or modify them without suffering embar—

82 What Hughes was implying in

rassment or loss of face.
March, 1923, was that he acknowledged the inevitability

of compromise. Closed meetings would permit the U.S.
delegates to salvage whatever possible from the Department's
stringent policy. Only four persons would know the sug-
gestions and exchange of ideas, their withdrawal or modi-
fication. The key word was embarrassment, and Hughes
wished any compromise of the U.S. position to be as little,

publicized as possible. Hughes could never admit that

his policy had failed or that he was fallible. But he

 

81See above, footnote 79.

82Pusey, Charles Evans Hughes, II, 421.

-237-

could make the transition to reality less noticeable and
less humiliating.

General Ryan was requested to inform Obregon of
Hughes's reaction to a joint commission and to explain

the basic format of this commission.83

Ryan advised that
the representatives appointed by each President be men
thoroughly acquainted with the political and national
interests of their country. In this way the delegates
would be adequately prepared to exchange ideas and posi-
tions and to report back their impressions very shortly
to their respective head of government.

At first Obregon did not seem to be very receptive
to the idea until he learned of Harding's approval. He
informed Ryan that he would likewise accept the invitation
for the establishment of a joint commission. It was sev-
eral weeks before Obregon made an official reply to Ryan.
Obregon remained dubious about the efficacy of the joint
commission, probably because Hughes had so eagerly pushed
the idea at this time. In Obregon's original letter of
April 9th to General Ryan (which was not sent), certain
conditions had been inserted on the proposed commission.

Its delegates, for example, were not to discuss existing

 

83This letter was contained within Obregon's reply
to Ryan, April 9, 1923, as quoted in Aar6n Saenz,‘L§
Politica Internacional de la Revolucion: Estudios y
Documentos (Mexico: Fondo de Cultura Econémica, 1961),
pp. 370—371.

 

-238-

Mexican legislation nor to mention a treaty prior to the
renewal of diplomatic relations. These safeguards were
omitted, in Ryan's assumption, to avoid complicating the
purpose of the commission as he had presented it.84
As Obregon had desired, Mexico City was chosen as
the meeting place for the proposed commission. To diSpel
adverse rumors on the conference to be held in May, both
governments decided to issue a joint communique in the
latter part of April (April 24th). The wording of the
communique showed that each government remained conscious
of its prestige and position. Precise and legalistic,
Hughes's statement85 was so worded as to avoid all refer-

86 or “presidents."

ence to such terms as "government“
Hughes maintained his ourward dogmatism by reiterating

that the status quo between the united States and Mexico
had not been altered. The United States had not changed
its basic position, he stressed, and diplomatic recognition
would not be accorded by the mere act of the meeting of

87

the commission. The State Department would give

 

84See Gen. J. A. Ryan to Hughes, April 13, 1923,
NA, 711.1211/114.

85Hughes to Summerlin, April 20, 1923, NA, 711.1211/63.

86The State Department had always referred to the
Obregon administration as "regime," not "government."

87The Obregon government took Hughes at his word
and was still conducting propaganda abroad when the com-
mission met. See note of the Foreign Office, AGN, lO4-
Rl-R-l Pq 15-1.

—239-

"friendly consideration" to the commission, but it retained
its position intact until a definite agreement was reached.
In reply to the U.S. reservation to the commission, the
Obregon government stipulated its reservation to be Obre-
gon's letter of April 9th to General Ryan and the conver-
sations between Obregon and Ryan which gave origin to that
letter.88

As evidenced by the diplomatic notes and memoranda,
the mere awareness of the forthcoming commission brought
a sigh of relief and an easing of tension for both govern-
ments. The reports on Mexico seemed more Optimistic. As
far back as February, Chargé Summerlin had seemed to sense
a change in Mexico. Compared to conditions the preceding
year, he noted, the Obregon government within the past
few months had earnestly maintained considerable peace

89 The following month

and security in the country.
Matthew E. Hanna of the Division of Mexican Affairs prepared
a lengthy memorandum on the alternatives for the Depart-

ment over the entire problem of Mexico.90 The first realis—

 

88Pani to Summerlin, April 21, 1923, as quoted in
Saenz, op. cit., pp. 373-374.

89Summerlin to State, February 10, 1923, NA, 812.00/
26204. Business activity had likewise increased in Mexico
with extensive American capital being invested in Mexican
mining, the railway system and irrigation projects. See
Literary Digest, May 12, 1923, pp. 13-14.

90Hanna Memorandum to Hughes, March 23, 1923, NA,
711.12/541.

-240-

tic appraisal of Obregon's position, the memorandum was
designed to comment on the advisibility of Hughes's
acceptance of the joint commission.

Both governments, Hanna emphasized, were seeking
a mutually satisfactory basis for agreement which was
probably possible if each made reasonable concessions.
The fundamental question for the Department to decide
was the limit of concessions which it could offer. To
sustain or to retreat from the Department's policy, Hanna
argued, essentially depended upon the existing situation
within Mexico. Over the past two years Obreg6n had made
a tremendous stride towards a stable and efficient govern—
ment. Since his was the most stable government since the
Revolution, the united States had more than enough justifi-
cation at the time to recognize Obreg6n. Two years ear—
lier this thinking could not have been justified in Hanna's
opinion.91 Though there were some unintentional violations,
the major issue for the State Department--the protection
of American property rights--was slowly gaining acceptance
in Mexico. Given the Current structure of Mexican society,
Hanna admitted that the United States as "a highly civilized
nation" could not expect to obtain justice through mere

logic where in a "barely civilized nation" as Mexico justice

 

91For a comparison of Hanna's earlier attitude, see
above, pp. 197-199, for his memorandum of January 26, 1922.

-241-

in the American sense conflicted with national aspirations.

Although basically defending the Department's policy
as legally sound and intelligible, Hanna did recommend in
view of changing conditions in Mexico that a certain modi-
fication or elasticity in the Department's position could
be made as needed. In light of the recent situation in
Mexico, the United States could now accept, if it desired,
written assurances from Obregon that American property
rights in Mexico would receive the necessary guarantees
required by the united States. In accepting this assur-
ance from Obregon as the basis for recognition, the United
States was taking a risk that Obregén might fail to act
in good faith. But if he did so, Hanna remarked, recog-
nition would strengthen Obregon politically and enable
him to extend without fear a full measure of protection
to American rights in Mexico.

The Department, Hanna continued, should examine the
alternatives before it. On the one hand Obregon's domes—
tic position and reliance on the support of Mexican nation-
alism precluded any extensive change in his attitude toward
the U.S. position. On the other hand, if the united States
was going to recognize Obregon, the closer his administra-
tion drew to an end the less apt Obregon would consider
it politically expedient to accept any American proposals.
Hanna concluded that the current settlement of the Mexican

problem and subsequent diplomatic recognition would far

-242-

outweigh any of the disadvantages. Moreover, American
business and commercial interests whose prosperity depended
upon Mexico would be pleased, claimants against Mexico
could obtain compensation, American oil and property
interests would be satisfied, and the U.S. public in gen-
eral would be relieved.

Hanna's memorandum reflected Hughes's modified
thinking on the Department's policy toward Mexico. Hanna
not only acknowledged the necessity of compromise but
more importantly admitted that the united States could
no longer justifiably withhold recognition from Obregon.
The United States could not ignore changed conditions
within Mexico nor the Mexican psychology. Hanna, as Hughes,
did not believe that the Department's policy had failed
but that circumstances made the strict application of the
policy infeasible. Hanna's conclusion reverberated Hughes's
probable attitude in March, 1923. In the best interest
of the United States, the Mexican problem should be per—
manently settled--through means of the joint commission
if applicable-—and Obregon recognized.

With the proposed commission in sight the Obregén
government finally replied to Hughes's pessimistic note

of August 3, 1922.92 Arguing that there were no longer

 

92Pani's note transmitted by Summerlin to State,
April 5, 1923, NA, 711.1211/61.

—243-

any obstacles to the renewal of diplomatic relations be-
tween the two countries, the Obregén government pointed

to the resumption of the payment of interest on the for-
eign debt, the action taken by the executive and the judi-
cial branches of the government on the non—retroactivity

of Article 27, and the proposed legislation to regulate
Article 27. The agrarian reform program showed some urgency
and injustice in expropriation and indemnification, but
this was usually unavoidable. In its attitude toward the
oil interests the Obregon government had permitted the
extensive development of petroleum production which brought
prOSperity not only to Mexico but to the companies as

well. Characterized by overgeneralized statements and

a rosy optimism, the reply was probably a means to clari-
fy its position to the Department before the commission
commenced. By emphasizing action and policy already in
existence and that which was promised or intended, the
Obregdn government may have sought to avoid unreasonable
demands for further assurances which might emerge from

the meetings of the commission.

The stage was set for the opening conferences between
the United States and Mexico. Exactly two years after the
Harding administration had taken office, the two govern-
ments had finally arrived at the break in the diplomatic
impasse. Serious talks were to begin on the controversial

issues pending between them. Whether the discussions would

-244-

result in a solution to these problems or in eventual dip-
lomatic recognition remained a matter of speculation for

the Obregon government. At least the door to negotiations

had been opened.

CHAPTER VII

THE BUCARELI CONFERENCE

The announcement of the proposed commission between
the United States and Mexico produced good wishes and a
cautious optimism in the press of both countries. Pleased
at a prospect of the renewal of diplomatic relations,
the press of Mexico City h0ped that Mexico's sovereignty
and national honor would not be sacrificed at the confer-
ence.1 In the United States the press viewed the confer-
ence as a means to solve the pending difficulties between
the two countries and as leading eventually to ObregOn's

recognition.2 On the other hand the Association of Pro-

 

lEditorial titles read as follows: "Toward American
Recognition," “Recognition on the way," "Mexico and the
United States Face to Face," "At Lastl", Summerlin to
State, April 26, 1923, NA, 711.1211/83.

2See a selected review of the press in the Literary
Digest, May 12, 1923, pp. 13—14; "C1a3ping Hands With
Mexico," New YOrk Times, April 25, 1923, p. 20. The Nation
was less optimistic about ObregOn's eventual recognition:
"Mexico vs. Mr. Hughes," Nation, May 23, 1923, p. 587.
An article in the same issue by Managing Editor Ernest
Gruening praised the work of the Obregén government over
the past two years in raising Mexico from the level of
civil war to peace and stability in spite of the passive
Opposition of the great powers. Formal recognition was
immaterial, he stressed, when world Opinion granted the
ultimate victory to the position and conviction of the
Mexican government and its people. "Will Mexico Be Recog-
nized?", Nation, May 23, 1923, pp. 589—591.

 

-245-

-246-

ducers of Petroleum in Mexico and other American companies
with large investments in Mexico continued apprehensively
to protest any consideration of ObregOn's recognition.

As the date drew near for the meeting of the com-
mission, both governments selected the pertinent personnel
to represent them. The chairman of the U.S. Commission
was Charles Beecher Warren, a Republican who had previously
been legal counsel for the united States in a number of
claims involving Great Britain, and within the past two
years the Ambassador to Japan.3 The other representative,
John Barton Payne, was a Democrat who among other posts
had served in Wilson's administration as Director General
of the Railways during WOrld‘War I and as Chairman of the
U.S. Shipping Board.4

For the Mexican delegation ObregOn chose RamOn Ross
and Fernando Gonzalez Roa.5 A merchant and farmer in a
small town in the state of Sonora, Ross was a close friend
of Obregén and supposedly well acquainted with his polit—
ical position. As a member of the Constituent Convention
in 1916 Ross was also aware of the goals and the inter-

pretation of the Constitution. Gonzalez Roa, an expert

 

3James M. Callahan, American Foreign Policy In Mex-
ican Relations (New YOrk: The Macmillan Company, 1932),
p. 585; New YOrk Times, April 25, 1923, p. 20.

4N. Y. Times, loc. cit.

SSummerlin to State, April 25, 1923, NA, 711.1211/67.

—247-

in international law, had been legal counsel for the
National Railways of Mexico and later a member of its
Board of Directors.6
The representatives for both countries appeared
to have been well chosen. For the united States there
was a representative of both political parties, a career
diplomat, and an experienced administrator. ObregOn had
likewise carefully selected his delegates. For the proper
interpretation of the Constitution of 1917 and of his
political position, ObregOn had appointed a member of the
Constituent Convention and a close friend. He also pro-
vided a legal expert and administrator.
In the united States at least there was a demand
for additional delegates to the commission. Samuel Gompers,
President of the American Federation of Labor, was anxious
to have a representative for American labor.7 Fearing

that additional delegates were detrimental to the work of

the commission, Hughes permitted only one further appoint-

 

6For the surveillance of the Department, Summerlin
reported that on various occasions Gonzalez Roa had voiced
his strong admiration for the principle of state owner-
ship of the subsoil and his support of ObregOn's agrarian
policy. Summerlin to State, May 9, 1923, NA, 711.1211/102.

7James Lord, Treasurer of the Pan American Federa-
tion of Labor (PAFL) (an affiliate of the AFL in Latin
America), was sent as an observer of that organization
but found the meetings of the conference closed. See
his memoranda on the position of the AFL and the PAFL
toward recognition in Snow, The Pan American Federation
of Labor, pp. 110-111.

 

-248-

ment. Robert H. Murray, a newspaper correspondent active
in the formation of the Pan American Federation of Labor,
was to be a secretary for the U.S. delegation in charge
of publicity.8
Prior to their first meeting in May the representa-
tives of each government were briefed. As background
material Hughes furnished the U.S. Commissioners with
the correspondence and other documents between the State
Department and the Mexican Foreign Office on points of

9

dispute since 1915. Hughes listed three topics which

the U.S. Commissioners were to discuss with the Mexican

delegates.10

The first and most important topic was the
procurement of satisfactory assurances against the con-

fiscation of subsoil rights obtained by American citizens

 

8Murray was a well known publicity agent of the

Obreg6n government and a critic of U.S. policy toward
Mexico. In answering the criticism of his appointment,

the State Department replied that having Murray represented
in an inconspicuous role was more advantageous than in
having his attacks on the Department as an outside observer.
The Department was trying to give an appearance of impar-
tiality to the Commission in the hOpe of avoiding unneces-
sary and adverse criticisms of the Commission itself.

The U.S. Commissioners acted independently of any influence
from Murray. under Secretary William Phillips Memorandum,
May 8, 1923, NA, 711.1211/99.

9A three hundred and fifty-one page compendium of
documents, memoranda and pamphlets on every phase of pro-
perty rights in Mexico was prepared. Dossier Prepared
For The American Commissioners To Mexico, April, 1923, NA,
711.1211/223.

10Hughes to Payne and to warren, May 8, 1923, NA,
711.1211/86a and 86b.

 

-249-

prior to May 1, 1917. Secondly, equitable compensation
was to be provided for the expropriation of lands owned
by American citizens. Finally, and judged least difficult
to obtain, the American delegates were to conclude appro-
priate claims conventions.

Hughes's three tOpics for discussion were curious
subjects for a policy based upon principle. For over two
years the Department's policy had been incessantly, and
vaguely, expressed in terms of assurances against the
confiscation of property. Confiscation of property, of
course, referred to the wording of the Constitution of
1917, its interpretation and enforcement which were con-
sidered detrimental to the property rights of American
citizens in Mexico. The emphasis Was on the acquired
rights to this prOperty. The assurances or security for
these rights had been originally projected in the Treaty
of Amity and Commerce, later reOpened to discussion.
Hughes, Fletcher and Hanna had on numerous occasions em-
phasized that the Department's policy was based on prin—
ciple, on a strict adherence to international law, and
denied the influence of Special interest groups. Yet
Hughes's suggestions to the U.S. Commissioners dealt with
particular issues advocated by these groups. The Depart—
ment had not protested specifically on the protection of
American citizens with claims to subsoil mineral deposits

in Mexico. Nor had the Department protested vehemently

-250-

against the expropriation of landed estates owned by
American citizens in Mexico. In both cases these points
were the arguments of the American petroleum interests

and of certain American property holders in Mexico. Hughes
showed an interest in the claims conventions presented by
Pani in early 1922, but thought that the subject of claims
was an individual matter between the claimant and the
Mexican government and not part of the Department's pol—
icy. Hughes's third topic was the concluding of claims
conventions between the two countries.

Why had Hughes made these issues the Department's
tOpics for discussion? Within the past several months
Hughes had demonstrated an inclination toward compromise
between a policy based on an ideal and the reality which
circumstances were forcing him to accept. Hughes was not
loath to recognize ObregOn. As he informed Warren and
Payne, recognition was merely a matter of procedure.

The important item for Hughes was assurances. Hughes needed
a justification to recognize ObregOn. He had to rational-
ize in his own mind that he could recognize Obregén within
the confines of the policy he had established. Though he
might concede on procedure, Hughes had to retain some
principle in his policy, that it had been basically sound.

Circumstances had changed but the policy had not failed.11

 

11For example, all diplomatic posts in Latin America
were notified that the meeting of the proposed commission

-251-

In the Opinion of his recent biographer, in none of Hughes's
writing did he "admit that he had made a mistake, . . ."

and he “seemed reluctant even to admit that he might have
changed his mind on some matters of public policy."12
The U.S. Commissioners were to present the three items
which Hughes had outlined, to make a thorough investigation
of the existing situation, and to report back that settle-
ment which could be reached with Mexico. Before the joint
commission met, Hughes had implied that it was to be the
termination of the impassé with Mexico on the basis of
specific complaints which American citizens had registered
against Mexico. If Hughes could not obtain from ObregOn

an acknowledgment of principle, he would acquiesce on an
understanding of disputed points which would hopefully
pacify the more vocal American interest groups and pro-
vide for the settlement of all claims against Mexico.

Foremost among the instructions given to the Mexican

delegates was an insistence on the absolute respect for

 

did not result in automatic recognition for the ObregOn
government. The posts were to make clear in their reSpec-
tive countries that the American Commissioners were only

to make recommendations on policy. During the time of

the conference, and if the conference failed, the status

quo in U.S.-Mexican relations would be maintained. Hughes

to all Latin American Missions, April 24, 1923, NA, 711.1211/
68a. Similar notes were sent to those countries (Great
Britain, France, Belgium, Poland and Cuba) which had fol-
lowed the U.S. policy toward Obregén's recognition.

12Glad, op. cit., p. 106.

 

-252—

Mexico's sovereignty.l3 TO present a conciliatory atmos-
phere for the commission, however, the delegates were
informed that they could accept a policy of the non-
retroactive application of Article 27 as it affected pe-
troleum subsoil rights acquired prior to May 1, 1917.
As the conference progressed, this policy was shown not
to have been a blanket acceptance. The other points given
to the Mexican delegates were concerned with the settlement
of pending but secondary disputes between the two coun-
tries.

The1first meeting of the joint commission officially
took place on May 14th in the building located at No. 85

14 The formalities of

Avenida Bucareli in Mexico City.
presenting the credentials of each commissioner occupied
the first day. In a public address that evening U.S.
Commissioner Warren attempted to state clearly the aims

of United States and to soothe any animosities which might
arise from the presence of the American delegates in Mex—

ico. Warren stressed that the United States had no inten-

tion of interfering with Mexico's sovereignty or in seeking

 

l3Summerlin to State, May 9, 1923, NA, 711.1211/

92a. New York Times, May 9, 1923, p. 28.

14The origin of the common name for the Mexican-
American Commission--the Bucareli Conference——was derived
from the street on which the meetings took place. The
meetings lasted until August 15th, consisting of fifteen
formal meetings and the four informal meetings which
occupied most of the three months' conferences.

-253-

special advantages.15 The United States, he added, wanted
only cooperation and an understanding with Mexico.

The next day warren presented the position of the
United States. Citing international law, warren argued
that regardless of the expropriation of property for pub-
lic utility American citizens who legally acquired pro-
perty under the legislation of the Diaz regime could not
be deprived of their rights of property ownership--unless
they were indemnified in cash for the just value of the

16 Essentially

land at the time of its expropriation.
Warren was saying that the United States was unconcerned
about the expropriation of property pg; g2. It was only
concerned about possible discrimination against American
citizens who legally acquired prOperty in Mexico prior

to the Constitution of 1917. If their property was to be
expropriated, American citizens were to be indemnified

in cash, not bonds, and at an equitable valuation of their

17

land when it was expropriated. The procedure outlined

 

15Proceedings of the united States-Mexican Commis-
sion Convened at Mexico City, May 14, 1923 (washington,
D.C.: Government Printing Office, 1925), pp. 3-4 (here-
inafter cited as Proceedings). These minutes of the
meetings published in English and in Spanish were the
only formal written record of the conference. A few
further insights are gained in the State Department
records and in monographs and articles written by mem-
bers of ObregOn's cabinet and others.

l6Ibid., p. 14.

17Ibid.. pp. 25-29.

 

 

-254-

by Warren was designed to avoid delays in actual payment
and in the immediate assessment of the property.

Given time to prepare their defense, the Mexican
delegates presented their position several days later.
In their argument the delegates relied on French inter-
national jurists since Mexico's system of civil legisla-
tion had been largely inspired by the Napoleonic Code.
Under such principles, they proceeded, there was a con-
siderable difference in meaning between an acquired right

18 In the case of expectation,

and a mere expectation.

legislation could be changed without causing injustice.

The Commissioners used the example of the existing Mexican

legislation referring to the discovery of treasures, whereby

half went to the discoverer and half to the owner of the

surface. While the treasure remained undiscovered and

no action was undertaken to retrieve it, that legislation

could be changed because there was only an "expectation"

of finding the treasure. If the treasure was in the process

of being explored, then that legislation would have to

admit the existence of an acquired right to the treasure.
Applying the analogy to the Constitution of 1917,

the Mexican delegates pointed out that all persons or

legal assignees who performed a positive act such as the

 

181bid.. pp. 17-20.

-255-

erection of drilling equipment—-thereby indicating their
desire to utilize the subsoil at any date prior to the
promulgation of the Constitution--were fully protected
against the application of paragraph IV of Article 27.
Those who did not fall in the preceding category did not
receive an acquired right to the subsoil. Desiring not
to deprive those without an acquired right from the bene-
fit of exploiting the subsoil, the Mexican government by
the legislation currently in force granted preferential
rights to these individuals in the use of the subsoil

to the exclusion of anyone else.

According to the Mexican Commissioners the federal
government admitted that under the laws of 1884, 1892 and
1909, the owner of the surface received the right to util-
ize the subsoil in the same manner as under Anglo-American
law. Under the preceding legislation the Mexican Nation
had made a donation of its property to the individual
owner. By the tradition of Mexican law and by the Con-
stitution of 1917, however, the Mexican Nation retained
complete control over the subsoil and could not be con-
sidered as ever having renounced its power to legislate

19 Since the matter

or to grant concessions on the subsoil.
of titles of ownership and the right of possession was

within the scope of Mexican's sovereignty and domestic

 

lgIbid., 22.

_____. P-

-256-

legislation, the federal government in acting on Article

27 had not violated international law.20

In concluding
their argument the Mexican delegates reminded that the
principal objective of Article 27 was the public welfare
of Mexico.

Because the U.S. Commissioners made no reply to
the position of the Mexican government on the subsoil
and Article 27, they presumably found it temporarily accept-
able. However the Mexican delegates had not commented on
Warren's presentation on the second day of the conference.
Warren turned the attention of the meetings to Mexico's
agrarian reform program. warren repeated the common com-
plaint made to the State Department by.American citizens
whose lands had been exprOpriated. These individuals or
groups regarded the compensation allotted as a totally
inadequate valuation of their property. Furthermore pay—
ment was made in depreciated agrarian bonds. The United
States, argued the American Commissioners, did not acknow—
ledge any right of the Mexican government to compel Amer-
ican citizens to accept these bonds as compensation. The

only manner in which bonds of the Mexican government would

be acceptable to the United States was if they were imme-

 

20The Mexican Commissioners pointed to the differ-
ences of judicial Opinion within the United States on
subsoil mineral deposits and cited several state and U.S.
Supreme Court cases which designated them to the sovereignty
of the state. Proceedings, p. 14.

~257-

diately convertible into hard currency at par value.

Several days later the Mexican delegates replied
that the agrarian reform program was a major aim Of the
Revolution. From the promises of Madero and later of
Carranza in 1915, land distribution was becoming an ac-
complished fact in Mexico. The prevention of further civil
war in Mexico was actually dependent upon the prompt ap-
plication of agrarian legislation.21 The urgency of the
program had unfortunately led to unavoidable abuses and
excesses. The economic situation facing the Mexican
government prevented immediate compensation in cash.
However, the bonds issued by the Mexican government as
payment for exPropriation were redeemable in twenty years
and bore an annual interest of five percent.22

Ross and Gonzalez Roa remarked that grievances by

American citizens were not as unbearable as they appeared

to be. Any foreigner whose prOperty had been expropriated

 

21By the time of the Revolution in 1910 over ninety
percent of the Indian villages (about two-thirds of the
population) had been deprived of their traditional com-
munal lands (ejidos). See Charles Wilson Hackett, The
Mexican Revolution and the united Statengl9lO-l926 (Bos—
ton: World Peace Foundation Pamphlet, 1926), IX, pp. 340—
341, 344—348.

22Proceedings, pp. 3l-33. The collateral for these
bonds was the revenues from the sale of lands expropriated.
The commissioners mentioned that the Mexican government
on the basis of an improved financial situation might be
able to redeem the bonds in less than twenty years or might
accept matured bonds in payment for taxes.

 

-258-

had recourse to the Mexican courts for petition of re-
dresses. On the question of a "just valuation" the Mex-
ican delegates pointed out that the basis of the assessed
valuation of the prOperty to be expropriated was taken
from the previous declaration for purposes of taxation
made by the prOperty owner himself.23 It was unfortun-
ate, they might have added, if some property owners had
purposely devaluated their property.

The meetings had been in progress for only several
weeks before a decision was made to discontinue, at least
temporarily, the formal atmOSphere and procedure. For
the next month and a half (June 5th through July 18th)

a series of informal meetings was held on the tOpics of
subsoil rights, the agrarian question, and the formula-
tion of claims conventions. It was the time of reexamin-
ation and clarification of positions, withdrawal or modi—
fication of suggestions, and heated discussions. Charge
Summerlin in Mexico City acted as the liaison between the

24 His fre-

U.S. Commissioners and the State Department.
quent short and undetailed reports to the Department men-
tioned unavoidable delays over the meaning of terms and

the intricacies of Mexican laws and decrees, disagreement

 

23A ten percent allowance in addition to this valua-
tion was the basis of indemnification. Proceedings, pp.
33-34.

24Summerlin's reports to State, May—July, 1923, NA,
711.1211/108-142.

 

-259-

within Obregon's cabinet, and unexpected technicalities
on the agrarian question which Hughes had not clarified
in his original instructions. The American Commissioners
were quickly discovering, as did Hughes, that a solution
of the issues pending between the two countries was not
as simple as it had been imagined. Even Hughes remarked
in a letter to Harding in late July that the delay in
the negotiations seemed "extraordinary" in view of what
he had conceived to be reasonable and uncomplicated assur-
ances.25

The only optimism Summerlin could express on the
conference during the early summer of 1923 was the earnest
desire of the commissioners of both countries to find a
solution. The prolonged duration of the meetings, however,
gave the appearance of failure. In fact, at least on one
occasion the meetings almost abruptly terminated. Accord-
ing to Mexican Minister of Industry, Commerce and Labor
Miguel Alessio Robles, an incident nearly disrupted and
ended the conference sometime in early July. At one meet-
ing in which RamOn Ross happened to be intoxicated, he
misinterpreted a statement on "Panama." In his stupor
Ross associated the term "Panama" with “Mexico" and began

shouting about "Yankee imperialism." The American Com—

 

25Hughes to Harding, July 23, 1923, LC, Hughes
-Papers (Box 24).

-260-

missioners left the meeting and announced their intention

to return immediately to the United States. Embarrassed,

ObregOn asked de la Huerta to prevent their departure.

With the assistance of General Ryan, de la Huerta persuaded

Warren and Payne to remain and to continue the conference

on the assurance of Ross's unimpeachable conduct during

the remainder of the sessions.26
Meanwhile the extensive publicity and Optimism given

to the conference in May by the Mexican press slowly ebbed

by'mid-June.27

Because the meetings were closed to the
public, anxiety and later rumors arose in the Mexican
press primarily over the issue of secrecy. The only news
from the meetings was the vague and general comments made
by the commissioners which gave the appearance of complete
harmony. In mid—July the neWSpapers of Mexico City were
predicting, though less enthusiastically, that the confer—
ence would soon be concluded successfully and that Obregén
would be recognized.28

washington's impatience with the delay in negotia-

tions was not relieved by the continued requests from

 

26Miguel Alessio Robles, Historia Politica de la
Revolucion (3rd ed; Mexico: Ediciones Botas, 1946), pp.
280-288.

27Summerlin's reports to State, May-July, 1923, NA,
711.1211/110-136. “The Obregon-Harding Conference in
Mexican Eyes," Literary Digest, June 9, 1923, p. 21.

28

 

Summerlin's reports, loc. cit.

 

—261-

countries which had not recognized ObregOn for informa-

tion on the progress of the meetings.29

If the meetings
were successful and recognition to be granted, these coun-
tries wished to extend diplomatic recognition simultan-
eously with the united States.

ObregOn likewise had shown some apprehension over
the meetings. In a letter to his Minister of Government
on May Blst3O ObregOn mentioned that he had spoken with
Gonzalez Roa and Ross at a dinner party and had clarified

31 ObregOn conveyed the impression in the

numerous points.
letter that the meetings up to that time had been unsuc-
cessful. He reiterated his position to the Mexican Com-
missioners that any settlement had to be consistent with
Mexico's sovereignty and national honor. In a later letter

ObregOn expressed a more optimistic outlook that the con-

ference would end shortly with a favorable settlement for

 

29See above, footnote 11. France and Cuba were most
insistent on knowledge of the meetings. Refer to their
comments in NA, 812.00/26368.

3OObregén to Calles, May 31, 1923, AGN, 104-Rl-E-
23 Pq l6. Already selected as Obregén's candidate for
the next presidential election, Calles was on a world
tour during the time of the conference.

31The U.S. Commissioners had been notified that
they could meet with Obregén. Though they occasionally
Spoke with him, Warren and Payne conducted their official
meetings with their Mexican counterparts. See above,
footnote 24.

-262-

Mexico.32

Having apparently reached a possible point of con-
sensus, Warren reOpened the formal meetings of the com-
mission on July 19th to discuss the issue of expropriation

33 In his research Warren could not

and indemnification.
find a legal precedent for the expropriation of property
which did not include a monetary indemnification based

upon the just valuation of the property. Hewever, depend-
ing upon the terms of the bonds of the Mexican government
and upon the sc0pe of a general claims commission to which
American citizens whose lands had been expropriated had

the right to present claims for damages, the Uhited States
would take "under consideration" whether it was willing

to accept these bonds as sufficient indemnification for

its citizens. The united States would understand, warren
stipulated, that the expropriation of land for the agrarian
reform program was to be based upon the restoration of

the "ejido." Warren proceeded to Specifically define the

term "ejido" to mean "an acre of land granted or hereafter

granted to a town or village now existing, not substan-

 

32ObregOn to Calles, June 28, 1923, NA, lO4—Rl-E-23.
This optimism was conveyed to the Mexican consulates abroad.

33warren and Payne seemed to have found satisfactory
the position of the Mexican Commissioners on the subsoil
rights. No further attention was given to this point in
the minutes of the meetings.

~263-

tially exceeding seventeen hundred and fifty-five hect-
acres" as the maximum area.34
One point which Warren insisted on was that the
United States would not accept the expropriation of lands
for ejidos on the basis of the prior assessed valuation.
The owner of such property was entitled to full compen—
sation for the valuation of the land at the time of its
expropriation.35 The Mexican government, Warren pointed
out, had no precise method for the assessment of the val-
uation of lands with whatever subsequent improvements
may have been made upon it since the initial declaration

of the owner for purposes of taxation.36

 

34Proceedingg, p. 37. The figure of 1775 hectacres
was the figure cited earlier by the Mexican Commissioners
as the size of the ordinary individual ejido before 1910.
Ibid., p. 32.

35Frederick S. Dunn pointed out that in the new
states created in Eastern and Southeastern Europe after
World War I compensation for the agrarian reform program
was at a much lower rate than that Specified in Article
27, paragraph VI of the Mexican Constitution. Dunn,
Diplomatic Protection . . ., p. 381.

 

36Proceedings, p. 37. Paragraph VI of Article 27
did fix the compensation as the valuation recorded in the
assessment of the property for tax purposes. Increased
or decreased valuation due to improvements or depreciation
after the assessment was made was to be taken into con-
sideration. While no detailed method for this valuation
was outlined, the article stipulated the valuation was
subject to the decision of experts and judicial proceedings.
Apparently this point was likewise found satisfactory by
the U.S. Commissioners Since no further mention was made
of the issue in the Proceedings.

-264-

After some discussion warren requested the Opinion
of the Mexican Commissioners on this proposal. If their
reply was favorable, warren repeated assuredly, the Ameri—
can Commissioners "would be in a position to make a recom-
mendation to their Government to accept federal bonds"
as indemnification for expropriated property. If the
State Department in turn approved their recommendation,

a binding agreement would be drawn up between the two
countries. By this agreement the united States consented
to accept the practice of the issuance of federal bonds
of the Mexican government in payment for the creation of

ejidos.37

An integral part of the agreement would be a
general claims convention providing for a commission to
arbitrate claims of damages from alleged unjust expropria-

tions.38

What Warren was implying was a procedure to
initiate the renewal of formal diplomatic relations be—
tween the United States and Mexico.

After reexamining warren's proposal, Gonzalez Roa

and Ross accepted the procedure outlined by‘Warren.39

After all, the united States had basically accepted the

 

37warren stipulated that a condition for the accept—
ance of the federal bonds was an adequate and prompt cash
payment to American citizens for any expropriation exceed-
ing the specified 1775 hectacres. Proceedings, p. 38.

38Proceedingg, p. 40.

391bid.. pp. 41-43.

-265-

Mexican position on indemnification for expropriated pro—
perty in federal bonds. Once this agreement was reached,
the atmOSphere became relaxed; and the American delegates
turned their attention to Hughes's third topic for dis—
cussion.

Within the next week the commissioners completed
acceptable drafts of both a Special Claims and a General
Claims Convention.40 The former41 was to cover losses
sustained by American citizens or companies between
November 20, 1910, and May 31, 1920. Claims were to be
submitted to a three man commission which was to arbitrate
all claims filed within the Specified five year period.
The decisions of the commission were final, and the amount
for damages was to be paid in gold coin or its equivalent.

Under a similar procedure the General Claims Conven-

tion42

provided for the arbitration of unsettled claims
brought by American citizens against Mexico or by Mexican
citizens against the United States Since the last general
claims commission between the two countries in 1868.

Although having a much broader jurisdiction, the General

Claims Convention Specifically excluded all claims which

 

40With some modifications these two claims conven-

tions were basically the arrangement that the Obreg6n
government had been offering since November, 1921.

1Special Claims Convention, Proceedings, pp. 53-57.

42General Claims Convention, Proceedings, pp. 58—62.

—266-

were within the bounds of the Special Claims Convention.
By the end of July tentative drafts of both conven-
tions had been submitted to the State Department.43 Upon
examining the conventions, legal counselor J. R. Baker
found them satisfactory except for the exclusion of pos—
sible claims arising from the agrarian laws of the Mexican
states and on a few other minor details.44 When Baker's
review was presented to Hughes, Hughes did not take issue
on the exceptions and replied that the U.S. Commissioners
need only obtain a verbal understanding on these points.45
After any further procedural changes were made, Hughes

added, the two conventions could be incorporated into the

minutes of the Proceedings of the joint commission to the

 

effect that they would be signed in the event of the re-

sumption of diplomatic relations between the two coun—

tries.46
By the first of August the meetings of the joint

commission in Mexico City were drawing to a close. At

the final formal meeting on August 2nd, the commissioners

 

43Summerlin to State, July 28, 1923, NA, 711.1211/

137.

44Baker to Hanna, August 2, 1923, NA, 711.1211/139.

45Those points not specified in the Proceedings were
understood to come within the scope of the Mexican courts
or under the broad jurisdiction of the General Claims
Convention.

46

 

Hughes to Summerlin, August 11, 1923, NA, 711.1211/
139.

-267-

of both countries inserted into the minutes of the Pro-
ceedings their concluding remarks and reservations. It
was deemed advisable to summarize the position of both
governments at the conclusion of the over two-and-a-half
conference. However, comments were limited to reservations
on subsoil rights. The Mexican Commissioners reminded
that under the Constitution the executive branch of govern—
ment had the duty to respect and to enforce the decisions
of the judiciary. This duty precisely referred to the
principle established in the decisions of the Supreme
Court on the five amparo cases concerning the non-retro-
activity of paragraph IV of Article 27. In its future
policy the Mexican government would thereby grant

. . . to the owners, assignees or other

persons entitled to the rights to the

oil [in the subsoil] drilling permits on

such lands, subject only to police regu-

lations, sanitary regulations and mea-

sures for public order and the right of

the Mexican Government to levy general

taxes. 47
For those individuals or companies which may not have
performed a "positive act"48 indicating their intention

to utilize the subsoil, the Obregdn government through

its executive decrees of 1920 and 1921 granted preferen—

 

47Proceedings, p. 48.

 

48The term was the basis of the five amparo deci-
sions of the Mexican Supreme Court. Refer to the broad
range of definition given to the term "positive acts" in
the Proceedings, pp. 47-48.

-268—

tial rights to the subsoil for these surface owners to
the exclusion of third parties which lacked any title.
The granting of preferential rights, the Mexican Commis-
sioners qualified, did not constitute an unlimited or
perpetual obligation on the part of the Mexican govern-
ment.

Whether or not diplomatic relations were resumed,
the U.S. Commissioners reserved all rights to the subsoil
for American citizens who possessed a valid title obtained
under the legislation and the Constitution (1857) of Mexico
existing prior to 1917. But the Mexican delegates imme-
diately added that under Mexican laws the government re-
served the rights to lands on which no "positive act" had
been performed. Otherwise they sustained the right of
the united States to make any reservation on behalf of
its citizens; that is, the privilege of future diplomatic
protests.49

Once this circumlocution ended, the U.S. Commissioners
communicated to Hughes the final points made in the con-

50 Of the two controversial

ference and their evaluation.
issues which they were to discuss with the Mexican delegates--
subsoil rights and the agrarian question--Warren and Payne

considered that they had achieved the best possible settle-

 

49Proceedings, p. 49.

50Summerlin to State, August 2, 1923, NA, 711.1211/

140.

—269—

ment. From the earliest meetings Gonzalez Roa and Ross
had declined to consider any permanent solution to the
problem of subsoil ownership except by means of decisions
of the Supreme Court or by congressional legislation.
Although the Mexican Commissioners were confident that
the Mexican Congress would satisfactorily settle the prob-
lem of Article 27 and the subsoil, warren and Payne were
still dubious. Yet no other paths seemed tangible since
the Obreg6n government had hesitated to make any arrange-
ment with the united States on subsoil rights which might
be construed as binding. Because the Mexican delegates
had remained staunch on this point, warren and Payne were
willing to acquiesce and not push the issue of subsoil
rights any further. The only concession which they could

51 by the ObregOn government to

obtain was a commitment
permit at least preferential rights to surface owners
who had not performed a "positive act."

The agrarian question was likewise a compromise.
Convinced of the inevitability of Mexico's agrarian reform
program, the American delegates modified their position

of full compensation in cash at the time of expropriation.52

Since immediate indemnification in cash was an enormous

 

51This commitment was binding neither on the Mexican
Congress nor upon a successive government.

52The question of a just valuation Of the property
did not appear in this report of the Commissioners.

 

-270-

financial burden for the Mexican government, the U.S.
Commissioners agreed that the United States would accept
long-term redeemable federal bonds for its citizens. In
having fixed the maximum area for an ejido, warren and
Payne hoped to prevent excesses in the expropriation of
property. Furthermore, the recourse of American citizens
to a claims commission would help to alleviate unforeseen
circumstances. Satisfied that compromise had not mater-
ially weakened the U.S. position on confiscation of pri-
vate property, warren and Payne were confident that Hughes
would find the minutes of the Proceedings acceptable.
Harding's death on August 3rd temporarily delayed

the closing formalities of the meetings until August 15th.53

54

With the best wishes of the Mexico City press, the U.S.

Commissioners departed from Mexico City the following

 

53Shocked at Harding's death, the Mexico City press
pondered the probable effect of his death on the current
meetings. Since Harding was considered to have been far
more sympathetic to Mexico's position than Hughes, there
was some anxiety that Harding's death might cause new
difficulties or delays in the concluding of the meetings.
Moreover the attitude of the newly sworn-in President
Calvin Coolidge was unknown. Summerlin to State, August 4,
1923, NA, 711.1211/151.

54Summerlin reported that Warren and Payne had won
the admiration and respect of the Mexican public as well
as of the government. Summerlin to State, August 17,
1923, NA, 711.1211/159.

-27l-

day.55

In Washington four days later warren and Payne
discussed the meetings with Hughes and Coolidge and pre-
sented their opinions and recommendations. Two days later
Hughes announced to Mexican Foreign Minister Pani that

he and Coolidge had found the report of the American Com-
missioners satisfactory and had approved the recommenda-

56 If ObregOn likewise

tions contained in their report.
approved the report and recommendations, Hughes offered
a procedure for the resumption of formal diplomatic rela-

tions.57

Suggesting an early date like September 6th,

both Washington and Mexico City would simultaneously re—

lease the official announcement. The following day the

two claims conventions would be signed jointly in washington

and in Mexico City by the appropriate diplomatic personnel.
The procedure for ObregOn's recognition was a sim—

ple, forthright formality. It had taken Hughes only six

days to decide on the desirableness of the joint commission.

 

55The anticlimax of the three month joint commission
was the failure of return rail transportation for the U.S.
Commissioners from Laredo, Texas, to‘Washington, D.C.
For this purpose an irate U.S. Consul in Nuevo Laredo,
Mexico, drew a bank draft of nearly $500.00 on the strength
of the signature of the Secretary of State, which he hoped
the State Department would promptly honor. Consul Harry P.
Walsh to State, August 17, 1923, NA, 711.1211/155.

56Hughes's note to Pani, Hughes to Summerlin,
August 22, 1923, NA, 711.1211/1756.

57Ibid. Technically Speaking, this meant g3 facto
recognition for Obreg6n until ambassadors were appointed
as the official representatives of each country.

-272-

It took him but two days to decide on the exigency of
Obregon's recognition. Had Hughes carefully analyzed
warren and Payne's critique of August 2nd, which implied
that Mexico's position had remained relatively intact
while the united States gained only on meticulous points?
What were the details of the report and the recommenda-
tions presented by the U.S. Commissioners? was there
debate or discussion on the Department's policy and the

58
outcome of the conference?

Why had Hughes outlined the
procedure for ObregOn's recognition before Obregén had
even approved the report and recommendations of the U.S.

Commissioners?

Indeed, it seemed surprising that of all the memoranda,

 

58For example, representatives of the leading Amer-
ican oil companies in Mexico had already held a conference
with Hughes to learn of the conclusions of the joint com-
mission regarding the oil controversy and the probable ac-
tion of the State Department. Hanna to Hughes, August l3,
17, 1923, NA, 812.6363/1427-1/2 and 812.6363/1437. Finding
the minutes of the meetings too vague and inadequate to
protect their interests, the representatives hoped before
the State Department acted on the matter of recognition
that it would carefully consider eliminating the oil con-
troversy as a future dispute. Director Guy Stevens of
the Association of Producers of Petroleum in Mexico to
Hughes, August 24, 1923, NA, 812.6363/1438.

Several American businesses in Mexico and some pri-
vate citizens had also protested any immediate considera-
tion of Obregén's recognition. Catholic clergymen and
a few Protestant missionary boards in Mexico later inquired
whether the Obregén government had given assurances during
the conference of religious liberty in Mexico. The Depart-
ment's response was that this issue was left a matter for
the regular diplomatic channels. Letters to the State
Department, September-October, 1923, NA, 812.404/248—250.

-273-

diplomatic notes, letters and other correSpondence exist-
ing for the two—and-a-half year controversy, such data

on the joint commission and the steps leading to actual
recognition were scanty, if not nonexistent. For a man

who was characteristically punctilious, methodical, and
dispassionately rational, there seemed to be little time

in less than a forty—eight hour period for serious deliber-
ation. Hughes's recent biographer takes note of his "pas-
sion for clarity and his need for moral justification"
which led him to present detailed explanations of his poli-
cieS in the Americas.59 Among his papers (or of Harding's),
no such explanation existed for Mexico in August, 1923.

Four months later he diligently outlined the U.S. policy
during the de la Huerta rebellion. Exacting and demand-
ing in the preparation of memoranda by his subordinates,6O
no record existed of the report and recommendations of the
American Commissioners. Hughes may have unquestionably
accepted the recommendations of the U.S. Commissioners

and initiated proceedings for the renewal of formal dip-
lomatic relations. Prior to the conference he had implied
61

that the joint commission would be the key to recognition.

Perhaps the duration of the conference wearied him, and he

 

59Glad, 9p. cit., p. 252.

60Ibid., p. 117.

61See above, Chapter VI, p.236; Chapter VII, p.251.

-274-

wished to end the whole affair very quickly. Or Hughes
merely gave tacit consent without ever abandoning what

he regarded as the underlying righteousness of his policy.
In effect, rather than seriously question his fallibility,
he preferred to quietly drop the matter of Obregén's recog-
nition with a minimum of publicity.

In replying to Hughes's note of August 22nd, Foreign
Minister Pani requested some modification in the proce-
dure for the resumption of formal diplomatic relations.62
For the benefit of ObregOn's political position Pani sug-
gested that official announcement be released on or before
August Blst so that Obregén could mention the renewal of
diplomatic relations in his annual message to Congress
on September lst. After a ten or fifteen day waiting
period Pani proposed that the claims conventions be signed.
In this fashion the resumption of official diplomatic
relations, which confirmed Obregén's recognition, would
not seem contingent upon the signing of the claims con-
ventions. Moreover the signing of the conventions could
then coincide with the 102nd anniversary of Mexico's
independence on September 16th.

Curiously enough, Hughes responded that he acknow—

ledged the sensitivity of ObregOn's position and was

 

62Pani's note to Hughes, Mexican Embassy in wash-
ington to State, August 25, 1923, NA, 711.1211/163.

-275—

willing to accommodate him.63 The announcement for the
resumption of official diplomatic relations was to be
released at noon on Friday, August 31st. Pending the
appointment of ambassadors, the formal accreditation of
the Charge d'Affaires of each country could take place
on September 3rd. However, Hughes recommended that the
claims conventions be signed within the week, as was the
procedure followed.

The renewal of official diplomatic relations with
the recognition of the Obreg6n government64 was generally

well received in the U.S. press.65

Although several papers
reserved comment, a considerable portion predicted wide-
spread business expansion and investment in Mexico and a
strengthening of the prestige of the united States in

Latin America. The press of Mexico City likewise enthu-

siastically praised the success of the conference and

expressed confidence that Coolidge would be as sympathetic

 

63
158a.

Hughes to Summerlin, August 25, 1923, NA, 711.1211/

64At least France, Belgium, Poland and Cuba imme-

diately followed the precedent of the united States in
recognizing ObregOn. Great Britain waited until August,
1925.

65See the synopsis of newspaper Opinion in the Literary
Digest, September 8, 1923, pp. l4-15; September 15, p. 13;
Current Opinion, October, 1923, pp. 399-400. Refer also
to the New York Times, September 2, 1923, II, p. 4; Collier's,
The National Weekly, September 29, 1923, pp. 7ff.

 

-276—

toward Mexico as Harding had been.66 Numerous personal
letters of congratulations at the resumption of formal
diplomatic relations were sent to Coolidge and Hughes.

While celebrations were being conducted along the
border and throughout Mexico, the final step in the pro-
cess of renewing diplomatic relations between the two
countries remained to be concluded. The claims conven-
tions had to be approved by the Senate of both countries,
and upon approval be signed by the respective Head of
State. Before the approval and ratification were even
begun, certain events occurring in Mexico by the middle
of September seemed to foreshadow ObregOn's overthrow by
a domestic rebellion. Within three months after it accorded
diplomatic recognition to ObregOn, the united States was
faced with another challenge in Mexico--whether to uphold
a government which it had recognized or to support a re-
volutionary movement. The question of Obregén's successor
and intervention by the federal government in the affairs
of a Mexican state were the causes of the new revolutionary

movement in the autumn of 1923.

 

66See the synOpsis of neWSpaper Opinion in Literary
Digest, September 8, 1923, p. 24.

CHAPTER VIII

REBELLION AND PEACE: THE TEMPORARY TERMINATION
OF THE MEXICAN PROBLEM

Sometime in the early part of 1923 ObregOn had
begun to consider the presidential election to be held
the following summer. AS the Constitution then read,
ObregOn was prohibited from re-election. Summerlin had
mentioned in March that ObregOn and his cabinet had de-
cided to run Finance Minister Adolfo de la Huerta as the
administration's candidate.1 As a former provisional
president of Mexico (May—November, 1920) and as ObregOn's
finance minister, de la Huerta had generally received
favorable comment.2 By June, however, Summerlin reported
that General Plutarco E. Calles, Minister of Government,
had been named ObregOn's "official" candidate for the
presidency.3

The change was considered surprising since Calles

 

lSummerlin to State, March 9, 1923, NA, 812.00/26254.

2Thomas W} Lamont of the International Committee of
Bankers had been very impressed with de la Huerta as a
potential presidential Candidate. Lamont to Hughes,
June 19, 1922, NA, 812.51/914.

3Summerlin to State, June 2, 1923, NA, 812.00/26384.

—277-

—278-

had previously been reported in the Mexican press as

being in very ill health. Moreover Calles was considered
to be disliked in Mexico, and had built up while in the
cabinet much support among certain Mexican labor, agrarian
and socialist segments which the united States regarded

as "radical."4

Summerlin's supposition was that Obregén
desired a continuation of the policies of his administra-
tion which Calles perhaps could best fulfill. Calles's
illness was soon publicly refuted, and he was conveniently
on a world tour during the three month conference between
the united States and Mexico. On August 30th Calles re—
signed his cabinet post and six days later became the
administration's candidate.

Obregdn's reconsideration of his successor was prob-
ably related to the Bucareli Conference. Realizing that
compromise with the united States was inevitable, ObregOn
needed a candidate who had little contact with the united
States. De la Huerta had already been involved in the
negotiations leading to the arrangements with the American
oil companies in September, 1921, and in March, 1922, and
in the agreement in 1922 with the International Bankers.
In both cases de la Huerta could be tainted with the ac-

cusation of “imperialism" if ObregOh were forced to yield

to the united States. Besides, de la Huerta as provisional

 

Ibid.

-279-

President in 1920 had sought recognition from the united
States.

Calles was regarded as being more Mexican in nature
by his public hostility toward the united States. With
his support among labor and the agrarian elements in the
country he would be more capable of restraining them in
the direction of ObregOn's evolutionary reconstruction
program. Because Calles was more independent, he could
accept more freely any agreement resulting from the con-
ference. His world tour during the time of the conference
was a prudent political maneuver which permitted Calles
to plead immunity from reaction in Mexico if the confer-

ence failed, or if elected, to argue that the Proceedings

 

of the conference were not binding upon him since he unlike
ObregOn was not in contact with the commissioners when the

Proceedings_were approved. ObregOn may also have thought

 

that he could dominate Calles more than de la Huerta.
In ObregOn's assessment, de la Huerta was inclined toward
emotionalism (as during the conference with the Interna-
tional Bankers) and more importantly lacked political
acumen and sufficient support among the key political
groups as labor and the peons in Mexico.

Though he had some supporters, de la Huerta had begun
to publicly and privately announce that he had no desire
to be a candidate for the election and would instead give

his backing to Calles. But when ObregOn delivered his

-280-

annual address to the Mexican Congress on September lst,
some Congressmen voiced their admiration for de la Huerta.
The accusation was already being made in Congress that
ObregOn had avoided the convocation of a national conven-
tion to select a candidate. Though not Spelt out, the pro-
cedure was reminiscent of Carranza's similar tactic with
Bonillas in 1920 which had Spawned the Plan of Agua Prieta
and the Revolution of 1920. Obregon, de la Huerta, and
Calles had all been participants in that revolution against
Carranza.

Within a few weeks a decision by ObregOn stimulated
an anti-Calles movement which in turn Sponsored de la
Huerta as its candidate for the presidency. Victory in
an election held in August for the governorship of the
state of San Luis Potosi was claimed by the two rival can-
didates, both of whom took office on September 18th.5
with this unusual procedure ObregOn requested the Senate
to declare the election null and void and to set up a
provisional government in that state until new elections

were held.6

TO enforce this decision federal troops were
dispatched to the state of San Luis Potosi. Reaction in

the press of Mexico City and elsewhere in the country was

 

5Refer to Dulles, Yesterday in Mexico . . ., pp.
186-189, for details of this event.
6As the procedure outlined in Article 76, paragraph
V, of the Constitution.

-281-

immediate. wideSpread disapproval of ObregOn's decision
was based on the supposition that intervention by the
federal government of Mexico City within that state was
a violation both of the state's sovereignty under the
federal system and of ObregOn's own agrument in the Plan
of Agua Prieta in 1920 directed against a similar action
by Carranza within the state of Sonora.7

Dissension was likewise being expressed in ObregOn's
cabinet. Declaring the intervention illegal, de la Huerta
threatened to resign his cabinet post if Obregén did not
relinguish his decision. De la Huerta had supposedly been
debating his resignation after his discovery in early
September of the contents Of the minutes of the joint

commission.8 ObregOn tried to dissuade his Minister of

 

7A detailed account of the origin and development
of the rebellion may be found in Dulles, op. cit., pp.
174-200. AS a former member of ObregOn's cabinet, Miguel
Alessio Robles offered some entertaining comments on the
affair in Historica Politica . . ., pp. 258-277. A Sketchy
background of the immediate incident was made by Summerlin,
September 28, 1923, NA, 812.00/26467.

8De la Huerta remarked later in his memoirs that
he initially disapproved of the conference as conceding
rights of extraterritoriality to foreigners (the U.S.
Commissioners) to be present in Mexico on a matter of do-
mestic policy. While ObregOn regarded the united States
as acting in good faith, de la Huerta continued to reiter-
ate the promises he claimed were made to him in conferences
with Harding and with Hughes in July, 1922. Recognition,
he asserted, would be automatic without the necessity of
a treaty and without humiliating conditions for Mexico.
Adolfo de la Huerta, Memorias de don Adolfo de la Huerta,
segun su proprio dictado: TranscripciOn y comentarios del
‘Lic. Roberto Guzman Esparza (Mexico: Ediciones Guzman,

-282—

Finance from resigning his post, or at least to avoid
making his resignation public until after the claims con-
ventions had been approved and ratified.9 After the print-
ing of his resignation by the anti-Calles movement on
September 24th, however, de la Huerta vacated his post
within two days.

To de la Huerta's surprise, the man whom he had
recommended to succeed him in his office as Minister of
Finance--Alberto J. PanilO--reported to Obregén on Sep-
tember 30th a deficit of over forty-two million pesos
in the federal treasury during the first nine months of

11

1923. Pani accounted for the deficit by de la Huerta's

acceptance of an agreement disproportionate to Mexico's

 

(1957), pp. 217-219, 229.

Miguel Alessio Robles mentioned that de la Huerta
had always been opposed to any conditional recognition
for Mexico, and continued to protest the conference
throughout the summer of 1923. Alessio Robles stated
further that the meetings of the joint commission were
not specifically mentioned in the cabinet meetings and
the Proceedings of the conference were not made known to
the cabinet as a whole until October, just prior to the
presentation of the claims conventions to the Senate for

its approval. Alessio Robles, op. cit., pp. 274-277; 265,
274.

9Dulles, op. cit., pp. l90-l9l.

10Pani was succeeded in turn in his post as Minister
of Foreign Relations by his under Secretary, AarOn Saenz.

llAlberto J. Pani, La Politica Hacendaria y la Revolu-
ciOn (Mexico: Editorial "Cvltvra," 1926), p. 12.

-283-

financial capabilities12 and of his carelessness and ex-

travagance in spending, his payroll of superfluous employ-

ees,13 the issuance of checks on insufficient funds and

the use of funds set aside for payment on the foreign

debt for the current operating expenses of the government.14
Pani's report and recommendations of October 7th

were immediately enacted upon. ObregOn began a series

of urgent austerity measures to prevent the predicted

financial collapse of the government. unnecessary govern-

mental personnel were removed from the payroll, all salaries

of remaining government and of army personnel were reduced

ten percent, general eXpenses were cut, and the tax col-

lection offices were reorganized.15
When ObregOn released this information to the public

on October 19th, he pleaded that the financial bankruptcy

facing his government had been accomplished without his

knowledge or authorization. De la Huerta, who had announced

on the same day his candidacy for the presidency, replied

 

12Pani had voiced a similar opinion on the Lamont-
de la Huerta Agreement in July, 1922, before its acceptance
by Obregén.

l3Pani estimated that there were nearly two thousand
unnecessary persons on the payroll which cost Mexico over
800,000 pesos monthly. Pani, "La Politica Hacendaria Del
Nuevo Regimen," Tres Monggraficas (Mexico: Editorial
'Cvltvra," 1941), p. 63.

l4Pani, La Politica Hacendaria . . ., p. 11.

15Pani,_'1r'res Monograficas, loc. cit.

-284-

to ObregOn's statements as unjust attacks upon his honor
and a personal antagonism by Pani.16 In spite of oil
crises and labor strikes de la Huerta considered that he
had managed his office well for three years, that the
Lamont-de la Huerta Agreement was within Mexico's capacity
to pay, and that if there were such discrepancies in the
federal treasury, ObregOn was aware of them.

The deficit in the federal treasury was probably
not fabricated by the Obregén administration as a politi-
cal maneuver to embarrass de la Huerta as a potential
presidential candidate or solely a matter of personal

17

enmity between Pani and de la Huerta. AS Minister of

Finance, Pani conducted over the next three years a rigid

18 The ObregOn government was appar-

fiscal reform program.
ently so Short of current Operating funds that it even
immediately accepted an advance of ten million pesos on

the petroleum production taxes from the Huasteca Petroleum

Company--the most antagonistic American-owned oil company

 

16Dulles, op. cit., pp. 199—200.

17Consul General Dawson and Charge Summerlin both
emphasized Pani's reports in September and October and
the financial crisis facing the Obregén government. Daw-
son to State, October 12, 1923, NA, 812.51/974; Summerlin
to State, October 17, 20, 1923, NA, 812.51/978 and 980.

18As evidenced by Pani's exhaustive report on Mexico's

public financés, 1923-1926, in La Politica Hacendaria . . .

-285-

in Mexico.19 Whether the criticisms directed against de
la Huerta were thoroughly valid or whether ObregOn was
unaware of Mexico's serious financial difficulties and
abuses, the controversy merely intensified the enthusiasm
of the anti-Calles movement.

AS de la Huerta's supporters grew steadily more
numerous during September and October (including some of
ObregOn's former cabinet members and many Officers of
the army), a few of ObregOn's friends tried to reconcile
the growing break between ObregOn and de la Huerta. Miguel
Alessio Robles and Governor Ignacio Enriquez of Sonora
warned ObregOn of his serious political error in attempt-
ing to impose Calles as a presidential candidate.20 De
la Huerta's strength was primarily increasing, they pointed
out, because he was the Opposition candidate and was being

accused of discrepancies by the administration he had

served in. Since ObregOn and Calles had allegedly never

 

19Harold Walker, legal representative for the Huas-
teca Petroleum Company, to Hughes, December 10, 1923,

NA, 312.115H86l/85. See also Manuel Calero, legal repre-
sentative for the same company, to ObregOn, November 1,
1923, and Obregon's reply, November, 1923, AGN, 104-Pl-
P-l6.

By this arrangement with the ObregOn government,
Doheny's Huasteca Petroleum Company apparently obtained
the ownership and rights of exploitation to one of the
greatest potential petroleum-producing regions in Mexico
at the time (the Juan Felipe Hacienda). See New YOrk
Times, November 15, 1923, p. 31.

, 20Alessio Robles, op. cit., pp. 291-293; Ignacio C.
Enriquez, The De la Huerta Disloyalty (n.p., 1924).

—286-

been close, intimate friends, Alessio Robles and Enriquez
pleaded with Obregon to reconsider Mexico's welfare by
averting political warfare.21
The split between Obregon (and Calles) and de la
Huerta became irreconcilable by early December. On Decem—
ber 7th the Plan of Veracruz22 was launched against the
ObregOn government with de la Huerta as the Supreme Chief
of the rebellious forces.23 The Plan (or program) rested
upon a point of honor over the intervention of the federal
government Of Mexico City within a state election and
over a matter of principle in the attempted imposition

24

of the administration's candidate. Like the Plan of

 

21In the ensuing rebellion Alessio Robles resigned
his cabinet post as Minister of Industry, Commerce and
Labor in protest to Obregon' S policies. Governor Enriquez
continued to support Obregon and criticized de la Huerta
for lack of compelling justification to provoke a rebell-
ion against Obregon.

2280 named because the headquarters of de la Huerta's
provisional government were located in the city of Veracruz.

23See Charles W} Hackett, "The de la Huerta Revolu-
tion in Mexico," Proceedings of the Fifth Annual Convention
of the Southwestern Political and Social Science Associa-
tion (Austin, Texas: By the Association, 1924), 116-133.

24The Bucareli Conference did not appear to have
been a specific issue. According to AarOn Saenz, eighteen
days before the pronouncement of the rebellion de la Huerta
mentioned before an informal session of the Senate that
he regarded the conference as a suitable triumph for Mexico
and that it would result in a better understanding between
the two countries; Quoted in Saenz, La Politica Interna-
cional . . ., pp. 71- 72.

 

-287-

Agua Prieta in 1920, the Plan of Veracruz became the stim-
ulus for rebellion by dissident groups throughout Mexico.
Voted extraordinary powers by Congress, ObregOn declared
martial law and personally directed the military campaign

25 I I O
The former Mex1can CommiSSioner

against the rebellion.
RamOn Ross was speedily dispatched to washington to seek
both moral and material support.

In washington Ross requested discarded U.S. naval
vessels and small arms weapons and ammunition.26 His
plea was urgent because the vessels of the Mexican navy
located at the port of Veracruz had joined the rebellion.
With the rebels controlling the customs houses at the port
of Veracruz and the oil fields in the state of Veracruz
the ObregOn government had been deprived of a vital source
of revenue. Meanwhile Summerlin had sent an urgent mes-
sage to the State Department warning that unless the united
States acted immediately with at least some kind of 'moral
intervention' on behalf of the Obreg6n government-—regard-
less of the political campaign and candidates--conditions

in Mexico would worsen and vastly increase the danger to

the lives and property of foreigners.27 Hanna agreed with

 

25For the military campaigns, see Dulles, op. cit.,
pp. 220-262.

6Mexico lacked a munitions factory capable of pro-
viding an ample supply for the Mexican army.
27
27132.

Summerlin to Hanna, September 22, 1923, NA, 812.00/

-288-

this and other reports from Mexico that the spread of
the rebellion throughout the country would retard its
thus far peaceful development since 1920.28
Hughes conferred with Coolidge and Secretary of war
John W1 weeks before announcing on January 7th an arms
embargo by the united States on Mexico.29 The purpose
of the embargo was to reduce the violence and bloodshed
in the country which was being promoted by the use of wea-
pons and ammunition from the united States.30 However
Hughes stipulated that under the embargo the President and
the Secretary of State had the discretion of supplying a
limited amount of weapons and ammunition to the recognized
ObregOn government.
Coolidge had thought that he was bound to some extent

by the arms limitation treaties Signed by his predecessor.

The sale of naval vessels had been prohibited by the Treaty

 

28Hanna to Hughes, December 28, 1923, NA, 812.00/
26673-1/2.

29The arms embargo proclaimed against Mexico in
July, 1919, was lifted in 1922. For a summary of the use
of the arms embargo against Mexico from 1912 through 1922
consult Elton Atwater, American Regglation of Arms Exports
(Washington: Carnegie Endowment for International Peace,
1941), pp. 96—98. A detailed account of its application
from December, 1923, through July, 1924, is found on pp.
104—111.

30Proclamation issued by President Coolidge, Jan-
uary 7, 1924, For. Rels., 1924, 428-429. Coolidge acted
under a joint Congressional Resolution passed on January 31,
1922. '

 

—289-

31 The sale of

of Limitation of Naval Armament in 1922.
rifles and other firearms and ammunition could be con-
sidered prohibited by a letter of Harding to the Secretary

of war on April 23, 1923,32

in which Harding had recom—
mended that surplus war materiel which encouraged warfare
in the world should not be sold. In consultation with
his cabinet Coolidge finally approved Hughes's suggestion
that the united States continue to waive certain restric-
tions in the arms embargo on the purchase of weapons and
ammunition by the ObregOn government.33 The Secretary of
war was given the authorization to proceed with the sale
of surplus war materiel.34
The application of the arms embargo was a very ob-
vious discrimination on ObregOn's behalf. Because this
action would be construed as indirect interference in
the domestic politics of a now friendly neighboring state,

Hughes publicly defended the Department's policy in a

series of addresses. Before a meeting of the Council on

 

31See For. Rels., 1923, 567-568.

32Harding to weeks, cited in For. Rels., 1923, 42-43.

33Coolidge to Hughes, January 28, 1924, LC, Coolidge
Papers (Box 160). The initial announcement by the United
States to sell a limited quantity of war materiel had been
made in a press release on December 29th. Hughes to Summer-
lin, December 29, 1923, For. Rels., 1923, 569-570.

 

34“Weeks relied upon statutory authorization given to
the Secretary of War in an act of June 5, 1920, for his
discretion on the sale of surplus war matériel. Between
January 7 and March 12, 1924, the war Department sold over
$1,286,000 dollars worth of weapons, ammunition and air—
planes. U.S., war Department, Shipment of Arms to Mexico,
68th Cong., lst Sess., 1924, Senate Doc. 104, pp. 2-3.

—290-

Foreign Relations in New YOrk City on January 23, 1924,
Hughes outlined the current policy of the united States

toward Mexico.35

In September of the previous year the
ObregOn government had reached such a satisfactory level

of stability and disposition to discharge its international
obligations that the united States could recognize and
renew diplomatic relations with that government. But the
sudden attempt to overthrow this constitutionally elected
government36 to determine its successor could not be toler-
ated by the united States, Hughes admonished, especially
when the ObregOn government requested to purchase weapons
and munitions from the United States. Hughes referred to
the de la Huerta rebellion as a matter of "personal poli-
tics." “It is an effort," he continued, "to seize the
presidency; it means a subversion of all constitutional

37 If the United States had denied

and orderly procedure."
ObregOn's request for assistance, it would have repudiated
a government which was recently recognized and would have

encouraged armed rebellion against a legitimate government.

Having surplus war matériel to sell, the united States

 

35Charles Evans Hughes, "Recent Questions and Nego-
tiations," American Journal of International Law, XVIII,
No. 2 (April, 1924), 235-236.

36The State Department never denied that ObregOn
had been constitutionally elected in 1920. Hanna Memoran-
dum to Hughes, May 12, 1922, NA, 711.1211/52.

37

 

Hughes, gp. cit., p. 235.

 

—29l-

exercised its legal right both to impose an arms embargo
as well as to sell arms to the legitimate government to
put down the insurrection.38
Hughes's strictly legalistic approach39 had politi-
cal overtones. Hughes was thinking in terms of a govern—
ment which the united States had finally found acceptable
to recognize after a two-and—a-half year waiting period.
The controversial issues between the two countries had
been eventually adjusted in the meetings of the U.S.-
Mexican Commission in which the united States had accepted
a compromise settlement. Having already tired of the
Mexican problem, Hughes was unwilling to quibble about
what he regarded to be purely a domestic matter. He had
made a decision to recognize ObregOn, and the settlement
reached was with ObregOn. Hughes's and the Department's

adamant support of Obregén Showed an unwillingness to

risk or to undo what had been laboriously accomplished.

 

38This interpretation was applied to Harding's letter
of April 23, 1923, in which the letter's content was taken
to be primarily concerned with the question of general
disarmament. It was thought not to apply to civil insur—
rections in Latin America where, if literally followed,
the policy in the letter would hinder the recurrent prob-
lem of keeping order on the continent. Atwater, op. cit.,
p. 106. Refer also to Hughes, Our Relations . . . Western
Hemisphere, pp. 51-54, for a discussion of arms policy
toward Latin America.

39Eleanor w; Allen, an expert in international law,
supported and substantiated Hughes's reasoning and poli-
cies in this case as within the valid principles of inter-
national law. Allen, "The Case for American Aid to Obregén,"
Current History, XX, NO. 1 (April, 1924), 71-78.

 

-292—

The State Department's public release, for example, was
worded to express a "firm belief" in ObregOn's determina-
tion to guarantee a peaceful free election for which he
was attempting to pacify the country.40 Under Secretary
of State William Phillips had suggested to Obreg6n's
representatives in washington that Obregon make a statement
of policy in the press on his belief in constitutional
principles and free elections. Because the American pub—
lic "believed absolutely in constitutional guarantees and
freedom of elections,“ Phillips thought that a statement
by Obregon would have a very favorable impact on U.S.
public opinion in backing the Department's policy.41
While Mexico was in the throes of another civil

war, the claims conventions remained unapproved and un—

ratified. Although the Proceedings of the U.S.-Mexican

 

Commission were in the form of an executive agreement
between the two administrations, the claims conventions
were the only technical and legal binding force upon the
Mexican government. The settlement on the agrarian question
in the minutes of the joint commission rested on the re—

course of American citizens to a general claims commission,

 

4OUnder Secretary'William Phillips Memorandum of a

conference with RamOn Ross and Manuel Téllez (the Mexican
Chargé d'Affaires in washington), January 26, 1924, NA,
812.00/27059.

41Ibid.

-293-

as provided for in the General Claims Convention. By
December 27, 1923, ObregOn reported that the Special Claims
Convention had been approved and ratified, but that the
General Claims Convention had not yet come up for discus-
sion in the Senate. Hughes stressed the urgency of the
approval and ratification of the General Claims Convention
before the Mexican Congress adjourned.42 Leaving the
unfinished business of ratification of this convention

to another session would create an unfavorable impression
in the united States at a time when the ObregOn government
was precariously involved in civil war.

The explanation given for the lack of approval on
the convention was an inability to have present the neces-
sary two—thirds quorum in the Senate to take a vote. To
end this delaying tactic ObregOn had arranged to call a
special session in January.43 Those Senators unable (or
unwilling) to attend would have "alternates" to fill their
places, and hopefully the vote taken would approve the

44

convention. At the time of the convening of the Special

 

42Hughes Memorandum of an interview with Manuel

Téllez and RamOn Ross, December 29, 1923, LC, Hughes Papers
(Box 176, No. 90).

43Manuel Téllez assured Hughes that the General
Claims Convention would be promptly ratified. Hughes
Memorandum of an interview with Tellez, January 3, 1924,
LC, Hughes Papers (Box 176, No. 90).

44AS provided for in Article 63 of the Constitution.

 

—294-

session, however, several curious events occurred. The
leading opponent of the General Claims Convention, Senator
Francisco Field Jurado, was assassinated on January 23,
1924. Three other Senators who were also opponents of

the convention were kidnapped, and "alternative" Senators
immediately sworn in to take their place in the special
session.45 Though these incidents were an obvious deliver-
ate threat to force the Senate to approve the General
Claims Convention,46 ObregOn denied knowledge of the con-
Spiracy and condemned the action.

Before the special session of the Senate, Obregén
sent Foreign Minister Aarén Saenz and the former Mexican
Commissioner Fernando Gonzalez Roa to present the case
for the approval of the General Claims Convention. They
argued that the convention was neither a limitation nor
a violation of Mexico's sovereignty or of the Constitution
of 1917. A minority of the Senators feared that the con-
vention gave a privileged position to the united States

and evaded certain provisions of the Mexican Constitution.47

 

45Field Jurado and the other Senators had been
threatened for some time by the Leader of the CROM, Luis
Morones. Labor organizations were the staunchest supporters
of Calles as the administration's presidential candidate.

46Details of the incident are found in Alessio Robles,
Op. cit., pp. 294-301.

47For the debate of the convention in the Senate,
consult AarOn Saenz, op. cit., pp. 92-101.

-295-

When put to vote on February lst, the convention as stated
was approved by the majority of Senators. The Special

and the General Claims Conventions were then ratified by
Obregén on February 16th. Ratifications of the conven—
tions were exchanged between the United States and Mexico,
and the conventions proclaimed law in both countries by

the beginning of March.48

The commissions provided for
in these conventions were to begin functioning in August.
The ratification of both conventions permitted the appoint-
ment of official accredited representatives of the highest
diplomatic rank (and accorded the actual g2 jp£§_recogni—
tion to ObregOn). Former U.S. Commissioner Charles B.
Warren was appointed U}S. Ambassador to Mexico, the Mexican
Commissioner RamOn Ross as Mexican Ambassador to the United
States.49

The de la Huerta rebel government, which claimed to

control the greater part of Mexico including the majority

of ports and most of the federal military and naval forces,50

 

48Ratifications on the Special Claims Convention were
exchanged on February 19th, the General Claims Convention
on March lst. The Special Claims Convention was proclaimed
law on February 23rd, the latter on March 3rd.

49Because warren had won Mexico's respect and con-
fidence, Gen. J. A. Ryan had suggested warren's appointment
as a psychological advantage for the united States in
Mexico as well as throughout Latin America. Ryan to
Coolidge, August 23, 1923, LC, Pershing Papers (Box178).
Ross was probably selected for his familiarity with Washington
and the number of Special missions he performed involving
the United States.

0

Consul General in New York City for the Provisional
Government of Mexico to the State Department, December 31,
1923, For. Rels., 1923, 570-571.

-296-

lasted about four months. In part the rebellion failed
for internal reasons, and in part from the attitude and
action of the united States. De la Huerta was not a mili-
tary Officer, and his movement lacked any coordinate
thought. Commanding a minimal number of loyal troops
ObregOn, the military hero of Carranza's Constitutionalist
Army, won a series of successful victories against the
rebel forces. ObregOn's defensive position was uniquely
aided by the creation of labor battalions from Mexico

City and a few peasant forces from the countryside. Both
labor and the peasants, which had benefited from the ObregOn
government, apparently saw a stake in its preservation.
Labor organizations had reached their largest growth and

51 ObregOn was con-

52

extent of power in the early 1920's.
sidered sympathetic with the labor movement and Calles
was regarded as a friend of labor. ObregOn's agrarian

reform program was slowly but successfully making some gains.

 

51Marjorie R. Clark, Organized Labor in Mexico (Chapel
Hill: university of North Carolina Press, 1934), pp. 55-
105; ‘William E. 'Walling, The Mexican Qnestion: Mexico
and American—Mexican Relations under Calles and Obregén
(New YOrk: Robin Press, l927),p pp 82- 84.

52Among the documents in the files of the PAFL was a
copy of a secret agreement dated August 6, 1919, between
ObregOn and a representative of the Partido Laborista
(Labor Party). In return for its support in the election
of 1920 Obregon pledged to carry out a pro- -labor program.
The Partido Laborista was one of the labor organizations
which dispatched labor battalions. Refer to Snow, Op. cit.,
pp. 139—141.

—297-

A considerable factor in the failure of the rebel-
lion was the policy of the State Department. While the
arms embargo was discriminately applied to the de la Huerta
rebel government, the ObregOn administration purchased
rifles, pistols, machine guns, ammunition, replacement
parts for weapons, bombs and airplanes from the war De-
partment. Private U.S. firms generally adhered to the
arms embargo and sold weapons and ammunition only upon
the sanction of the State Department.53

During the early months of 1924 the Department like-
wise aided ObregOn in non-military matters. Several times
the ObregOn government was permitted to tranSport its
troops and equipment across united States territory to

54 U.S. des-

sections of Mexico where they were needed.
troyers and cruisers were dispatched to the Gulf coast

of Mexico to patrol the Veracruz-Tampico oil region as a
precautionary measure in the protection of American life
and prOperty. The Department sent diplomatic protests to
the rebel government on the closing of various ports under
its control as a threat to world commerce. unless the
rebel government maintained an effective blockade of these

ports, the Department argued, the closing of the ports

was contrary to international law. The Department issued

 

53New York Times, January 25, 1924, p. 16.

54See For. Rels.y 1924, 431.

 

-298-

a stern warning against the mining of ports under the
control of the insurgents and on the threat of bombardment
of ports not under their control.55 Unless absolutely
necessary, the Department refused to acknowledge any com-
munication from those individuals claiming to represent
the "SO-called rebel authorities in Mexico."56 In its
action and policies toward the de la Huerta rebel govern-
ment the State Department was taking a much stronger and
more hostile stand than it had ever maintained against
ObregOn.

De la Huerta's faction was at a further disadvan-
tage in the united States because American public opinion
was generally sympathetic to ObregOn. From its beginning,
the de la Huerta rebellion was viewed as a matter of per-

57

sonal politics. Though in a few instances there was

some criticism about a possible precedent in the recent

 

55All of the preceding action and policies are found
in For. Rels., 1924, 432-438.

56Attached memorandum of Hanna to Assistant Secre-

tary Leland Harrison, February 29, 1924, NA, 812.00/27042.

57Nation, December 19, l923, pp. 703-704; December 26,
pp. 748-749; Outlook, December 19, 1923, pp. 661-662; §HET
ypy, January 1, 1924, pp. 318-320; a survey of newspaper
opinion in the Literary Digest, December 22, 1923, pp.
10-11.

 

-299-

U.S. policy toward Latin America,58 a considerable number
of American newsPapers59 supported the Department's policy
toward civil war and revolution in Latin America. In the
case of Mexico the rebellion was seen as the destruction
of ObregOn's accomplishments.

In Congress there were only a few voices of criti-
cism on the Department's policy. In January, 1924, Senators
Hiram Johnson (R, Calif.) and Joseph T. Robinson (D, Ark.),
Representatives Benjamin L. Fairchild (R, N.Y.) and Emman-
uel Celler (D, N.Y.) opposed the partisan sale of weapons
and ammunition to the ObregOn government as intervention
in the domestic affairs of Mexico.60 Resolutions by Fair-
child and by Robinson which would have prohibited these
sales were shelved. The Senators from the border states

generally approved the policy of the State Department.61

 

58See the press comments in Literary Digest, January 12,
1924, pp. 10-11. One journalist, George W; Hinman, Jr.,
regarded the sale of weapons and ammunition to the ObregOn
government as committing the united States to a policy of
supporting the established order in Latin America against
revolutionary factions. Hinman, "The United States' Ban
on Latin American Rebels," Current History, XX, No. 1 (April,
1924), 63-70.

59See the press comments summarized in the Literary
Digest, January 19, 1924, p. 11. New YOrk Times, December 31,
1923, p. 12; January 2, 1924, p. 16; January 12, p. 12;
January 24, p. 16. Refer also to American Review of Reviews,
February, 1924, 147-157; Current History, July, 1924, pp.
586-596.

6OU.S., Cong. Record, 68th Cong., lst Sess., January 24,
1924, 1406-1408; April 1, 5323.

61

 

New York Times, January 13, 1924, VII, p. 13.

 

 

 

 

 

-300-

The American Federation of Labor actively supported
and assisted Obregon. Its president and also chairman
of the Pan American Federation of Labor (PAFL), Samuel
Gompers, wished to see the continued growth and develop-
ment of labor organization in Mexico. Gompers had recommended
to the ConfederaciOn Regional de Obreros Mexicanos (CROM),
the largest and.most important labor organization, that
they support ObregOn's candidate (Calles) in the election
in 1924.62 When the rebellion occurred, the leadership of
the CROM appealed to Gompers to use his influence to pre-
vent weapons and ammunition from reaching the rebel forces.
Pledging the full support of the AFL to the ObregOn govern-
ment, Gompers urged all American labor under his control
to watch for any Shipments of weapons and ammunition to
the rebels from the united States.63 He likewise enlisted
the aid of the International Federation of Trade Unions
(IFTU) in Europe to prevent such shipments to de la Huerta

64

from abroad. When de la Huerta attempted to neutralize

Gompers's efforts, Gompers rejected all compromise.

 

62Snow, Op. cit., pp. 114-117.
631bid., p. 118.
64

The I.F.T.U. requested all its affiliates through-
out Europe to cooperate with the Pan American Federation
of Labor. Snow, op. cit., p. 120. Report of the Proceed-
ings of the Fourth Congress of the Pan American Federation
of Labor (n.p., 1924), p. 40. The I.F.T.U. reported no
shipments of weapons or ammunition from Europe to de la
Huerta. Snow, p. 123.

-301-

In a small way perhaps de la Huerta's eagerness to
obtain sympathy and support from the United States led to
the eventual failure of his rebellion. Not wishing to
Offend the united States, de la Huerta gave assurances
that the lives and property of foreigners in the terri-
tory under his control would not be endangered. In pos-
session of the petroleum fields on the Gulf coast and the
customs houses of Veracruz, de la Huerta did not exact
as much revenue through taxes and custom duties as he
might have. Though he sent mild diplomatic protests to
'Washington on its action and policy toward his provisional
government, de la Huerta always promptly complied with

65

the diplomatic protests from the united States. By the

first part of March de la Huerta still hoped for an inter-

66 By his own

view with Hughes to explain his position.
attitude de la Huerta made it possible for Hughes and
Coolidge to pursue an open policy of interference and
discrimination against him. In turn the united States did
not suffer any embarrassing results of retaliation and
reprisals as the Wilson administration had experienced.

Already losing ground in February, the rebel army

was finally disbanded by the first of April. Escaping

 

65For example, the mines laid in harbors under his
control were removed.

66Consul Rankin (Frontera, Mexico) to Hughes,
March 10, 1924, NA, 812.00/27098.

-302-

to the united States, de la Huerta remained in exile.
Once more Mexico began to return slowly to normal pursuits
and peaceful activity. The Short-lived rebellion had
its cost, however, on the economy. The Obregon govern-
ment had found sufficient difficulty in meeting the first
installment due the International Committee of Bankers in
December, 1923, on the payment of interest on the foreign
debt. The cost of the de la Huerta rebellion, including
military expenditure,67 government property destroyed,
government funds seized by the rebels and the loss of
revenue from the areas controlled by the rebels, amounted
to more than sixty million pesos.68
With the exception of a loan from the Huasteca Pe-
troleum Company in November, 1923, the ObregOn government
was unable to obtain any loans from American bankers. To
help defray the overdue salaries and its current operating
expenses the ObregOn government in May, 1924, had ordered
the sale by auction of some of the public lands.69 In
the oil fields the cessation of operations by most of the

American oil companies eliminated the petroleum produc-

tion taxes as a source of revenue. As the rebellion ended,

 

67The surplus military supplies purchased from the
United States were obtained on a deferred payment contract.

68Turlington, gp. cit., p. 300.

69New YOrk Times, May 9, 1924, p. 9.

 

IIIIJI‘ Ill l||ll Alli I

E

—303-

labor unrest and strikes in the oil fields continued to
halt Operations. By June 30th ObregOn issued a decree
temporarily suSpending the Lamont-de la Huerta Agreement
of 1922 on the basis that it was Signed on the strength
of a subsequent loan which did not materialize.70 In
consideration of the recent turmoil in Mexico, the Inter-

national Committee of Bankers acquiesced in this suSpension

of the debt payment.

II

By the late spring of 1924 Mexico had begun to enter
into another period of peace and stability. The political
turmoil which had recently ruptured the country had grad-
ually ebbed by April. With diplomatic recognition--and
still in power deSpite a rebellion--ObregOn might renew
his reconstruction program for Mexico. However, Pani's
report the preceding autumn on the condition of the federal
treasury and the disrupting influence of the rebellion
on Mexico's economy and on foreign investment seemed to
predict a bleak economic future. The reports of vast
investments of American capital in Mexico as a consequence

of diplomatic recognition had been largely exaggerated.

 

70In January of 1925 Pani conferred with Lamont,
and a revision of the 1922 agreement was arranged in the
Pani-Lamont Agreement of 1925.

—304-

Since American capital was turning to lucrative invest-
ments elsewhere in Latin America, Obregon sought to influ-
ence American business and investment through the usual
techniques of planned excursions to Mexico and reports
of optimistic conditions. By summer it appeared ObregOn's
efforts were Slowly reawakening opportunities for trade
and investment in Mexico.71
As far as the State Department was concerned, there
had been no actual opportunity to test Obreg6n's conduct
and policy subsequent to his recognition. His preoccupa-'

tion with a rebellion and its aftermath Shortly after the

renewal of diplomatic relations lasted into early June.

 

71For example, see "New American Capital In Mexico,“
New York Times, March 1, 1924, p. 12; "Mexican Progress un-
der President Obregon," Current History, June, 1924, pp.
463-468; an article by the President of the Baldwin Loco-
motive Works of Philadelphia, Pennsylvania in Collier'sL
The National Weekly, September 13, 1924, pp. 10-11. Refer
also to Cleland (ed.), The Mexican Year Book, 1922-24,
and a statistical handbook compiled and edited by H. Sch-
nitzler, The Republic of Mexico: Its Agriculturey Commerce
and Industries (New YOrk: Nicholas L. Brown, 1924). An
American Industrial Mission to Mexico, composed of nearly
one hundred prominent American industrialists and organized
by the American Manufacturers Export Association, visited
Mexico in September, 1924, and relayed a very favorable
report on Mexico as a natural market for the United States.
See New YOrk Times, July 10, 1924, p. 33; July 31, p. 20;
August 4, p. 22; August 30, p. 11.

The Revolution and its influence on Mexican life
and culture and on Mexico's future were discussed in the
social welfare magazine Survey, whose entire issue of May 1,
1924, was devoted to Mexico. See also the Nation, August 27,
1924, where a considerable portion of the issue was devoted
to Mexico's problems, and whose advertisements emphasized
opportunities for trade and investment in Mexico.

 

 

-305-

Within a month Plutarco Elias Calles was elected President,
to take office on December lst.72 With Obregén's term

of office ending, the Department did not anticipate any
serious problems or crises.73 In spite of Calles's

alleged radicalism,74

the Department withheld comments on
his election, preferring to wait until his term of office
began.

On his pre-inaugural tour of the united States during
October and November, Calles was the guest of honor at
numerous dinners. Representatives of large business or-
ganizations and chambers of commerce, industrialists and

bankers toasted wishes of good will between the two coun-

tries and for the opportunities of Mexico as a lucrative

 

72Impressed with the peaceful election, the U.S.
press thought Calles would continue ObregOn'S pattern of
progress and stability. See Literary Diggst, July 26,
1924, p. 13; New YOrk Times, July 8, 1924, p. 18.

73Only two minor issues arose while Warren was Am-
bassador. Those oil companies which had not reached a
satisfactory agreement with the ObregOn government even-
tually met in a conference by early autumn. Tentative
arrangements were made for these oil companies to explore
and to exploit lands acquired or leased since May 1, 1917.
Warren to Coolidge, August 4, 1924, NA, 123W251/69.

The second case involved the land expropriated from
a widowed American citizen, Mrs. Rosalie Evans. Refusing
to relinquish her property or to accept bonds in payment,
she protested to Mexico City as well as to washington.
Though provided with Mexican federal troops, she was mur-
dered in August. Her death, and her letters published
posthumously, provided a small amount of publicity on some
abuses of the agrarian reform program and on the alleged
failure of the united States to protect the rights of its
citizens after recognizing Obregon. See the Literary
Digest, August 16, 1924, p. 9; Daisy Caden Pettus (ed.),
The Rosalie Evans Letters from Mexico (Indianapolis:
Bobbs-Merrill, 1926).

74

 

 

Three years' earlier the New YOrk Times had warned

-306-

market.75 A Special dinner was provided in his honor by
the State Department. Hughes welcomed Calles by inform-
ing him that the dinner reflected the new spirit of good
will and confidence existing between the two countries.76
Among the guests at Calles's inaugural on December lst
was the newly appointed Ambassador to Mexico, James R.
Sheffield.

The State Department was pleased at the outcome
of events in Mexico. Ambassador warren's final report
to Washington reflected the growing optimism and confi-

77 Re-emphasizing

dence placed in the Mexican government.
the progress made in U.S.-Mexican relations since 1920,
Warren was satisfied that the basis for a better under-
standing between the two countries had been reached. In
the General Claims Convention, for example, a precise

and satisfactory method had been provided for the protec-

tion of the rights of American citizens in Mexico. As

 

of a serious "Bolshevik" threat in Mexico. Reflecting
the changed atmosphere by Calles's inauguration in Decem—
ber, 1924, the N. Y. Times foresaw no such danger. N. Y.
Times, December 2, 1924, p. 24.

75
p. 18.

76Ibid., November 12, 1924, p. 5; Beerits Memorandum,
"Relations with Mexico," LC, Hughes Papers, Box 176, No.
37, p. 17.
77warren had accepted the post of Ambassador on a
temporary basis. He resigned in August. warren to Cool-
idge, August 4, 1924, NA, 123W2Sl/69.

New YOrk Times, October 29, 1924, p. 23; November 7,

 

-307-

Warren foresaw it, the future was hopeful; and the Depart-
ment concurred. The optimism, however, was short-lived.
Within a matter of several months after Calles's inaugura-
tion, another series of crises arose in U.S.-Mexican rela-
tions over petroleum and agrarian legislation. And the
cycle of diplomatic protests was renewed--this time with

a government recognized by the United States.

III

Hughes was no longer Secretary of State when the
new Mexican petroleum and agrarian legislation by December
of 1925 had created another crisis in U.S.-Mexican rela-
tions. Hughes had remained as Secretary until the beginning
of Coolidge's full term in March, 1925. He was spared
the ordeal of facing another crisis with Mexico, this
time with Plutarco E. Calles (ObregOn's successor). It
is not difficult to imagine how Hughes would have reacted.
He would have no doubt insisted that the provisions of the

Proceedings of the joint commission in 1923 were at least

 

morally binding on Calles. But he left his post when
U.S.-Mexican relations were at their best rapport within
the past fifteen years.

One cannot, of course, divorce Hughes's policy toward
Mexico from his other considerations as Secretary of State.

No Secretary of State--a man concerned with foreign affairs--

-308-

has operated in a vacuum. In addition to Mexico Hughes
had to decide on the role of the United States in the
world and the problems of the League of Nations, the
World Court, reparations, the Far East, even the Monroe
Doctrine in Latin America. His overall characteristics
as Secretary of State, however, applied equally, if not
more pronounced, toward Mexico. Particularly noticeable
was his legalism. As one biographer has aptly described
Hughes: "as Secretary, he clung to the lawyer's metho-
dical definition of problems and the rendition of final
decisions in strict conformity with the rules of logic,

78 His legalism, however, transcended

law, and precedent.“
mere routine business of state to encompass the interna-
tional comity. Like most advocates of a world governed
by law, he saw law as an instrument to preserve order,
peace, and stability in the community of nations as do-
mestic law brought order to anarchy within nations. Law
then served as a solution to many of mankind's problems.

In a sense Hughes continued rather than abandoned
the idealism attributed to Wilson. The emphasis on prin-
ciple, justice, righteousness, a strict adherence to inter-

national law, was reminiscent of Wilson's policy. His

stress on logic and rationality whether in the application

 

78John Chalmers Vinson in Graebner (ed.), An uncertain
Tradition . . ., p. 132.

 

-309—

of law or in the concept of a world order led him to over-
simplify complex matters and "reduce them to formulas,"79
as for example, in the Treaty of Amity and Commerce as the
simple solution to the controversies between Mexico and

the United States. Hughes repeatedly referred directly

or implicitly to the terms "reason" and "logic," so much

so that Justice Louis D. Brandeis was supposed to have
attributed to him "'the most enlightened mind of the eight-
eenth century."'80 Combined with characteristics of strict
legality and sublime rationality was the desire to uphold
American rights. Here Hughes accepted the pattern devel-
oped by his predecessors and the precedents of customary
international law. The policy established to protect
American rights abroad was conceived by Hughes to be a
general principle, and not dictated by any special inter—
ests.

Hughes had not really broken away from the traditional
attitudes of the united States in the nineteenth century.
Yet the ship of state which Hughes commanded in the early
1920's was one tossed about by the storms and stresses
of the times. The three major social revolutions of the

1910's and the new states created after WOrld war I could

scarcely be ignored. The world of Hughes's college days

 

791bid., p. 133.

80As quoted by Vinson, loc. cit.

 

-310-

and early legal career in the 1880's and 1890's was rapidly
disintegrating. Reared in the nineteenth century, the
problem for Hughes was how to meet the challenge of the
twentieth century.

That social revolutions in China, Russia, and in
Mexico had successfully challenged the established order
meant to Hughes primarily a breakdown of law and the en-
couragement of anarchy and chaos. The new states formed
in eastern and southeastern EurOpe and in the Ottoman
Empire after World‘War I showed an erosion of the empires
or monarchies which had once ruled EurOpe and imposed on
it at least a facade of order. Against this background
Hughes's withholding of recognition from ObregOn to obtain
assurances against the so-called confiscation of (legally
acquired) property rights of American citizens in Mexico
was essentially then not an isolated policy. Adhering
to a traditional View on the sanctity of private prOperty,
Hughes would not tolerate social and economic reforms abroad
which restricted the rights of Americans (as defined by
him). Although Hughes claimed that he was always sympathe-
tic to the basic aims of the Mexican Revolution and was
in no way attempting to alter its Constitution,81 he pro—

tested as had his predecessor Lansing against "confiscatory"

 

81Beerits Memorandum, 9p. cit., p. 2.

 

-3ll-

measures inherent in the petroleum decrees or agrarian
legislation. (Curiously, neither Secretary defined the
term "confiscation.")

Nonetheless, Hughes's attention to the safeguarding
of American property rights abroad seemed logical and
reasonable to him at the time, for as he once remarked to
Harding, the principle involved was "under the present
conditions of the world, rather important."82 Hughes
showed a marked distrust of revolution, of reform or
change accomplished through violence, civil disorder or
comprehensive social legislation. Revolutions disrupted
the order, peace, and stability of a world governed by law.
A strong believer in gradualism when social revolutions
demanded results, Hughes's conservatism unwittingly de-
fended and upheld the traditional society. And from the
numerous comments on "radicalism” and the fear of “B01-
shevism" in Mexico, the State Department staff followed
Hughes's thinking. The problem, as one astute observer
stated it, was to find a means to achieve essential social
and economic reforms on a national scale without virtually
"upsetting the international economic system as embodied

in the existing body of international law."83

 

82
25494.
83

Hughes to Harding, March 25, 1922, NA, 812.00/

Dunn, Diplomatic Protection . . ., p. 331.

 

—312-

In his policy toward Mexico Hughes had compartmen-
talized rather than synthesized his thinking. This per-
mitted him to retain his my0pic position on Mexico despite
growing evidence of incongruities in his policy. Hughes
had reduced the whole complex imbroglio of united States
relations with Mexico over the past decade to a single
formula--the guarantees in the Treaty of Amity and Com-
merce. In doing so, he attempted to hold Obregdh respon-
sible to customary international law as interpreted by
the United States. Hughes stressed rights and duties
under international law, which Mexico as a sovereign nation
likewise possessed. Certainly ObregOn as had Carranza
thought that he was fulfilling Mexico's obligations under
international law. Hughes had urged Great Britain and
France to adhere to the non-recognition policy of the
United States. Yet it did not seem to have occurred to
Hughes that Great Britain, for example, could have pro-
tested the eighteenth amendment on prohibition which under-
cut "acquired rights" of British firms in the united States
and have demanded a Special category for British citizens
in the United States as Hughes was essentially demanding
for American citizens in Mexico. His obsession with the
fear of "confiscation," his stress on protection for legally
acquired property rights, and his questioning of prece-
dents in Mexican law had made him oblivious of court de—

cisions and legislation in the united States in which

 

-3l3-

private property was not always held to be inviolable.
Hughes had continually repeated that the policy of
the safeguarding of American interests was based upon

84 He denied that Special interests as the oil

principle.
companies, the International Bankers, or prOperty holders
had directly influenced or dictated the Department's pol-
icy. The Department's policy was supposed to have been
left "entirely free" to deal solely with the diplomatic
problems. Yet this policy, as that on loans and invest-
ments in March, 1922, was inconsistent as stated in divorc-
ing the political from the economic issues. NO matter

how sincere Hughes was, the implication in the Nation

and other media of a link between the oil companies, wall
Street bankers and the State Department's policy osten-
sibly contained some truth. By the time of the Bucareli
Conference Hughes had turned from principle to practical
matters for discussion.

Not until 1922 was Hughes willing to make some re-
evaluation or modification of his policy. Public criti-
cism and embarrassing incidents had revealed inconsistencies
inherent in the Department's policy. Its non-recognition
policy was thwarting the interests of American business

(backed by the Republican Party) to expand its markets

 

84Hughes Memorandum, April 9, 1924, NA, 812.51/1051.

-3l4-

and to seek new investments abroad. Discrimination against
Mexican citizens in the United States and the problem of
a legal suit against an unrecognized government pointed
further to the barrenness of the Department's position.
Hence Hughes was more amenable to eventual compromise
with the Bucareli Conference, although he never abandoned
what he considered to be the intrinsic righteousness of
his policy. Defeat on his position and the embarrassment
of being wrong were bitter pills which Hughes could not
swallow. He had hoped to avoid what he regarded as the
mistakes of the previous administration on Mexico, and
to raise the prestige of the Republican Party with a new
and effective policy. unable to admit that he had made
a mistake, Hughes continued to find justification for
ObregOn's recognition by stressing that changed conditions
in Mexico had permitted him to demand less than he could
have in 1921.

unlike his counterpart in the united States, Obregdn
as President of Mexico was the chief policy-maker. His
desire for recognition was clear--to retain his government
in power. Perhaps without the Bucareli Conference and
the resumption of diplomatic relations he might have re-
mained in power until his term of office expired in
November, 1924. The de la Huerta or a similar rebellion
would probably have occurred anyway and Obreg6n might have
been fortunate or skillful enough to weather it. (The

backing of the United States in the rebellion in 1924

-315-

certainly proved beneficial to Obregon, if only in pre-
venting the prolongation of another civil war.)

Nevertheless, recognition did rank high among Obre-
gon's priorities for he worked diligently at it. An ex-
tensive propaganda program, personal emissaries, and
numerous plans and prOposals showed that Obregon considered
recognition as a valuable aid, if not a necessity, in con-
solidating his power. Even during the Bucareli Conference
he still hoped for recognition. The question might be
asked: could recognition have come sooner? Under Hughes,
probably not. Even if the negotiations with the Wilson
administration in October and November, 1920, had resulted
in gg.£§gpg recognition of de la Huerta or of Obregén,
Hughes would have probably withheld gguippg recognition
on a policy similar to that developed in 1921.

ObregOn, of course, faced the graver burdens. By
1920 Mexico was ready for peace, and ObregOn and his govern-
ment were sincere in their desire to restore peace and
stability. They were aware that foreign financial assist-
ance, eSpecially from the united States, was necessary
for the task of reconstruction. Mexico had been handi-
capped by the decade of embittered relations with the
United States, and ObregOn was aware that the united States
had certain legitimate complaints against Mexico. In
his campaign addresses in 1919-1920 he made promises which

he fulfilled. On numerous occasions ObregOn showed himself

‘51

F-'

-3l6-

more than willing to advantageously settle claims of damages
to American citizens, to define and to limit the inter-
pretation and enforcement of Article 27 of the Constitu-
tion and to make a settlement on Mexico's foreign debt.

All he requested in turn was that the State Department
acknowledge his political limitations.

The recurrent theme which ObregOn had tried to im-
press upon the Department was the Mexican nation's extreme
sensitivity to its sovereignty and dignity. As emphasized
in Pani's last note to the Department prior to the Bucareli
Conference, this sensitivity was the most striking char-
acteristic of the Mexican political psychology.85 The
Department had failed to consider adequately, Pani might
have added, that "dignidad" was important to a peOple who
felt dominated in their past relations with the United
States. Smaller nations were more conspicuous of a sense
of sovereignty, of being autonomous or free from the ex—
ternal control of other nations. A.nation as Mexico--of
unequal wealth, power and importance compared to the united
States--seemed weak or insignificant beside the stronger,
dominating united States. The Mexican nation relied upon
sovereignty as a consolation, as the only asPect of its

nationality on which it could stand up to a much greater

 

85Pani's note to Hughes, Summerlin to State, April S,
1923, For. Rels., 1923, 528.

A, __-___
.1 1‘

~317—

power. Consequently, Obregdn rejected a formal agreement
such as the Treaty of Amity and Commerce proposed by the
United States which would bind his government. ObregOn
pleaded for freedom of action in acceding to the legiti-
mate demands of the United States, to obtain what was
politically and momentarily feasible. The alternative,
bluntly stated, was the overthrow of his government.
Because Mexico was in the stage of recovery and
transition, certain conditions did give the State Depart-
ment in its mode of mind some justification for caution.
Rebel bands existed along the U.S.—Mexican border in late
1921 and into 1922. There were some left-wing elements

86

in Mexico, and certainly abuses in the agrarian reform

program and in permits granted for the drilling of petrol—

7 . . . .
eum.8 Questions were raised in the Mex1can press on the

 

86The day following the official resumption of dip-
lomatic relations, several so-called "radical“ Americans
and Mexicans in the Department of Education were dismissed
by ObregOn for ”'subversive activities.'" Consul General
C. I. Dawson to State, September 5, 1923, NA, 812.00/26455;
New York Times, September 30, 1923, p. 6.

87The Agrarian Commissions were often careless in

the exprOpriation of land. Occasionally their own records
were lost or misplaced. Frequently there was considerable
confusion and inefficiency in the various governmental
agencies concerned with the issuance of provisional per-
mits to drill petroleum. The concessions were sometimes
conflicting, whereby some companies were granted permits
and others refused on no apparent valid grounds. Because
of the red tape involved, it took nearly a year for a
company to obtain a permit; and permits might then be
arbitrarily cancelled. See AGN, series lO4-Pl- on pe-
troleum.

Obregdn had relied upon the data provided by the

 

—318-

precise interpretation to be given to certain paragraphs

of Article 27.88

In reality, these only served to exem-
plify a delicate domestic situation with which Obregon
had been fairly successfully contending.

Like Hughes, Obregon did not lack criticism. The
most serious confrontation for ObregOn was the Bucareli
Conference,89 and his subsequent recognition became both
praised and criticized. To some he emerged as the master
politician in the struggle with the united States, to
others as the man who paid a high and dear price for recog-
nition. The closed meetings of the joint commission and
the events leading to the de la Huerta rebellion so shortly

after the conclusion of the conference--not to mention

the assistance and position of the united States toward

 

Secretary of Industry, Commerce and Labor. In one case
in 1922 a company which had always complied with the re-
gulations of the Mexican government lost its permit to

a piece of land because of a mistake by the Department
of Petroleum. Through a legal technicality that permit
was obliged to be given instead to a bitter adversary of
the Obregon government--Doheny's Huasteca Petroleum Com-
pany. See AGN, lO4-Pl-P-12 Pq 15 on the hacienda Juan
Felipe. Also see above, footnote 19.

88See above, Chapter VI, footnote 45.

891t should be noted that two days after the meetings
of the joint commission had begun, the Mexican Chamber of
Deputies had passed a resolution giving Obregén a vote of
confidence and acknowledging that his foreign policy had
been conducted within "the general aspirations of the
Nation." Chamber of Deputies to Obregén, May 16, 1923,
AGN, lO4-Rl-E-25 Pg 16. Obregén had at least some domes-
tic support.

—319-

ObregOn--lent circumstantial evidence to the charge of

a secret treaty embodied in the minutes of the Proceedings

which sacrificed Mexico's sovereignty.90 The most impar—

 

tial critic of the conference, legal expert Antonio GOmez

Robledo, considered that ObregOn conceded far less than

91

what the united States demanded. Though he was critical

of the Proceedings and the claims conventions on a number

 

of technical points which he asserted gave U.S. citizens L-
a privileged status, GOmez Robledo implied that compromise
was inevitable. Under imminent domestic circumstances,
GOmez Robledo concluded, recognition had become almost
mandatory for ObregOn.
In summary, the withholding of recognition by the
United States created the impression that its recognition
of ObregOn implied approval or disapproval of the policy
and behavior of his government. A former Solicitor to the
State Department and.widely acclaimed international lawyer,

John Basset Moore, once remarked that the withholding of

 

90Most of the criticisms of the Bucareli Conference

and its results were written in the 1920's and 1930's.
The issue was raised again in 1958 with the publication
of de la Huerta' s memoirs and with articles on the con-
ference appearing in the newspaper Excelsior. Nine of
the leading theses are outlined and refuted in Aaron
Saenz, op. cit., pp. 138- 244. As Obregon' s second For-
eign Minister, Saenz defended Obregon' 3 foreign policy
against what he referred to as primarily partisan poli-
tics. saenz also mentioned other authors who supported
ObregOn.

91

 

GOmez Robledo, The Bucareli Agreements . . ., p. 180.

 

-320-

recognition from a government was essentially a form of
intervention in its domestic affairs and contrary to the
concept of sovereignty under international law.92 In
its past policy of recognition, Moore continued, the
United States had never thoroughly approved of all the
governments with which it held diplomatic relations.
Good and bad governments were part of the "international"
facts of life, he added, in a world in which the United
States lived and conducted business.93 To Hughes, however,
the policy of assurances and guarantees based upon a con—
ception of rights seemed more urgent than the establishment
of normal political and economic contacts which would
have hastened real peace and recovery in Mexico.

The effect on Mexico of the application of the U.S.
policy of diplomatic recognition emerged in the so—called
Estrada Doctrine. In 1930 Foreign Minister Genaro Estrada,

recalling the problems which had in turn faced Victoriano

Huerta, Venustiano Carranza, Adolfo de la Huerta, and

 

92Moore's comments as quoted and summarized in Her-
bert W} Briggs (ed.), The Law of Nations: Cases, Documents,
and Notes (2nd ed.; New York: Appleton-Century-Crofts,
Inc., 1952): PP. 129—130.

93A further description of Moore's comments in 1930
was made two decades later by Secretary of State Dean
Acheson. "'We maintain diplomatic relations with other
countries,‘ he said, 'primarily because we are all on the
same planet and must do business with each other.'" Quoted
in Briggs, op. cit., p. 130.

-321-

Alvaro Obregon, prOposed the repudiation of that practice
of recognition which in his opinion "'allows foreign gov-
ernments to pass upon the legitimacy or illegitimacy of

94 This doctrine

the regime existing in another country.'“
as well as others postulated by Latin Americans were con-
tributions of the Latin American states to international
and to inter-American law. Like the interpretations of
international law by the united States, these theories
would remain in turn interpretations by the Latin Ameri-
can states to be enforced or ignored on the basis of na—

tional interests. Mexico, in general, has been remarkably

consistent in adhering to the Estrada Doctrine.

 

94As quoted in Charles C. Fenwick, The Organization

of American States: The Inter—American Regional System
(Washington, D.C.: privately printed, 1963), p. 297.

APPENDIX

SELECTIONS FROM ARTICLE 27 OF THE MEXICAN
CONSTITUTION OF 1917:1

(Paragraph 1) "Ownership of the land and waters within
the boundaries of the national territory is vested ori-
ginally in the Nation, which has had, and has, the right
to transmit title thereof to private persons, thereby
constituting private property.

(Paragraph 2) Private prOperty shall not be expropriated
except for reasons of public use and subject to payment of
indemnity.

(Paragraph 3) The Nation shall at all times have the
right to impose on private property such limitations as
the public interest may demand, as well as the right to
regulate the utilization of natural resources which are
susceptible of apprOpriation, in order to conserve them
and to ensure a more equitable distribution of public
wealth . . .

(Paragraph 4) In the Nation is vested the direct owner-
ship of all natural resources of the continental shelf
and the submarine shelf of the islands; of all minerals
or substances, which in veins, ledges, masses or ore
pockets, form deposits of a nature distinct from the com-
ponents of the earth itself, such as the minerals from
which industrial metals and metalloids are extracted;
deposits of precious stones, rock-salt and the deposits
of salt formed by sea water; products derived from the
decomposition of rocks, when subterranean works are re-
quired for their extraction; mineral or organic deposits
of materials susceptible of utilization as fertilizers;
solid mineral fuels; petroleum and all solid, liquid,
and gaseous hydrocarbons; . . .

 

1Constitution of the united Mexican States, 1917
(Washington, D.C.: Pan American union, 1964), pp. 8-10.

—322-

-323—

(Paragraph 6) . . . ownership of the Nation is inalien-
able and imprescriptible and concessions shall be granted
by the Federal Government to private parties or civil or
commercial companies constituted in accordance with Mexi—
can laws only on condition that regular works be estab-
lished for the exploitation of the resources in question
and that the requirements provided by law be complied
with. (Before amendment in 1960).

(Paragraph 7) Legal capacity to acquire ownership of
lands and waters of the Nation shall be governed by . . .:
I. Only Mexicans by birth or naturalization and
Mexican companies have the right to acquire ownership of
lands, waters, and their appurtenances, or to obtain con-
cessions for the exploitation of mines or of waters. The
State may grant the same rights to foreigners, provided
they agree before the Ministry of Foreign Relations to
consider themselves as nationals in respect to such pro-
perty, and bind themselves not to invoke the protection
of their governments in matters relating thereto; under
penalty, in case on noncompliance with this agreement,
of forfeiture of the property acquired to the Nation.
Under no circumstances may foreigners acquire direct owner—
ship of lands or waters within a zone of one hundred kil-
ometers along the frontiers and of fifty kilometers along
the shores of the country.”

BIBLIOGRAPHY

Bibliographies.

 

For both the history of Mexico from the Revolution
of 1910 and for the concurrent U.S.-Mexican relations
there exists an extensive bibliography. The most recent
indispensable guide to the Revolutionary history of Mex-

ico is Luis Gonzalez (ed.), Fuentes de la Historia Con-

 

temporanea de Mexico: Libros y Folletos (3 vols; Mexico:
El Colegio de Mexico, 1961-1962), which provides a nearly
comprehensive collection of bibliography on all aSpects of
Mexico from 1910 to about 1960. While the majority of
books, pamphlets and articles are in Spanish, a few titles
in English or in English translation are listed. Some
selections are annotated, and most have the name of the
Mexican library (or the U.S., Library of Congress) where
they may be located. Equally valuable are several of the
thirty-one volumes of the earlier bibliographical work
published by the Ministry of Foreign Relations under the
direction of the Under Secretary of Foreign Relations

Genaro Estrada. In general the Monograficas Bibliograficas

 

Mexicanas (31 vols.; Mexico: Imprenta de la Secretaria
de Relaciones Exteriores, 1925-1935), devotes more space

to the 19th century than to the Revolutionary era. Roberto

—324-

—325—

Ramos, Bibliografia de la Revolucién Mexicana (No. 21 and
30 of the preceding series) has been revised in the 1958-
1960 edition and a third volume added for the twenty years
after 1940. Less exhaustive and more general in scope
is Genera Estrada, 200 Notas de Bibliografia Mexicana
(No. 31 of the Monograficas Bibliograficas Mexicanas).
For the petroleum situation in Mexico the Department of
Petroleum of the Ministry of Industry, Commerce and Labor
compiled a bibliography of monographs and articles in
1927, Bibliografia delApetrOleo en Mexico (No. 8 of the
Monograficas Bibliograficas Mexicanas). One of the major
difficulties in the use of these Mexican bibliographies is
either the absence of an index or the items listed are
not annotated. Indifferent or valueless monographs and
articles are often listed indiscriminately with the key
and essential works.

Bibliographical data in the United States on Mexico
and U.S.-Mexican relations are generally indexed and anno-
tated but more selective. Samuel Flagg Bemis and Grace

Gardner Griffin, Guide to the Diplomatic History of the

 

United States, 1775-1921 (washington, D.C.: Government

 

Printing Office, 1935), is a standard though dated work.
The Foreign Affairs Bibliography: A.Se1ected and Annotated
List of Books on International Relations (New York: Harper
& Brothers, 1933, 1945, 1955), has been published for the

Council on Foreign Relations about every decade and provides

-326—

Similar data as Bemis and Griffin's Guide. The annual

(since 1935) Handbook of Latin American Studies, prepared

 

under the direction of the Hispanic Foundation in the
Library of Congress, contains the more recent material

on the Mexican Revolution. More pertinent to Mexico and
the American Southwest is Charles C. Cumberland, The Uhited
States-Mexican border: A Selective Guide to the Litera-

ture of the Region (Supplement to Rural Sociology, XXV,

 

No. 2 (June, 1960)). Especially valuable for the legal
thinking on Article 27 of the Mexican Constitution and

the petroleum question are John T. Vance and Helen L.
Clagett, A Guide to the Law and Legal Literature of Mex-
igp_(washington, D.C.: The Library of Congress, 1945),

and S. A. Bayitch, Guide to Inter-American Legal Studies:
A Selective Bibliography of WOrks in English (Coral Gables:
University of Miami Law Library, 1957) and Latin America:
A_§ib1iographical Guide to Economy, History, Law, Politics

and Sociepy (Coral Gables: University of Miami Press,

 

1961). In these guides can be found a ready reference
of articles published in U.S. scholarly journals and in

American law school and international periodicals.

Manuscript Sources and Printed Documents.

The State Department records on Mexico in the Na-
tional Archives (washington, D.C.) are a wealth of informa—

tion beyond the formation and execution of policy. Personal

-327-

letters, memoranda, comments, the reports of the U.S.
Chargé d'Affaires and consular agents present a fascina-
ting story of attitudes, motivations, explanatory background
material and humor which are often lacking in the purely
policy documents. The Decimal File Group 812.00/ and
711.12/ series on U.S. political affairs and relations
with Mexico (1910-1929) have been microfilmed on about
two hundred reels. The microfilming makes the documenta-
tion available in one location and includes key documents
from the personal papers of the (U.S.) Presidents, Secre-
taries of State and other leading officials, similar copies
of which are not always found in their personal papers.
The microfilmed index to these records provides a cross-
index to the documents on microfilm as well as to other
records (and file numbers) which have not been microfilmed.
In the Manuscript Division of the Library of Congress
(Washington, D.C.) are the personal papers of WOodrow
Wilson, Robert Lansing, Bainbridge Colby, Henry P. Fletcher,
Charles Evans Hughes, Calvin Coolidge and John J. Pershing.
The personal papers of Warren G. Harding are deposited in
the Ohio State Historical and Archaeological Society in
Columbus, Ohio.

Less comprehensive than the records of the State
Department are the twenty reels of microfilm of the Archivo
General de la NaciOn (Documentos, periodo ObregOn-Calles,

afibs de 1921-1924 y 1925-1928) available in the Michigan

-328—

State University Library, East Lansing, Michigan, and in
the personal collection of Charles C. Cumberland). The
AGN is a more carefully edited arrangement in which pages
of essential reports and correSpondence are often missing.

Among printed documents, the Papers Relating to the-

 

Foreign Relations of the united States (washington, D.C.:

 

Government Printing Office), for 1910-1924 include the

*a
I

major policy-making documents with translation of the

5

important notes, decrees, proposals and editorials of the
Mexican government and press, but omit the bulk of the
State Department records and the more personal, evaluative
documents. The Proceedings of the united States—Mexican
Commission Convened at Mexico City, May 14, 1923 (washing-
ton, D.C.: Government Printing Office, 1925), is the only
printed documentary material on the Bucareli Conference.

A wealth of economic and statistical data (and some-
times political) on foreign commerce and how it affected
the United States is found in the U.S., Bureau of Foreign

and Domestic Commerce, Monthly Consular and Trade Reports

 

or Commerce Reports (Daily Consular and Trade Reports)

 

and its supplements. Items of interest and value beyond
congressional Opinion on an issue are often found in the

Congressional Record, despite its poorly organized index.

 

To justify its position in 1924 the Obregén government
released selected printed documents of its correspondence

with the United States. The official position of the

-329-

Mexican government on the major questions of land expro-
priation, petroleum, claims, and of course, recognition,
were published in La CuestiOn Internacional Mexicano-
Americana, durante e1 Gobierno del General don Alvaro
Obregén (Mexico: Imprenta de la Secretaria de Relaciones
Exteriores, 1924, 1926, 1949). The correspondence leading
to the settlement of Mexico's foreign debt and Obregén's
criticism in 1924 of the Lamont-de la Huerta Agreement
was published separately in Spanish and English, Official
Documents Relating to the Agreement de la Huerta—Lamont
(Mexico: Imprenta de la Secretaria de Relaciones Exter-

iores, 1924).

Standard Monographs, Pamphlets and Articles.

Lacking the sufficient documentation, no monograph
on the subject of U.S.-Mexican relations in the early
1920's has been able to access thoroughly or to confirm
speculation on the problems and the positions of both
governments. Most authors drew their analyses or infer-
ences from the published government documents, from the
press and periodicals or whatever printed material was
available.

Charles W. Hackett, The Mexican Revolution and the
United States, 1910-1926 (Boston: WOrld Peace Foundation

Pamphlet, IX, No. 5, 1926), was the earliest scholarly

-330-

summary and analysis of the complicated petroleum and
agrarian issues in the diplomatic relations between the
United States and Mexico. Frederick S. Dunn, The Diplom-
atic Protection of Americans In Mexico (New York: Columbia
University Press, 1933), included more than the title
indicates (Chapters 10-15 inclusive) with a fair evalua-
tion of the role of the social revolution in Mexico, and

of Mexican nationalism, agrarian reform, nationalization

E‘fr-“m

of petroleum, and the matter of claims between the United
States and Mexico. Volume IV (pp. 1-315) of Charles P.
Howland (ed.), Survey of American Foreign Relations (4
vols.; New Haven: Yale university Press, 1931), is more
comprehensive than Dunn by including discussion of Mexico's
debt, its economic relations, Mexican labor and the Church,
but is equally as valid as Dunn. Among works of a more
general nature on the diplomatic relations between the
united States and Mexico prior and subsequent to the Revol-
ution of 1910 would be J. Fred Rippy, The United States
And Mexico (New YOrk: Alfred A. Knopf, 1926, 1931), in
which Chapters 18-22 are devoted to a critical appraisal

of American investment and U.S. policy in Mexico. Chap-
ters 12-15 of James M. Callahan, American Foreign Policy

In Mexican Relations (New YOrk: The Macmillan Company,

 

1932), are based almost exclusively on the printed Foreign
Relations Papers without any analysis of the policy.

Howard F. Cline, The United States And Mexico (Rev. ed.;

 

-331-

New York: Atheneum, 1963), is good in part for some of
the diplomatic problems during the period 1910-1920 (pp.
113-203). Daniel James, Mexico And The Americans (New
York: Frederick A. Praeger, 1963), presents a factual
but oversimplified account of ObregOn's recognition in
Chapter 9.

U.S. policy on diplomatic recognition and its rela-
tionship to Mexico are summarized in William L. Neumann,
Jr., Recognition of Governments in the Americas (Washing-
ton, D.C.: Foundation for Foreign Affairs, 1947), and in
Green Hackworth, "The Policy of the United States in
Recognizing New Governments during the Past Twenty—five
Years," Proceedings of the American Society of International
§§w_(Washington, D.C.: American Society of International
Law, 1931), 120-137. Stuart A. MacCorkle, American Policy
of Recognition Towards Mexico (Baltimore: The Johns Hop-
kins Press, 1933), is heavily concentrated on the 19th
century with little attention given to the Revolution of
1910 and practically lacking of any substantial discussion
of ObregOn's recognition. Chapters II and III of C. Neale
Ronning, Law and Politics in Inter-American Diplomacy
(New YOrk: John Wiley & Sons, Inc., 1963), are concerned
with the general problems of diplomacy and international
law. Sourcebooks on problems and procedures in interna-
tional law are numerous. An excellent summary by a long

distinguished professor of international law is Clyde

-332-

Eagleton, International Government (3rd ed.; New YOrk:

 

The Ronald Press Company, 1957).
Brief and favorable biographies of Secretaries of
State Lansing, Colby and Hughes, are found in Samuel Flagg

Bemis (ed.), The American Secretaries of State And Their

 

Diplomacy (10 vols.; New York: Alfred A. Knopf, 1929),

 

X. The biographers of the three Secretaries were connected
officially or in an advisory position with the State De-
partment, and their biographies reflect data accessible

in documents which were closed to the public at the time.
Since Harding turned over all affairs of state to Hughes,
the character and policies of Hughes are crucial. Unfor-
tunately Hughes's personal papers in the Library of Con-
gress give little motivation of his policy towards Mexico.
No more insight is available in the general editing of

his career. under Hughes's supervision, his secretary
Henry C. Beerits prepared a series of detailed memoranda
in 1933-1934 on the outstanding periods and events of
Hughes's career and general policies as Secretary of State.
Beerits Memorandum No. 37, "Relations with Mexico," 1921-
1925, LC, Hughes Papers (Box 172), is a seventeen page
routine condensation of the bulk of the State Department
records. Occasionally, however, Beerits emphasized a
particular point which one might infer was a suggested
change in Hughes's thinking. As far as Hughes's official

policy is concerned, one could consult his Our Relations

 

-333—

to the Nations of the western Hemisphere (Princeton:
Princeton University Press, 1928), for a discussion of
Mexico (pp. 37-46; 51-54; 54-73).

Hughes's other early biographers have been no less
analytical than Beerits. Hughes's first biographer was
legal counsel Charles Cheney Hyde who worked under him.
No less favorable than Hyde's chapter in Bemis (ed.),

The American Secretaries of State . . ., was Hughes's
principal biographer, Merlo Pusey. Based upon Hughes's
papers and his biographical notes (interviews with Pusey),

Pusey produced a two volume work, Charles Evans Hughes

 

(New York: The Macmillan Company, 1951-1952), which was
mainly concerned with his domestic role. Dexter Perkins
later wrote a very brief domesticeoriented biography en-
titled Charles Evans Hughes and American Democratic States-
manship (Boston: Little, Brown & Co., 1956). The first
evaluation of Hughes's policies was John Chalmers Vinson,

“Charles Evans Hughes," An Uncertain Tradition: American

 

Secretaries of State in the Twentieth Century, ed. Norman A.
Graebner (New YOrk: McGraw-Hill Book Company, Inc., 1961),
pp. 128-148. Though somewhat favorable toward Hughes,
Vinson pointed out Hughes's central characteristics and
provided a more critical assessment of his overall policies,
his successes and his failures, within the milieu in which
he Operated. While Betty Glad--Hughes's most recent bio—

grapher--lacks sufficient analysis of his policies, she

—334-

has developed a fairly complete psychological study of his
early life and career in Charles Evans Hughes and the I1—

1usions of Innocence: A Study in American Diplomacy

 

(Urbana: University of Illinois Press, 1966), Chapters
1-7. Her biography might well have ended when Hughes
entered the State Department, for her documentation and
analysis are best only in examining the parental, educa-
tional, and political influences which shaped Hughes's
outlook and personality. On Hughes's policy toward Mex-
ico, for example, she has gone no further than his earlier
biographers.

On Mexico since the Revolution of 1910 and the prob—
1ems confronting Obregon's recognition, the literature is
voluminous and often merely propaganda. Much of this
prOpaganda may be found in the Library of Congress or in
the Columbus Memorial Library of the Pan American Uhion.
However, there are some Specific and.excellent works which
cannot be discounted. On the background and early devel-
opment of the Mexican Revolution are Charles C. Cumberland,
Mexican Revolution: Genesis under Madero (Austin: Univer-
sity of Texas Press, 1952), and less analytical, Stanley R.
Ross, Francisco I. Madero: Appstle of Mexican Democracy
(New YOrk: Columbia university Press, 1955). Luis Cabrera,
et al., presented an interesting and penetrating approach
to the Mexican Revolution in "The Purposes and Ideals of

the Mexican Revolution," Supplement to the Annals, LXIX

-335-

(January, 1917). Ward M. Morton, "The Mexican Constitu-
tional Congress of 1916-1917," Southwestern Social Science
[Quarterly, XXXIII, No. 1 (June, 1952), 7—27, gives some
insight into the thinking of its members. One member,
Félix F. Palavicini, wrote a two volume study on the Con-
stitution, Historia de la Constitucidn de 1917 (Mexico:

By the author, 1938).

The Constitution of 1917 has undergone numerous trans—
1ations as well as incessant scrutiny. The Pan American
Union has an official translation in Constitution of the
United Mexican States, 1917 (Washington, D.C., 1964). On
the central dispute over Article 27 and its interpretation
on petroleum, no amount of material is lacking. Guy Stevens,
Director of the Association of Producers of Petroleum in
Mexico, summed up the position of the large American oil
companies in his collection of speeches and addresses,
Current Controversies With Mexico: Addresses and writings
(N.P., 1926-1928). A brief summary of the position of
the Mexican government from 1917 through ObregOn is avail-
able in The True Facts About the Expropriation of the Oil
Companies' PrOperties in Mexico (Mexico: Government of
Mexico, 1940), pp. 22-52. A contemporary though fair
evaluation of the Constitution of 1917 is J. P. Chamberlain,
“Property Rights under the New Mexican Constitution,"
Political Science_guarter1y, XXXII, No. 3 (September,

1917), 369-390. Merrill Rippy, "The Mexican Oil Industry,“

—336-

Essays in Mexican History, ed. Thomas E. Cotner and Carlos E.
Castaneda (Austin: University of Texas Press, 1958), pp.
248-257, discussed its rapid development and growth in the
first twenty-five years. wendell C. Gordon made a judi-
cious examination of the early petroleum controversy under
Carranza and during the 1920's as a basis for the later

problems of the late 1930's in The Expropriation of Foreign-

 

Owned Property in Mexico (Washington, D.C.: American

 

Council on Public Affairs, 1941).

For the decrees and legislation pertinent to the
petroleum controversy (under Diaz and Carranza) a brief
summary is Joseph W. Thompson, Petroleum Laws of All Amer—
ipa_(washington, D.C.: Government Printing Office, 1921),
for the section on Mexico. Among numerous editions of
such legislation by the Mexican government, one compendium
(with annual supplements in the 1920's) is the comprehen-
sive Legislacién Petrolera. Leyes, Decretos y Disposi—
ciones Administrativas referentes a la Industria Petrolera,

1783-1921 (Mexico: Talleres Graficos de la Nacion, 1922).

 

A comparison of the Mexican Constitution and legislation
with the existing American and English legislation is
found in J. Rueben Clark, Jr., “The Oil Settlement With

Mexico,“ Foreign Affairs, VI (July, 1928), 600-614.

 

For a synthesis of interventionist propaganda in
the United States during 1919-1920 (including the anti-

interventionist positions) the Albert B. Fall Subcommittee's

—337-

report (U.S., Senate) Investigation of Mexican Affairs

 

(66th Cong., 2nd Sess., Sen. Doc. 285, 2 vols., 1920),
cannot be ignored. Herbert Feis, Petroleum and American

Foreign Policy (Stanford: Stanford University Press, 1944),

 

pp. 3-10, is the briefest account of the global "oil scare"
from 1917 through the early 1920's and its relationship to
Mexican oil. Two of the leading contemporary monographs
on the subject are Joseph E. Spurr (ed.), Political and
Commercial Geology and the WOrld's Mineral Resources:

A Series of Studies by¥Specialists (New YOrk: McGraw-
Hill Book Company, Inc., 1920), Preface and Chapter I,

and Joseph E. Pogue, The Economics of Petroleum (New York:
John Wiley & Sons, Inc., 1921), Chapters 2, 24—25. Harold
E. Davis made an interesting and accurate hypothesis on
how ObregOn attempted to utilize Mexico's vast natural
resources of petroleum to the advantage of his government
in "Mexican Petroleum Taxes,” Hispanic American Historical
Review, XII, No. 4 (November, 1932), 405-419.

On the Obregén administration itself John W; F. Dulles,
Yesterday in Mexico: A Chronicle of the Revolution, 1919-
12§§_(Austin: University of Texas Press, 1961), pp. 1-
267, has provided an almost detailed day by day reconstruc—
tion of events as well as a description of personalities.
Though a metallurgical engineer by profession who used
few primary sources and accepted secondary material uncri—

tically, Dulles did construct on the basis of the data

—338-

used a fairly valid history of Mexico in the post-revolu-
tionary period. In addition to Dulles's description of
personalities, Francisco Naranjo had compiled a brief
sketch of the revolutionary personnel since 1910 in
Diccionario Biografico Revolucionario (Mexico: Imprenta
Editorial "Cosmos," 1935). Though undocumented, Miguel
Alessio Robles's reminiscences as a former ObregOn cabinet
member, Historia Politica de la RevoluciOn (3rd ed.: Mexico:
Ediciones Botas, 1946), provide some description of person-
alities and events not found elsewhere. As in the case

of many Mexican authors, documentation is non-existent.
Only when their writings are compared with other authors

or with the documentation can their assessments or state-
ments be judged as reliable.

Of the numerous biographies written about ObregOn,
most have been of a hagiographic nature. John W} F. Dulles
(Yesterday in Mexico . . ., p. 692) lists nearly a dozen
Mexican biographies of ObregOn. In English, Emile J.
Dillon, Mexico on the Verge (New YOrk: George H. Doran
Company, 1921), and President ObregOnL a world reformer
(London: Hutchinson and Co., 1923), were prOpagandist
works. Manuel Gonzalez Ramirez has written a favorable
article on Obregén as a statesman in the third edition of
Obregdh's account of his military campaigns (1913-1914),
Ocho mil kilometros en campana (Mexico: Fondo de Cultura

Econdmica, 1960), pp. 513-549. Ernest Gruening eulogized

-339-

Obregon after his assassination in 1928 in "Obregon, Bul-

wark of the Mexican Revolution," Current History, XXVIII,

 

No. 6 (September, 1928), 887-891.

While the diplomatic problem of recognition appeared
to overshadow ObregOn's administration, domestic affairs
also played a part in limiting or aiding ObregOn. Chapter

XIII of Wilfred H. Callcott, Liberalism in Mexicoyil857-

 

1929 (Stanford: Stanford University Press, 1931), is
devoted to education and religion during Obregén's admin—

istration. Marjorie R. Clark, Organized Labor in Mexico

 

(Chapel Hill: University of North Carolina Press, 1934),
examined in Chapters 2-4 the development and strength of
the organized labor movement during the 1920's. Despite
certain overtly biased articles against the Mexican Revolu-
tion, Robert G. Cleland (ed.), The Mexican Year Book: The
Standard Authority on Mexico, 1920/21 (Los Angeles: Mexican
Year Book Publishing Co., 1922), provided some valuable
economic data on Mexican petroleum, commerce, banking, and
so forth.

Carlton Beals represents the other side of the prism
of criticism by his anti-capitalist and anti-foreign view-
point. One of several Americans who held various educa-
tional and literary posts under Carranza, Beal was per-
sonally acquainted with many prominent officials of the

Carranza and the ObregOn governments. His Mexico, An

 

Interpretation (New YOrk: B. W. Huebsch, Inc., 1923)

-340-

contains interesting insights into domestic events and
personalities of the ObregOn administration (Chapters 5-8,
17—19). Though favorable to Obregén, Ernest Gruening in

Mexico and Its Heritage (New York: Century Co., 1928),

 

attempted to make an objective interpretation of ObregOn's
administration. Unlike his earlier position as Managing
Editor of the Nation, Gruening in 1928 did point out in-
stances in which the United States had valid points in

the problem of ObregOn's recognition (pp. 606-611). Al-
though concerned with the Mexican labor movement, William E.
Walling made a reasonable appraisal of U.S.-Mexican rela-

tions during the ObregOn administration in The Mexican

 

Opestion: Mexico and American-Mexican Relations Uhder

Calles and Obregén (New York: Robin Press, 1927), pp.

 

159-162. The various political programs as the Plan of
Agua Prieta in 1920 and de la Huerta's manifesto in 1924,
together with selected political cartoons from the elec-
toral campaign of 1920 through the de la Huerta rebellion,
are available in Volume I (pp. 262-265) and Volume II

(pp. 88-93) of Manuel Gonzalez Ramirez (ed.), Fuentes para

 

1a Historia de la Revolucién Mexicana (4 vols.; Mexico:
Fondo de Cultura Econ6mica, 1954-1957).

The financial question of Mexico's foreign debt and
its relationship to recognition are aptly treated in former
State Department aide Edgar W. Turlington, Mexico And Her

Foreign Creditors (New York: Columbia University Press,

 

-341—

1930), Chapters 7-8--the most comprehensive and scholarly
analysis of the subject. From the Mexican point of view,
the greatest controversy arose over the Bucareli Confer-

ence and the Proceedings of the joint commission. Former

 

Minister of Foreign Relations AarOn Saenz combined into

one volume a documented defense of the position of the
ObregOn government and a summary of the theses of the

main critics of the conference, in La Politica Internacional
de la RevoluciOn: Estudios_y Documentos (Mexico: Fondo

de Cultura EconOmica, 1961). The only translated study

of the conference is by critic Antonio GOmez Robledo,

The Bucareli Agreements and International Law (Mexico:
National University of Mexico Press, 1940), acknowledged

by Saenz to be the most impartial writer on the subject.

Periodicals and the Press.

 

The Reader's Guide to Periodical Literature provides
an invaluable listing of articles in the leading periodi-
cals and scholarly journals. The Nation, and to some
extent the New Republic, were periodicals most favorable
to ObregOn's position. Obtaining neWSpaper sentiment is
more difficult, but the Literary Digest does offer a sampling,
however limited, of editorial Opinion in the American press.
Though sometimes erroneous, the New YOrk Times Index is
valuable as a ready source of facts, events, and personali—
ties. Opinion by the Mexican press may be found in trans—

lation in the State Department records.

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