Petroleum Expropriation of 1938 (Mexico)

Petroleum Expropriation of 1938 (Mexico), the takeover of foreign-owned oil properties in Mexico by the government of President Lázaro Cárdenas. This dramatic act climaxed two decades of tense relations between the Mexican government and multinational petroleum companies. These tensions resulted from Article 27 of the Constitution of 1917, through which the Mexican government claimed ownership of subsoil resources including petroleum. Periodic pressures from the United States discouraged the Mexican government's full enforcement of Article 27 until a 1936–1937 labor dispute brought a major confrontation. The oil companies rejected union demands for increased compensation. The workers appealed to the government, which determined that the companies could afford most of the union demands, and the Mexican Supreme Court soon ordered compliance. The companies, led by Standard Oil, refused, and opened a media assault on the Cárdenas administration. On 18 March, Cárdenas expropriated the oil properties, in part because the companies' defiance threatened to destabilize his government. (He acted under Article 27 and a 1936 law which authorized presidential expropriations.)

The resulting dispute continued for five years. U.S. and British oil companies urged the government of President Franklin D. Roosevelt to pursue an aggressive policy to enforce their claims; however, U.S. Ambassador Josephus Daniels used unorthodox but skillful diplomacy to calm relations between Mexico City and Washington. The Roosevelt State Department wanted to maintain the harmony created by the Good Neighbor Policy as World War II enveloped Europe and the Pacific and threatened the Americas. Finally, in 1943 Mexico agreed to pay the oil companies approximately 30 million dollars, only a fraction of the 400 to 500 million dollars they had originally claimed.

In spite of diplomatic stresses and economic dislocations, Cárdenas enjoyed widespread domestic support for the expropriation. Critics as well as followers regarded his stand against the large oil companies as an act of far-reaching importance in the relations between industrialized powers and nations beginning the process of industrialization.

See alsoCárdenas del Río, Lázaro; Petroleum Industry.

BIBLIOGRAPHY

Joe C. Ashby, Organized Labor in the Mexican Revolution Under Lázaro Cárdenas (1967), explores the role of the oil workers union, esp. pp. 179-271. Lorenzo Meyer traces the evolution of the Mexican government's policies and the foreign pressures it faced in Mexico and the United States in the Oil Controversy, 1917–1942, translated by Muriel Vasconcellos (1977). This expropriation is placed in international and comparative contexts in George Philip, Oil and Politics in Latin America (1982), esp. pp. 7-82, 201-226, and 329-334.

Cole Blasier, The Hovering Giant: U.S. Responses to Revolutionary Change in Latin America (1985). Clayton R. Koppes argues that U.S. diplomats and oil company executives eventually shaped Mexican oil policy in the 1940s in "The Good Neighbor Policy and the Nationalization of Mexican Oil: A Reinterpretation," in Journal of American History 69 (1982): 62-81.

Additional Bibliography

Jayne, Catherine E. Oil, War, and Anglo-American Relations: American and British Reactions to Mexico's Expropriation of Doreign Oil Properties, 1937–1941. Westport, CT: Greenwood Press, 2001.

Herrera Montelongo, Judith. Colaboración y conflicto: El sindicato petrolero y el cardenismo. México: Universidad Autónoma Metropolitana, Azcapotzalco: M.A. Porrúa, 1998.

Santiago, Myrna. The Ecology of Oil: Environment, Labor, and the Mexican Revolution, 1900–1938. Cambridge: Cambridge University Press, 2006.

                                   John A. Britton