SECTION V. PETROLEUM AND MINING Summary of the Petroleum Industry for 1921.. SECTION I-HISTORY AND GEOGRAPHY HISTORICAL SUMMARY, 1921-4* The 1920-21 edition of the Mexican Year Book was issued shortly after President Obregón came into office. The problems which Mexico then faced were very great. There was still opposition to the new régime in certain quarters and this had to be dissipated either by force or by conciliation. The economic situation of the country also left much to be desired. The railroads, for example, were in wretched shape and could not serve the nation's transportation needs until they had been rehabilitated and supplied with new equipment. Though much still remained to be done to bring the railroads up to an adequate standard of efficiency, the improvement in railway service during the first three years of Obregón's administration (until the De la Huerta revolution undid much of what had been accomplished), was very marked. Two enterprises of especial importance were begun by the Southern Pacific of Mexico and by the Mexican Railway, both of which, it might be added, are privately operated, independent lines. The Southern Pacific, employing funds received from the Mexican treasury to satisfy the company's claims against the government for damages suffered during the revolutions, set out to build some ninety miles of track between Tepic and Guadalajara. It is estimated that the cost of this undertaking will be in the neighborhood of $16,000,000. When completed the line will link the rich west coast of Mexico with the capital, and also furnish a direct means of communication between Mexico City and all the Pacific States of the United States. No more important railway project has been undertaken in Mexico in many years. The Mexican Railway, operating between Mexico City and Vera Cruz, in its turn undertook to electrify a portion of its line which leads over some of the steepest grades known to railway engineering from the high central plateau to sea level. In addition to the railway problem, Obregón had to face many other serious issues of an economic and social character. He was *For a summary of Mexico's historical development prior to the Obregón administration, see the Mexican Year Book for 1920-21. confronted with the difficult task of reconciling certain of the provisions of the Constitution of 1917 with Mexico's international obligations and with his own earnest desire to see the country prosperous and contented. The Agrarian Laws, of which Dr. Priestley writes in Section IV of this volume, were particularly troublesome. Labor, moreover, was restless, not exactly sure of its own mind, and much inclined to strike at the bidding of certain leaders who often used their power for selfish purposes. The disastrous and long-continued conflict in the fall of 1923 between the railway employees and the marine workers at Vera Cruz (a quarrel not between labor and capital, but merely between two labor organizations) was a case in point. From an economic standpoint, also, the country did not revive after Carranza's downfall as rapidly as certain enthusiasts predicted. The petroleum industry, fortunately for the government as well as for the country at large, experienced a genuine boom during 1921 and 1922, as the statistics published further on in this volume will show. But in 1923 a reaction set in which has had a depressing and widespread effect even beyond the oil fields. Mining during the past three years has shown some improvement over the stagnation of 1920; but the revival has not been uniform nor continuous, and it would be an exaggeration to say that the industry today is in normal or satisfactory shape. Agriculture, also, had by no means recovered from the disastrous effects of the long years of revolution, which followed Madero's overthrow, when Obregón became president. The economic depression which followed the World War also laid a blight upon this branch of Mexico's economic life, as the almost complete collapse of the henequen industry in Yucatán so sadly showed. Furthermore the uncertainty to which the Agrarian Decrees gave rise also retarded any genuine agricultural revival. These conditions, however, were gradually growing better when the De la Huerta revolution, which will be spoken of a little later, disrupted the normal trend of this revival. How seriously the revolt has affected Mexican agriculture cannot be determined at this time. From a financial standpoint, Mexico has made little progress in the last three years. The banking system, so completely ruined by revolutions and Carranza's manipulations, has never been restored. Interest rates are so high as to strangle all attempts at business expansion, and several disastrous banking failures have occurred. since 1921. More serious still, there has not been any very great influx of American or European capital to furnish the necessary elements for a genuine era of national prosperity. From these financial evils the Mexican government itself has not escaped. At the very beginning of Obregón's term, the treasury was confronted by the most insistent obligations. Interest had not been paid on the national debt since 1913. Tremendous claims for damages had been lodged against the government by foreigners as a result of the revolutions. The railroads which the government had taken over required vast sums for improvements. To carry out an educational program in any way adequate to meet the country's needs, and to make effective the plans of social betterment which constituted one of the strongest planks in the platform of President Obregón, required even larger sums. The army also had to be maintained (though Obregón succeeded materially for a time in reducing this expense), and millions of pesos had to be found annually for salaries. These various demands the Mexican treasury did not meet. Up to about the middle of 1923 there was an apparent improvement in the government's financial situation; but in September, after the resignation of Adolfo De la Huerta from the Treasury, it was found that conditions were almost demoralized. During the next few months the government suspended payment on its drafts, allowed salaries to remain unpaid, and dismissed hundreds of employees. Just what the current obligations of Mexico are today, in addition to the staggering national debt under which she rests and the claims for damages she has assumed, cannot definitely be stated. Even before the De la Huerta revolution was well under way, however, this floating debt was placed at about 75,000,000 pesos. Closely interwoven with the government's financial difficulties and the questions arising from the petroleum and land provisions of the Constitution of 1917 was the matter of recognition by outside powers. Though several European and Latin-American governments accorded this recognition early in Obregón's administration, the two outside nations whose interests in Mexico were more important than those of any other governments refused to follow their example. Both the United States and England, despite the very earnest desire of Obregón to secure formal recognition, refused to grant this until they were given definite assurance that Mexico proposed to meet her just obligations and conform to the principles of international law. The two chief points at issue were the agrarian and petroleum provisions of the Constitution of 1917. The United States, as we shall presently see, finally adjusted these matters and recognized Obregón in the late summer of 1923; but England has not yet granted recognition. In addition to the matters already spoken of, three events of outstanding significance have occurred in Mexico since 1921. The first of these was the signing of an agreement (June 16, 1922), between Adolfo De la Huerta, at that time Secretary of the Treasury, and Thomas Lamont of New York, representing the International Committee of Bankers on Mexico, by which Mexico was able to bring some sort of order out of the confusion of her national debt and satisfy her creditors without placing too heavy a strain upon her treasury. The text of this agreement will be found in Section VI of this volume. The second event of primary importance was the drafting and ratification of two Claims Conventions between Mexico and the United States. The representatives for Mexico in the negotiations. were Ramón Ross and Fernando Gonzales Roa; for the United States they were Charles Beecher Warren, now Ambassador to Mexico, and John Barton Payne. The Claims Conference began its sessions on May 14, 1923, at Mexico City and adjourned its sittings on August 15. On the 31st of the same month, the United States formally recognized the Obregón government, thus resuming full diplomatic relations with Mexico after an interval of over three years. The work of the conference resulted in two agreements, a General Claims Convention and a Special Claims Convention. The text of these two documents is published in Section II of the Year Book. The ratification of the Conventions by the two governments provided the necessary machinery for settling the aggravating and unfortunate sources of discord between this country and Mexico. Up to the present time, however, neither government has appointed its representatives on the joint commission, though this must soon. be done to conform to the terms of the agreement. The final event of chief significance in Mexican history from 1921 to 1924, was the disastrous attempt to overthrow the Obregón government by a party of discontented army leaders and politicians at whose head, nominally at least, stood Adolfo De la Huerta, former Secretary of the Treasury, provisional President from the downfall of Carranza to Obregón's inauguration, and for three years, together with Obregón and General Plutarco Elias Calles, a member of the famous Sonora triumvirate which controlled the politics and government of Mexico. The revolt began in December, 1923, some three months after De la Huerta had resigned his position as Secretary of the Treasury and announced his candidacy for the presidency to succeed Obregón. The principal leaders of the movement besides De la Huerta were Jorge Prieto Laurens of San Luis Potosí, and Generals Guadalupe Sanchez, Fortunato Maycotte, and Enrique Estrada. The rebel forces were particularly strong in Vera Cruz, Jalisco, Hidalgo, Puebla, in the Yucatán Peninsula, and throughout the Isthmus. To the north, also, various companies of bandit-revolutionists caused the Obregón forces much annoyance by attacking trains and interrupting railway communications. The revolt was finally suppressed, after the loss of many lives, the expenditure of much money, and the total disruption of the nation's business, in March of this year. That the Obregón government survived the uprising at all was due in large part to the timely and effective aid of the United States, and to the moral sup |