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AP WAS THERE: Mexico's 1938 seizure of the oil sector from US companies


MEXICO CITY — EDITOR’S NOTE:

Mexico took control of its most precious natural resource by seizing the oil sector from U.S. companies in a move that’s taught starting in first grade today and celebrated each year as a great patriotic victory.

The woman holding a double-digit lead in the June 2 election to replace President Andrés Manuel López Obrador is an environmental engineer who helped produce the 2007 Nobel Prize-winning Intergovernmental Panel on Climate Change report. Claudia Sheinbaum has also been a faithful protege of López Obrador, who hails from the oil industry’s Gulf of Mexico heartland and led a 2008 fight against energy reform.

The AP is making available its story from March 18, 1938, reporting the expropriation of foreign oil companies.

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President Lazaro Cardenas tonight announced expropriation by the government of foreign oil companies operating in Mexico.

The President announced by radio that the government was taking over the properties of the 17 British and American oil companies, representing investments of $400,000,000.

The announcements was made less than two hours before the time set by the Mexican Oil Workers’ Syndicate for a nation-wide “folded arms strike” as the outcome of months of labor dispute.

The President’s office, immediately following Cardenas’ unannounced and unexpected broadcast, said the government would proceed to issue a decree, setting forth the terms for nationalization of the industry and new bases for its operation.

No announcement was made as to the amount the companies would be paid as indemnification for their properties. Under Mexican law, such indemnification must be made within years.

Cardenas’ decision was made after a three-hour meeting of the hastily summoned cabinet.

A two-year conflict between the foreign companies and heir workers had apparently reached a stalemate.

The 18,000 members of the syndicate, following a decision of the labor board dissolving existing contracts, decided to “suspend operations.”

The bone of contention was a federal arbitration board ruling that the companies should pay higher wages, which the operators said would cost them $12,000,000 a year — more than expected profits — and would force them out of business.

After the workers’ syndicate announced that the strike would start at midnight tonight the companies, in statements to newspapers, said they had offered to pay the amount (stipulated by the government to equal $7,200,000 annually) stipulated in the award …

Cardenas was said to have replied: “It is too late now.”



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