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The pathway to friendship: Mexico-US trade relations, 1934-1940 Cortez, Julio Edmundo 1994

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THE PATHWAY TO FRIENDSHIP:MEXICO-US TRADE RELATIONS, 1934-1940byJULIO EDMUNDO CORTEZB.A., The University of British Columbia, 1 991A THESIS SUBMITTED IN PARTIAL FULFILLMENT OFTHE REQUIREMENTS FOR THE DEGREE OFMASTER OF ARTSinTHE FACULTY OF GRADUATE STUDIES(Department of History)THE UNIVERSITY OF BRITISH COLUMBIAApril 1994© Julio Edmundo Cortez, 1 994We accept this thesis astotheIn presenting this thesis in partial fulfilment of the requirements for an advanceddegree at the University of British Columbia, I agree that the Library shall make itfreely available for reference and study. I further agree that permission for extensivecopying of this thesis for scholarly purposes may be granted by the head of mydepartment or by his or her representatives. It is understood that copying orpublication of this thesis for financial gain shall not be allowed without my writtenpermission.Department of \ 0The University of British ColumbiaVancouver, CanadaDate \DE.6 (2/88)ABSTRACTThe relationship between Mexico and the United States during the twentiethcentury has evolved from one mostly characterized by Mexican economic dependenceon the US to one of interdependence between the two countries. In the 1 930s, tradebecame a concrete expression of this interdependence and the link that eventuallybrought these two countries to friendly terms. The objective of this paper is toevaluate the impact of international trade on the growing interdependence of Mexicoand the US between 1 934 and 1 940.This thesis is structured in two parts. The first section deals with the factorswhich shaped American foreign policy towards Mexico; the second discusses theMexican side of the relationship. The two analyses are pulled together in a briefconclusion. The emphasis of this thesis is on the Mexican side of the relationship, andthe discussion of American policy serves primarily to provide a context for thesubsequent analysis of the factors shaping Mexico’s treatment of the United States.Much of the primary source material used in this thesis was researched in theBanco de Comercio Exterior and the Secretarla de Relaciones Exteriores in Mexico City.Contemporary economic journals and newspapers were also an important source ofinformation; the secondary literature on Mexican-American relations and on thegovernment of Lázaro Cárdenas was also valuable.The thesis concludes that trade was the key element promoting cooperation andthat the relationship between Mexico and the United States in the period 1 934-1 940was not determined by nationalism, capitalism, imperialism, or any other ‘ism”. Thelimits of the relationship between the U.S. and Mexico have not been based on someardent nationalism, but on the shifting interests of the sectors controlling politicalpower in both countries.TABLE OF CONTENTSPageABSTRACT iiTABLE OF CONTENTS iiiLIST OF TABLES ivACKNOWLEDGMENTS vINTRODUCTION 1CHAPTER 1: THE AIMS AND CONSEQUENCES OF US POLICY 6THE GOOD NEIGHBOR POLICY 7ROOSEVELT AND THE DOMESTIC DEBATE OVER TRADE POLICY . . . 11GERMAN ECONOMIC ENCROACHMENT IN LATIN AMERICA 19MEXICO, GERMANY AND THE US: TRADE POLICY, INTERDEPENDENCE,AND THE US NON-RETALIATORY APPROACH 27IMPROVEMENT OF TRADE AND THE ROAD TO FRIENDSHIP 32CHAPTER 2: DETERMINANTS AND OUTCOMES OF MEXICAN POLICY 36CARDENAS 36LAND, CALLISMO AND THE UNITED STATES 40CARDENAS, RELIGION, AND THE US 54CARDENAS’ LABOR POLICY AND ITS REPERCUSSIONS IN THE US.62THE POLITICS OF OIL 71THE EXPROPRIATION OF THE FOREIGN OIL COMPANIES 77CHAPTER 3: CRISIS AND RESOLUTION IN US-MEXICO RELATIONS 81NATIONALIZATION OF OIL AND US GOVERNMENT REACTION 81MEXICO, THE OIL COMPANIES, AND THE US 86OIL COMPANIES’ ENCIRCLEMENT OF MEXICO AND ITSCONSEQUENCES 90CRITICISM AND OBSTACLES DID NOT STOP THE US FROM HELPINGMEXICO 98THE RESOLUTION OF THE OBSTACLES AND SETTING THE PACE FORAVILA CAMACHO 105CONCLUSION 116BIBLIOGRAPHY 120APPENDIX 126IIILIST OF TABLESPageTABLE #1 21TABLE #2 22TABLE #3 23TABLE #4 28TABLE #5 28TABLE #6 33TABLE #1 126ivACKNOWLEDGMENTSThe completion of this thesis has demonstrated to me one more time the needfor cooperation. I would have not been able to bring this work to a happy conclusionwithout the help of others. In this sense I want to thank my supervisor William French,who provided me with vital comments and challenges, particularly in the last phase ofthe writing of this thesis. I also want to thank Professor Cohn Gordon who at thebeginning of this process took the time to read the first chapter and give helpfulcomments and bibliography on the American side of this story. I am also grateful forthe patience and help given to me by the UBC interhibrary loan people. I am indebtedto the helpful and kind librarians from the National Library, the Banco of ComercioExterior and the SecretarIa de Relaciones Exteriores in Mexico City. Finally, I must saythat without the help of Jennifer nothing of this would have been possible.V1INTRODUCTIONLe commerce libre favorise toutes les classes, agite toutesles imaginations remue tout un peuple. II est identique avecl’égalité et porte naturellement a l’indépendance.Napoleon Bonaparte, Code de CommerceThe relationship between Mexico and the United States during the twentiethcentury has evolved from one mostly characterized by Mexican economic dependenceon the US to one of interdependence between the two countries. In the 1 930s, tradebecame a concrete expression of this interdependence and the link that eventuallybrought these two countries to friendly terms. The objective of this paper is toevaluate the impact of international trade on the growing interdependence of Mexicoand the US between 1 934 and 1 940.This thesis is structured in two parts. The first section deals with the factorswhich shaped American foreign policy towards Mexico; the second discusses theMexican side of the relationship. The two analyses are pulled together in a briefconclusion. The emphasis of this thesis is on the Mexican side of the relationship, andthe discussion of American policy serves primarily to provide a context for thesubsequent analysis of the factors shaping Mexico’s treatment of the United States.American foreign policy toward Mexico in the 1 930s reflected America’s globalstrategic concerns. Regaining and surpassing America’s pre1 929 position ininternational trade was a central consideration in the formulation of American foreignpolicy during this period. What distinguished Roosevelt’s strategic approach tointernational affairs was his use of international trade as the economic arm of hisforeign policy. In this sense, this paper will dispute the historiography which has2depicted Roosevelt’s foreign policy as isolationist, trying to keep the US away frominternational involvement.1American efforts in Latin America aimed to protect and promote US commercialinterests in the region, and this necessarily involved stopping Germany’s economic andpolitical encroachment. The neutralization of German competition in Latin America wasthe most important element guiding US behavior toward Mexico. America’s treatmentof Mexico, in other words, aimed at ensuring Mexico’s political and economiccooperation in the greater US enterprise of curtailing Germany’s increasing economicinfluence in the world and particularly in Latin America.This thesis rejects the interpretation, offered by Lorenzo Meyer and JosefinaVasquez, that Roosevelt’s Good Neighbor Policy represented a sophisticated newstrategy of the same evil empire to obtain an old objective, the domination of Mexico.2Likewise, interpretations which depict the United States as targeting the Mexicaneconomy with destabilizing economic measures must be rejected.3 Instead,Roosevelt’s policy toward Mexico was fundamentally non-retaliatory, and the Americangovernment maintained this approach in spite of substantial domestic political pressuresto change it. The decision of the Roosevelt administration to defend long-term1 See, for example Edgar Eugene Robinson, The Roosevelt LeadershiD 1 933-1 945(New York: J.B. Lippincott, 1955), pp. 122-137. C.A. Beard, President RooseveltAdheres to Isolationist Policy in 1 933, in American Foreign Policy in the Making 1 932-1 940 (New Haven: Yale University Press, 1 946), pp. 11 7-1 56.2 Lorenzo Meyer and Josefina Zoraida Vasquez, The United States and Mexico(Chicago: the University of Chicago Press, 1985). Edmund David Cronon, JoseDhusDaniels in Mexico (Madison: The University of Winsconsin Press). Irwin F. Geliman,Good Neighbor Policy: United States Policies in Latin America 1 933-1 945 (Baltimore,London: The John Hopkins University Press, 1 979).Lorenzo Meyer, Mexico and the United States in the Oil Controversy (Austin:University of Texas Press, 1972).3American interests in Latin America by implementing a strategy of political and tradeliberalization to stop the German trade encroachment in the continent restrainedAmerican willingness to retaliate in Mexico.Mexican president Lázaro Cárdenas also pursued, for the most part, a policy ofcooperation with the U.S. In Mexican historiography, President Cárdenas has oftenbeen depicted as a strong nationalist leader antagonistic to the United States; he hasalso been labeled anti-imperialist and a socialist. His treatment of the United States,however, was not determined by any ideological notion of independence, socialism,national honor, or “standing tall.” Cárdenas was rather what I would call a “symbolicnationalist,” whose incendiary anti-foreign rhetoric went far beyond his actions. Incontrast to those who have argued that the foreign policy of the Mexican governmentof Lázaro Cárdenas toward the US was the result of Cárdenas’ nationalistic, even anti-imperialistic, inspirations,4 it is apparent that the Mexican policy toward the U.S. wasad-hoc rather than cohesive, and reactive and pragmatic rather than idealistic.5 Inspite of his passionate statements, Cárdenas in fact wanted and ultimately managedto pursue a policy of cooperation with the Americans. Moreover, during his presidentialterm, Mexico and the United States embarked on political and economical cooperationdifficult to match in Mexican history.Charles Cumberland, The StrucgIe for Modernity (London: Oxford UniversityPress, 1 968), p. 307. Tzvi Medin, ldeologIa v Praxis Polltica de Lázaro Cárdenas(Mexico D.F.: Siglo Veintiuno, 1 972), p. 1 90. Dick Steward, Trade and HemisDhere(Columbia: University of Missouri Press, 1 975), p. 1 99.In the general characterization of the Cãrdenas government I tend to agree withthe interpretation of historian Alan Knight. I disagree, however, with his opinion aboutthe nationalization of oil as being “something of a special case”. Alan knight, Mexico1930-1946, Vol. VII of The Cambridge History of Latin America ed. Leslie Bethel (9vols.; New York: Cambridge University Press, 1 990), p. 42.4The good relations between Mexico and the US did not come easily. Cárdenas’treatment of the US up to 1 939 was a mix of friendliness and friction, which wasmostly determined by the concessions his government had to make to workers andpeasants in the pursuit of domestic political power and social stability. Concessionsthat Cárdenas made to the peasants and workers included, among other things, thenationalization of the American oil companies, an act that caused strong protest in theUS. On this point I disagree with historian Nora Hamilton who has characterized thenationalization of oil as a manifestation of Cárdenas’ economic nationalism.6Cárdenaswas motivated not by nationalism but by domestic political pressures brought to bearby oil workers; obstacles to cooperation with the United States were not the productof Cárdenas’ economic nationalism but of domestic political concessions that he hadto deliver in order to stay in power.The decisive changes which set the US and Mexico on the path of strongereconomic cooperation and public political acceptance took place as a consequence ofthe outbreak of the Second World War and the British blockade of Germany. However,in this respect I must make an important clarification: although I recognize that the warhad a catalytic effect on the rapprochement of these two nations, it was not [ashistorian Alan Knight has argued] crucial to the formulation of U.S. policy towardMexico . The U.S. policy of trade liberalization and economic cooperation withMexico was already in place by early 1 930s; consequently, the war did not shape theAmerican policy; it merely did away with the last pockets of resistance to a policy6 Nora Hamilton, The Limits of State Autonomy (New Jersey: PrincetonUniversity Press, 1 982).‘ Alan Knight, Mexico 1930-1 946, p. 48.5which had been formulated by the beginning of the decade. On the Mexican side, thewar produced the definitive neutralization of Cárdenas’ political enemies and therealization that Germany was not a feasible long-run alternative to the US as a tradepartner. On the American side, it made the oil companies finally understand that if theyhad not been able to persuade the US government to act against Mexico before thewar, then after the outbreak of the war the government was even less likely to supporttheir cause.In short, a rapprochement between Mexico and the US was well in place beforeCárdenas stepped down from the Mexican presidency in 1 940. Consequently, theconciliatory and friendly approach toward the US adopted by Cárdenas’ successor,Avila Camacho, must not be seen as a radical departure from Cárdenas, as argued byLorenzo Meyer,8 but as the continuation of the path of rapprochement that Cárdenashad initiated.8 Lorenzo Meyer considers that, in 1 938, the offensive of the workers againstcapital was stopped in favor of “national unity” and that the political program whichwas going to put Mexico in its “route toward socialism” took a turn of 180 degrees.Lorenzo Meyer, Mexico y Estados Unidos en el Conflicto Petrolero 1 91 7-1 942 (MexicoD.F.: El Colegio de Mexico, 1968), p. 1 63._6CHAPTER 1: THE AIMS AND CONSEQUENCES OF US POLICYIn the early 1 930s, the world was experiencing a process of economic recoveryand political rearrangement, and within this context the Roosevelt administration aimedto achieve economic and political leadership in the emerging new world order. On thisfront it faced a worrying challenger: Germany. In Latin America in particular, Germanywas making economic inroads at the expense of the United States.9In the face of this challenge, it was necessary for the US to act to check theemerging German economic influence in Latin America. Mexico, in particular, becameimportant because of its high volume of trade with the US, its geographical proximity,and the political message its treatment would send to other Latin American countries.Accordingly, the United States sought to consolidate its economic and political tieswith all the Latin American nations, and especially with Mexico; this policy becameincreasingly important as evidence mounted of Germany’s economic encroachment intoLatin America.President Roosevelt’s international trade agenda put the US in a position ofinterdependence with Latin America, and particularly Mexico. This interdependencewas the overriding factor shaping American policy towards the region. The US couldnot risk adopting coercive policies that might anger Mexican leaders and lead them toredirect Mexican trade to Germany. Consequently, Roosevelt’s policy towards Mexicowas not simply a modernized version of his cousin Theodore’s “carrot and stick”US exports to Latin America dropped from 1 8.6 per cent of total US exportsin 1929 to 13.4 per cent in 1932. Meanwhile, German exports to the area wereincreasing. Dick Steward, Trade and Hemisohere (Columbia: University of MissouriPress, 1975), p. 21.7strategy, as some historians have argued.1° Rather, FDR’s treatment of Mexico wasconciliatory, non retaliatory, and favoured negotiation rather than coercion.Roosevelt was constrained in his pursuit of this trade policy by certainprotectionist forces active in US politics. In order to neutralize these forces, and thusto keep himself in political power, Roosevelt appointed several anti-free trade officialsto high governmental positions. Ultimately, however, Roosevelt was a free trader; hepromoted Cordell Hull’s reciprocal trade agreements and rejected the protectionistpolicies advocated by Hull’s adversaries.THE GOOD NEIGHBOR POLICYFranklin Roosevelt’s Good Neighbor Policy was a departure from the sort ofthinking that his cousin Theodore Roosevelt had applied when running American foreignaffairs. Theodore Roosevelt’s ideas were premised on assumptions similar to thosearticulated by James Rockwell Sheffield, US ambassador in Mexico City in 1 925, whostated that Mexicans were “Latin-Indians who in the final analysis recognize noargument but force.”11 Such “old thinking sustained positions like the one held bythe former American Secretary of State Charles Evans Hughes, who, during the SixthPan-American Conference in Havana in 1 928, proclaimed the right of the US tointervene in the affairs of another country.12 Paradoxically, Franklin Roosevelt’s Good10 See, for example, Felix Greene El Enemicio: Lo gue Todo Latinoamericano DebeSaber Sobre el Imperialismo (Mexico D.F.: Siglo Veintiuno S.A., 1 973). William Keylor,The Twentieth Century World (New York: Oxford University Press, 1 984).Robert Freeman Smith, The United States and Revolutionary Nationalism inMexico. 1 91 6-1 932 (Chicago: The University of Chicago Press, 1 972), p. 232.12 Ramon Beteta, La Polftica Exterior de Mexico (Mexico D.F: Memoria de IaSecretarla de Relaciones Exteriores 1 941), p. 1 6.8Neighbor policy was a departure from opinions he himself had articulated concerningPresident Wilson’s nonrecognition policy toward the Victoriano Huerta’s governmentof Mexico in 1914. On that occasion, Roosevelt had stated: “Sooner or Iater...theUnited States must go down there and clean up the Mexican political mess. The besttime is right now.”13 Roosevelt had vigorously proposed interventions andannexations in Latin America and, up to 1 922, he had defended American control ofHaiti. 14In contrast to these “old” ways of thinking Roosevelt’s Good Neighbor Policyemphasized compromise, instead of coercion and the use of force, as a tool tosafeguard American interests. During his inaugural address on March 4, 1 933 the newPresident announced the new US policy in international relations: he pledged that hewould “dedicate this nation to the policy of the good neighbor--the neighbor whoresolutely respects himself and, because he does so, respects the rights of others.”15On April 1 2, 1 933, during the celebration of Pan American Day he declared:The essential qualities of a true Pan Americanism must bethe same as those which constitute a good neighbor,namely, mutual understanding and, through suchunderstanding, a sympathetic appreciation of the other’spoint of view. It is only in this manner that we can hope to13 Robert Dallek, Franklin D.Roosevelt and American Foreign Policy,1932-1 945(New York: Oxford University Press, 1 979), p. 8. James MacGregor Burns, Roosevelt:The Lion and the Fox (New York: Harcourt, Brace and Company, 1 956), p. 60. FrankFreidel, Franklin D. Roosevelt; The Arjorenticeshiij (Boston: Little, Brown andComapany, 1952), pp.158, 172-1 73.14 Robert Dallek, Franklin D. Roosevelt and American Foreign Policy, 1 932-1 945,p. 18.15 Samuel I. Rosenman (ed.), The Public Papers and Addresses of Franklin D.Roosevelt (New York: Random House, 1938) Vol. II, p. 14.9build up a system of which confidence, friendship, and goodwill are the corner-stones.16In Latin America, the Good Neighbor approach translated into a strengthening oftrading links. Thus, the implementation of Hull’s policy to establish Reciprocal TradeAgreements throughout Latin America became the economic arm of the Good NeighborPolicy. Roosevelt understood that the customary use of US force upon Latin Americancountries was not going to convince the leaders of those countries to trade with theU.S. Moreover, the President foresaw the real possibility of losing the support of thesecountries to Germany which was becoming an important economic force in the region.In effect, there was a policy shift which had been initiated by President Hoover(who had repudiated Theodore Roosevelt’s corollary to the Monroe Doctrine) andcontinued by the successful performance of Cordell Hull in the Pan-AmericanConference of Montevideo held in December 1 93317 Examples of US behaviorthroughout Latin America make it clear that the Good Neighbor Policy represented areal change and was not just “a new disguise of old-fashioned U.S. imperialism”, asJuan F. Azcárate the Mexican Military Attaché to Washington, and some historianshave described it)° American troops withdrew from Nicaragua and America endedits twenty-year occupation of Haiti on August 1 5, 1 934. The Platt Amendment of May22, 1 903, which had given the United States the right to intervene in Cuba if that16 Ibid., p. 130.17 DaIlek, Franklin D. Roosevelt and American Foreign Policy,1 932-34, p. 81-83.18 Friedrich E. Schuler, “Cardenism Revisited: The International Dimensions of thePost-Reform Cérdenas Era 1 937-1 940” (Phd dissertation, University Chicago, 1 990,p. 37. Irwin F. Geilman, Good Neicihbor Policy (Baltimore: The Johns Hopkins UniversityPress, 1 979.). E. David Cronon, Josephus Daniels in Mexico. David Green, TheContainment of Latin America (Chicago: Quadrangle Books, 1971).10country failed to protect adequately “life, property, and individual liberty,” thus makingCuba a de facto protectorate of the US, was abrogated. Mexico and the United Statessigned a treaty on April 13, 1937 abrogating Article 8 of the Treaty of Limits of LaMesilla, which had been concluded by the United States and Mexico on December 30,1 853. This Article had granted the United States commercial and military transit rightsover the Mexican Isthmus of Tehuantepec; it had also given the US the authority toprotect the highway and railroad to be built in this area of Mexico.19 In February,1 934, Roosevelt initiated trade negotiations with Cuba, one objective of which was toreduce the tariff on Cuban sugar, and, in March, he approved a $4 million loan to helpthe Cuban economy. In June, 1 934, Roosevelt organized his Good Neighbor Trip--a1 0,000 mile cruise to the Caribbean--which included a visit to Puerto Rico, Colombia,Haiti, and Panama. During 1 935, the US established Reciprocal Trade Agreements withHaiti, Honduras, Colombia, and Brazil and was in the process of trade negotiations withnine other Latin American countries. Roosevelt was the first American President tocross the Panama Canal and to set foot in South America. He was, also, the firstAmerican President who met Latin American diplomats from Mexico, Chile, Brazil, andArgentina to discuss current American foreign policy.20It was with this mood that the United States and all Latin American countriessubscribed unanimously to the Protocolo de No Intervención in the Pan-AmericanConference For Peace held in Buenos Aires in December 1 936. The signing of the Non19 Mexico D.F., SecretarIa de Relaciones Exteriores, Las RelacionesInternacionales de Mexico (Dirección General de Prensa y Publicidad, 1 957), p. 22.20 Dallek, Franklin D. Roosevelt and American Foreign Policy, p. 63.11Intervention agreement by the Roosevelt administration indicated a disposition whichemphasized cooperation in its relations with Latin American nations.The Good Neighbor policy aimed to create a favourable political mood toward theUnited States in Latin America. It was necessary to dispel or, at least, neutralize thelongstanding distrust felt by the Latin American nations for the US. This was anecessary prerequisite to implementing the Reciprocal Trade Agreements, the economicarm of the Good Neighbor policy, the objective of which was to promote Americantrade in Latin America and ensure the exclusion of Germany from these markets.ROOSEVELT AND THE DOMESTIC DEBATE OVER TRADE POLICYRoosevelt, above all, was concerned with the development of Germany’sinfluence in world affairs. Therefore, he endorsed the liberalization of internationaltrade, promoted by his Secretary of State Cordell Hull, aimed at neutralizing Germany’scommercial influence in Latin America. Roosevelt’s policy toward Mexico was friendly,economically cooperative, and coherent in terms of its non-retaliatory character.However, the US foreign policy was also, at points, contradictory. The ramificationsof the debate in Congress between the Republicans and Democrats over the ReciprocalTrade Agreements Act endorsed by Hull21 is a good example of the mixed messagessent by the US administration. This debate, although neutralized once the Germanthreat became apparent, cannot be ignored since it created strong opposition to the21 Trade Act endorsed by Cordell Hull, and passed by the American Congress in1 934. Empowered the President to reduce tariffs by as much as 50 percent in thegoods traded with other nations which had made agreements with the US to tradeunder the priciple of the most favoured nation. This meant that the US was entitledto the lowest tariffs exercised by a country with which the US had a reciprocalagreement.12Roosevelt administration and had an important restraining impact on the formulation ofRoosevelt’s foreign policy.22 Nevertheless, in the final analysis Roosevelt camedecisively in support of Hull’s trade liberalization policies.In the early 1 930s, the world trade system was going through a crisis ofstaggering proportions, and the United States was in the process of devising aninternational economic strategy to pull the country out of the economic collapsebrought by the Great Depression. The Americans had sufficient reasons to beconcerned with the economic slump in international trade. World trade had decreasedby 25 per cent from 1 929 to 1 932. Its value in 1 933 was 65 per cent less than thatof 1 929, and the United States had suffered a loss greater than any other country.World exports, in gold values, had decreased by 1 3 per cent, while exports from theUS had declined by 1 9 per cent. American exports in 1 933 amounted to only 52 percent of the volume and 32 per cent of the value of 1 929 exports.23In 1 930, the American administration, looking for ways to pull the United Statesout of this disastrous decline in foreign trade, turned inwards. The Hawley-Smoot tariffwas promulgated as a response to the international trade situation. This tariffostensibly promoted “equalization of costs of production”; this clause empowered thePresident to raise or lower tariffs by up to 50 per cent to equalize costs borne byforeign and US firms, and thus to reduce foreign competition. The Hawley-Smoot Tariffdiscriminated against foreign trade and, therefore, not surprisingly, it caused a22 This restraining effect was reflected in Roosevelt’s handling of the EconomicConference in London. The Moley affair showed Roosevel’s political opportunismupsetting his Secretary of State, and making it, at times, difficult for other countries,and particularly Mexico, to identify the goals of U.S. foreign policy, and trade.23 Dick Steward, Trade and Hemisphere, pp. 1-2.13protectionist response in foreign countries. Economic protectionism became thestandard of international economic conduct. In Latin America, particularly, thisresponse took the form of barter arrangements, currency depreciations, higher tariffs,and quotas.24During the 1 930s American economists debated about whether America shouldcontinue to pursue a protectionist economic policy or open its markets to freer trade.The debate divided Democrats from Republicans. The Republicans argued that thereduction of tariffs exposed American exports to unfair competition. They adopted aprotectionist attitude and opposed the reciprocal trade agreements that the Democraticadministration was negotiating with Latin American nations. The Democrats believedin free trade; they sought the reduction of tariffs and the gradual liberalization ofinternational trade.Roosevelt’s Secretary of State, Cordell Hull, was a known free trader, and hisfundamental trade policy aim was to reverse America’s trend towards economicprotectionism. Cordell Hull was convinced that isolationism was at the root ofAmerica’s economic problems, and that American prosperity demanded a liberal tradepolicy that encouraged American exports. In his memoirs Hull recalls a report he wrotefive months before the Great Crash of 1 929, where he said:our production capacity today is 25 per cent in excess ofour ability to consume. High tariffs cannot save us fromgrowing surpluses....It is my individual view that these glaring facts andconditions will compel America to recognize that these everincreasing surpluses are her key economic problems, and24 Ibid., pp. 5-7, 62-1 97.14that our neglect to develop foreign markets for surpluses isthe one outstanding cause of unemployment.25Hull wanted to promote the reduction of tariff barriers by negotiating reciprocal tradeagreements with foreign countries; to this end, he pushed for the passage on June 1 2,1 934, of the Reciprocal Trade Agreement Act.However, Cordell Hull faced many obstacles to his free trade program. Oneimportant source of trouble was the lack of coordination among the differentdepartments that dealt independently with foreign trade, often with little regard forState Department guidelines. In this respect economic adviser Herbert Feis referred to:“the continued chaos and conflict within the government about the nature and directionof our commercial policy.”26 In 1933, Under-Secretary of State William Phillipsthought that: “every department, especially the tariff commission, was in a fog as tothe foreign trade policy to be pursued.”27A more serious obstacle to Hull’s program was the appointment of politicalscience professor Raymond Moley, an enemy of trade liberalization, as an AssistantSecretary of State. Hull referred to Moley as a functionary lacking information onforeign affairs, who was not “any great aid in conducting foreign policy.”28 In otherwords, Moley was Roosevelt’s instrument to keep the president informed of events andto act as a check on Hull.25 Cordell Hull, The Memoirs of Cordell Hull. (New York: The MacmillanCompany, 1948), Vol. 1, p. 133.26 Herbert Feis, Characters in Crisis (Boston: Little, Brown and Company, 1 966),p. 262.27 Steward, Hemispheric Trade, p. 14. Williams Phillips Diary, Vol. 1, Nov 22,1933, p. 14.28 Hull, The Memoirs of Cordell Hull, p. 1 61.15The speech Moley made on May 20, 1 933, just before Cordell Hull was preparingto go to the World Economic Conference in London to promote his strategy of cuttingdown trade barriers, illustrates the difficulties the Secretary of State had to face inorder to convince other nations of the coherence and seriousness of his foreign tradepolicy. Moley stated in his speech--of which Hull had no prior knowledge--that foreigntrade was of little importance; he also discounted the possibility that any beneficialresult would be achieved by the conference and condemned the tariff programsupported by Hull. The speech was broadcast throughout America and Europe and waswidely interpreted as the actual position of the Administration.29 In Hull’s opinion,Moley deserved “a severe call-down from the President”3°for discrediting Hull’sofficial position and undermining his international status. In private, Hull’s opinion ofMoley was a lot cruder; he referred to him as “that piss-ant Moley, here he curled upat my feet and let me stroke his head like a hunting dog and then he goes and bites myass!”31Roosevelt had to choose between Moley, who had no political power beyond thePresidency, and Hull, who held substantial congressional and party influence. Hull wonthat round, and soon after Moley was dismissed. However, the troubles in the StateDepartment were far from over and they evolved into a full-fledged power strugglewhen Roosevelt appointed George Peek, in December 1 933, to head a neworganization within the State Department to promote foreign trade. Peek was adetermined enemy of free trade and a strong advocate of self-reliance; he became a29 Raymond Moley, After Seven Years (New York: Harper & Brothers Publishers,1939), p. 409.° Cordel Hull, The Memoirs of Cordell Hull, p. 249.31 Dallek, Franklin D. Roosevelt and American Foreign Policy, p. 56._16leading figure for economic nationalists, commercial isolationists, and protectionists.Republican House Representative from Massachusetts, Allen Treadway, whorepresented the anti-free trade sectors in Congress, used Peek’s arguments to voicebitter opposition to reciprocal trade initiatives.32 Peek acquired more power inFebruary 1 934, when Roosevelt nominated him to head two governmental banks topromote export trade, as well as a new trade organization that the State Departmentthought would overlap with many of its functions. Under Secretary William Phillipscalled this nomination the “biggest blow the State Department has ever received.”33Why would President Roosevelt promote such archenemies of his Secretary ofState? What would he gain out of this? Maintaining himself and his party in office wasa substantial part of the answer. Roosevelt, as Neustadt has written, “had a love affairwith power.”34 Arthur Schlesinger, Jr., came to the same conclusion:His favorite technique was to keep grants of authorityincomplete, jurisdictions uncertain, charters overlapping.The result of this competitive theory of administration wasoften confusion and exasperation on the operating level; butno other method could so reliably insure that in a largebureaucracy filled with ambitious men eager for power thedecisions, and the power to make them, would remain withthe President.3532 U.S., Congress, House, Allen Treadway, 74th Congress, 2nd Sess., Vol. 80,Part4 1936, (Washington, Government Printing Office, 1936), p. 4614-461 6.Steward, Trade and Hemisphere, p. 34. Williams Phillips Diary, 1 933-1 936Vol 1, February 27, 1 934.Dalek, Roosevelt Foreign Policy, p. 29. Richard E. Neustadt, PresidentialPower. pp.154-5Arthur Schlesinger Jr. The Coming of the New Deal (CambridgeMassachusetts: The Riberside Press Cambridge, 1959), pp. 527-528, 583-584.17Roosevelt appointed Peek because he represented powerful anti-free trade groups, likethe farm block and the Republican House of Representatives. Since international tradehad become a partisan issue--only four Republican senators and just two RepublicanRepresentatives in the House had supported the Reciprocal Trade Agreement Act--Peekwas a powerful element in the hands of Roosevelt to placate Republican opposition.Peek himself remarked that he “may have been only an opiate to pacify the farmers andCongress.”36Roosevelt in this instance honored Voltaire’s definition of a politician:“Politicians, more than most people, use words only to disguise their opinions.”Roosevelt appeared to be ambivalent about free trade: at different times he promotedboth trade liberalization and protectionism, depending on the political climate andaudience. Speaking to the Governing Board of the Pan-American Union in April 12,1933, he said:It is of vital importance to every nation of this continent thatthe American governments individually take, without furtherdelay, such actions as might be possible to abolish allunnecessary and artificial barriers and restrictions whichnow hamper the healthy flow of trade between the peoplesof the American republics.37On the other hand, during his presidential campaign, Roosevelt had delivered a speechin Baltimore on October 26, 1 932, in which he had stated:36 George N. Peek and Sammuel Frowther, Why Quit our Own (New York: VanNostrand Company Inc., 1936), p. 155.Samuel I. Rosenman, The Public Papers and Addresses of Franklin D.Roosevelt, Vol.2, p. 131.18Of course, it is absurd to talk of lowering tariff duties onfarm products.. .1 know of no effective excessively high tariffduties on farm products. I do not intend that such dutiesshall be lowered. To do so would be inconsistent with myentire farm program.38In the final analysis, though, FDR was a free trader. He thought that “in the longrun” high tariffs and the “Buy American” proposal “would work against us and ourworld trade and our industry.”39 In the short term, however, his main concern wasthat of any politician: he wanted to neutralize his opposition and to maintain himself inoffice. It was this short-run concern that prompted him to promote protectionists likeMoley and Peek.The isolationist attitude of the American public in general and of the Republicanparty in particular played a restraining role, therefore, in the formulation of theRoosevelt administration’s foreign policies. President Roosevelt, a shrewd politician,played a balancing game between the isolationists and the internationalists. Cordell Hullwas well aware of this maneuvering, as testified by his memoirs:Hence, while advocating international cooperation at alltimes, we were faced with the extremely delicate task ofbeing careful not to present and urge measures in suchnumbers as to alarm the people and precipitate isolation asan acute political issue in the nation. Had we done so, theRoosevelt Administration would have been thrown out ofpower bodily as soon as the American public had a chanceto go to the polls, and the nation would have been thrown38 Steward, Trade and Hemisphere, p. 13. Daniel R. Fusfeld. The EconomicThought of Franklin D. Roosevelt and the Origins of the New Deal (New York: ColumbiaUniversity Press, 1956), p.236- 237, 303.Hull, The Memoirs of Cordell Hull Memoirs, Vol. I, pp. 246-9. Schlesinger Jr.The Coming of the New Deal, p. 1 92.19back still farther to the extreme isolationist period followingthe Senate’s rejection of Wilson’s League of Nations.40In summary, Roosevelt believed that a leading role in world affairs would benefitthe American people as well as the needs of poor countries around the globe.However, he had to contend with the opposition against internationalism led by theRepublicans, and his concessions to this group sometimes made him appear to beopposing Hull’s internationalist trade approach. However, in practical terms, Rooseveltsupported and implemented his Secretary of State’s political and economicalcooperation policies of no retaliation, and trade overture with regards to Latin America,and particularly with Mexico.GERMAN ECONOMIC ENCROACHMENT IN LATIN AMERICAWhile the opposition from the isolationist sectors in Congress continued to bea moderate restraining factor for the Roosevelt administration, Germany was developingits trade with Latin America. Germany strengthened its commercial ties with Argentina,Brazil, Chile, Colombia, Mexico, Uruguay, and Venezuela. In spite of the domesticpolitical risks of adopting an internationalist approach, this challenge led the RooseveltAdministration to gear up for competition in Latin America.Starting in 1 933, America’s economic presence in the area was being challengedby Germany. The continuous gains of German exports in Latin America became aworrisome trend for the US.4’ At first, the British had carried the losses: Britishexports accounted for 24.4 per cent of Latin American imports in 1913 but only 13.240 Hull, The Memoirs of Cordell Hull, p. 177.41 Steward, Trade and Hemisohere, pp. 96,133-1 35,142-1 50, 206, 209-213.20per cent in 1 93742 The fate of the British in Latin America sent a warning sign toAmerica.43The gains of German trade and the losses of the United State were evidentthroughout Latin America. In effect, from 1 927 to 1 936, German exports to Venezuelaincreased from 9 per cent of Venezuela’s total imports to 15.1 per cent and in 1938this figure reached 36 per cent. This time America was the loser: US trade withVenezuela had declined by 52.8 per cent.44 Colombian imports from Germany hadfollowed a similar course, increasing from 13.9 per cent in 1928 to 22.3 per cent in1 936. German’s progress in Brazil was particularly dramatic: in 1 927, Germany hadexported 10.6 per cent of its total exports to Brazil, in 1936 Germany sold more toBrazil than the US did, and was shipping 23.5 per cent of its total exports to Brazil.46Germany continued to increase its share of Latin American trade between 1 935 and1 938, and although the German gains were not everywhere as dramatic as they42 Franklin Johnston, “Aumenta el Comercio Mundial en los Ultimos Años,” .jComer[o, (Mexico D.F.: June, 1939), p. 17.‘ One factor that facilitated Germany’s penetration of Latin American marketswas the fact that Germany lacked hard currency and, therefore, their trade was largelybased on barter deals. Germany was selling its industrial products in exchange for foodand the raw materials required for its industry. Latin America countries, also sufferingfrom a chronic lack of foreign exchange, benefited from bartering; they found a marketfor their raw materials and in return they were getting the products essential to thesupport of their own industry. For a more detailed explanation of the German tradepolicy see: Percy W. Bidwell, “Latin America, Germany and the Hull Program,” ForeignAffairs Review, (New York: January 1939), pp. 380-382. Also, Banco Nacional deComercio Exterior de Mexico, Mexico Exøortador (Mexico D.F.: Editorial Cultura, 1 939),pp 71-98.‘ Johnston, “Aumenta el Comercio Mundial en los Ultimos Cinco Años,” p. 18.‘ E. Taylor Parks, Colombia and the United States (North Carolina: DukeUniversity Press, 1 935), p.466. Johnston, “Aumenta el Comercio Mundial en losUltimos Años,” p. 18._46 Steward, Trade and Hemisphere, pp. 142-1 45.‘ Banco Nacional de Comercio Exterior de Mexico, Mexico Exportador (MexicoD.F.: Editorial Cultura, 1939), p. 84.21were in Brazil, they were steady--as is illustrated by Table #1 48TABLE #1PERCENTAGE SHARES OF THE UNITED STATES AND GERMANY IN TOTALIMPORTS OF EIGHT LATIN AMERICAN COUNTRIES.1933 1936 1937 1938*ArgentinaUnited States 12.7 16.4 16.3 19.2Germany 10.8 10.3 10.9 10.1BrazilUnited States 21 .0 23.1 21 .9 24.6Germany 12.1 23.9 24.0 24.1ChileUnited States 22.5 29.1 28.1 29.5Germany 11 .4 26.0 25.8 24.2ColombiaUnited States 36.8 48.4 49.1 47.2Germany 17.8 20.1 12.6 18.0GuatemalaUnited States 51.0 45.3 46.4 45.8Germany 12.5 32.4 30.6 33.6MexicoUnited States 59.9 62.8 66.4 58.5Germany 12.0 15.6 14.9 19.9PeruUnited States 27.4 35.4 34.0 36.2Germany 9.6 19.7 19.2 20.1UruguayUnited States 9.2 13.6 13.1 12.8Germany 9.0 11.1 10.8 15.6* The 1 938 figures account for trade from January to June. Bartering of Mexican oilfor German and Italian manufactures, which took place in the first half of 1 938, andwhich the Mexican government did not report at the time, have not been included.48 Percy W. Bidwell, “Latin America, Germany and the Hull Program”, pp. 378-379. Banco Nacional de Comercio Exterior de Mexico, Mexico Exortador, p. 83.22Mexico was part of this development, and after the Great Depression Mexico’scommerce with Germany increased rapidly and reached levels which had not beenknown in the past. In 1 933 Mexico bought goods from Germany worth 29.3 millionpesos; four years later this figure had increased to 98.6 million pesos, an increase of337 per cent.49 The increase of Mexican imports from Germany is verified in table#2.°TABLE #2MEXICO IMPORTS FROM GERMANY(thousand of pesos) (% of total Mexican)(imports)i92831* 29,000 8.9i93236* 41,000 12.61937 99,000 16.11938 94,000 19.2*Average.The German gains in the mid-i 930s were sufficient to disturb the political andbusiness leadership in the United States. US trade with Latin America during the1 930s was not in a critical stage, America was still the leader, enjoying 34.1 per centof the total exports to Latin America.51 This was good news for the US, but it wastempered by a development which had aroused President Roosevelt’s concern early in1 93352 While the US wanted to bring down the barriers of protectionism, it hadsuffered a reduction of its imports because some Latin American nations were usingBanco Nacional de Comercio Exterior de Mexico, Mexico ExDortador. p.71.50 Harry Block, “What Next in Mexico?,” The Nation, (March 4, 1 939), p. 259.51 us Deparment of Commerce, Statistical Abstract of the United States(Washington: US Government Printing Office, 1934, 1940), #56, pp. 424-425; #61,pp. 484-485. Also, see Appendix, Table # 1.52 Franklin Roosevelt, The Public Papers and Addresses of Franklin D. Roosevelt(New York: Random House, 1938), p. 131.23protective commercial measures or not buying American exports. Cuba, as early as1 927, had initiated a protective tariff.53 Argentina, concerned with its unfavourablebalance of trade with the US, had restricted its American imports from 1 937 to 1 939.Uruguay had adopted similar measures from 1 934 to 1 938, even though its balanceof trade with the US had been favourable.54 Mexico was also part of thisphenomenon; historian Carlos Arroyo Crotte has characterized the period from 1919to 1 930 as protectionist. Crotte pointed to The Comision de Aranceles (TariffCommission) established in 1 924 and the new tariff 1 930 to corroborate his claim.55An element which helps to understand Mexican protectionism is the fact that, from thelate 1 860s to 1 930 the Mexican government had collected more than 40 per cent ofits total federal revenues from taxes on international commerce.56 Table #3 illustratesthe shifting of Mexican exports away from the US after 1 923.TABLE #3PERCENTAGE OF MEXICAN EXPORTS DESTINED FOR THE U.S.1923 82.98%1926 70.98%1929 60.73%1937 56.23%Dick Steward, Trade and Hemisphere, p. 96-97.‘ Harold Peterson, Argentina and the United States 1810-1 960 (New York:State University of New York, 1 964), p. 358. U.S. Deparment of Commerce, StatisticalAbstract (1940), #61, pp. 484-485.Carlos Arroyo Crotte, “Historia de los Aranceles Aduanales y su lnfluencia enNuestro Comercio Exterior,” Revista de Hacienda, (Mexico D.F.: Noviembre, 1 937), pp.3 1-42.56 Banco Nacional De Comercio Exterior, Mexico Exportador 1 937 (Mexico D.F.:Editorial Cultura, 1 939), p. 763-764. It is understood for lmpuestos Exteriores taxeson imports, exports and consul duties when applicable. Among the taxes on importsand exports, besides the taxes of export and export proper there were duties on transitof goods, load and unloading, weight, patents and navegation, and sanitary duties.Banco Nacional de Comercio Exterior, Mexico Exportador 1937, p. 55.24American politicians and economists viewed the German trade policy success inLatin America as a challenge to American businesses with the region. There wassubstantial concern among American business circles over the German tradepenetration in Latin America. The United States Chamber of Commerce, in a reportpublished in 1 938 urged that steps be taken to stop the non-American participation inLatin American trade. Part of this report stated:It is significant that during the decade (1 927-1 936 inclusive)the share of the United States in providing the goodspurchased abroad by each of the South American nationshas shown a decline. While our country still does the bulkof the trade with South American countries as a whole, thissurvey leaves little doubt that our leading position is beingchallenged constantly by other nations, particularly Germanyand Japan.The greater the commercial hold that the Fascist and militarydictatorships get on Latin American countries, the moredeeply they will influence the form of government amongour Latin neighbors. This means that the fate of All-American government, and in many lands of democracyalso, may be decided in Central and South America by thegigantic trade battle now under way.58In essence, the trend reflected the commercial expansion of Germany and thiswas interpreted as a threat to US prosperity. Germany was recovering from theeconomic disaster of the First World War and German manufacturers were producingand conquering new markets and thus threatening US trade worldwide. Concurrently,58 Burt M. McConnell, Mexico at the Bar of Public Oijinion (New York: Mail andExpress Publishing Company, 1 939), p. 259. The concern of the American businesscommunity was also influenced by the fact that, in 1 935, Latin America was thebiggest recipient of the U.S. direct investment in the world, importing $2,529,900,000.By comparison American capital invested in Europe amounted to $1 ,369,600,000, andin Asia to only $487,6000,000. Cleona Lewis, America’s Stake in Internationalinvestments (Washington: The Brookings Institution, 1 938), p. 606.25the Japanese were pursuing a closed door policy based on the idea of “Asia for theAsians,” a Japanese version of the Monroe Doctrine. Therefore, the consolidation ofcommercial exchange and relations with Mexico became especially important becauseof the geopolitical implications of Mexico falling under the influence of Germany andthe precedent this example would have set for the rest of Latin America. For the USto lose preponderance in Latin American trade would have meant being deprived of aregion which was essential to fulfill Hull’s strategy to place the US in a position ofworld commercial leadership.The Roosevelt administration, faced with this actual and potential decline ininternational trade and the loss of political influence, set its “trade-diplomacy” in actionto shift the course of events. A significant step taken in that direction was thepromulgation of the Reciprocal Trade Agreements Act on June 1 2, 1 934. The firstsubstantial favourable result of this initiative in Latin America was the signing of aReciprocal Trade Agreement with Brazil in February 1 935, which was the LatinAmerican country where German commercial expansion had been most direct andimportant.59 The 1 935 agreement thus made Brazil one of the first nations to bedrawn into the new American trade strategy in Latin America.6° Between August1 934 and November 1 936, reciprocal trade agreements were concluded with Cuba,Haiti, Colombia, Honduras, Nicaragua, Guatemala, El Salvador, and Costa Rica, and inSteward, Trade and Hemisrjhere, p 133.60 Osvaldo Aranha, the Brazilian Minister of Finance, traveled to the U.S. to closethe agreement in which the U.S. extended credit to Brazil amounting to $1 9,2000,000.The Americans also established a fund of $50,000,000 to reorganize the BrazilianCentral Bank. Bernardo Ponce, “El Mundo Dió Quince Vueltas,” El Economista, (MexicoD.F.: March 15, 1939), p. 31.261 937 the United States declared its intentions to negotiate a trade agreement withEcuador.Efforts to obtain a trade agreement with Mexico did not go far, however, asthese two countries continued to carry on long-standing quarrels and the Cárdenasgovernment, in particular, could not rally the domestic support necessary to resolvethem. Moreover, the resolution of Cárdenas’ internal political difficulties aggravatedand created new sources of friction with the US, as we shall see below. Nevertheless,the tangible and threatening German encroachment in Mexico was an important factormoderating any American retaliatory action against Mexico.Cárdenas himself misunderstood these American motives; he believed that “theUnited States will not intervene in our internal affairs, first because of its GoodNeighbor Policy.. .and second because it is profoundly concerned with meeting theproblems that have arisen within its own territory.”61 In fact, the US was far fromacting on some sort of benign feelings, reflective of the Good Neighbor Policy; nor wasits attitude the result of a preoccupation with the domestic agenda. The softness ofthe Roosevelt administration toward Latin America, as I will demonstrate in the nextsubsection, is largely explained by the German threat to American trade in LatinAmerica. As a result, a new relationship of interdependence developed between LatinAmerica and the US.61 James D.Cockroft, Mexico (New York: Monthly Review Press, 1 983), p. 1 25.27MEXICO, GERMANY AND THE US: TRADE POLICY, INTERDEPENDENCE, AND THE USNON-RETALIATORY APPROACHThe American goal of establishing itself in a position of trade preponderance inLatin America, and the options that the German market opened for Mexico, placed theUnited States in an interdependent position since its trade strategy for Latin Americarequired that it have a friendly Mexico on its side.US commerce was very important, if not essential, for Mexico during the 1 930s.In truth, Mexico’s dependence on the US for both export markets and imports was afact that Mexico could not ignore. In 1 938, 57.67 percent of Mexican imports camefrom the US and 67.41 percent of Mexican exports were directed to the United States.Nevertheless, from the early 1 920s until 1 930 this dependence had decreased, andfrom then until 1 938 it had remained in a stagnant condition.62Because most of Mexico’s exports went to the United States, the US was partlyresponsible for the decline in trade with Mexico. Up to the election of Roosevelt, theUS had adopted a strongly protectionist policy dictated by the Underwood tariff of1 922 and the 1 930 Hawley-Smoot tariff of 1 930. Statistical evidence of the declineand then stagnation of US-Mexico trade is given in Tables 4 and 5, which show thevalue and amount of Mexican exports and imports to the United States as percentagesof total Mexican exports.62 Banco Nacional de Comercio Exterior, El Comercio Exterior de Mexico 1 938-1 939 (Mexico City D.F.: Editorial Cultura, 1 940), p. 11 4.28TABLE #463MEXICAN EXPORTS TO THE UNITED STATESAS A PERCENTAGE OF TOTAL EXPORTS1923 82.98%1926 70.98%1929 60.73%1937 56.23%TABLE #5MEXICAN IMPORTS FROM AND EXPORTS TO THE USAS A PERCENTAGE OF TOTAL IMPORTS AND EXPORTSIMPORTS EXPORTS1935 65.34 62.801936 59.13 60.761937 62.16 56.241938 57.67 67.41Mexican protectionist policies were more responsible for the decline thanAmerican policies, because they specifically targeted the US. Here the culprits were theMexican protectionist tariff of 1 930, and the first four years of the Cárdenasadministration during which time his administration continued to approach foreign tradein a protectionist manner.65 Cárdenas maintained this tradition, and on April 15,1 935, just a few months after being elected, his government issued a decree imposinga progressively increasing tax on silver exports.66 The tax increase especially affectedtrade with the US, since about 70 per cent of silver production was in the hands ofAmerican owners and most of the silver was being exported to the US. Again, in63 Banco Nacional de Comercio Exterior, Mexico Exportador 1937, p.55.64 Banco Nacional de Comercio Exterior, El Comercio Exterior de Mexico 1 938-1939, p. 114.65 Banco Nacional de Comercio Exterior, Mexico ExDortador 1 937, pp. 763-764.66 Banco Nacional de Comercio Exterior, Mexico Exortador 1 937, p. 764.29January 1 937, Cárdenas decreed an average increase of 25 per cent of the Mexicangeneral tariff on foreign trade67 On January 1, 1 938, he authorized another tariffincrease of 200 to 400 per cent on American products.68 The Mexican Congressapproved a further tariff increase on August 22, 1 938. Again American interests werestrongly affected as was the case with the 700 peso tariff set for cars of four to eightcylinders made in the US. In 1 937 the rate on such cars had been only 200 pesos.69The protectionist character of the Cãrdenas approach to tariff policy can hardlybe disputed, although it should be noted that Cárdenas did not have many choices. Hisgovernment needed money, and the fact that from 1 935 to 1 937 Mexico obtained anaverage of 26.5 per cent of its federal revenues from trade taxes,7°and that 64 percent of its international trade was with the United States,71 left him few alternativesbut to tax American trade. Similar considerations led to the 1 2 per cent export taxincrease, affecting the 75 per cent American owned mining industry, that wasannounced on August 5, 1 938. The Mexican government explained that the tax hadtwo purposes: “to boost government revenues and to keep the cost of living downthrough subsidies to importers of necessities.”72This period of decline in the trade balance between the United States and Mexicocoincided with a period of constant diplomatic bickering. The central issue of disputewas the compensation which expropriated American landowners and the American6] The New York Times, July 4, 1937, s.IV, p. 6:8.66 The New York Times, May 1 5, 1 938, s.lll,p. 1:4.69 The New York Times, August 23, 1938, p. 10:3.70 Banco Nacional de Comercio Exterior, Mexico Exortador 1937, p. 764.71 Banco Nacional the Comercio Exterior, El Comercio Exterior de Mexico 1 939-1938, p. 114.72 The New York Times, August 7, 1938, p. 23:1.30government had been trying to obtain from Mexico since 1 927. The resolution of thissituation was important because it would set a legal precedent and establish themanner in which Mexico would have to treat any other expropriation of foreign ownedproperty in the future. It was also important because the government of Cárdenascontinued to expropriate property owned by Americans without immediatecompensation, leaving the resolution of the matter for the future.In the US, critics argued that Mexico could benefit from the Good NeighborPolicy only if it would reciprocate. By this they meant that Mexico should provide“prompt and adequate” compensation for expropriated American property. This Mexicoresisted. In this respect President Roosevelt had declared that “the Good Neighborpolicy can never be merely unilateral. is bilateral and multilateral73 Consequently,Roosevelt came under strong pressure to stiffen his treatment of Mexico. However,Roosevelt did not react strongly against Cárdenas. There were periodic statementsfrom the US State Department claiming the American right to compensation forexpropriated property, such as Hull’s diplomatic notes addressed to the Mexicangovernment of July 21 ,1 938, and August 22, 1 938. Some saw in these notes a firmattitude and the New York Times of July 24, 1 938 stated that Hull’s note was goingto “dissipate the idea that Washington will wink at acts violating rules of internationalpractice.” Senator Pittman, the chairman of the Foreign Relations Committee, remarkedthat “the situation demanded of the Secretary of State that he sent his final andpositive note which required a definite answer.”74 Roosevelt not only winked, but heThe New York Times, July 24, 1938, p. 3:1.The New York Times, July 24, 1938, p. 3:1.31closed his eyes with regard to Mexico’s compensation policy, and Senator Pittman didnot get a “definite answer” from the Mexican government.Eventually, Mexico agreed to end the land controversy. In a note sent to USAmbassador Josephus Daniels by Mexican Secretary of State Eduardo Hay, in responseto a message sent by Hull to the Mexican ambassador in the US, Mexico agreed tomake the first of ten land imdemnization payments of $1,000,000 before May 31,1 939. At first sight the Mexican agreement to pay could be interpreted as a USdiplomatic victory. However, it was Mexico that obtained the best in this deal. Firstthe Americans accepted the principle of delayed indemnity payment and, second, themoney to pay came from American and British mining companies. Before making hisproposal to the Mexicans, Hull had ordered Pierre de L. Boal, a counselor of the USembassy in Mexico, to consult with the American mining companies, whose exportswere largely purchased by the United States Treasury silver program, about theircapability to absorb a new tax that would enable Mexico to make its land payments.Accordingly, Mexico established a new tax on silver exports affecting the miningindustry, which did not result in a single complaint to the US State Department. Thisnew tax increased the Mexican government revenue by $6,000,000 a year, from whichthe $1,000,000 annual indemnization payment was made--a net Mexican profit of$5,000,000!.The evidence admits no doubt: the US did not act tough on Mexico. Why wasit that the US did not take any measures to force Mexico to compensate theexpropriated American landowners or the oil companies promptly? After all, RooseveltThe New York Times, November 14, 1938, p. 10:1.32had often asserted that the Good Neighbor Policy was not one of unilateral friendship.The softness of the US is best explained in terms of international politics, trade, andthe role Roosevelt saw America playing in this context. The abrogation of the Anglo-Japanese pact, which reflected the weakened world prestige of England, the Japaneseinvasion of Manchuria in 1 931, and the alliances which had been forged among Japan,Germany, and Italy placed a higher value on the general American relationship withLatin America, in particular with Mexico, because this nation was a leading country inLatin American and any aggressive response against Mexico could have run the risk ofalienating the rest of Latin America. Hull’s crusade for the liberalization of trade in thecontinent would have been ruined and the German influence in Latin America wouldhave been strengthened.The new element which modified Mexican dependency and led the US to adopta policy of restraint in relation to Mexico was the appearance of Germany as analternative market to the US. The use of international trade as a tool to consolidatepositions of international political and commercial power placed the United States in arelation of interdependence with Mexico.IMPROVEMENT OF TRADE AND THE ROAD TO FRIENDSHIPThe deteriorating trend in trade and diplomatic relations between Mexico and theUnited States was reversed in 1 939. The trade figures started to improve, as isillustrated by the following figures [Table #6, next page].76Banco Nacional de Comercio Exterior, El Comercio Exterior de Mexico (1 938-1 939), p. 114-11 5. Banco Nacional de Comercio Exterior, Comercio Exterior de Mexico1 940-1 948 (Mexico D.F.: Editorial Cultura, 1 949), p. 64.33TABLE #6MEXICO’S IMPORTS AND EXPORTS TO THE USIN THOUSANDS OF PESOSYEAR IMPORTS % EXPORTS %1935 265,348 65 471,203 621936 274,457 59 471,100 601937 381,479 62 501,762 561938 284,933 57 564,846 671 939 41 5,834 66 678,820 741 940 527,285 78 858,758 891941 771,232 84 665,211 91The improvement is partially explained by the gradual reduction of the Americanprotectionist tariff of 1 930. Effectively, in 1932, 31 .8 per cent of Mexican exports tothe United States had been subjected to this tariff, while in 1 938 this percentage hadbeen reduced to 23.9 per cent.77 Mexico was allowed to enjoy the privileges of themost favoured nation, although this country had not signed a Reciprocal TradeAgreement with the US. Therefore, Hull’s campaign to remove trade barriers andestablish Reciprocal Trade Agreements throughout Latin America, a policy endorsed bythe December 1 6, 1 938 Trade Resolution of the eighth Pan-American Conference inLima, was also partly responsible for the upturn. Another more general explanationis the sign of recovery that the Mexican economy showed by 1 939. Nevertheless, themost important, immediate reason that caused the commercial relationship to change,‘ Banco Nacional de Comercio Exterior, El Comercio Exterior de Mexico 1938-1939, p. 133-1 34.34and translated into better diplomatic relations between Mexico and the United States,was the British blockade of Germany. This action terminated Mexico’s access toGermany, its most important buyer of oil after the expropriated oil companies decidedto boycott Mexican sales of expropriated oil.The loss of the German market for Mexican oil made the United States a firstbuyer of Mexican oil, a situation that had not occurred since the expropriation of theoil companies in March,1 938. The effect of the blockade was dramatic. Mexican oilexports were reduced by about half; in August 1 939 Mexico had exported 2,000,000barrels, while in September it only managed to send abroad 1 ,067.000 barrels. Noneof these barrels went to Germany, which in the previous eight months had imported anaverage of 793,000 barrels of Mexican oil a month. The United States increased itspurchases from an average of 392,000 barrels for the previous eight months, to640,000 barrels in September. Italy, another major buyer of Mexican oil, took 266,000barrels in September, while its average in the previous eight months had been 407,000barrels. Moreover, in September 1 939, the Scandinavian countries stopped theirpurchases altogether. The sales to all other countries in September totalled 99,000barrels, and most of them were shipped to one country, Uruguay.78 This shake upof Mexican international trade made clear to Mexico that the option of having Germany,Italy, and Scandinavia as an alternative trade partner to the US had disappeared. Thisevent clearly signaled to Cárdenas the need to act more vigorously in terms ofreconciliation with the United States.78 New York Times, October 6, 1939, p. 23.35By the end of the decade Mexico took definitive steps to align itself behind theUnited States’ war effort against Germany. Therefore, diplomatic and economicrelations between Mexico and the United States improved gradually as the Americaninvolvement in the European war increased and Mexican hopes of Germany as analternative trade partner to the United States faded away. However, the road torapprochement was not smooth and a substantial number of the obstacles in the wayhad been placed there by the Cárdenas administration. Ironically, the Mexicanobstruction was not the intended product of the Mexican President: Cárdenas spentmost of his presidential period involved in a political struggle for power. Its resolutionin Cárdenas’ favour demanded concessions from the President which were responsiblefor most of the trouble with the United States. It is the purpose of the next chapter totell that story.36CHAPTER 2: DETERMINANTS AND OUTCOMES OF MEXICAN POLICYCARDENASLázaro Cárdenas, president of Mexico between 1 934 and 1 940, was acontroversial political leader. Many myths and legends have been built around hispersonality and his government. His treatment of American enterprises operating inMexico aroused energetic reactions. He was called a bandit by British newspapers79and a communist and irresponsible by the Americans.80 In fact, Cárdenas, far frombeing a communist or a thief, or an adherent to totalitarian ideologies, was rather a“symbolic nationalist” who was ultimately guided by pragmatism.There is little doubt that Cárdenas wanted to curtail the free hand foreigncompanies had been granted by Porfirio Diaz, Calles and other Mexicans, and on thebasis of his rhetoric he appears to have been inspired by nationalism, socialism or someother “ism”. However, a closer look at Cárdenas’s actions reveals a pragmatic man andan artful politician who tried to neutralize enemies to maintain himself in power.Cárdenas was a leader who adopted a populist discourse with eruptions of extremesocialistic and nationalistic rhetoric, the product of his political accommodations andhis emotional commitment to the dispossessed. He was first of all a survivor, andaware of his limitations; despite his political zigzagging and use of symbolic rhetoric,Cárdenas was a president who put aside his symbolism and ultimately led Mexico downa path of action dictated by “realpolitik.”Time Magazine (U.S.), May 23, 1938, p. 15.° Burt M. McConnell, Mexico at the Bar of Public Opinion, pp. 217-226. EduardoCorrea, El balance del Cardenismo (Mexico D.F.: AcciOn, 1941).37Mexico’s relationship with the U.S. during the Cárdenas period was not easy.The Mexican administration delivered confusing signals about its attitude toward itsneighbor to the North. During this period the Mexican Foreign Ministry went througha process of professionalization and took greater responsibility for the formulation ofMexican Foreign policy.81 Nevertheless, Cãrdenas did not allow this change to affectthe formulation of the Mexican policy toward the U.S. and therefore he assumed fullresponsibility for the Mexican treatment of the U.S. Cárdenas’ treatment of the UnitedStates up to mid-i 939 was erratic and disconcerting. This was mostly the result ofconcessions Cárdenas was forced to make to peasants and workers whom he neededas allies to resolve the challenges to his political power.Cárdenas was an astute politician who had made all the right political movessince the revolutionary times. At the beginning of the Mexican Revolution in 1910 hebecame a follower of Madero; at Madero’s death Cárdenas joined the agrarians ofEmiliano Zapata until the ‘Federales” dispersed this force and took him captive.Cárdenas did not last long in captivity. He escaped and joined an ObregOn unit andthen later he shifted his allegiance first to the forces of the legendary Pancho Villa andthen, by March 1915, to Carranza and Calles who had become Villa’s enemies. UnderCalles’ command Cárdenas became a General, directed military operations against Villaand the Yaqui Indians, and destroyed Zapatista forces in Michoacan and Jalisco. Bythe age of twenty-five, and, in large part due to his political and military abilities,81 Friedrich E. Schuler, “Cardenism Revisited: The International Dimensions of thePost-Reform Cárdenas Era 1 937-1 940” (Ph.D. dissertation, University of Chicago,1990), p. 31-32.38Cãrdenas was promoted to brigadier general and named the provisional governor ofMichoacan.Early in 1 934 the Part/do Nacional Revoluc/onarlo recognized him to be thepresidential candidate who could best reconciliate all the factions. Cárdenas’s Six Yearprogram82 was an illustration of his ability to balance all the interests; this programwas an exercise in compromise which attempted to address all the divergent groupswithin the Party. Consequently, he managed to win the nomination for the presidencyin the PNR and was elected President of Mexico in December, 1 934. However,Cárdenas’ quest for the Presidency made him important enemies, the most notoriousof whom was the ex-president of the republic, Don Plutarco Calles, popularly knownas “El Jefe Max/mo.”83 Calles had run Mexico’s politics from behind the scenes formore than ten years. He had been the maker of Presidents of Mexico and Cárdenashad not been his preferred choice. Calles’ main objections to Cárdenas centered onCárdenas’ Six Year Plan of reforms, which he perceived as too radical. Once elected,it was made clear to Cárdenas that he was expected to subordinate himself to the“Jefe Max/mo.”8482 The Six Year Plan was Cárdenas’ program of action for his presidential period.It established that the State was going to play a key role as a promoter and controllerin the main activities of the country. This plan proposed fundamental changes in thetenancy of the land, announced that the government would act strongly againstmonopolies and would promote the recovery of the national resources in the hands offoreigners. For more details about this plan see: Luis Gonzalez, Los DIas del PresidenteCárdenas, Vol. XV de Ia Historia de Ia RevoluciOn Mexicana, ed. Luis Gonzalez (23vols.; Mexico D.F.: El Colegio de Mexico, 1981), pp. 170-176.83 The Supreme Chief.Carlos Alvear Acevedo, Lázaro Cárdenas el Hombre y el Mito (Mexico D.F.:Editorial Jus, 1972), pp.1 1 7-1 37.39Cárdenas initially went along with Calles’ tutelage, as demonstrated by theexchange which took place shortly after he had been elected. On this occasion, thenewly elected President dutifully paid a visit to Calles at his sugar plantation in Sinaloa.At the time of the visit “El Jefe Maximo” was playing poker with two generals; whenhis aide informed him about Crdenas’ arrival he said only: “have him wait until I’mthrough here,”85 and Cárdenas complied patiently. Publicly, Cárdenas deferred toCalles and when he made his first public statement on education, agriculture, andbetterment of the standard of living of the Mexicans, he declared that his programwould be realized in its totality according to the doctrine “for which General Calles hadbeen fighting to make Mexico a strong and responsible country.”86 When Cárdenasbegan to challenge his authority, by June, of 1 935, the power struggle became publicand the relationship between the two men soured. Calles made threats announcing thatthe government of Cárdenas was going to end the same way Ortiz Rubio’s governmenthad ended.87 Ortiz Rublo was the Mexican President who had preceded Cárdenas andCalles had forced him to resign. Cárdenas refused to become a puppet, however; yet,in order to stay in power, he had to defeat Calles and his old guard. Cárdenas neededallies and to gain them he had to make concessions to different sectors of Mexicansociety. He decided to make the peasants and workers the supporting pillars of hisgovernment.85 William Cameron Townsend, Lázaro Cárdenas Mexican Democrat (Michigan:George Wahr Publishing Co. 1952), p.92.86 Josephus Daniels, Shirt Sleeve DiDlomat (The University of North CarolinaPress, 1947), p. 60.87 Fernando BenItez , Lázaro Cárdenas y Ia Revolución Mexicana, Vol. III: ElCardenismo (2d ed.; Mexico D.F.: Fondo de Cultura EconOmica, 1978), p.28-29.40In order to rally them to his side, Cárdenas expropriated and distributed land tothe peasants and conceded to political and economic demands from the labormovement. As the peasant and worker organizations targeted American companiesand individuals, having an economic stake in Mexico, Cárdenas was forced to actagainst some of these American companies. This action against American interestbecame the key factor troubling Mexico’s relationship with the United States up to thelast quarter of 1 939.LAND, CALLISMO AND THE UNITED STATESThe negotiations carried on between the US and Mexico to resolve the issue ofcompensation to the American landowners was a long and troublesome enterprise.These negotiations revealed Cárdenas’ willingness to find a solution, although it alsoshowed his weakness and inability to control the process of land expropriations. Aportion of these land expropriations were carried out without the knowledge or theauthorization of the President. This was the work of his enemies in the ministry ofagriculture who had arrived there as the result of Cárdenas’s political concessions tothe Callistas.88 The American government found the attitude of the Mexicangovernment annoying and inconsistent, but it did not react according to the demandsof those who accused the American government of letting the Mexicans get away withtoo much. Still, Càrdenas became the first Mexican president to agree to a program88 The “Callistas were the followers of Plutarco Calles also called the “JefeMaximo”. Calles had, as a President or as a political leader behind the scene, runMexican politics from the 1 920’s to 1 934.41of payments for the land expropriated from American landowners, which had been asource of dispute and bad feelings since the Mexican Revolution.Cárdenas’ policy of expropriating land from the rich and distributing it to the poorearned him a reputation as a good-hearted philanthropist.89 Cárdenas was a Presidentwho demonstrated a strong emotional concern for the fate of dispossessed Mexicans.He was known for his trips all over Mexico in which he got a first-hand impression ofthe Mexican peoples’ problems. Cárdenas would work late into the night receivinghundreds and hundreds of peasants who would personally present their problems to thePresident. He had also ordered the national telegraph office to make available the lineson a daily basis for one hour to any Mexican who would want to express a complaintor opinion to the president. His emotional linkage with the long-oppressed masses ofMexico was frequently stated in his political speeches and demonstrated by thejourneys he made to observe conditions among the people.However, Cãrdenas also acted in the world of real politics to attract socialsectors and consolidate his position of authority. He worked accordingly to unify thepeasants in one effective political and military force behind his government. TheConfederación de Campesinos Mexicanos [CCM] (Mexican Peasant Confederation) hadbeen organized in 1 933 to support Cárdenas’ candidacy, and since July 1 935,Cárdenas had been pressing the Executive Committee of the Part/do NacionalRevo/ucionario [PNR]9° (National Revolutionary Party) to recognize the need to unify89 William Cameron Townsend, Lázaro Cárdenas Mexican Democrat. Jesus SilvaHerzog, De La Historia de Mexico 1810-1 938 (Mexico D.F.: Siglo Veintiuno Editores,1980).90 The National Revolutionary Party [PNR]. Organized by Plutarco Calles in early1 929. From this point it became the official political party of Mexico. This partycontrolled all national elections and run the central government.42all the peasant organizations under the control of the PNR. The Executive Committeeof the PNR complied with Cárdenas’ scheme and the Mexican peasants were organizedinto a single national organization, which in 1938 took the name of ConfederaciónNacional de Campesinos [CNC] (National Peasant Confederation). This organizationclaimed to represent 3 million peasants.91 Cárdenas armed 100,000 of thesepeasants and they constituted a militia under the control of the ministry of defense.This force provided Cárdenas with substantial political-military support to checkattempts to overthrow his government.The pragmatism and political shrewdness of Cãrdenas was revealed in thisscheme to gather the political support of the peasants, because at the same time thathe was creating a powerful peasant organization he was also careful in preventingexcessive concentration of power beyond his control. Thus, he kept the new peasantorganized forces separate from organized labor.92 Mexican historian Arnaldo Cordovawrites, “Cárdenas was afraid that an alliance between the peasants and workers wouldreduce his capacity of control over these labor organizations”93To consolidate the support of the peasants, Cárdenas went ahead with the landexpropriations, even as the US tried to obtain compensation payments for theAmerican-owned land Mexico had expropriated between 1 91 7 and 1 927. Negotiationsbetween the US and Mexico over indemnity payments took place in Mexico City in April1 935, but after four months of talks, the American negotiators left empty- handed. In1 936, the Cárdenas government intensified the pace of the expropriation of property91 James D. Cockcroft, Mexico, p. 134....92 James D. Cockcroft, Mexico, p.134.Luis Gonzalez, Los DIas del Presidente Cárdenas, p. 201. Arnaldo Cordova, LaPolitics de Masas del Cardenismo (Mexico D.F.: Ediciones Era, 1974), pp.1 16-122.43owned by Americans. American property owners and the US government startedinsistent diplomatic action; however this initiative proved to be fruitless. USAmbassador Josephus Daniels met Cárdenas and his Secretary of External Relations onOctober 7th and December 1 5th, 1 936. In these meetings Daniels argued that theAmerican owners of agricultural property in Mexico had been in the country for twogenerations and had made a substantial contribution to Mexican agriculture, by openingnew lands for cultivation, building canals, and organizing pueblos. Cárdenas respondedto Daniels that, in his opinion, Americans owning land in Mexico had obtained enoughprofits to be compensated for their initial investment. Cárdenas also pointed out thatthe government of Mexico had social and economic priorities that could not afford towait until the country had enough money to pay for the land expropriated fromAmericans. The bottom line, however, was that the Cárdenas government had madeeconomic and political commitments to the Mexican peasants which, as PresidentCárdenas himself stated in his report to the Mexican Congress on September 1st,1938, were “urgent and vital to obtain social and economic stability in Mexico.”94In order to achieve internal social peace Cárdenas was forced to take steps thatadversely affected American landowners in Mexico; as a consequence, Mexicanrelations with the United States suffered.The example of the expropriation of the Yaqui Valley95 illustrates howrequirements of internal political stability, not anti-imperialist schemes, made Cárdenascarry out this expropriation. It also reveals the desire of Cãrdenas to cooperate andSecretarIa de Relaciones Exteriores, Las Relaciones Internacionales de Mexico1 935-1 956, (Mexico D.F.: DirecciOn General de Prensa y Publicidad, 1 957), p. 29.For a detailed account of the expropriation of American landowners in theYaqui Valley see: E. David Cronon, Joserhus Daniels in Mexico, pp. 1 30-1 53.44establish procedures for negotiation. This case also shows the obstructive hand ofMexican bureaucrats and Callistas in the Ministry of Agriculture who, up to 1 936, wereled by Tomas Garrido Canabal, an ardent Calilista. Finally, the case of the Yaqui Valleyreveals the contrast between the angry reaction from several American sectors causedby Mexico’s attitude and the passivity of the State Department.On January 24, 1 938 Josephus Daniels, the ambassador in Mexico, sent amessage to Cordell Hull explaining that the breaking of Mexican commitments toprovide free irrigation to American landowners in the Yaqui Valley was creating trouble.The American landowners had renounced their right to 300 hectares of unirrigated landto receive 100 hectares of irrigated land. However, the Mexican authorities in theYaqui Valley had denied the free irrigation and yet held the American landowners to anentitlement of 100 hectares of land as “small properties.”96 Daniels also informedHull that Ramón Beteta Quintana the Mexican Under Secretary of State was going tobring this matter to Cárdenas’ attention.97 For five months the situation in the YaquiValley rested unresolved, until on June 4, 1 938 the US Secretary of the State receiveda dispatch from the American Vice Consul at Guaymas. The Vice-Consul’s noteinformed Hull that Americans whose properties were provisionally affected by theagrarian petition of Campo Yaqui in the Yaqui Valley had received written notice thattheir properties would be definitely expropriated on Sunday June 5th.98 The same day96 Small Properties. Articles 51 of the Mexican Agrarian Code provided the 1 50hectares of irrigated land or 300 hectares of seasonal land were to be inaffectable orreserved to owners whose lands were to be expropriated.U.S. Diplomatic Papers, The American ReDublics, Vol. V of Foreign Relationsof the United States, (5 Vols.; Washington: Government Printing Office, 1 956), Vol.V,pp. 660-661.98 U.S. Diplomatic Papers, The American Rerublics, Vol. V of Foreicin Relationsof the United States, (5 Vols.; (Washington: Government Printing Office, 1 956), p.45Pierre Goal, the American Charge d’Affaires in Mexico, had an audience with theMexican Foreign Secretary Eduardo Hay, in which Boal pointed out to Hay that theMexican government was treating the situation in the Yaqui Valley as a fait accomolieven though Francisco Najera, the Mexican ambassador to the US, had just taken newpropositions in relation to the Yaqui Valley to Washington and these were still undernegotiation. Hay responded that he would take action to hold up the expropriation inquestion.99On June 6, 1 938 Boal sent a telegram to the US Secretary of State in which hestated that Hay had told him that no one in the Mexican Agrarian Department knew ofany plan to make the Yaqui expropriations definitive. Hay had also informed Goal thathe had brought this matter to the attention of Ramón Beteta Quintana, the UnderSecretary of Foreign Affairs, who was credited with having great personal influencewith President Cárdenas.10° The head of the agrarian department, Gabino Vasquez,had also been contacted by Hay and this official stated that he was unaware ofanything definitive in the Yaqui Val1ey.10 On June 30 1938, Lawrence Duggan, theChief of the Secretary of State Division of the American Republics, had a meeting withJohn D. Stocker, chief representative of the American landowners in the Yaqui Valleyto go over the situation in the valley. In the memorandum about this meeting Dugganwrote:666.Ibid. p.666.100 Frank L. Kluckhohn, The Mexican Challenge (New York: Doubleday, Doran &Company, Inc. 1939), p. 243.101 U.S.Diplomatic Papers, The American Republics, Vol. 5, p.667...46Mr. Stocker had cleared a misconception I had entertainedbased upon the reports from both Mr. Yepis and theEmbassy Mexico City. I had understood not only that thelands had not been definitely expropriated but that theywere still being worked by their American owners. Mr.Stocker informed me that the situation is as follows. Theirrigated lands belonging to the American citizens, with theexception of the pequeñas propiedades,102 have beenturned over to the former workmen who have constitutedthemselves into ejidos.103At first instance this account might give the impression that the Mexicanauthorities were embarked in a concerted effort to deceive the US State Department.That was not the case, however; Cárdenas had little room for maneuvering and wasnot able to clear up the confusion. The Yaqui Indians had maintained a tradition offighting for their land against any central government in Mexico. They had fought forcenturies against the incursion of outsiders. Cárdenas himself had been one of theirenemies when in 1915-1916 he had led troops against them. Therefore, it wasimperative for Cárdenas, in spite of souring the relationship with the Americans, to goahead with the expropriation of American landowners in order to satisfy the demandsof the Yaquis and thus save his administration from a potentially dangerous enemy.Added to Cárdenas’ difficulties were the activities of two groups that attemptedto destabilize his administration. First, there were the Callistas still in public office, whohad been or were in the process of being expropriated themselves. Second, a group ofanti-American Mexican officials, who interpreted the soft American treatment ofMexico as something momentary, were disposed to take full advantage of the102 Small Properties.103 U.S.Diplomatic Papers, The American Republics, Vol. 5, p. 673.47situation.104 One of these latter officials was Under-Secretary of State RamOn BetetaQuintana, who, in spite of being married to an American woman, was known to havea strong antipathy to the United States. Beteta had demonstrated this antipathy inOctober 1 937 as he addressed United States consuls, members of the embassy staff,and officials of the Department of the State in Mexico City. In this meeting, he referredto the Mexican governmental policy of American-owned land expropriation as areconquest of “Mexico Para Los Mexicanos” and declared explicitly that no furtherpayment for the seized lands should be expected.105 The obstructionist maneuveringof the Callistas and the hard core anti-American functionaries, plus the pressuresunfettered by Cárdenas himself to grant land in order to maintain social peace and keepthe peasants on the side of the government, created anger and confusion amongleading American circles. They thought this was a concerted plan to injure Americaninterests. However, Cárdenas had not devised a plan purposely to deceive theAmerican officials. The contradictory messages from Mexico originated in the needsof the Mexican president, who was not firmly in control of either his government or hisagricultural program, to make concessions to Mexican interests.The official treatment of American property-owners in Mexico caused substantialdiscomfort in the U.S. and congressional leaders aired their disapproval.104 New York Times reporter Frank K. Kluckhohn, a veteran journalist familiarwith Mexican politics, had suggested that President Cárdenas and his Secretary ofForeign Affairs could be trusted, but that secondary officials in key positions were aproblem because they were interpreting the “hands off” policy of the US as a happyinterlude: as he put it, their disposition was to make hay while the sun shone. IhQNew York Times, July 4, 1 937, IV, 6:8. Frank K. Kluckhohn, The Mexican Challenge.Also Josephus Daniels, Shirt Sleeve Dirlomat.105 New York Times, October 15, 1937. p. 5:2.48Representatives like Everett M. Dirksen of Illinois106, Charles A. Plumley of Vermont,John J. Boylan of New York, John P. Higgins and George H. Tinkham ofMassachusetts107, and Hamilton Fish of New York108 among others, believedMexico was taking advantage of American generosity. Energetic action against Mexicowas demanded and, on occasion, this discontent was expressed in insulting andextremely rude terms, as evidenced by the editorial of the Burlincton Daily News whichRepresentative Charles A. Plumley added to his remarks in the House ofRepresentatives. The editorial in question declared:Mexico needs a lesson in discipline. Firmly diplomatic, ifpossible; martial if not. The United States must protect herinterest in Mexico. If it cannot be done throughambassadorial channels (and apparently this is too much tohope for), then we must go there and do it. We are dealingwith a country without honor, without ethics-a countrywhich harbors a majority of vicious, sulky, treacherouspeople who will never comprehend other than drastictreatment. “Teddy” had the right idea: “Own or control thatterritory” “America, curb Mexico -now.”109106 U.S. Congress, House, Hon. Everett M. Dirksen, What about Mexico?, 75thCong., 3rd Sess., April 2, 1938, p. 1290.107 U.S. Congress, House, The Mexican Problem-Statesmanship-Non Intervention,74th Cong., Sess., 1, Vol.79, Part 8, June 10, 1935, p. 9009. U.S. Congress, House,Hon. Charles A. Plumley, Curb Mexico, 75th Cong. 3rd Sess., Vol.83, Part 10, April2, 1 938, p. 1 296. U.S. Congress, House, Hon. John J. Boylan, 74th Cong., 1St Sess.,Vol. 79, Part 2, February 5, 1 935, pp. 1485-1486. U.S. Congress, House, Hon. GeorgeH. Tinkham, Mexico is a Communistic State and its Communism has been promotedby President Roosevelt and Secretary of State Hull, 75th Cong., 3rd Sess., Vol. 83,Part 6, May 2, 1938, 1938, p. 6097-60978.108 U.S. Congress, Hon. Hamilton Fish, The Good Neighbor Policy in Mexico,75th Cong., 3rd Sess., Appendix, Vol. 83, Part 11, 1 938, June 1 6, 1 938, p. 2982.109 U.S. Congress. Hon. Charles A. Plumley, Curb Mexico, Appendix to the 75thCong. 3rd Session, Vol., 83, Part 10, April 2, 1938, p. 1296.49In contrast, the response of the US State Department was expressed by Secretary Hullin a Press Conference in March 30, 1938, where he said: “This government has notundertaken and does not undertake to question the right of the Government of Mexicoin the exercise of its sovereign power to expropriate properties within itsjurisdiction.”110 Questioned about the compensation aspect of the expropriations hestated: “It is my very earnest hope that because of the very friendly relations existingbetween the two Governments a fair and equitable solution of this problem may soonbe found by the Mexican Government.”111Mexico was not curbed and the muddled situation around the expropriation ofAmerican land continued to be a source of trouble. In an attempt to promotenegotiations, Josephus Daniels, the US Ambassador to Mexico, met President Cárdenason October 26, 1 938. At this meeting, Daniels indicated to the President that theDiario Oficial of Mexico had been publishing lists of expropriated land affectingAmericans since September, and, as negotiations were ongoing, this kind of procedurecould bring difficulties to the talks taking place in Washington. Moreover, some of theexpropriations being published had already been made effective the previous year. ThePresident was surprised and responded: “I will instruct the Minister to cease publicationof any further agrarian cases affecting American citizens until after negotiations inWashington have terminated.”2Daniels also expressed the hope that the Mexican government would stop furtherexpropriations while the negotiations were taking place, and Càrdenas responded: “I110 U.S. Diplomatic Papers, The American Reoublics, Vol.V, p. 662.Ibid., p.662.112 U.S. Diplomatic Papers, The American Reøublics, Vol. 5, p. 712.50will give immediate instructions to the Agrarian authorities to cease any furtherexpropriation of American lands while negotiations are in progress.”113 Cárdenassounded surprised and confused and, in spite of his promises the expropriation ofprivate land became more frequent. His agrarian program had unleashed expectationswhich it could not satisfy without suffering a destabilizing counteraction from thepeasants. Thus, Cárdenas became aware of his limitations, and took action to stop thetaking of land which was occurring beyond his control. He issued Order 1 9.650 whichcompelled all state governors to dictate: “All the measures needed to avoid acts as theones that have been taking place in different areas of the country, in which differentelements have taken possession of lands without the intervention of the competentauthority. “114Nevertheless, enormous pressure continued to be exercised on Cárdenas tosatisfy the expectations he had created. In order to maintain social peace Cárdenas wasbeing forced to balance the concessions he had to grant in order to keep the loyalty ofhis supporters with the reaction that these measures produced. The beleagueredposition of President Cãrdenas was registered in the developments involved in theexpropriations of the United Sugar Company properties in Los Mochis, Sinaloa. InSeptember 27, 1 938, as a result of labor agitation, Cárdenas announced theexpropriation of the United Sugar Company lands. The terms of the expropriation werenot accepted by the workers who argued that the company was getting the “lion’s113 Ibid., p. 173.114 Luis Gonzalez, Los DIas del Presidente Càrdenas, p.71. Alfonso Taracena,La RevoluciOn Desvirtuada, ContinuaciOn de Ia Verdadera RevoluciOn Mexicana (MexicoD.F.: Costa-Amic, 1967), Vol.lV p.126.51share” of the land and goods.115 Cárdenas’ response to the demands of the workerswas an explanation that any other kind of a deal would result in enormous externalpressures and that Mexico could not afford to continue on that path of action.116The concerns of the Cárdenas government with the peasant agitation was reflected inthe appointment of a Senate Commission to investigate the bloody events in the Stateof Hidalgo where 102 people had lost their lives in June 1 938. Once the investigationconcluded, the Senate as a block proposed to the Secretary of defence the immediatedisarmament of all the peasants in the State of Hidalgo.’7The difficult situation in which Cárdenas found himself, the result of unrestrainedpeasant-labor agitation which not only affected Americans, was illustrated by the landexpropriation of the Cusi family in Michoacan. Cárdenas called the Cusi’s to theNational Palace and apologetically informed them of the impending expropriation oftheir land. In his memoirs, Ezio Cusi recalled Cárdenas’ apology as follows:I am very sorry, sirs, to inform you that I am forced toexpropriate your farms and give your land to the peasantsI recognize that you have been good farmers ... Buteverybody’s attention is focused on your extensiveproperties and people wonder why they haven’t beenaffected as all the others in the country. In order not toleave you in a bad economic condition, the cooperatives thatare going to be formed ... will buy the buildings of thefarms, all the machinery, windmills, tools, all the cattle,horses and mules ... in short, everything...115 Luis Gonzalez, Los DIas del Presidente Cárdenas, p. 206.116 Ibid., p. 207.117 El Universal (Mexico City), June 27, 1 938.118 Luis Gonzáles, Los DIas del Presidente Cárdenas, p. 209.52Cárdenas’ apology leaves no doubt that he was forced to carry out expropriationswhich were not his preferred course of action.In spite of the apologies, the land expropriations proceeded and the Americanlandowners continued to be affected, as Cárdenas sought to neutralize the enemies ofhis government. Moreover, his allies were not the only ones who profited from thegranting of land. The rebellion of San Luis PotosI against the Cárdenas government,led by General Saturnino Cedillo, Cárdenas’ former Minister of Agriculture, in May1 938, was neutralized by providing the rebels with tracts of land. Federal troops werestill in pursuit of the rebel General when Cárdenas announced the immediate distributionof 390,000 acres in sixty-six communities of the rebellious State; another distributionof land would be carried out in 31 9 more communities. Among the recipients of landwere many of Cedillo’s supporters who had taken arms against Cárdenas.119The insistent demands of the American landowners on the American governmentto defend their interests produced a public diplomatic note in July 21, 1938 fromSecretary of State Cordell Hull to Francisco Nájera, the Mexican ambassador in the US.In this message, which engaged extensively in a discussion about the legality ofMexican land expropriations, Hull asked for arbitration on the Mexican land seizures,and that those procedures should be carried out according to the provisions of theGeneral Treaty of Arbitration which both countries had signed in Washington inJanuary, 1 929. Cárdenas found himself in a dilemma because he had to choose119 The New York Times, May 31, 1938, p. 1:7.53between a continuation of the land seizures, which would keep peasants satisfied, anda course of moderation that would appease the US.High Mexican officials were divided over the tone of the response the Mexicangovernment should give to the American note. RamOn Beteta, Under Secretary ofForeign Affairs, and General Francisco Mujica, Secretary of Communications, advocateddefiance, while another group which included Manuel Avila Camacho, the Secretary ofWar, proposed a friendly response. The split between moderates and radicals over theland issue was also taking place within the official Party of the Mexican Revolution,[PRM]120. On July 23, 1938, radical labor leader Vicente Lombardo Toledano,supported by the President of the party, Luis I. Rodriguez, had managed to expelGeneral Ramón F. Iturbe and Colonel Bolivar Sierra, who represented importantelements in the Army, from the PMR. The level of confrontation between these twogroups was such that in a Congressional session scheduled to discuss the expulsion ofthe two military men revolvers were drawn, forcing the government to suspend thesitting121.Cárdenas realized that his strategy of maintaining himself between the radicalsand moderates was eroding his position of power. He finally opted for a course ofmoderation, understanding that the peasant sector and its non-ceasing demands forland had become in itself a factor destabilizing his government.In a meeting with Josephus Daniels in October 1 938, Mexico agreed to pay forthe expropriated land previously owned by Americans, and made it official on120 The Party of the Mexican Revolution [PRM]. Its constitutional congress washeld on March 30, 1 938. This new party structure was created by Cárdenas and aimedto institutionalize a broader support base.121 The New York Times, August 1, 1938, p. 8:1.54November 12, 1938. The first payment of a $1,000,000 of a total debt of$10,000,000 was made on May 31, 1939. The expropriations of land owned byAmericans in Mexico did not stop altogether after the agreement of November 1 2.Nevertheless, expropriations affecting American citizens were gradually phasedout.’22However, the peasants did not only want land, many wanted religious freedomand the resolution of religious issues became another stage on which the dynamics ofinternal politics took priority over the relationship with the United States.CARDENAS, RELIGION, AND THE USPresident Cárdenas’ handling of religious affairs was also a source of trouble withthe US. Cárdenas declared that his attack on the church aimed to curtail foreignideological interference and, therefore, that it represented an assertion ofindependence.123 To the contrary, Cárdenas’ treatment of the church reflected onlyhis political pragmatism. Initially, he allowed attacks on the church, so long as itprovided him political gains. Then he shifted quickly into a friendly policy toward thechurch once he realized this change could be an effective weapon against his political122 In November 24, 1938, the Mexican government ordered the seizure2,014,000 acres belonging to the Titania and Mercedes companies which weresubsidiaries of the Standard Oil Company of New Jersey, although this expropriationwas directly linked to the oil companies expropiation rather than peasants issues. InNovember 30, 1 938, 7,230 acres were expropriated from an American widow Mrs.Lettie W. Weller. There is some evidence which indicates that this seizure of land hadbeen decided before the agreement between Mexico and the US had been achieved.123Lázaro Cãrdenas, Obras 1-Apuntes 1913-1940, (Mexico D.F.: UniversidadAutónoma de Mexico DirecciOn General de Publicaciones 1 972) pp.297,324-325.William C.Townsend, Lázaro Cárdenas-Mexican Democrat (Ann Arbor, Michigan,George Wahr Publishing Co. 1952), p. 80-81.55enemies in Mexico. His friendly approach toward the church also sent a goodwill signto the US, but it is important to recognize that improving relations with the US was notCárdenas’ major reason for the change of policy.Churches, particularly the Catholic church, were centers of political influenceduring the presidential period of Lázaro Crdenas. Consequently, religion becameanother battleground in the internal dispute for political power. During the first yearsof Cárdenas’ presidency the political stability of the government depended greatly onthe political support of the Callistas, and because of this dependency Cárdenas did notact to curb their fanatical anti-religious feelings. Indeed, Cárdenas adopted a rabid anticlerical position which tarnished Mexico’s relationship with the US. However, onceCãrdenas’ alliance with Callismo soured, he saw the Catholic church and believers ingeneral as potential allies in his maneuvers to isolate politically the Callistas. Cárdenascommenced a rapprochement with the Catholic Church which, as a by-product,produced a better diplomatic environment with the US. Cãrdenas’ friendlier attitudetoward the church delivered him benefits he did not intended to obtain. His softerhand on religious issues was acknowledged as a good sign by the American public ingeneral, the American government and diplomatic circles, and, in particular by the USAmbassador in Mexico, Josephus Daniels, who was a devoted believer.Early in his presidential term Cárdenas expressed his unhappiness with theactivities of religious organizations in Mexico. He showed himself to be as anti-religiousas the “Jefe Max/mo.” In August 1 934 Cãrdenas wrote in his diary that the Catholicpriests and any other minister of “the other religious sects” should be consideredforeigners, “pernicious foreigners, because they are an obstacle to the progress of the56people.”’24 Later, he allowed the American Bible Society to distribute sections of theBible among his soldiers125 and in Chiapas he left the incorporation of the ChiapanIndians into Mexican society in the hands of religious Americans.126 Nevertheless,in the fall of 1 934 Cárdenas abolished religious education. He began 1 935 by statingthe urgent need to rescue Mexico from the blind oppression of the clergy;127 clearly,he considered the Church a political enemy.The Church was not only an enemy corrupting the mind of the Mexicans, butalso a competitor for political power. In March 1 935 Cárdenas recorded in his notesthat he had received reports, which he did not doubt, implicating Mexican generalSaturnino Cedillo, the American oil company El Aguila, and Mexican ArchbishopLeopoldo Ruiz in a plot to overthrow his government128 Consequently, thegovernment of Cárdenas acted vigorously against any religious expression. NachoGarcia Tellez, his Education Minister, promised that he was not going to leave anythingbut secular beliefs in the minds of Mexican students.129 The government controlledradio and newspaper were systematic in their denigration of the Church and itsfollowers.Cárdenas also included in his cabinet the notorious anti-religion “crusader”Tomás Garrido Canabal as his Agriculture Minister. Garrido Canabal was an ardent124 Lázaro Cárdenas, Obras 1-ADuntes 1913-1 940, p. 297.125 William C. Townsend, Lázaro Cárdenas Mexican Democrat, p. 348.126 Cárdenas approved and provided aid to the Indian Linguistic Group, whichwas an organization, conceived, and led by the American priest Cameron Townsend.Townsend was a protestant missionary who headed a group of young Americanswhose job was to teach Spanish and religious education to Indians from the state ofChiapas. Josephus Daniels, Shirt-Sleeve DiDlomat, pp. 75; 1 67-1 71.127 El Nacional (Mexico City) January 3, 1 935.128 Lázaro Cárdenas, Obras l-Aøuntes 1913-1940, p. 316.129 Luis Gonzalez, Los DIas del Presidente Cárdenas, p.22.57Callista and a hard core anti-religion man. He was known by his strident statementssuch as: “All the religions are absurd and the Catholic is even tyrannic andopprobrious.”130 He liked to make a mockery of religion and during the first cattleexposition of the new regime he exhibited a bull imported from the US that he called“The Bishop”, and an enormous donkey whom he “baptized” as “The Pope”.131Garrido Canabal made a tradition of The Bishop and The Pope, exhibiting them atagricultural expositions throughout the country. But not everything was hilarious aboutTomás Garrido. He organized about five hundred thugs, known as The Camisas Rojas,who dressed in red shirts and black pants and terrorized religious believers throughoutthe country. This group was responsible for the burning and vandalism of manychurches, and on occasion their incursions ended in the killings of believers, ashappened in Coyoacan on December 30th, 1 934, when twelve Catholics were shotdead.132Such systematic religious persecution continued unrestrained by the government.Consequently, this sort of unpunished abuse generated a violent reaction among thereligious sectors, who organized themselves and presented armed resistance. By theend of 1 935, Cárdenas’ religious policy was being opposed by about eight thousandrebels who were operating in fifteen states, and the possibility of another religiousuprising like “The Cristero Rebelion”133 was a real threat to the government.130 Ibid., p.22131 Fernado Benftez, Lázaro Cárdenas y Ia RevoluciOn Mexicana, pp.15-i 6. LuisGonzalez, Los DIas del Presidente Cárdenas, p. 23.132 Carlos Alvear Acevedo, Làzaro Cárdenas el Hombre y el Mito (Mexico D.F.:Editorial Jus, 1972), pp. 143-1 53.133 Jean A. Meyer, The Cristero Rebellion (New York: Cambridge UniversityPress, 1976).58Roosevelt came under strong pressure to take a firm position against Mexico.Many ecclesiastical and political leaders, including senators and congressmen, hadexpressed their displeasure with the treatment of religion in Mexico’. In June 1 935Dr. Charles S. McFarland, Secretary General Emeritus of the Federal Council of theChurches of Christ in America, published a volume in New York entitled Chaos inMexico in which he stated that the Mexican persecution was not only against theCatholic Church, but “upon the idea of God and religion as such.”135 In the first halfof 1 935 Senator William E. Borah asked for a Senate investigation of Mexico’sviolations of religious rights, and on August 1935, Congressman John J.Boylanprotested Mexico’s refusal to grant a visitor’s permit to Reverend Howard W. Diller onthe grounds that he was a Protestant clergyman.136 Congressmen introduced fifteenresolutions demanding a response to Mexico’s behaviour on religious matters.137134 U.S. Congress, House, 74th Cong., 1st Sess.:Sen. Robert F. Wagner, January 21, 1935, p.680. Sen. David I. Walsh, January 31,p.1296-1297. Emanuel Celler and John J Boylan, February 1, 1935, p.1362. Rep.John J Boylan, February 5, pp.1485-1487. Rep. Clare G. Fenerty, February 6, 1935,p.1619. Rep. William P. JR. Connery, February 8, 1935 p.1745-1862. Rep. John N.Garner, March 4, 1935, p.2814. Rep. Clare G. Fenerty, March 13, 1935, p.3581-3585. Sen. John N. Garner, March 1 8, 1 935, p.3796-3797. Rep. Emanuel Celler, May8, 1935 p.7144-7145. Sen. David I Walsh, May 21, 1935, p.7894. John J Boylan,June 21, 1935,p.986970. Rep. Mary T. Norton, June 27, 1935, p.1 0334-10339.Rep. John P. Higgins, June 10, 1935, p.9009-9026. July 2, 1935, p.10673. July 8,p.10761-10762; July 10, p.10988-10990; July 17, p.11356-11358; August 8,p.12734; August 20, p.13863.135 U.S. Congress, House, 74th Cong.lst. Vol.79, Part 9. June 1935, p. 9869-9870.136 U.S. Congress, House, John J. Boylan, 74th Cong., Sess. 1, 1935. p.1 2734.137 U.S. Congress, House, 74th Cong., 1st Session, 1935. (Washington, U.S.Government Printing Office, 1935). H.Con.Res.3 p.212; H.Con.Res.7 p. 1410;H.Con.Res.8 p.1410; H.Con.Res. 12 p.2508; H.Con.Res.17 p.34.92; H.Con.Res.28p.9506 ; S.Res.70; H.Res.70; H.Res.179; H.Res.194; H.Res.277; H.Res. 282;H.Res.283; H.Res.286; H.J.Res.31 1, Rep. FENERTY; committe on foreign afairs,p.8819.59Josephus Daniels himself protested to the Mexican government, and Clement Kelley,the Bishop of California, voiced his discontent in his book Blood Drenched Altars. TheKnights of Colombus had constantly pressed Cordell Hull to break relations withMexico, and the New York Times accused “the men that have the control of thegovernment in Mexico as having as a goal the end and destruction of all religiousfreedoms”38Roosevelt did not budge and Secretary Hull worked hard against the approval ofthe Borah resolution, which consequently was not passed in the Senate. The manycongressional resolutions demanding action on the part of the US government wentnowhere. Roosevelt refrained from intervention because that would have tarnished thegrowing mood for cooperation with the US that Hull’s non interventionist reciprocaltrade approach had nurtured in Latin America. Also, the American Catholics weredivided, which diminished the possibility of the Roosevelt administration losing theirsupport because of its passive policy toward Mexico. In effect, Father John J. Burke,head of the National Catholic Conference, and George Cardinal Mundelein, Catholicleader of Chicago, supported the President on his policy of non-intervention.139American criticism did not make Cárdenas change his attitude towards thechurch either. Rather, he sought a reconciliation with the church in order to gain alliesin his political battle against the forces of the Jefe Max/mo, whom Cãrdenas had bythen expelled from the country. The degree of confrontation between adherents of138 Alfonso Taracena, La Revolución Desvirtuada, p. 75.E.D. Cronon, “American Catholics and Mexican Anticlericalism 1 933-1 936,”Mississipi Valley Historical Review, XLV (September, 1958), pp. 201-30, 209-210,217, 223-30. George Q. Flynn, American Catholics and the Roosevelt Presidency,1 932-1 936.(Lexington: University of Kentucky Press, 1 968), pp. 1 50-1 94. RobertDallek, Roosevelt and American Foreicin Policy 1 932-1 945, pp. 1 23-1 24.60Cardenismo and of Callismo had gradually increased in intensity, giving rise to violentclashes, such as the shooting that took place between Cardenistas and Callistasrepresentatives in the Camara de Diputados in September 1 935. The aftermath of thisarmed clash--during which more than five hundred shots were fired--was the death oftwo representatives and gunshot wounds suffered by three others. In December theMexican police found numerous machine guns, rifles and ammunition in the house ofLuis Morones, a fervent Callista and important labor leader.14°As the challenge against his political leadership became more threateningCárdenas needed to replace the allies he had lost. The church was an ideal potentialcandidate since the Callistas had alienated the church completely. Consequently,Cárdenas inaugurated the year 1 936 by making statements which were aimed atplacating the hostility his own policies had generated among the religious sectors. Hedeclared publicly in Tamaulipas that “It is not the attribute of the government and it isnot within its purposes to fight the beliefs of any religion.”141 In Guadalajara hestated that “It is not up to the government to promote anti-religious campaigns,”142and then he reassured a group of teachers by saying: “from now on any anti-religiouspropaganda in the schools should not exist.”143 In September 1936, the churcheswere opened in Guadalajara and Jalisco, and the opening of churches becamefashionable throughout the country. The law on religious affairs was changed in order140 Luis Gonzalez, Los DIas del Presidente Cãrdenas, p.61. John W.F. Dulles,Aver en Mexico: Una Crónica de Ia Revolución 191 9-1 936, (Mexico D.F.: Fondo deCultura EconOmica, 1977), p. 610.141 Excelsior, (Mexico City) February 1 7, 1 936. Luis Gonzalez, Los DIas delPresidente CArdenas p.62.142 Ibid. p.62.143 William C.Townsend, Lázaro Cárdenas Mexican Democrat, p. 135.61to moderate the restriction on the number of priests allowed per state. Accordingly,in the state of Nayarit a law was promulgated to allow twenty priests in the state,compared to the one allowed under the previous law. A similar law was put in placein the state of Queretaro, where one priest was allocated for each municipaljurisdiction.144If Cárdenas had any intentions to curtail foreign ideological interference andassert Mexican independence they were overridden by his pragmatism. Cárdenas putaside his anti-clericalism in order to gain the favour of the church and removed thatsworn enemy of the church, Tomas Garrido Canabal, from his post of Minister ofAgriculture . Cárdenas’ choice to replace Garrido, Saturnino Cedillo, offers anotherillustration of his political shrewdness. Cedillo was another enemy of the Cárdenasgovernment; he was actively involved in anti-Cárdenas activities (in collusion with theChurch). Cárdenas had written in his diary in March 1 5 1 935 that in the case of Cedilloinsisting on a subversive path he would bring him into his cabinet145 Cedillo’sinclusion in the cabinet accomplished two things: it sent a friendly message to thechurch and, for the time being, neutralized Cedillo’s seditious acts. Cedillo, eventually,revolted against Cárdenas and was killed in 1 939.The measures taken by Cárdenas accomplished his original objective which wasto attract to his camp the political support of the Church. Cãrdenas’ religiousliberalization produced the collapse of the armed religious groups fighting against hisgovernment, as corroborated by historian Jean Meyer who concluded that “the change144 Jean Meyer, La Cristiada (Mexico D.F.: Siglo Veintiuno Editores, 1 973) Vol.I, pp.363-364. Luis Gonzalez, Los DIas del Presidente Cárdenas p. 82.145 Lázaro Cárdenas, Obras 1-Apuntes 1913-1940, Vol 1, p. 316-317.62of government policy during the spring of 1 936 obtained the goal which the weaponshad not been able to do.”146 As for improving diplomatic relations with the UnitedStates, although it was not Cárdenas’ driving motive, his change of direction in relationto religious issues had a positive effect in the United States. It neutralized theincreasing American congressional opposition to his treatment of the Church,147 andtherefore released some of the pressure on Roosevelt to act against Mexico. It alsomade him American friends in Mexico, as Cárdenas gained the appreciation of JosephusDaniels, who later acted on his behalf to “cushion” harsh American State Departmentreactions to measures, demanded by Mexican labor, taken by his government againstAmerican interests. Mexican Labor policy, and the implications of this policy withrespect to the United States lead us into the central theme of study of the next section.CARDENAS’ LABOR POLICY AND ITS REPERCUSSIONS IN THE US.Cárdenas’ relationship with organized labor and its repercussions in the US hasbeen a prolific terrain for the creation of myths about Cárdenas’ motivations andpolitical personality. His alliance with Mexican workers and responsibility for thetremendous increase of labor agitation against foreign companies in Mexico has beenidentified by historians Tzvi Medin and Anatol Shulgovsky as the product of Cárdenas’146 Jean Meyer, La Cristiada (Mexico D.F.: Siglo Veintiuno Editores,1973), p.371. Luis Gonzalez, Los DIas del Presidente Cárdenas, p. 82.147 U.S. Congress, House, 74th Congress, 1st Sess., 1935. (Washington, U.S.Government Printing Office, 1 935) pp. 10673; 10761-10762; 10988-10990; 11356-11358; 12734; 13863; 9869-9870; 10334-10339; 7144-7145; 7894; 3581-3583;3796; 2814; 1296-1297; 1362; 1485-1487; 1619; 1745; 1750-1759.63anti-imperialism.148 Eduardo Correa describes Cárdenas as an agitator, a demagogue,and outright communist.149 Jorge Basurto and Jesus Silva Herzog have stated thatCárdenas and the Poder Sindica/15° in partnership made the most positive anddeepest transformation in the history of contemporary Mexico.151 While ArturoAnguiano and James D. Cockroft agree that Cárdenas manipulated the workers toreform and make stronger the capitalist-business structure of Mexico, without changingthe essence of the system, and without benefiting the workers much.152 FrankTannenbaum has said that under Cãrdenas “the trade union became an instrument forthe reduction of power of private industry.”153 In this same line of thought Joe C.Ashby has stated that: “the labor movement , through trade union organization,exercised considerable power in the state; therefore, it became one of the principalagents in its march to a more significant position in the evolution of Mexican economic148 Tzvi Medin, in ldeolociIa v Praxis PolItica de Lãzaro Cárdenas argues thatCárdenas was anti-imperialist by principle, and that his Panamericanism wasLatinoamericanism striking back. Anatol Shulgovsky, in Mexico en Ia Encrucijada de suHistoria, depicts Cárdenas as the leader of an anti-imperialist movement which wentbeyond the limits of a capitalist regime, and created the base to push for more radicaltransformations. He also emphasizes the ideological impact of socialism on Cárdenasand his followers.149 Eduardo J. Correa, El Balance del Cardenismo (Mexico D.F.: TalleresLinotipográficos Accion, 1941).160 Poder Sindical. Unions’ power, it refers to the leverage and actual capacityof organized worker’s to influence the economic, social and political development of agiven country151 Jorge Basurto, Cárdenas v el Poder Sindical (Mexico D.F.: Ediciones Era,1 983). Jesus Silva Herzog, La RevoluciOn Mexicana in Crisis (Mexico D.F.: Fondo deCultura EconOmica, 1944), p. 18.152 Arturo Anguiano, El Estado y Ia Polftica Obrera del Cardenismo (Mexico D.F.:Ediciones Era, 1990), p. 139.163 Frank Tannenbaum, The Struggle for Peace and Bread (New York: Alfred A.Knopf, 1 950), p. 11 4. James D. Cockcroft, in Mexico, pp. 1 23-1 41.64and social life.”154 I wilt argue that Cárdenas’ labor policy was very far from beingmotivated by some cohesive political or economic ideological definition to fightimperialism or build either capitalism or socialism. It mostly involved the creation of aunified worker’s movement under Cãrdenas’ tutelage to neutralize his political enemiesand insure his position of power. The “empowerment” of the workers eventuallybackfired, and for some time Cárdenas lost control over organized labor. Free ofCárdenas’ reign, labor agitation and actions created friction with American companiesand the U.S. government. Ultimately, Cárdenas was able to regain control and returnthe labor movement to its original role.Cárdenas’ labor policy had as a first objective the organization of industrialworkers into one powerful union aligned behind his government. This task required theneutralization of the Callista influence among organized workers. The politicalconcessions Cárdenas made to the workers to win their support away from Callismounleashed a wave of political agitation which developed its own dynamic; running outof official control, it turned into a force that destabilized his government. Laboragitation against foreign ownership of the Mexican industry and the consequentnationalization of the American oil companies made the relationship with thegovernment of the United States difficult. Cárdenas’ association with leaders of theworkers, who professed sympathy for communist ideas, made American officialssuspicious and did not facilitate the building of trust between the two countries.However, rather than the American government, it was the American oil companiesthat stridently called for action against Mexico. These companies did not understand154 Joe C. Ashby, Organized Labor and the Mexican Revolution Under LázaroCárdenas (North Carolina: The University of North Carolina Press, 1 963), p. 285.65the domestic and international politics affecting the two countries. Their ignorance,therefore, led them to assume an arrogant attitude lacking in intelligence and politicalshrewdness. When Cárdenas eventually changed his tone toward labor, it was not inresponse to pressure from either the US government of the US oil companies. Rather,his decision was influenced by domestic Mexican politics. Cárdenas gradually realizedthe seriousness of the economic and political destabilizing effect of “uncontrolledlabor,” whose continuance his government could not afford. Therefore, he applied abrake on the workers’ excesses and moderated his course in time to enter a path ofmoderation which set the pace of reconciliation between Mexico and the United States.During the early 1 930s the organized labor movement in Mexico was goingthrough a turbulent period. The reformist leadership of Don Luis Napoleon Morones inthe ConfederaciOn Regional Obrera Mexicana [CROM] (Mexican Workers RegionalConfederation) was being challenged by younger, radical leaders who, in the congressof the CROM of March 1 933, managed to split this worker’s organization.155 InDecember 1 933, the unions which had left the CROM under the leadership of VicenteLombardo Toledano created the ConfederaciOn General de Obreros y Campesinos de155 After 1 928 the CROM went through an internal power struggle, and thereforeit lost much of its strength. Vicente Lombardo Toledano, who represented a “radical”wing within the CROM, was one of those labor leaders trying to gain control of thislabor organization. Once Toledano failed his quest for the secretary general of theCROM he split away and organized a number of labor unions into the ConfederacionGeneral de Obreros y Campesinos de Mexico (General Confederation of Workers andPeasants of Mexico) or CGOCM. The purposes of the CGOCM was to organize all theworkers of Mexico and develop the workers “class consciousness”. This labororganization defined itself as anti-capitalist and anti-imperialist. For a detailed analysisof Mexican organized labor see: Arturo Anguiano, El Estado y Ia Poiftica Obrera delCardenismo. Joe C. Ashby, Organized Labor and the Mexican Revolution Under LázaroCardenas.66Mexico CGOCM (General Confederation of Workers and Peasants of Mexico). By June1 935 the CGOCM was still competing with the CROM for the leadership of organizedworkers. Plutarco Calles himself was taking part. He advocated restraining the powerof labor and launched an offensive against the unions which, in his view, were abusingtheir right to strike. On June 1 2, 1 935 Calles made a public statement denouncing the“extemporary and unjustifiable character of the workers’ strikes”156 a statement thatcreated widespread discontent among industrial workers.Cárdenas seized the opportunity to build a wedge between Calles and theorganized workers. However, Cárdenas was still ambiguous about throwing his supportbehind Lombardo Toledano since this labor leader had stated that his workers wouldnot support “the Jacobinism and the false socialism of Cárdenas,”157 and had alsomade public his sympathies for communism.158 Nevertheless the Caiistas posed abigger threat and this convinced Cárdenas to facilitate the way for Toledano to becomethe head of the new official workers’ union, the ConfederaciOn de TrabajadoresMexicanos [CTMI (Mexican Worker’s Confederation). In February 1 936 Toledanobecame head of the CTM, which claimed a membership of 750,000 workers of thetotal of 2,000,000 industrial workers in Mexico.159Cárdenas was ambivalent in his support of Toledano, and was equally ambivalentabout supporting the workers’ right to strike. On May 1 8, 1 936 the railway workers,156 Anatol Shulgovsky, Mexico en Ia Encrucijada de su Historia (Mexico D.F.:Fondo de Cultura Popular, 1968), p. 275.157 Fernando Benftez, Lázaro Cárdenas y La RevoluciOn Mexicana, Vol.: III, ICardenismo. p. 22.158 S. Walter Washington, “Mexican Resistance to Communism,” Foreign Affairs,Vol., XXXVI, No.,3 (April 1958), p. 507.159 D. Graham Hutton, “The New-Old Crisis in Mexico,” Foreign Affairs, Vol.,XVI, No., 4 (July 1938), p. 630.67supported by the CTM, declared a strike against the railway companies. The Cárdenasgovernment, through the Federal Junta of Conciliation and Arbitration, declared thestrike illegal and sent the workers back to work. Cárdenas acted this way because ofthe active influence of Calles’ supporters in the Mexican political arena and thepressures from the moderate sectors within the PNR, led by Emilio Portes Gil, thePresident of the Party, who disagreed with the course of labor agitation pursued by theCTM.A second serious challenge from Toledano’s union came with the strike ofelectrical workers against foreign electrical companies in the states of Guerrero,Hidalgo, Puebla, and Michoacan on July 1 6, 1 936. By this time, Cárdenas and hisminister of labor, Genaro Vasques, had already made public (on February 11, 1 936) thefamous Fourteen Points platform which had defined the government’s position withrespect to industry, labor, and worker-employer relations.16° This platform sentworkers a clear message--they had become political allies necessary to insure thestability of the Cárdenas government. Accordingly, the government of Cãrdenas did notexercise the mandatory arbitration law on the electrical workers, weakening theposition of the companies that signed an agreement satisfying most of the workers’demands on the 25th of July, 1 936.This green light given by Cãrdenas to the unions stoked labor unrest throughoutthe country, which involved innumerable labor conflicts and economic demands frommore than 3000 unions.161 The workers’ unions, sensing Cárdenas’ soft approach160 For a more detailed explanation of The Fourteen Points platform see: JoeAshby, Organized Labor and the Mexican Revolution Under Lázaro Cãrdenas, pp. 34-37.Luis Gonzalez, Los DIas del Presidente Cárdenas, p. 29.68towards labor, seized the opportunity and pressed harder to improve their economicsituation, and an epidemic of strikes broke out.162 The frequency of strikes rose froman average of 16.4 strikes per month in 1 934 to 55.5 per month in 1936, which wasthe year with the highest number of strikes during the Cárdenas’ period.163 The levelof agitation ranged from demands like the one made by the workers of the AguilaPetroleum Company, for payment of overtime work performed between 1 906 and1 933164, to general strikes. The government of Cárdenas satisfied many of theworkers’ demands. Industry owners were forced to pay for holidays and a minimumwage was established for unskilled workers and, in different industrial sectors,regionally and nationally the workers were able to establish unique collective contracts.The process of phasing Morones out and gaining the support of organized labor calledfor the granting of rights and benefits to workers, including Càrdenas’ decision to grantgovernment bureaucrats the same rights enjoyed by union workers. The political gainof this measure was the massive alignment of government workers with thegovernment, as evidenced by the thousands of government workers demonstrating inthe streets of Mexico, Guadalajara, and Monterrey to express their thanks to thePresident on July 11, 1 937165 Cárdenas was successful and able to defeat the162 William Cameron Townsend, Lázaro Cárdenas Mexican Democrat, p. 129.Joe C. Ashby, Organized Labor and the Mexican Revolution under Lázaro Cárdenas, p.33.163 Joe C. Ashby, Organized Labor and the Mexican Rvolution Under LázaroCárdenas, Appendix D-ll.164 El Excelsior, from the, 1 2th to the 25th of January 1 936. Fernando Benftez,Lázaro Cárdenas y Ia Revolución Mexicana Ill El Cardenismo, p. 22-23. Luis Gonzalez,Los Dias del Presidente Càrdenas, p. 29.165 Alfonso Taracena, La Revolución Desvirtuada, Vol.V, p.165-166.69influence of Callismo among organized workers and the CTM, aligned behind theCárdenas government, became the most important labor union in the country.However, this success at home created circumstances out of the government’scontrol, which became a source of friction with the United States. Cárdenas’ liaisonwith the working class was interpreted by American leading circles as a sign ofCãrdenas’ commitment to Communism.66 The rhetoric of Cárdenas and his alliescould not have produced any other reaction in the US, as Cãrdenas made statementslike: “We must fight capitalism, and the school of liberal capitalism, which ignores thehuman dignity of the workers.”167 Union leaders who supported Cárdenas profferedsimilar statements; for example, Juan Gutiérrez, the General Secretary of the RailwayUnion, proclaimed that the completion of the railway nationalization process was a steptowards “the application of the revolutionary program to socialize all the branches ofthe economy, to transform gradually the capitalist system that exists in thiscountry.”168 Moreover, once Cárdenas had his falling out with Calles, and was inneed of new allies, he recognized the Communist Party and his own party, the NationalRevolutionary Party (PNR), started accepting communist members. Cárdenas also madeGeneral Francisco Mujica, a believer in Marxist doctrine who had maintained a166 E. David Cronon, Josephus Daniels in Mexico, p. 232. Hon. Rep. George H.Tinkham, Mexico is a Communistic State and its Communism Has Been Promoted byPresident Roosevelt and Secretary of Sate Hull, U.S Congress, House, 75th Cong., 3rdSession, Vol. 83, Part 6, May 2, 1 938, p. 6097. Burt M. McConnell, Mexico at the Barof the Public Orinion, pp. 217-248.167 Luis Gonzalez, Los DIas del Presidente Cárdenas. p. 30.168 Ibid., p. 169.70correspondence with Leon Trotsky since the Russian revolutionary had been givenasylum in Mexico169 his Secretary of Communications.Cárdenas, when charged with being a dangerous communist, categorically deniedhaving any interest in communism; he made this clear to US ambassador Daniels in1935:this country and this government are not communistic andhave no sympathy with communism. How can a country becommunistic when the chief desire of the campesino is toget a piece of land for himself and his family.17°However, American businessmen were not reassured by this sort of statement. Theyhad suffered losses and were being directly affected by Cárdenas’ support of radicallabor. Therefore, they addressed their complaints to Washington and to the USEmbassy in Mexico City.The American government did not take any retaliatory action. The Rooseveltadministration was accused of doing nothing to stop “Mexican communism;” SenatorStyles Bridges of New Hampshire said that the US government had “encouraged andeven connived at the establishment of communism in Mexico.”171 Senator RobertR. Reynolds of North Carolina called for a probe of the Mexican situation; for him thefact that Mexico had granted asylum to Leon Trotsky was enough proof that Cárdenaswas leading Mexico into communism.172 Even Secretary of State Cordell Hull169 Frank L. Kluckhohn, The Mexican Challenge (New York: Doubleday, Doran &Company, Inc. 1939), p. 247.170 E. David Cronon, Joseohus Daniels in Mexico, p. 14.171 New York Times, March 3, 1 939. Hon. Sen. Styles Bridges Senate Res. 1 77,76th Cong., 1 sess., Congressional Record, LXXXIV (July 29 and 31, 1939), pp.10411, 10418.172 E. David Cronon, Josephus Daniels in Mexico, p. 232.71declared that it seemed that Mexico was “getting close onto Marxism or theCommunistic basis”173; however, his words were not accompanied by any tangibleretaliatory action against Mexico.American companies were a natural target for Mexican labor activists simplybecause their ownership of Mexican industry was significant. Therefore, radical leadersin the labor movement used the liberties newly allowed to labor organizations to createexpectations of higher salaries, better working conditions and benefits, which theydirected against foreign companies operating in Mexico. Nationalization of foreigninterests operating in Mexico became a fashionable demand among labor circles.174Consequently, although the nationalization of American companies was not thestrategic end of Cárdenas’s labor policy, that policy itself generated pressures fornationalization. After Cárdenas had unleashed the labor movement, it acquired adynamic of its own, and ultimately, placed the government of Mexico in a positionwhere it had no choice but to nationalize the oil industry.THE POLITICS OF OILSome historians, like Gordon Connell-Smith and David Green, Jesus Silva Herzog,and Lorenzo Meyer have disputed or ignored the clear steps that Cárdenas tooktowards the consolidation of political and economic ties with the United States. Theyhave emphasized the nationalization of American oil companies in 1 938 to demonstrate173 Ibid. p.225.174 Joe C. Ashby, Organized Labor and the Mexican Revolution under LázaroCãrdenas, pp. 24,26,40,47,69,87,120,123,162,183-184,187,290,72Cárdenas’ nationalistic motivations.175 The fact that President Cãrdenas embarkedon the wagon of jingoistic euphoria after the fait accompil of the oil nationalization hasprovided apparent support to those who have assumed that nationalization followedfrom strongly held beliefs about nationalism. Rather, President Cárdenas nationalizedthe oil industry i: because of an ideological desire to vindicate Mexican nationalinterest, but to satisfy the demands of the oil workers whose support he needed toconsolidate his domestic position of power. The stubbornness of the oil companies alsoinfluenced his decision. The thesis that Cárdenas was motivated by nationalismweakens further in the face of the fact that at the time of the oil expropriation the mostimportant American economic interest operating in Mexico was not oil, but silver.Cárdenas himself bears some responsibility for the creation of the myth whichequates the Mexican nationalization of American oil companies with a conscious steptaken toward the consolidation of Mexican sovereignty, and solid evidence of Cárdenasnationalism. After the fact, Cárdenas presented his decision to nationalize the oilcompanies as the exercise of Mexico’s sovereign right to control its own naturalresources. The moving pictures of humble peasant women taking their chickens andbelongings to the market to earn money to make a contribution to help TataCárdenas176 stand tall to the big neighbor to the North and recover “Mexico for the175 Gordon Connel-Smith, The United States and Latin America (London:Heinemann Education Books, 1 974), p. 1 72. David Green, The Containment of LatinAmerica (Chicago: Quadrangle Books, 1 971), p. 28. Jesus Silva Herzog, Historia de IaExproriaciOn de las Emoresas Petroleras (Mexico D.F.: lnstituto Mexicano deInvestigaciones Ecónomicas, 1 964). Lorenzo Meyer, Mexico and the United States inthe Oil Controversy. 1 917-1 942.176 Thousands and thousands of humble Mexicans responded to Cãrdenas’ callto make a monetary contribution to pay for the expropriated oil companies. Theamount of money collected was not significant, but the scenes of poor Mexicansbringing their “precious” belongings to the markets to be able to make a contribution73Mexicanos” were genuine. The scare among American business circles about theconsequences of the Mexican example for the rest of Latin America, the hysterical callsby American congressmen to take action against Mexico, and the attempts by the oilcompanies to unseat Cárdenas were not fictional either, and also contributed to thebuilding of the myth. So did the very real discontent and “malaise” that thenationalization caused in the US State Department.Cárdenas’ decision to seize the American oil companies was not, in spite of thisapparent evidence, a concerted effort inspired by nationalism. Neither was it directlybased on a desire to reclaim natural resources of the subsoil. In this respect theconclusions of historians Alan Knight and Luis G. Zorrilla seem correct.177 Rather,nationalization was mostly the result of Cárdenas being the victim of his ownmachinations. He “trapped” himself in his dual objective of using the workers as ashield against his political enemies, and restraining the excessive advantages given toforeign companies in order to enjoy a bigger portion of their profits. Cárdenas createdexpectations and stoked the fire of agitation among the oil workers until it becameobvious that there was no way to turn back. Once the Cárdenas government hadorganized the oil workers in one big union with great potential political power, theworkers were able to challenge the government and the oil companies178. To resistwere quite moving.177 In this sense Alan Knight has stated that: “the notion that the governmentincited the dispute in order to justify a planned expropriation is unconvincing.” AlanKnight, Mexico 1930-1940, p. 43. Luis G. Zorrilla has proposed that: “Theexpropriation was not caused directly by a desire to recover resources of the sub-soil,but to resolve a labor conflict and to execute an order of the Mexican Supreme Court”Luis G. Zorrilla, Historia de las Relaciones Entre Mexico y los Estados Unidos deAmerica 1800-1 958 (Mexico D.F.: Editorial Porrua, S.A., 1966), Vol. II, p. 474.178 Direct orders, from Cárdenas to oil workers to stop strikes were disobeyedby the workers in at least two occasions in 1 937. El Universal (Mexico City), May 30,74the pressures for expropriation Cárdenas would have had to repress the workers’movement, which at that time was his main political support; moreover, he would haveappeared to be siding with the foreign oil interests. The Mexican government madeconstant attempts at conciliation with the oil companies, but these were either missedor ignored. Ultimately, the Cárdenas government was left with no choice but toexpropriate them.The free operation of American oil companies in Mexico had been a long standingphenomenon, and Mexicans bore great responsibility for this fact. It had occurredthanks to the concessions, corruption, and connivence of leading Mexican officials.Advantageous legal rights granted to foreign oil companies in Mexico date back to theend of the 1 9th century. The direct state control over the country’s oil resources hadbeen lost in Mexico when the Cod/go de Minas had been promulgated in 1 884 duringthe administration of President Manuel Gonzalez. On December 24, 1 901 theadministration of Porfirio DIaz passed a new law, based on the Mining Code of 1884,which integrated the property of the soil and the subsoil and recognized explicitly theright of the owner of the property to exploit any oil existent in the property. The firstimportant concessions made to foreigners, like the Briton Weetman Dickinson Pearsonand the American Edward L. Doheny, were based on this law. Moreover, mining lawsof 1 887, 1 901, and 1 909, all decreed by Mexican governments, provided even moreguarantees to the owners of oil properties. The law of 1 887 exempted the exploitationof oil from any federal, state, and municipal tax. The law of 1 901 freed the oil ownersfrom paying any taxes on any natural product which had been refined or processed;1937, p. 1:1. El Universal (Mexico City), December 11, 1937, p.1 :1, p. 3.75moreover, they were allowed to import free of duty all the machinery required for theindustry. Finally, the law of 1 909 made the property owner the exclusive owner of anycombustible mineral existent in the subsoil. Bribery of corrupt Mexican officials wasused when necessary; accordingly, Doheny bought many authorities and officials inVeracruz to manipulate the public registration of property and make cancellations orinscriptions of property at will.179 Violence, including murder, was also part of theprocess; for example,the assassination of Francisco Mendez Aguirre, the notary of thecity of Panuco, was linked to “La Huasteca” oil company.18°The first attempt to curtail the privileges enjoyed by foreign oil companies wasmade by Francisco Madero, the first President of Mexico after the revolution of 1910.He created the first taxation to be applied to the production of oil, a charge of threecents per barrel of oil produced. Madero’s action provoked an infuriated response fromHenry Lane Wilson, the American ambassador, who sent a note to the MexicanSecretary of External Relations demanding that the Mexican government stoppersecuting and robbing the American oil companies, and threatening President Maderowith the landing of US marines.181After Madero, the jefes of the Revolution accommodated themselves to theforeign oil companies’ laissez-faire style of operating, and enriched themselves in theprocess. They ensured labor peace and liquidated any attempt to disrupt thecompanies’ operations, for which they were rewarded generously. Although severaladministrations made lukewarm attempts to apply Article 27 of the Mexican179 SecretarIa del Patrimonio Nacional, El Petróleo de Mexico (Mexico D.F.: LaSecretarla del Patrimonio Nacional, 1 963), p. 14.180 Ibid., p. 14.181 Ibid., p. 15.76Constitution, which had granted the Mexican state ownership of subsoil resources, itwas not until Cárdenas assumed power that a serious attempt to curtail the privilegesof the US companies operating in Mexico was made.Cárdenas did not succumb to threats or bribes from the oil companies. He hadhad an early contact with the American oil industry as a military commander inHuasteca (1 925-8) and on that occasion Cárdenas had refused to accept a Packardsedan offered by an oil company as recognition of “high esteem and respect.”182Once President he continued to surprise the oil companies who were used to Calles’more flexible practices. They complained that the new President “was curiously naivein these matters and did not appreciate business convention as understood inMexico. “183Following in the steps of Madero, Cárdenas delivered on his presidential promiseto exercise greater control over the oil companies by ordering businesses operating inthe country to abide by the “Calvo Clause” which established the full jurisdiction ofMexican laws over foreign companies. Also, on February 4, 1 935, the Mexicangovernment produced an executive decree cancelling all concessions of national landthat had been given to the Dutch-Shell-controlled Mexican Aguila Company in 1 906.This is as far as Cárdenas wanted to go; the expropriation of the oil companies was notpart of his program. Nevertheless, as has been illustrated, requirements of domesticpolitical forces led him to initiate a process of labor agitation which ultimatelyculminated in the expropriation of the foreign oil companies operating in Mexico.182 William Cameron Townsend, Lãzaro Cárdenas, Mexican Democrat, pp. 43-45.183 Alan Knight, Mexico 1 930-1 946, p. 41.77THE EXPROPRIATION OF THE FOREIGN OIL COMPANIESWhen Cárdenas became President, there were 1 5 major foreign oil companiesin Mexico, all associated, in one way or another, with two worldwide monopolisticinterests: The Royal Dutch Shell Company, which was mostly English, and the StandardOil Co., which was American. In 1 934, some 1 3,000 workers were employed in thepetroleum industry, and they were grouped into 21 different labor unions. By 1935,the Cárdenas government had been able to organize these workers into just one bigunion, which was then affiliated with the umbrella CTM (Confederation of MexicanWorkers) the following year.Strikes against the oil companies were not a new phenomenon; however, as aconsequence of Cárdenas’ permissive policy towards labor, they became more seriousand more numerous during 1 935 and 1 936. In November 1 936, eighteen thousand oilworkers went on strike for 10 days, and by the end of 1936 the oil union demandeda working contract from the oil industry. The workers’ demands included double payfor overtime, paid holidays, schools for their children, decent accommodations, theinclusion of the office workers in the union, and higher salaries. The companiesobjected particularly strongly to the last two demands: they considered their officeemployees to be part of management and the recipients of confidential information, andthey found the salary demands highly exaggerated. Faced with this refusal, the unioncalled for a general strike.The government labor authorities promptly stepped in and suggested that thecompanies and labor should discuss the situation for a period of six months. By the endof this term, however, the companies and workers were disagreeing as strongly asever, and once again the union announced its readiness to go on strike. The Mexican78government intervened again, arguing that this was a conflict of national magnitude andthat the lack of petroleum could paralyse the country. On May 30, 1 937 Cárdenasmade a public call to the oil workers to settle their differences with the companies; healso discouraged any labor strike in solidarity with the oil workers, stating that it wouldonly make matters worse.184 A Federal Commission of Conciliation and Arbitrationwas appointed to conduct an investigation into the causes of the conflict and theconditions under which the petroleum industry was operating. Two commissions, oneon workers and the other on the owners, chaired by Jesus Silva Herzog, had twomonths to deliver their report.While the Federal Commission was carrying on its investigation, the governmentof Mexico did not stop looking for other ways to resolve the impasse. On July 7, theMexican government contacted Pierre Boal, the American Embassy’s charge d’affairesin Mexico City, and proposed an alternative arrangement. It consisted in setting up apartnership between the foreign oil companies and the government of Mexico in theexploitation and ownership of the oil fields. In exchange, the government of Mexicooffered labor peace and an increase of allowed oil production. The promise of laborpeace was an important one, given that, in 1 937, there were more than 90 strikes inthe oil industry. The US government and the oil companies rejected the Mexicanproposal because it involved measures contrary to decisions of the Mexican SupremeCourt, the Petroleum Code and the Bucareli Pact which had helped the oil companiesto avoid full application of Article 27 of the Mexican Constitution.185184 El Universal, May 31, 1 937, p. 1.185 Luis G. Zorrilla, Historia de las Relaciones entre Mexico v los Estados Unidosde America, Vol. II, p.469-470. For a full account of the Bucareli Agreement and the1 924 Accord see, Lorenzo Meyer, Mexico and the United States in the Oil Controversy,79The federal commission presented its report on August 3, 1 937. In it, it statedthat, on average, the Standard Oil and the Royal Dutch companies operating in Mexicoenjoyed a 16.81 percent rate of profit, in other words 77,000,000 pesos in profitsannually left Mexico. By way of comparison, the profitability margin in the UnitedStates for these companies was less than 2 percent. The report also indicated thatworker’s salaries were four times higher in the US and that these salaries had increasedby 9 percent since 1 934, while in Mexico salaries had decreased by 23 percent.186Consequently, the commission found that the companies should have no problemcovering the salaries demanded by the oil workers, amounting to 26,000,000 pesosannually. The operating procedures of the oil companies were also criticized; the reportconcluded that the companies had concentrated their extraction in the richer areas,neglecting the initiation of new sources and, therefore, depleting reserves. The oilcompanies claimed that their profits amounted to 1 8,000,000 pesos and that the salarydemands of the workers amounted to 42,000,000 pesos; , it was, therefore,impossible for them to accept the workers’ demands or the report itself. The FederalCommission gave its decision on December 1 8, 1 937, when it ordered the oilcompanies to increase the workers’ salaries by 27 percent or 26,329,393annually.187 The oil companies appealed this decision to the Supreme Court ofMexico. On March 1, 1 938 the Supreme Court affirmed that the decision of theFederal Commission did not violate the constitution; it established March 7 as the dateby which the oil companies must comply.pp. 75-1 06.186 Luis G. Zorrilla, Historia de las Relaciones entre Mexico y los Estados Unidosde America, Vol. II, P. 470.187 Ibid. p.471-472.80Cárdenas, one more time, made new attempts to negotiate an agreement andavoid confrontation. Accordingly, he sent Eduardo Sáenz, his Minister of Finance, toWashington to discuss specifically the oil situation with Roosevelt. Saenz returned toMexico City empty-handed. Last-minute negotiations between the companies, theCommission and the workers resulted in the companies offering to raise salaries by24,000,000 pesos without including any of the other demands. The Mexicangovernment, at this point, felt inclined to accept the offer, but the companiesdemanded guarantees from the President, in writing, that no demands would bepresented at a later time. The arrogant attitude of the oil companies marked the pointof no return for the Mexican government. The companies made a last minute offer topay 26,000,000 pesos; unfortunately, for them, the offer had come too late. PresidentCárdenas announced the expropriation of the oil companies that evening, March 1 8,1938. The Cárdenas government’s attempts at negotiation with the oil companiesreveal his disposition to find a non-confrontational approach to resolve the impasse withthe oil companies. In contrast, the oil companies showed little willingness to beflexible. To sum up, the attitude of Cárdenas vis a vis the American oil companies wasconciliatory, open to negotiation, and aimed to avoid a conflict.81CHAPTER 3: CRISIS AND RESOLUTION IN US-MEXICO RELATIONSNATIONALIZATION OF OIL AND US GOVERNMENT REACTION.The seizure of 450,000,000 dollars worth of foreign owned-oil property by theMexican government became a test for the “Good Neighbour” policy of the US. Theevent was a “surprise” for the American Ambassador to Mexico, Josephus Daniels,who claimed: “Neither President Roosevelt, Secretary of State Cordell Hull nor I knewabout the expropriation in advance...It came like a bolt from the blue!”188 WhetherAmbassador Daniels was completely unaware is debatable; however, what cannot bedisputed is the enormous domestic pressure on the US government to act againstMexico. Publication after publication called for a strong response from the government;the American business community with investments in Latin America insisted that theexample of Mexico could not be tolerated.189 There were also extravagantstatements, like the one from the Federal Bureau of Investigation, agreeing with thecommunist plot thesis advanced by the oil companies. The Bureau, however, not onlycorroborated the oil companies’ accusation, but added that the Nazis were alsoresponsible)9° The FBI was not alone in believing that the communists were behindthe nationalization; Cordel Hull had told Henry Morgenthau, the Secretary of theTreasure, that “he was determined to teach the group of communists who formed theMexican government to respect international law.”191188 Time Magazine. March 28, 1938, p. 18.189 Burt M. McConnell, Mexico at the Bar of Public Opinion, pp. 293-312.190 Lorenzo Meyer, Mexico y los Estados Unidos en el Conflicto Petrólero, p. 377.191 Lorenzo Meyer, Mexico v los Estados Unidos en el Conflicto Petrólero, p. 380.Wood, Bryce, The Making of the Good Neighbor Policy, p. 21 7.82Secretary of State Hull in a less informal manner delivered a strong note on theland and oil controversy to Castillo Najera, the Mexican Ambassador to the UnitedStates, on July 21, 1 938. In it, Hull accused the Mexican government of actingunilaterally in the confiscation of property and of disregarding the rights of Americansowning property in Mexico. Finally, Hull remarked that the Mexican attitude threatenedto destroy the whole structure of friendly intercourse of international trade andcommerce. Senator Key Pittman, the head of the Senate Committee on ForeignRelations, supported Hull by stating:It would be very injurious to the United States if variousgovernments of the world were led to understand that ourgovernment does not stand firmly upon the internationaldoctrine set forth in Secretary Hull’s note. Without themaintenance of such doctrines throughout the world,commercial intercourse would be so unsafe that it would beimpractical, if not impossible.192Ambassador Josephus Daniels became a target of attacks for not having thecourage to use the “Big Stick.” Daniels was criticized for his public agreement with thestatement made by Sumner Welles, the Under Secretary of State, that “Americancapital invested abroad should be subordinate to the authority of the country where itis located.”193 Secretary of State Cordell Hull was harsh with his Ambassador inMexico City, and he stated during the oil controversy: “Daniels is down there taking192 Ibid., p.299.193 El Universal (Mexico City), December 8, 1 937, p. 3. Josephus Daniels, ShirtSleeve Diplomat, p. 223.83sides with the Mexican government [giving] the impression that they can go right aheadand flaunt everything in our face.”194In spite of the statements and the threatening tone, however, the Americangovernment did not take any serious measures to “punish” Mexico. The US responseto the Mexican nationalization of the oil companies was mainly conditioned not by legalconsiderations but by the German threat to American interests in Latin America and USefforts to neutralize this threat, which included the implementation of Reciprocal TreatyAgreements in Latin America and the promotion of Pan-Americanism.The principal interest of the United States, as perceived by the government, didnot lie in the resolute defense of the American oil companies operating in Mexico. Inthis respect I sharply disagree from the opinion of historians like Lorenzo Meyer whohas claimed that: “Washington supported the oil companies to the hilt.”95 Thenoncommittal attitude toward the oil companies of the American government datedback to 1 934. On December 2, 1 934, Edward L. Reed, Chief of the Mexican Divisionof the State Department, sent a memorandum to Josephus Daniels explaining therequest made by Harold P. Walker, vice- president of the Huasteca Oil Company, aboutthe regularization of property titles held by the foreign-owned oil companies in Mexico.These titles, confirming the oil concessions, had been found to contain “technicaldefects,” which actually meant that some of these concessions had been obtainedthrough bribes in open violation of the Mexican Constitution. The oil companiesattempted to use Josephus Daniels’ influence to organize a meeting between Plutarco194 Frederick W. Marks Ill, Wind Over Sand The Diplomacy of Franklin Roosevelt(Georgia: The University of Georgia Press, 1 988), p. 222.195 Lorenzo Meyer, Mexico and the United States in the Oil Controversy, 1 91 7-1942, p.231.84Calles and Reuben Clark, who had been Daniel’s predecessor and was now working forthe oil companies. Plutarco Calles had been the “mastermind”, at the time, creating the“technical defects” which had allowed the oil companies to obtain their “irregular”petroleum concessions in 1 927. Mr Reed’s response to this proposal was that he “didnot believe Ambassador Daniels would acquiesce in this plan without the Department’sconsent,” and that he “felt certain that the Department would not commit itself in thematter.”196 In his response to the State Department, Daniels wrote:The only recourse open to the oil companies is by appeal tothe Mexican courts. We have no more right to demand anyspecific decrees by the courts for our nationals thanMexicans in the United States would be justified in askingthe State Department to request the Supreme Court torender a certain decision.197In agreement with this early pronouncement, twelve days after the Mexicangovernment had expropriated the oil companies, the American administration declaredthrough its Secretary of State that the United States did not doubt the right of theMexican nation to exercise its sovereign power in the expropriation of property underits jurisdiction.Concurrently, the American Administration recognized the American oilcompanies as legitimate businesses, which were rightfully entitled to compensationfrom the Mexican government. However, Roosevelt was aware that any overtlyaggressive US behaviour toward Mexico could have a negative impact in the rest ofLatin America. Countries like Pro-Nazi Argentina and ambivalent Chile would have been196 Josephus Daniels, Shirt Sleeve Diilomat, p. 221.197 Ibid., p. 221.85driven away from the US, and others could have been influenced to take the sameroute if the United States showed a willingness to use force against any member of theLatin American community.In this sense, the communication from the Under Secretary, Sumner Welles, tothe Mexican Ambassador, Castillo Nájera, of May 9, 1 938 is in agreement with a policyof distancing the US government from the fate of the oil companies. Welles’ note saidWith regard to the expropriation of the properties ofAmerican oil companies located within Mexico. I feel Ishould make it quite clear that this government as stated inprevious communications to the Mexican Government, is notproposing to act finally on behalf of these companies.198With war on the horizon, political concerns were added to the economic ones.In American government circles, the position that the Axis offered a bigger threat thanthe expropriation of oil prevailed. The US government continued to promotenegotiation over confrontation and officials formulating American foreign policy towardMexico were aware of the importance of maintaining friendly relations with LatinAmerica. Harold L. Ickes, Interior Secretary was explicit in this respect when hestated: “If bad feeling should result in Central and South America as a result of the oilsituation that exist just now in Mexico it would be more expensive for us than the costof all the oil in Mexico.”99 Secretary of State Cordell Hull maintained that detentewas the correct treatment of Mexico during this period. However, it was not the threat198 U.S. Diplomatic Papers, Foreing Relations of the United States 1 938. TheAmerican Republics, Vol.V, p. 665.199 Harold L. Ickes, The Secret Diary of Harold L. Ickes (New York: 1 954), Vol.II, pp. 352-353. Alan Knight US Mexican Relations 1 910-1 940 an Interpretation (SanDiego: Center for U.S.-Mexican Studies, 1987), p.18.86of war in Europe that made Hull adopt this position. He had proclaimed and worked forfriendly relations and the establishement of Reciprocal Trade Agreements with Mexicoand Latin America since he had assumed his position as Secretary of State. The threatof war did, however, convince the conservative sectors of the Republican party thatconfrontation with Mexico could work against the American interest. It became clearto them that the ultimate interests of the United States would be best served byavoiding confrontation with Mexico, and that a prudent distance from the conflictbetween the US oil companies and the government of Mexico must be maintained.MEXICO, THE OIL COMPANIES, AND THE USShortly after the event, Cárdenas pledged that Mexico would pay for thenationalization of the American oil companies. In a note to Josephus Daniels in March31, 1938, Cárdenas assured the US Ambassador that “Mexico will know how to honorits obligations of today and its obligations of yesterday.”20° However, thenegotiations between the oil companies and the government of Mexico to settle theirdispute over the expropriation made little progress.The event which brought the issue back to the headlines took place on July 22,1 938, when Cordell Hull sent a note to Mexico concerning lands claims. In this note,the government of the United States explained that, in its opinion, the only feasibleway to overcome the impasse over land claims compensation was arbitration.201 In200 U.S. Deparment of State, Press Release, XVIII, 436, April 2, 1 938. WhitneyH. Shepardson and William o. Scroggs, The United States in World Affairs 1 938 (NewYork, Harper and Brothers, 1939), p. 379.201 The New York Times, July 22, 1938, pp. 1:1, 4:3.87Mexico, it was believed in political circles that the response given by Mexico to theAmerican arbitration proposal would set the stage for the settlement of the oil issue.In this instance, again, Cárdenas was faced with an internal political dilemma which hada direct impact on the stance he adopted towards the US.The American request for international arbitration to settle the payments of theagrarian debts provoked a further radicalization of some of Cárdenas’ allies. The radicalwing, led by Ramon Beteta, Under Secretary of Foreign Affairs, General FranciscoMujica, Secretary of Communications, and the labor leader, Lombardo Toledano,appealed for an intensification of nationalistic” measures; in other words, theyadvocated a confrontational attitude toward the US. Opposing this group was GeneralManuel Avila Camacho, the Secretary of War, whose supporters were inclined topromote a friendly relationship with the United States. Cãrdenas was placed in theuncomfortable position of mediating between these two groups. The jostling for powerbetween these two sectors became an important element which conditioned Mexico’sresponse to the US.The labor group, through the National Council of the CTM, controlled byToledano, embarked on a campaign to control Mexico’s press; and, within the PRN,Toledano along with its President, Luis I. Rodriguez, attempted to excise “fascist”sectors within the party. They succeeded in obtaining the expulsion of General RamOnF. [turbe and Colonel BolIvar Sierra from the party. These two military men wererepresentatives in Congress of the conservative wing of the army and had refused towithdraw their names from a manifesto calling for the formation of a democratic front88which repudiated both fascism and communism.202 The labor leaders imposedthemselves and won the first round, although the conservative wing was emerging toprotest energetically the expulsion of their military men and called the labor leadersmany unprintable names. Moreover, they were able to convene a CongressionalSession to reconsider the expulsion and it was only after guns had been drawn that thegovernment decided to suspend this session to avoid a bloody showdown between theLabor and Conservatives members of Congress.203 Cárdenas gave in to the politicalpressure exercised on him by the radical factions and rejected the US call for arbitrationin a note handed to Josephus Daniels on August 3, 1 938. In other words, the “labor”faction won out.Added to the disturbing effect which internal struggles for political power hadin creating bad relations with the United States, there was the obtrusive and retaliatoryrole played by the expropriated oil companies. The action of these companies becamethe overriding element which frustrated the willingness of both administrations to strikean agreement. The oil companies articulated a full-fledged campaign against Mexico;they made contact with some of Cárdenas’ enemies and provided money to fuelattempts to overthrow the Cárdenas government, as in the case of General SaturninoCedillo, who rebelled in May, 1 938.204 The most destructive weapon that the202 The New York Times, July 25, 1938, p. 7:2. July 17, p. 22:2. July 24, p.5:4.203 The New York Times, August 1, 1 938, p.8:1.204 Anatoly Shulgovsky, Mexico en Ia Encrucijada de su Historia (Mexico D.F:Ediciones de Cultura Popular, 1 972), pp. 370-372. In this book Shulgovsky claimed tohave informers who testified to the connections between Cedillo and the oil Companies.Luis Gonzalez, Los DIas del Presidente Cárdenas. p.1 96. Here Gonzales states that theoil companies went around looking for Mexican generals willing to participate in asubversion against Cárdenas. He also remarks on the participation of El Aguila (UK)and La Huasteca (US) in Cedillo’s uprising.89companies exercised against Mexico, however,was the economic boycott. The oilcompanies used their influence internationally to deprive Mexico of potential buyers ofexpropriated oil. This represented a great loss for Mexico. The sales of oil and itsderivatives in 1 937 represented 1 8 per cent of total Mexican exports, and theextraction of oil was the third most important economic activity in the country. Theaction of the companies dislocated the market for Mexican oil and this affectedMexico’s’ ability to keep wells in production. By the end of 1 938, the number of wellsin operation had decreased from 981 to 756;205 while exports of oil had reached24,960,335 barrels in 1 937, this figure had decreased to 1 4,562,250 barrels in1 938.206 The companies even implemented embargoes against tankers carryingMexican oil to different ports around the world, and although their actions were notcompletely successful, the potential buyers were fearful of entangling themselves inexpensive law suits.207In summary, after the nationalization of the American oil companies, therelationship between the United States and Mexico soured. However, this developmentwas not the result of a calculated Mexican decision to distance itself from the US ora defensive strategy against a strong reaction from the American government on behalfof the oil companies. Rather, it was mostly the oil companies’ boycott against Mexicowhich drove Cárdenas to seek other markets and consequently to move away from theUS. Paradoxically, after the nationalization of the American oil companies, both205 Lorenzo Meyer, Mexico y los Estados Unidos en el Conflicto Petrólero, p. 409.206 M.H. GOereña, “Producción y ExportaciOn del PetrOleo despues de IaExpropiaciOn,” El Economista, (November 1, 1939), p. 31.207 Ramon Beteta, La Politica Exterior de Mexico (Mexico D.F.: Memoria de IaSecretarla de Relaciones Exteriores, 1 941), p. 1 7.90countries found themselves in a frame of diplomatic friction even though it was neithertheir policy nor their intention to act that way.OIL COMPANIES’ ENCIRCLEMENT OF MEXICO AND ITS CONSEQUENCESIn the United States, the business community interpreted the nationalization ofMexican oil as a direct threat to the “safety” of 2,963,000,000 dollars of Americancapital operating South of the Rio Grande.208 The US oil companies and businesscircles in general feared that this example might be followed by other Latin Americannations. Besides, the Standard Oil Company of New Jersey in Bolivia had already beenexpropriated in 1 936.209 Argentina, for years, had been having disagreements withthe US oil companies, and on more than one occasion the Argentine government hadthreatened these companies with expulsion.210 Chile had also threatened tonationalize its nitrate industry which was mostly controlled by American interests.211Colombia and Ecuador had had difficulties with the functioning of foreign companiesin their territories and the threat of expropriation or expulsion had surfaced on morethan one occasion.212208 This figure amounted to 43 percent of all direct investments of Americancitizens abroad. Samuel Flagg Bemis, The Latin American Policy of the Unites States(New York: arcourt, Brace and Company, l943),p. 343. U.S. Department ofCommerce, Historical Statistics of the United States (Washington: Government PrintingOffice, 1 975), p.870.209 Gordon Connell-Smith, The United States and Latin America, pp. 171-172.210 Harold F. Peterson, Argentina and the United States 1810-1 960 (New York:State University of New York, 1 964), pp. 348-349.211 William F. Sater, Chile and the United States: Empires in Conflict (Athens,Georgia: University of Georgia Press, 1 990), pp. 101-11 2.212 Stephen J. Randall, The Diplomacy of Modernization: Colombia-AmericanRelations 1 920-1 940 (Toronto: University of Toronto Press, 1 977). Dick Steward,Hemisrheric Trade.91The American oil companies, expecting a strong reaction from the USgovernment and questioning the constitutionality of the expropriation, chose toconfront the Mexican government. Standard Oil maintained that the US governmenthad the indisputable right to intervene in other countries to protect the interests ofAmerican citizens.213 It also formally requested that the State Department preventthe sale of Mexican oil abroad. The hopes of the oil companies for governmentassistance in their fight against the Mexican government were soon frustrated however.American businessmen in Mexico City were shocked by what they believed was USgovernment complacency; they were definitely not happy with Roosevelt’s attitudetowards Mexico.214 The companies thought the Mexican government was toodependent on the oil revenues to put up a decisive fight. Oil executives pressed on anddemanded a show of US force to “teach the Greasers Thou Shalt Not Steal.”215 Inthis respect, their strategy proved to be wrong; the oil companies misread theinternational situation and, therefore, the national state of affairs in their own country.The US government did not come forward to defend their interests.However, the insulting and arrogant tone of the oil companies, and their demandfor an unconditional and immediate return of the expropriated properties, madeCárdenas feel under siege. The hostile attitude of the oil companies provoked theMexican president to respond with extreme statements like “we would burn the oil213 SecretarIa del Patrimonio Nacional, El Petroleo de Mexico (Mexico D.F.:Secretarla del Patrimonio Nacional, 1963), p. 23.214 The New York Times, April 15, 1938. p.7:1. U.S. Congress Record, 3rd.Session, 75th Congress, 1 938. pp.6097-6098; 6276-6278; 6638-6639; 1 290-1 291;2982.215 Josephus Daniels, Shirt-Sleeve Dijlomat, p. 227.92fields to the ground rather than sacrifice our honor.”216 The policy of encirclementexercised on Mexico by the oil companies produced a substantial shift in Mexico’s tradefrom the US to Germany, and made Cárdenas a symbolic nationalist. Cárdenas turnedinto a fervent nationalist for popular consumption. He worked hard to avoid thenationalization of the oil companies, but once it had occurred, in spite of his efforts, hedecided to profit politically out of the situation. His nationalistic rhetoric touched manyMexicans and has convinced many historians about his genuine nationalisticmotivations.In a message to the nation Cárdenas called on Mexicans to help “save theinterests and honor of the country.”217 In the international arena, the MexicanPresident’s reaction to the oil companies’ harassment translated into an appeal to theLatin American nations to show solidarity with Mexico; in a speech delivered inTampico in June 1 2, 1 938, addressed to the Cuban people, he declared that this wasthe time “to stand together and to fight to eliminate economic imperialism.”218 Hewent on to say:Love of justice united us and we should fight togetheragainst economic, political or moral imperialism that mayimpede our development as sovereign nations..The political autonomy of Latin American countrieswould be destroyed if there were not solidarity among theirpeople in their fight for social renaissance. 219216 Joe C. Ashby, Orcianized Labour and the Mexican Revolution under LázaroCárdenas, p. 180. Alan Knight, Mexico 1930-1 940, Vol. VII p44.217 El Universal (Mexico City), June 5, 1 938, p. 1:6.218 The New York Times, June 13, 1938.219 The New York Times, June 19, 1938.93The rhetoric of Mexico and some Latin American countries, calling for liberationand anti-imperialism, had an unsettling effect on the American government andAmerican businesses abroad.However, the sources of major concern for the American government andAmerican trade circles were not those statements, but the reports which indicated ashift of Mexico’s international commerce toward Germany, Italy, and Japan. Thenationalization of oil led to an increase in this shift of Mexican trade, which had beenmanifested, particularly with respect to Germany, since the early 1 930s.22°The Mexican appeal won the sympathy of some listeners as evidenced byMexican press reports which publicized the statement of the Cuban Secretary ofAgriculture, Amadeo Lopez Castro, in reference to the new Cuban mining laws; Lopezsaid that if the foreign companies were not satisfied with new Cuban laws, they couldleave. The New York Times correspondent in Costa Rica reported substantial supportamong the Costa Rican public for the expropriation of American-owned electriccompanies221 and Leon Castro Cortes, the President of Costa Rica, praised the landdivision program of Mexico.222 The majority of Latin American countries resteduncommitted; the Mexican appeal did not produce a warm welcome among them.220 Ramón Beteta, “Mexico’s Foreign Relations,” The Annals of the AmericanAcademy of Political and Social Science (March 1 940), p. 31. Banco Nacional deComercio Exterior, Mexico Exrjortador, pp. 71-98. The New York Times, March 27,1938, Sec.lll, pp. F: 1, 2, 3; August 15, 1938, pp. 1, 6. September 6, 1938, pp. 1,12. September 7, 1938, p. 10. October 29, 1938, p. 29. January 19, 1939, pp. 1,6.January 21, 1 939, pp. 1, 21. February 1 2, 1 939, p. 39. Harry Block, “What Next inMexico,”? The Nation (March 4, 1939), pp. 257-259.221 The New York Times, April 1 5, 1938.222 The New York Times, June 23, 1 938.94The nationalization has been identified, then and since, as an assertion ofMexican independence from American control. However, this was an unwanted andcostly enterprise reluctantly carried out by the Crdenas administration, since Mexicohad to sell its oil at a lower price than that previously paid by the American companies.The boycott of the American oil companies against Mexico left Cárdenas no choice, hehad to sell to others.Concurrently, authorities from Japan and Germany had manifested their interestin buying oil from Mexico,223 and in Mexico City, government officials declared thatMexico would not be averse to such a deal.224 There were also dispatches thatindicated the possibility of constructing pipelines from the Mexican oil fields to a porton the Pacific Coast to make the oil more accessible.225 Additionally, the fact thatJapan possessed a respectable fleet promised to make a deal workable. Nevertheless,and in spite of Mexico’s acceptance of commercial dealings with Germany, Cárdenasinsisted that Mexico took this route reluctantly. In an interview given to New YorkTimes’ correspondent Anita Brenner on July 11, 1 938, Cãrdenas stated:It is true that shipments of oil to Germany under contractsproviding for exchange of machinery for oil products mightseriously affect American exports business to Mexico. Wewould regret this very much, as we prefer to trade with theUnited States, but we cannot pay too great a price for thispreference. It is also true that greatly increased commercewith Germany might tend to heighten German politicalinfluence here. This is something that we take even moreseriously than the loss of trade with the United States. In223 The New York Times, March 27, 1938, III, p. 1:8.224 The New York Times, July 13, 1938 p. 10:2.225 Hon. Everett M. Dirksen, What About Mexico? U.S. Congress, House , 75thCongress, 3rd Session, Vol., 83, Part 10, (Washington: GOvernment Office, April 2,1 938), p. 1 290. The Washington Start, March 25, 1 938.95such matters we need the help of our neighbors, and if ourneighbors do not help us we will have to manage as best wecan ourselves.226In other words, Cárdenas explicitly stated to the American government, Americanbusiness, and the American public, that he was being forced to act in this manner bythe American oil companies. In another passage of the interview with Brenner,Cárdenas said:There has been in the past a great deal of bitternessbetween the peoples of the United States and Mexico,which can always be stirred up again. But we are muchcloser to each other now than we have ever been before.The oil question is not an anti-foreign question. It is aninternal struggle.227It was not Cãrdenas’ plan to appear anti-American. However, the circumstancescreated by the oil companies made him take steps which adversely affected commercialrelations with the United States. These measures fostered distrust and fear amongAmericans with investments in Mexico, resulting in a further decline of Americaninvestment in Mexico; according to a report from the Department of Commerce inWashington, US investment in Mexico had decreased by $203,000,000 between 1 929and early 1 937 228 Nevertheless, to find markets for the sale of oil Cárdenas had nochoice but to establish commercial deals with Germany and Italy. On July 1 938,Cárdenas, through W.R. Davis & Co. of New York, formalized the sale of 10,000,000barrels of Mexican oil for $10,000,000 to Germany, Italy, and Sweden, with 60 per226 The New York Times, July 13, 1938, p. 10:2.227 Ibid, p. 10:2.228 Frank L. Kluckhon, The Mexican Challenge (New York: Doubleday, Doran &Company, Inc., 1 939), p. 94.96cent of the payment to Mexico in German, Italian, and Sweden machinery andproducts. 229The US oil companies were utterly incensed at this “robbery”, which was howthey chose to call the situation that they had had a great deal of responsibility increating. On the other hand, the deal that Cárdenas struck with Germany was notfavourable to Mexico. According to figures given by The Wirtschafts-Ring, in the firstfive months of 1938 Germany had paid a total of 103,887,000 Marks for 1,745,701tons of oil imported, or 60 Marks a ton. Through the post- expropriation arrangementwith Mexico, Germany bought 9,000,000 barrels of the 10,000,000 barrels of oilincluded in the whole deal, for a price of about 20 Marks per ton--a bargain deliveredto Germany by the American oil companies. The 9,000,000 barrels shipped toGermany amounted to one-third of this country’s annual import of oil and about 23 percent of Germany’s total consumption.23°The secrecy surrounding the Mexican-German oil barters began to crack onSeptember 6, 1 938, when it was revealed that the first oil deal between Mexico withthe 3rd Reich had been formalized. The Mexican government Petroleum Administrationhad arranged to ship expropriated oil to German businessman Ernst Jung of Hamburg,who was a supplier for the German navy, in exchange for different German products.It was also revealed that there had been three previous shipments of oil to Jung.231The Mexican newspaper El Universal corroborated this information when it reported onSeptember 7, 1 938 that the German freighter Memel had arrived in Veracruz to unload229 The New York Times, July 17, 1938, p. E5.230 The New York Times, July 24, 1 938, p. 3.231 The New York Times, September 6, 1938, p. 1, 12.972300 tons of German products received in return for oil.232 This shift in the marketfor Mexico’s oil created alarm in the US, since it was accompanied by a reduction ofMexican purchases from that country. In July 1 938, these purchases amounted to$3,000,000, while in the same month of 1 937 this figure had been around$10,000,000. Espinosa Mireles, head of the Mexican government petroleumcompany’s foreign sales, did not dispel the American fears. The day after the oil dealhad been announced he confirmed publicly that “Mexico was selling large quantitiesof oil to Germany and to various firms there.”233 Mexico began 1939 by promotingeven further its barter exports to Germany in an attempt to recover from their 1 938losses. Shipments of Mexican oil in 1 937 had amounted to 24,972,483 barrels, while,in 1 938 they dropped to 1 4,800,000 barrels.234 The Mexican effort to reorient tradewas successful and exports of oil to Germany grew from 403,200 tons in 1 937 to1,010,800 tons from January to August of 1939.235 Concurrently, United Statesconsuls in Mexico City reported that the Tampico Petroleum Administration hadcanceled orders of American office machinery because German equipment was nowavailable; according to State Department officials the US had controlled 90 per cent ofthe market for this equipment in Mexico.236 In the Mexican capital Americanautomobile dealers complained that the Mexican government had instructed all its232 El Universal, September 7, 1 938.233 The New York Times, September 7, 1938, p. 10.234 M. H. Güereña, “Producción y ExportaciOn del PetrOleo Después de IaExpropiación,” El Economista (Mexico City, November 1, 1 939), p. 31.235 Ibid, p. 32.236 The New York Times, January 27, 1939.98departments to purchase German trucks for official use, whereas American companieshad supplied this vehicles up to that date.237The forced sale of Mexican oil at low prices was responsible for the evolution ofa new Mexican trade policy toward the US. Tariffs were put in place to discourage theentrance of American goods and machinery because Mexico was entering a system ofopen barter of oil for articles which in the past Mexico had acquired from the US. OnOctober 28, 1 938, Mexican officials announced a large oil barter deal with Italy. Thisdeal involved $3,000,000 worth of rayon, yarn and machinery, and this again meantbad news for American businesses, since most of Mexican rayon business had beencontrolled by American companies. Also made public was the existence of another dealwith Azienda Generale Italiana Petroli, which had been set up through the Export andImport Bank.238 In spite of the bad feelings aroused by the events that followed inthe wake of the oil crisis, and substantial evidence of Germany’s penetration of Mexico,both Mexico and the U.S. maintained a course of “wait and see”. When politicalcircumstances allowed it, both took measures that indicated their disposition to worktogether.CRITICISM AND OBSTACLES DID NOT STOP THE US FROM HELPING MEXICOThe increase of the new Mexican barter system created pessimism amongAmerican trade circles which had thought that the American government would protectAmerican trade at all costs. Political circles opposing Roosevelt had an even strongerreaction. William R. Castle, former Under-Secretary of State denounced Roosevelt’s237 The New York Times, January 19, 1939, p. 1:3-6:2.238 The New York Times, October 29, 1938, p. 29:1.99lack of firmness as a “surrender of American interests’239. Congressmen HamiltonFish of New York, was “unable to understand the weak and vacillating attitude ofPresident Roosevelt,”240 and Everett M. Dirksen of Illinois, criticized harshly the non-retaliatory attitude of the President.241 Kansas Senator Henry J. Allen warned theChamber of Commerce of the State of New York, at their 1 70th annual dinner, of thedangers of the Mexican stand.242The American government showed no eagerness to act against Mexico, and theMexicans showed no great concern over the uneasiness in trade circles and in sectorsof the American political spectrum. Moreover, Mexico had been reported to haveapproached American embassy officials to ask for a reduction in US oil tariffs and tobe seeking to acquire control of the Eastern States Petroleum Company based in Texas.The government of Mexico had agreed to pay $250,000 of the company’s debts andto ship 3,500,000 barrels of Mexican oil for two years, for which Mexico would getmortgages on the company. This deal caused great commotion in Texas since Texaswas simultaneously pursuing a program to reduce oil production.243The American government rested calm, and far from taking any measure againstMexico, sold it 3,000,000 bushels of wheat under the export subsidy plan in October,1 938. This deal meant a triple benefit to Mexico: first, Mexico paid a price which was239 The New York Times, September 18, 1938, p. 29:2.October 29, 1938, p. 29:1.240 Hon. Hamilton Fish, The Good Neichbor Policy in Mexico, U.S. Congress,House, 75th Cong., 3rd Sess., Vol. 83, Part 11, Appendix to the Congressional Record(Washington: Government Printing Office, June 16, 1938), p. 2982.241 Hon. Everett Dirksen, What About Mexico?, U.S. Congress, House, 75thCong. 3rd Sess., Vol 83, Part 10, Appendix to the Congressional Record (Washington:Government Printing Office, April 2, 1938), p.1290.242 The New York Times, November 23, 1938, p. 5:2.243 The New York Times, September 10, 1938.100less than the market price; second Mexico used the money collected from its silverexport tax to pay for the wheat (this tax was paid by the silver companies which weremostly American); third, almost the totality of Mexican silver was bought by theAmerican government, for which Mexico was paid a price that the US governmentcould have lowered at will but did not.244 On October 25, 1938 the United StatesTreasury decreed an order allowing the Mexican oil export agency to send oil to theEastern States Oil Company under bond to be refined and reshipped abroad withoutpayment of duties.Roosevelt’s conciliatory policy to Mexico continued to arouse significantdiscontent in America. Senator Reynolds, a Democrat from North Carolina and amember of the Senate Foreign Committee, and New York Democrat HouseRepresentative Martin J. Kennedy introduced a resolution on January 25, 1 939 askingfor the creation of a committee of seven to investigate conditions in Mexico.Kennedy’s resolution indicated that:The policies being pursued by Mexico in its confiscation ofAmerican property, its anti-American tariffs, its cooperationwith and willing subservience to the Nazi regime inGermany, are not alone a violation of the elementaryprinciples of international law, and concord, good will andgood faith which should subsist between all nations, but inaddition are a flagrant contravention of the MonroeDoctrine.245244 Agustin Aguiar Almada, “Mexico y Ia Platat1” El Economista, (June 1, 1939),pp. 33-35.245 U.S.Congres, House, 76th Cong., 1st Sess., Vol. 84, Part 1, H. Res. 69,January 25, 1 939, p.805. The New York Times, January 26, 1 939, p. 7:2101Referring to the attitude of the US government toward Mexico, the resolution statedthat the policy of the US government “has brought the United States into contempt inour neighboring republic and through-out the whole of Latin America because theAmerican government is subsidizing Mexico’s anti-American program.”246Representative Kennedy was correct insofar as the US government pursued apolicy of conciliation and concessions toward Mexico. Cordell Hull expressed publiclyhis hope to win Mexican amity, and effectively blocked Representative Kennedy’sresolution by convincing the Foreign Affairs Committee, in secret session, that adoptingKennedy’s resolution would obstruct delicate negotiations with the Mexicangovernment. The Committee convinced the floor and the House voted to tableKennedy’s resolution.247 Kennedy tried again on February 22, 1 939, urging the recallof Josephus Daniels whom he charged with being “apparently responsible for themuddle concerning Mexico”248 Once again Kennedy’s complaints made no progressand Mexico continued its barter trade with Germany.The New York Times reported, in February 1 939, a new $2,000,000 oil barterdeal between Germany and Mexico. This last deal was in addition to another recentbarter commercial arrangement amounting to $17,000,000, and another cash deal for$8,000,000 to provide fuel for the German Navy. Additionally, the same Americannewspaper gave details concerning a $750,000 contract between Germany and Mexicoto build a paper mill at Toluca, Mexico. The construction work had been awarded toa German firm and Mexico was to pay with expropriated oil; during the time of246 Ibid.247 Congressional Records February 7, 1 939, House of Representatives. The NewYork Times, January 27, 1939. February 8, 1939.248 The New York Times, February 23, 1939.102construction, Mexico had promised to buy 10,000 tons of German newsprint.249Another event creating concern among American diplomatic circles was the return ofGeneral Azcarate, who had been withdrawn in 1 937, as Mexican Minister to Berlin inJanuary 1 939; by contrast, the United States Ambassador to Germany had been calledto Washington after the anti-Jewish riots of 1 938.The increasing commercial penetration of Mexico by Germany and the apparentcompliance of the Mexican authorities might lead us, wrongly, to believe that Cárdenashad embarked on an anti-American crusade, which had resulted in a profitable increaseof Mexican control over its national resources. That was not the case. Throughout theperiod of increase of commercial links with Germany, Cárdenas was always explicit andquick to remark that it was not his choice to distance Mexico from the United Statesbut rather that he had been forced by the American oil companies to enter that route;moreover, the Mexican economy, and the Mexicans, were paying a high price for therelocation of their international trade, since Germany was clearly taking advantage ofthe situation.25°The Mexican government continued to make efforts to resolve the impasse withthe American oil companies and the companies, realizing that the American governmenthad not and was not going to interfere on their behalf, had somewhat changed theirnegotiating approach toward the Mexican government. President Roosevelt was alsoanxious to see the conflict between the American oil companies and the government249 The New York Times, February 12, 1939, p. 39:4.250 M.H. Güereña. ‘ProducciOn y ExportaciOn del Petróleo Después de IaExpropiación,” pp.27-35. “Trayectoria de Mexico,” El Economista, October 16, 1939,pp. 3-5. “La SituaciOn de Mexico Juzgada en el Extranjero,” El Comercio, June 1938,pp. 1 5-1 6. The New York Times, April, 12, 1 940. The New York Times, July 30,1939, p. 20:1.103of Mexico ended, and Ambassador Daniels was told to convey this message toCárdenas.251 In late February, 1 939, President Cárdenas honored Donald R.Richberg, the chief negotiator for Royal Dutch and Standard Oil, with a formal dinnerat Chapultepec Castle. Richberg had come to Mexico City with a new proposal fromthe oil companies to the Mexican government.The official welcome offered to Richberg augured success; however, soon afterthe talks had got underway, any hopes of agreement vanished. Richberg confided toAmbassador Daniels that in his first talk with Cárdenas he had “veered away fromultimatums” and had presented his proposal “as sweet as possible.”252 The oilcompanies offered $150,000,000 for fifty-year operating rights in the oil fields andadded that, by the end of the fifty year period, the Mexican government would haveall the rights over these properties. The Mexican Secretary of the Treasury, EduardoSuarez, commented on the oil companies’ offer that the oil companies’ proposalsounded similar to the story of the condemned man who:told the king that if he would spare his life he would teachthe king’s donkey, which accompanied him everywhere,how to talk in ten years. The king spared his life and heagreed to return on the morrow and begin to teach thedonkey to talk. “You know you cannot teach the donkeyhow to talk,” said a friend who accompanied him. “Why doyou promise to do that?” The man replied, “In ten years,one of three things will happen: (1) the king will be dead; (2)the donkey will be dead; or (3) I will be dead.253251 Josephus Daniels, Shirt Sleeve Diplomat.p.263.252 lbid.p.263.253 Ibid.p.264.104Suarez explained that: “with control of operation by the oil companies, the only thingleft at the termination of the contract would be a hole in the ground. They would havedrained the oil to the last drop.”254In spite of the impasse with the American oil companies, the Mexicangovernment did not adopt a confrontational attitude vis-a-vis the US government.Moreover, Càrdenas made an effort to indicate his readiness to improve relations withthe US. Accordingly, he canceled, at the request of the US government, an oil barterdeal to buy thirty planes from the German Junkers aircraft company, and on July 30,1 939 Mexican Ambassador Francisco Castillo Najera left for Washington with anotherproposal to the oil companies to compensate them for the expropriation of theirproperties. Mexico’s willingness to promote friendly relations was again demonstratedby making effective the first $1,000,000 payment to settle claims on American-ownedland expropriated since 1927. Mexican Foreign Minister Eduardo Hay, handing thecheck to Ambassador Daniels declared: “Mexico again proves that she honors herword--it is a satisfaction to me to be the intermediary through the obligation isfilled.”255 The US government was also giving signs of good will by allowing theprocessing and the transport by ship, under the United States flag, of 6704 tons ofMexican gasoline sent to Brazil256 and by maintaining its purchases of Mexican silverwhich was a lifeline to the Mexican economy. But all these gestures were not enoughto overcome the obstacles between the US and Mexico; resolution of the dispute overcompensation for the oil companies remained elusive. Obstacles remained because the254 lbid.p.263255 The New York Times, May 31, 1939.256 The New York Times, August 21, 1 939. 11:2105two governments did not have the power to make them disappear. The domesticdifficulties which had led Cárdenas to take many steps that annoyed the Americanleadership, as well as the unyielding attitude of the American oil companies, were stillproblems.THE RESOLUTION OF THE OBSTACLES AND SETTING THE PACE FOR AVILACAMACHOThe unresolved difficulties in the way of a closer and cooperative relationshipbetween Mexico and the United States were cleared before the end of the presidentialperiod of Lãzaro Cárdenas. Cárdenas set Mexico in an environment of diplomatic andeconomic collaboration with the United States difficult to match in Mexican history.Therefore, in this sense there was no real departure between the government ofCárdenas and that of his successor General Avila Camacho. Moreover, the policies ofthe incoming president in diplomatic, labor and trade affairs followed the path that hadbeen built by Cárdenas.Many historians disagree. Lorenzo Meyer and Nora Hamilton, for example, haveinterpreted the arrival of Avila Camacho to the presidency of Mexico as a turning point,“a change of 180 degrees.”257 For Hamilton the “victory of Avila Camacho markednot merely a defeat of the “Progressive Alliance” but its virtual elimination as aneffective force for change.”268 In other words, they argue that “revolutionary”257 Lorenzo Meyer, Mexico y Estados Unidos en el Conflicto Petrolero, p. 263.258 Nora Hamilton, The Limits of State Autonomy (Princeton, New Jersey,Princeton University Press, 1 982) p. 279.106Mexico faded away by the end of the 1 930s and a Thermidorian period began withAvila Camacho in December 1 940.Meyer and Hamilton are part of a group of historians who have tried toperpetuate the ideological labeling of Cãrdenas. Cárdenas was not motivated by anyideological definition of the “left” or the “right.” I dispute Meyer’s notion that the “rightwing of the revolutionary family”, pressured Cárdenas to concede to the nomination ofAvila Camacho, who embarked Mexico in a program of “Unidad Nacional” to stop theconflict between the political elite and the social classes.259 Cárdenas was notstopped, as Hamilton suggests, by the “limits of state autonomy”, in other wordspolitical constraints originating in “pressures from dominant class segments, externaland internal, and their allies within the state” to stop the “Progressive Alliance”.260Hamilton’s definition of the “goals of the state” is unclear; nevertheless, in the case ofthe Cárdenas administration she equates these goals with the objectives of the“Progressive Alliance,” which were to incorporate peasants and workers to enjoy agreater participation in the benefit of the national wealth.The fundamental weakness of these two arguments resides in the fact that theyhave attached a socialistic character to the Cãrdenas administration. The governmentof Cárdenas did not seek to do away with capitalism, but rather to make it better. Itis true that Cárdenas talked a lot against imperialism, the evils of capitalism, andassociated himself with Marxist elements, but this was the product of the need forpolitical alliances. The record of the Cárdenas administration reveals a president who,259 Lorenzo Meyer, PetrOleo y NaciOn (Mexico D.F., Fondo de Cultura Económica,1990), p.80.260 Nora Hamilton, Limits of State Autonomy, p. 269-270.107far from acting on the premises of ideological allegiances to any creed, was supremelypragmatic. His alliances with the peasants and the workers, although they cost himinternal and external difficulties, provided Cárdenas with the support he needed todefeat Caiismo, and when the time arrived he had no qualms about stopping theexcesses of the workers’ demands and threatening them with the use of force ifnecessary.261 In the international plane, Cárdenas immersed itself in the world of“Realpolitik” and set Mexico on a path of economic and diplomatic collaboration withthe United States which his successor Avila Camacho followed.262Early in 1 937, during the negotiations with the oil workers, Cárdenas had startedto send messages which expressed his desire to have employers and workerscooperating with each other, and to avoid a clash with the US. The wave of laboragitation he himself had helped to unleash did not permit him to make substantialadvances in this direction until the second half of 1 938.By mid 1 938 Cárdenas was categorical when he stated that he was not goingto tolerate any more union excesses. He warned workers on June 4 that there mustbe “discipline in work” and, in his message to the First National Export Congress, hereiterated his appeal to labor unions to cooperate with the government.263 OnAugust 1 4, 1 938, the Cárdenas government demonstrated its resolution, vis a vislabor, when Mexico City officials bluntly told Tampico oil workers to call off their261 New York Times, August 15, 1938.262 On Avila Camacho see; Luis Medina, Del Cardenismoal Avilacamachismo (Mexico D.F. El Colegio de Mexico, i 978).263 The New York Times, October 23, 1938.108programmed strike. The government threatened that troops would be used against theworkers if they went on strike.264Cárdenas also institutionalized mandatory arbitration to resolve labor conflicts,and his firm attitude toward labor substantially reduced the number of strikes whichcame down from a peak figure of 675 in 1936 to 325 in 1938.265The last bastion of labor opposition to friendly relations with the Americans wasfinally neutralized with the outbreak of the war in Europe. On September 9, 1 939 theChief of the CTM, Vicente Lombardo Toledano and its National Committee, launcheda nation-wide campaign to get Mexico into the war, and Toledano stated:if we declare war on the fascist countries, we could moveour industry, although limited, to a higher level of activitywe would be exporters of fabrics, we would sell our sugar,our cotton, all our henequen, we would find a market for ouroil ... we would become suddenly an exporting countrynot only of raw materials but of manufactured products.Mexico would enjoy a higher level of economic activity.266In November, the same Toledano who, in the past, wanted to do away with the“unjust” capitalist system said: “It is not true that we wanted or want to subvert thesocial order ... or that we try to establish the proletarian dictatorship in our country, orto finish with private property.”267 The startling statements of the Chief of organizedMexican labor conveyed the message Cárdenas wanted to hear: no more strikes, nomore widespread labor agitation. In other words, labor peace. This of course had a264 The New York Times, August 15, 1938.265 Joe Ashby, Organized Labor and the Mexican Revolution Under LázaroCArderias Appendix D-ll.266 Luis Gonzalez, Los DIas del Presidente Cárdenas, p. 255.267 Ibid., p. 267.109positive effect on the US-Mexico relationship since, from there on labor friction withforeign companies would be avoided, and the American leadership and public in generalwould not have to listen to Toledano’s anti-American diatribes any longer.Still, the expropriated American oil companies remained an obstacle to friendshipbetween these two countries. The US government was anxious to clear this problemaway and Hull produced another diplomatic note on April 9, 1 940, calling the Mexicangovernment to settle the issue by arbitration. This became unnecessary, sinceCärdenas, already engaged in bilateral negotiations with the Sinclair group, whichrepresented in 1 938 forty percent of the expropriated American oil investment,produced on May 1, 1 940 a settlement document signed by Mexico and the Sinclairgroup. Mexico agreed to pay 8.5 million dollars in cash within a period of three years.This development was a major blow to the negotiating position of the rest of the oilcompanies. The Mexicans signaled to the US government that arbitration wasunnecessary, and invited the other companies to make similar arrangements with theMexican government. By the end of May 1 940 Mexico signed a new agreement withCities Service, another American oil group affected by the oil expropriation. The restof the major companies--mostly in the Standard Oil group--did not alter their stubbornposition until April, 1 942, when they settled for $23.8 million dollars--4 per cent oftheir original claim.The war thus finally cleared away Cárdenas’ internal and external difficulties, andhe was able to articulate a cooperative working relationship with the US. The Americangovernment, in terms of international trade, also made things easier for Cárdenas. InNovember 1 939, Cordell Hull made statements to the effect that Mexico would begranted Most Favoured Nation status and would benefit from the reduction of the oil110tariff just conceded to Venezuela, even though the United States did not have a TradeAgreement with Mexico! This tariff reduction, from 21 cents to 10.5 cents per barrel,allowed Mexico to compete with international prices. In the same month Jesus SilvaHerzog signed a deal with an American company by which Mexico sold at currentinternational market price 60 percent of its oil production destined for export. It wasestimated that the tariff reduction would save Mexico about 3000 dollars daily.268Diplomatically, Mexico also moved closer to the US. The Mexican governmentadopted a policy of neutrality which was in complete agreement with the Declarationof Lima of December269 1 938, of which Mexico had been a signatory, and with theneutral position the United States had assumed with regard to the war in Europe.Roosevelt acknowledged this attitude in a message to Cárdenas, thanking him for thesupport the Mexican delegation had given to the proposals presented by Sumner Wellesthe US Under-Secretary of State in the Panama City neutrality conference of November1 939270 The Panama City neutrality conference agreements had placed 21 nationsof the Western Hemisphere in constant diplomatic consultation which was a differentsituation from 1914 when the Latin American nations acted independently.On January 11, 1 940, Cárdenas made a symbolic move to express thedisposition of Mexico to move closer to the US, when he walked into the American268 El Excelsior, November 24, 1 939. November 25, 1 939. November 30, 1 939.269 Eight International Conference of American States, which took place at LimaPeru on December 9-24, 1 938. Here the 21 republics reaffirmed continental solidarityand the spirit of cooperation against foreign intervention, also the Hull’s trade policieswon reaffirmation. See, Samuel Flagg Bemis, The Latin American Policy of the UnitedStates (New York: Harcourt, Brace and Company, 1 943), pp. 355-366. For the text ofthe agreement and details.270 The New York Times, October 20, 1 939, p. 38:2.111Embassy for the first time. The occasion was a luncheon offered by Josephus Danielsto present the New Year’s greeting to the Mexican president. In the New YearCárdenas continue to take step after step which showed his determination to alignMexican interests with the interests of the US. On June 11, 1 940 Cárdenas sent atelegram to President Lebrum of France conveying to him the Mexican concern andsympathies aroused by the Italian declaration of war on France. This message, whichcould appear as just Mexico’s customary expression of solidarity for a victim ofaggression was fairly significant because it indicated Mexico’s partiality in the conflict.This trend was corroborated by the statement to the Press on May 1 8, of the officialMexican delegate to the International Petroleum Exposition at Tulsa, Oklahoma, whohad said that Mexico “would probably follow the United States’ attitude in thewar.”271 More explicit, and authoritative, were the actions of Ignacio Garcia Tellez,Mexican Secretary of the Interior, who in June called in Mexican editors and publishersto notify them that the Mexican foreign policy was one of friendship toward the UnitedStates; he requested their cooperation in sending that message. A few days after thiscall, Arthur Dietrich known chief Nazi in Mexico City and press attache of the Germanembassy was declared persona non grata and was told to leave Mexico. The weeklyNazi publication the Deustche Zeitung von Mexico also was suspended.272 Thestatement of President Cárdenas to the Mexican press on October 29 left no doubtsabout the course Mexico would take. Cárdenas confirmed that the visit to Mexico ofthe Ambassador to Washington, Francisco Castillo Nãjera was “to fix the fundamental271 Maurice Halperin, “Mexico Shifts her Foreign Policy,” Foreign Policy, October1940, p. 208.272 The New York Times, August 26, 1940, p. 4:2.112points of an agreement resolving all general claims between the United States andMexico.” And he added that “the points of view advanced by the two countries havenow come so close that it is possible to say that the United States and Mexico are onthe eve of a final settlement.”273 Cárdenas also announced that part of thesettlement would include the establishment of American naval and air bases in Mexico.Military and naval sources in Mexico city reported that an agreement had been reachedwith the US to improve eight military ports, five of which would be provided with airbases.274All these diplomatic overtures were accompanied by the continued increase ofbusiness between the two countries. Mexican imports from the US increasedsubstantially. In 1 938 Mexico had imported 57.6 per cent of its total imports from theUS, while in 1 940 this figure rose to 78.8 per cent. Exports to the US, as a percentageof total Mexican exports, also grew, from 67.4 percent in 1938 to 89.4 percent in1 94Q275 The increase of this trade had been helped by the measures the Mexicanpresident had taken to reduce protectionism in Mexican foreign trade and by theoperation of foreign companies in Mexico. In October 1 939, Cárdenas had decreednew rules affecting the exports of raw materials, and this new legislation eliminated thetax on the export of profits. In December the absentee tax on remittances abroad,which had been enacted in 1 935 to prevent a flight of capital because of uncertaintyover labor conditions, was also abrogated. In the same month Cárdenas established273 El Universal (Mexico City), October 30, 1 940.274 The New York Times, November 14, 1 940, p. 1:4.275 Banco Nacional de Comercio Exterior, Comercio Exterior de Mexico 1 940-1 948 (Mexico D.F.: Editorial Cultura, 1 949), p. 64. Banco Nacional de ComercioExterior, El Comercio Exterior de Mexico 1 938-1 939, p. 11 4.113new legislation to promote the creation of new industries, which affected foreign andMexican companies equally. The new rules gave new businesses an exemption for fiveyears from the following taxes: import of foreign machinery and raw materials, taxeson exports and property, and contributions to the federal government.The outbreak of hostilities in Europe had a cleansing effect on the relationshipbetween Mexico an the United States. Once the war broke out, Germany ceased toexist as an alternative trade partner for Mexico, and therefore Mexico’s internationaltrade turned toward the US. Also, by this time most of the oil companies ceased tobe an obstacle. They realized the futility of their inflexible position. It became clear tothem, that if the US government had not taken action against Mexico before the war,the chances of this happening once the conflict was developing were minimal. Finally,the union movement, as confirmed by the statements of its leadership, ceased to bea problem. Once the political and economical constraints disappeared Cárdenas ledMexico on a straight course to close cooperation with the United States.The relationship between the United States and Mexico in 1 940 was probablycloser than at any other time. General Avila Camacho, the successor of PresidentCárdenas, received a country immersed in an environment of open, cordial and frankcooperation with the neighbor to the north, and Avila Camacho followed route. Thenewly elected president of Mexico had expressed his desire to maintain and improvethis relationship.276 The degree of rapprochement between the US and Mexicoachieved by Lázaro Cárdenas was evidenced at Camacho’s inauguration day. PresidentRoosevelt sent his Vice-President Henry A. Wallace to the ceremony of passage of276 The New York Times, October 6, 1939, p. 33:1.114power between Cárdenas and Avila Camacho, and the Mexican congress burst into astanding ovation for several minutes when the American delegation entered thechamber.The continuity between Cárdenas and Camacho expressed itself in several ways,and one of them was the fact that General Cárdenas became an active member ofCamacho’s government. When the news of the Japanese attack on Pearl Harbourreached Cárdenas he wired to President Camacho the following message: “as result ofthe painful event of the declaration of war between the United States and Japan, I amhonored to place myself immediately at the disposition of your government.”277Camacho appointed Cárdenas Commander in chief of the Pacific Coast and inSeptember 1 942, he welcome him into the cabinet as Minister of Defense. Cárdenasand Camacho worked together and with the US during the war effort and expressedgreat pride when the Mexican Aviation Squadron No. 201 saw action under GeneralMacArthur. Modern war equipment was brought from the US to Mexico andcollaboration with the American government and the American army became routine.Cárdenas also dedicated his efforts to the construction of a large plant to manufacturemunitions for the Allies. This project was part of a larger plan to create a military bloccomposed by the United States, Canada, and Mexico, a project that was dropped oncethe war was over, to the disappointment of General Cárdenas.278A major indicator of continuity between the two regimes was their trade policyand the amount of trade which the two administrations engaged with the UnitedStates. In 1 940, the last year of the Cárdenas government, the United States absorbed277 William Cameron Townsend, Mexican Democrat, p. 355.278 Ibid., p. 359-360.11589.4 percent of the total of Mexican exports, while Mexican imports from the US were78.8 percent of total Mexican imports. The same figures for the Avila Camachoadministration for the years 1941 to 1946 were: 91.2, 91.4, 87.7, 85.0, 83.5, 71.3percent of total Mexican exports; and 84.2, 87.0, 88.5, 85.4, 82.3, 83.6 percent oftotal Mexican imports279. In other words, there was no substantial change betweenthe amount of trade that the Càrdenas administration had managed to bring Mexico in1 940, and the average performance of the entire period of Avila Camacho. UnderCamacho, Mexico continued to trade with America within the parameters and theamounts the Cárdenas administration had reached by 1 940. Far from departing fromCárdenas’ policies, Avila Camacho continued and consolidated Cárdenas’rapprochement with the US. This trend of rapprochement had its ultimate expressionwhen Camacho signed a Reciprocal Trade Agreement with the United States onDecember 23, 1942.279 Banco Nacional de Comercio Exterior, Comercio Exterior de Mexico 1 940-1948, p. 64.116CONCLUSIONFriction between Mexico and the US during the Cãrdenas period was mostly dueto the concessions which the Mexican President was forced to make in order tomaintain his political power at home. Concessions made to organized labor and topeasants hurt the interests of American companies operating in Mexico. At the sametime, these companies compounded the situation, first by leaving Cárdenas little choicebut to nationalize them, and then by their boycott of nationalized Mexican oil. Anappreciation of these bases of U.S. and Mexican actions helps us to see the flaws ininterpretations of U.S.-Mexico relations that overemphasize the role played by Americanimperialism or by Mexican nationalism.Imperialism has been a common theme of many historians to explain theelements guiding the American attitude toward Mexico. It has been argued thatRoosevelt’s treatment of Mexico during the 1 930s was designed to promote U.S.domination of Mexico. The Roosevelt government’s treatment of Mexico has beencharacterized as retaliatory, and seen as an element disturbing the Mexican economy,particularly after Mexico nationalized the American oil companies. The historicalevidence, however, does not support this interpretation. On the contrary, the U.S.attitude toward Mexico was moderate and non aggressive; the United States had theability to inflict substantial economic damage to Mexico but did not exercise its power.For example, the Roosevelt administration did not retaliate against the Mexicannationalizations of land and oil which affected the interest of American citizens.In short, the American government chose the path of negotiation over aggressionbecause it was in the interest of the U.S. to maintain good relations with Mexico: they117needed Mexico’s support to make their free trade crusade, and their policy ofcontaining German influence in Latin America, successful. The degree ofinterdependence that existed between the United States, Latin America and Mexico,in other words, spared this latter nation from suffering retaliatory actions from theAmericans. The coming of the Second World War also had a shaping effect onAmerican behaviour towards Mexico, but it must be made clear that this event had acatalytic rather than a determining impact on American policy: Cordell Hull had defineda policy of cooperation and trade with Mexico as far back as the early 1 930s, but itwas only with the coming of the war that conservative sectors of the Republican partywere won over to this approach.A second interpretation of the relationship between the U.S. and Mexico duringthe Cárdenas period focuses on the influence of Mexican nationalism. It is one of themain purposes of this paper to state that this focus has served only to obscure thedetermining elements shaping the relationship. Nationalism has frequently been citedto explain the “Mexican character” and the actions of political leaders in Mexico.Historians, political scientists, poets, and writers have mixed reality and fantasy to buildthe myth of the importance of nationalism to the actions of the Mexican government.Mexican politicians have, indeed, effectively manipulated this idea in order to ensuretheir positions of power. Cárdenas was a master in this sense, and artfully capitalizedon the nationalization of the American oil companies once it was a fait accompil. Atthe same time, however, Cárdenas placed Mexico on a path of cooperation with theU.S. difficult to match in Mexican history. Cárdenas made substantial efforts to avoidthe nationalization of the American oil companies, and by the end of his periodMexico’s trade was solidly linked with the U.S. which was the country against which118his “nationalism” was supposedly intended. The “traditional Mexican nationalism” thatmany have argued was a substantial part of the Cárdenas government and the Mexicancharacter did not stop Cãrdenas from establishing closer relations with the U.S. whicheventually led to the signing of a commercial treaty with the Americans.It is necessary to review the historiography of the Cárdenas period and itsrelationship with the U.S. because Cárdenas’ treatment of America has been used asa base to build the most abundant production of myths around the relationship betweenthese two countries. The Cárdenas administration has been portrayed as the archetype,the supreme example, of Mexican nationalism. This myth continues to be used todayto muddle the understanding of the key elements which have defined the relationshipbetween Mexico and the U.S.For example, Robert A. Pastor and Jorge G. Castañeda in their LImites en IaAmistad28°have signaled the “traditional” Mexican nationalism as the great obstaclethat the Mexican President would have to face in the eventuality of promoting a freetrade agreement with the U.S. The signing of the Commercial Treaty of 1 942 and therecent signing of the NAFTA agreement is the most solid refutation of these arguments.LImites en Ia Amistad is a work which perpetuates the myths of the relationshipbetween Mexico and the U.S. The limits of the relationship between the U.S. andMexico have not been based on some ardent nationalism, but on the shifting interestsof the sectors controlling political power in both countries.This paper has focussed on the role of international trade and the commercebetween these two nations as being the key element which placed them together in a280 Jorge G. Castañeda and Rober A. Pastor, LImites en Ia Amistad (Mexico D.F.,Joaquin Mortiz/Planeta, 1 989).119environment of cooperation. Ultimately, regardless of any imperialism or nationalismMexico and the U.S. came together because they had a mutual interests in thepromotion of trade between their two countries. In this sense there was no substantialdeparture in policy toward the U.S. between Cárdenas and Avila Camacho. On thecontrary Avila Camacho followed and consolidated the process initiated by Cárdenaswhen he signed the Trade Agreement between Mexico and the U.S. in December 1 942.The Cárdenas government was responsible for taking the first steps and setting thestage for open cooperation with the United States.120BIBUOGRAPHYPublic DocumentsBanco Nacional De Comercio Exterior. Mexico Exportador 1 937. Mexico D.F.: EditorialCultura, 1939. (Consulted at the Research Center of the Banco Nacional deComercio Exterior in Mexico City).Banco Nacional de Comercio Exterior. El Comercio Exterior de Mexico 1 938-1 939.Mexico City D.F.: Editorial Cultura, 1 940. 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Consulted at the Hemeroteca of the National Library inMexico City.Excelsior (Mexico City).Nacional (Mexico City).Nation (Washington, D.C).New York Times.Time Magazine (U.S.)Universal (Mexico City).APPENDIXTABLE #1UNITED STATESEXPORTS AND IMPORTS TO SOUTH AMERICA(In thousands of dollars)EXPORTS IMPORTS1933 $114,048 $202,2801934 $161,701 $228,9581935 $174,341 $281,4721936 $204,222 $291,5051937 $318,354 $422,0261938 $299,714 $262,613126


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