1940: Mexico

Political Affairs.

In spite of persistent rumors of imminent revolution, both during the bitter presidential campaign and in the months following the national elections, which took place July 7, the new Congress was installed in September and the President-elect, Gen. Avila Camacho, was inaugurated according to schedule Dec. 1. The sole opponent of significance in the presidential race was Gen. Juan Andreu Almazán, leader of the conservative forces. Gen. Camacho had the support of the PRM (Mexican Revolutionary Party), the CTM (Confederation of Mexican Labor), although there was dissidence in the ranks of the labor group, and the CNC (Confederation of Farm Workers). Following the election, which was attended with rioting, especially in Mexico City, resulting in the death of almost fifty people and the wounding of some 300 more, both sides claimed a victory, and Gen. Almazán, in defiance of the government, summoned a rump Congress which, on Sept. 3, declared him President-elect and issued a manifesto violently attacking the Cárdenas administration. Although there were a number of uprisings in several pro-Almazán states during September and October, resulting in clashes between Federal troops and the rebels, there was no organized challenge by force of arms. On Nov. 26 Gen. Almazán withdrew his claim, following the defeat of Wendell Willkie in the United States presidential election and the decision of the United States to send Vice-President-elect Henry A. Wallace to the inauguration ceremonies. Meanwhile the Mexican Congress had declared Avila Camacho President-elect by a 16-to-1 majority, the official returns giving him 2,476,641 votes, Almazán 151,101, and Rafael Sánchez Tapia 9,840. The total votes cast represent the highest ever recorded in a Mexican election.

In addressing the new Congress on Sept. 1 President Cárdenas gave it and Avila Camacho official recognition. The outgoing President took this occasion to review the achievements of his six-year administration, stressing the reduction of illiteracy, the redistribution of land to over a million peasants, and the completion of the legal process of expropriating foreign oil properties. The question now arises whether the revolutionary program will continue. Business interests, the upper middle class and Catholic groups (the Church took no official part in the campaign) supported the opposition candidacy, in part out of a belief that Gen. Almazán would turn back the course of the Revolution, come to terms with foreign capital and restore 'prosperity' to Mexico. No one believed that Gen. Camacho would extend the Revolution for, although he had CTM and Communist support, it was understood that he advocated a more conservative policy than President Cárdenas. During the campaign, for example, he assured the people that he would not allow socialist education to be rigidly enforced and that it would not interfere with religious teachings in the home. The first Cabinet appointments, which include followers of the conservative ex-President Emilio Portes Gil, and the initial acts of the Camacho administration, lend support to this suspected conservatism, which finds verbal expression in talk of 'consolidating' the Revolution, not extending it.

The new President's first important victory came with the passage of a bill, recommended by him, depriving the Railroad Workers' Syndicate of the management of the National Railways of Mexico, which had been entrusted to the workers in 1938. A decree in modification of the agrarian reform, granting the peon definite title to land given him, in contrast to communal ownership, carries the land reform back to the original intent of the 1917 Constitution, and provides further indication of the conservative tendency of the Camacho administration. This was one of Camacho's principal pre-election pledges. The farmer is free to work his land either communally or individually, depending on the nature of the crop and local conditions; hence the new reform will maintain the communal services of cultivation, storage and marketing, especially in one-crop districts which require large-scale development. Exploitation by hacendados or money-lenders is to be prevented by the prohibition on sale or mortgage of lands allotted, and by the financial features of the decree, which provide for the strengthening of the Banco Agrícola, which will undertake the financing of all farm activity in the face of gradual liquidation of the National Bank of Ejidal Credit. During the coming year 55,000,000 pesos will be spent on irrigation.

Although his inaugural address was favorably received by both leftist and rightist press, the rift between the increasingly strong conservative element among the President's followers and the left wing labor groups is widening. The rightist elements, victorious in the Congressional elections, want to outlaw and disband the Communist Party, the 'popular bloc' in the Senate, on Oct. 14, supporting a resolution to that effect. The organization of a National Committee to Fight Reaction by the CTM, 'to coordinate forces in defense of the revolutionary institutions of the nation,' widens the gap between the Left and the growing Right. Optimism in business and financial circles, attributable to the increasing conservatism of the government, is indicated by the rise in stock values and government securities in December.

Oil Question.

The new administration inherits a legacy of economic problems, some arising from the trade dislocation caused by the war in Europe, which impedes the marketing of petroleum and industrial metals; some stemming from the expropriation of foreign oil properties. Dispute over this last is still pending with the United States. The controversy entered a new phase with the reply on May 1 of the Mexican government to Secretary Hull's note of April 3, requesting arbitration of the claims for indemnity. The Mexican note, firmly but without hostility, maintained, as hitherto, that this was a domestic question and, hence, not arbitrable by international courts; that there was no denial of justice since it would compensate; and that the Mexican courts were still trying to appraise the value of the properties, although negotiations regarding some of the outstanding claims had been suspended, due to financial stringency caused by the boycott of Mexican oil by the foreign companies. The new element in the situation was injected by the statement that an agreement had just been concluded with the Sinclair interests for direct negotiations, the inference being that this might serve as a model on which the other companies might reach a settlement and, thus, break the deadlock. The Sinclair agreement, at least, broke the united front of the expropriated interests. It provided for cash payment for the Sinclair properties in three years (the sum of $8,500,000 has since been reported); in return, the Consolidated Oil Corporation will purchase specified amounts of petroleum on a long-term basis, and will transport and market the same. Three other big contracts for the sale of Mexican oil have since been reported, the third unconfirmed: one for 24,000,000 barrels, over a five-year period, with a subsidiary of Standard Oil of Indiana; one with the First National Company, a group of independents; and the last for 24,000,000 barrels of Poza Rica crude oil, to be delivered within four years, with the Cities Service Company. A Japanese oil concession to exploit 247,000 acres of Vera Cruz oil lands was cancelled in October, as 'an act of continental solidarity.' Early in the year a part of Mexico's unsalable petroleum was sold to Japan for cash at a price thirty cents below the world market price.

Valuation proceedings of a unilateral nature regarding the expropriated oil properties are pending in the Mexican courts. On Aug. 31 the Mexican government placed a value of about $35,400,000 on them, a figure called absurdly low by the oil companies, especially since deduction of workers' claims against the companies would result in an actual indemnity of only $11,000,000. The companies, still at outs with the Mexican government with regard to sub-soil rights, have put the valuation at around $400,000,000.

Reorganization of the petroleum industry has been one of the administration's most urgent domestic problems in the last year. Since both it and the National Railways were operating under a large deficit, in each case in the neighborhood of 22,000,000 pesos in 1939, the Cárdenas government proposed, and when both the oil and railway workers' unions refused, it ordered the adoption of reorganization plans which would cut excess personnel, impose salary reductions, reduce overtime pay, and lead to repayments to the national treasury. A provisional agreement was reached with the oil industry in August, largely following the Cárdenas plan. On Nov. 28 terms regarding dismissals and wage cuts were set by the Federal Conciliation and Arbitration Board, effective immediately, which were harsher than those in the original plan.

Silver Purchases.

Serious consequences to Mexico threatened when the United States Senate, May 9, voted the Townsend bill to halt foreign purchases of silver, since 1939 silver purchases gave the Mexican government revenue amounting to about $28,000,000. Since petroleum exports have fallen off so greatly, silver has become the mainstay of Mexico's economy, representing almost one-half the total exports to the United States in 1939. The United States purchases about 70 per cent of Mexico's exports, and in the first six months of the European War the value of shipments to the United States from south of the Rio Grande rose 30.5 per cent.

Financial Affairs.

The cut in the price of silver was one factor in the drastic decline of the peso, which the Bank of Mexico early in the year pegged at 6.00 per United States dollar. The cheap peso had been somewhat of a boon, however, in stimulating tourist trade, now estimated at about $160,000,000 a year, which is an important source of foreign exchange. Hence, to prevent a rise in the peso, the Bank of Mexico is now buying dollars in large amounts, whereas a few months ago it sold dollars to bolster exchange. The national budget for 1940 was estimated at 448,769,000 pesos, which is about 3,000,000 pesos larger than the original budget for 1939. Mexico has not shared yet in Export-Import Bank loans, although Mexican circles have expressed a wish for a $50,000,000 national defense loan. The seventh annual installment of $500,000, under the special claims convention of April 24, 1934, was paid Dec. 31, this convention providing for en bloc settlement of claims on account of damages suffered by North Americans in the Mexican Revolution.

Inter-American Indian Congress.

The first Inter-American Indian Congress met at Pátzcuaro, April 14-24, with representatives from the United States and from those American republics with large Indian populations, to exchange information and ideas relative to the basic problem of adjusting these indigenous peoples to conditions of temporary life. Its principal achievement was the establishment of a permanent Institute for Indian Affairs, with its seat in Mexico and Dr. Moíses Sáenz as provisional director. The most important resolution adopted, proposed by the CTM leader, Lombardo Toledano, concerned the division of large landed estates. It was also proposed to make credits and technical assistance accessible to the Indians. Other topics considered dealt with Indian education, emphasis being laid on instruction in the native languages on the lines of Mexico's experiments with the Otomí and Tarascan idioms, and with nutritional and health problems, irrigation and similar matters important in improving the conditions of the 30,000,000 Indians of the Americas.

Foreign Relations.

Although the Cárdenas government was inclined to minimize the Nazi activities, which were reported to be alarmingly increasing in the spring, it took active steps to curb them. The Attorney-General has undertaken an extensive investigation of the alleged propaganda activities, which emanate from the German Legation and the semi-official news agencies, as throughout Latin America, and are said to be paid for by a forced levy on the German colony in Mexico. In June the Minister of the Interior requested the cooperation of the Mexican press in suppressing material favorable to the totalitarian powers. A closer check on aliens has been instituted in the face of the great increase in the number of German 'tourists' and salesmen, and counter-espionage services are planned by the Army. Immigration has been severely restricted since the first of the year. The German press attaché, Herr Arthur Dietrich, in June was declared persona non grata and his recall requested. Finally, the government has suspended the Nazi magazine, Timon, and the German propaganda sheet, El Diario Alemán, is under investigation. The Falange Española, an organization to reconquer Spain's 'spiritual empire' in Latin America, has been officially outlawed. Spanish Republican refugees still in France will be permitted by the new administration to settle in Mexico, as heretofore agreed, provided they are of 'desirable character.' The CTM, at a mass meeting in November, defended Communism but, at the same time, came out for the democracies without reservations. Its organ, El Popular, has shifted its position to a pro-United States, anti-Nazi one. Communists in Mexico, on the other hand, as throughout Latin America, have been inclined to transfer the old charge of 'Yankee imperialism' to the United States' present foreign policies regarding continental solidarity and hemisphere defense, and to dispense with the European War as another 'imperialist' war.

Defense Activities.

On June 18 the Mexican Cabinet approved a law providing for compulsory military training for a one-year period. Early application of the law was announced by President Cárdenas in October. Rumors of an impending agreement for hemisphere defense, such as the United States signed with Canada, have not been substantiated. The foreign policy of the Cárdenas government has been unequivocally pro-democracy in the European struggle against totalitarianism, and in favor of cooperation with the United States in defense of the Western Hemisphere, although President Cárdenas is said to have rejected the first United States proposals for such defense.

See also ARCHAEOLOGY; JAPAN, and RAILROADS.