Oil, Banks, and Politics: The United States and Postrevolutionary Mexico, 1917–1924

By Linda B. Hall

A study in conflict between a powerful industry and a struggling nation: “This fine monograph . . . addresses an important issue in Mexican history.” —The Americas

Mexico was second only to the United States as the world’s largest oil producer in the years following the Mexican Revolution. As the revolutionary government became institutionalized, it sought to assure its control of Mexico’s oil resources through the Constitution of 1917, which returned subsoil rights to the nation. This comprehensive study explores the resulting struggle between oil producers, many of which were U.S. companies, and the Mexican government.

Linda Hall goes beyond the diplomacy to look at the direct impact of a powerful, highly profitable foreign-controlled industry on a government and a nation trying to recover from a major civil war. She draws on extensive research in Mexican archives, including both government sources and the private papers of Presidents Alvaro Obregón and Plutarco Elías Calles, as well as U.S. government and private sources. In the wake of the North American Free Trade Agreement’s expansion of United States business ties to Mexico, this study of a crucial moment in U.S.-Mexican business relations will be of interest to a wide audience in business, diplomatic, and political history.

• Language: English
• Publisher: Open Road Integrated Media
• Release date: Jul 22, 2010
• ISBN: 9780292786462

Book preview

Oil fields of Mexico, circa 1923. Map by Chase Langford.

OIL, BANKS, AND POLITICS

The United States and Postrevolutionary Mexico, 1917–1924

Linda B. Hall

University of Texas Press

Austin

Copyright © 1995 by the University of Texas Press

All rights reserved

First edition, 1995

Requests for permission to reproduce material from this work should be sent to Permissions, University of Texas Press, Box 7819, Austin, TX 78713-7819.

Library of Congress Cataloging-in-Publication Data

Hall, Linda B. (Linda Biesele), 1939–

   Oil, banks, and politics : the United States and postrevolutionary Mexico, 1917–1924 / Linda B. Hall. — 1st ed.

      p. cm.

   Includes bibliographical references and index.

   ISBN 0-292-73092-6 (alk. paper)—ISBN 0-292-73101-9 (pbk.: alk. paper)

   1. Petroleum industry and trade—Government policy—Mexico—History.   2. Petroleum industry and trade—Government policy—United States—History.   3. Mexico—Foreign economic relations—United States.   4. United States—Foreign economic relations—Mexico.   5. Investments, Foreign—Mexico.   6. Mexico—Politics and government—1910–1946.   I. Title.

HD9574.M62H34   1995

338.2'7282'0972—dc20      94-22408

ISBN 978-0-292-75499-7 (library e-book)

ISBN 9780292754997 (individual e-book)

DOI: 10.7560/730922

For John J. Biesele

and Esther Eakin Biesele,

with fond affection

And to the memories of

Marguerite McAfee Biesele

and Anna Jahn Biesele,

whose love and support

always meant so much

to me and my children

CONTENTS

Acknowledgments

CHAPTER 1. Introduction

CHAPTER 2. The Struggle for Mexican Oil, 1917–1922

CHAPTER 3. Albert Fall and Mexican Oil

CHAPTER 4. Power and Resources: The United States, Great Britain, and Mexican Oil, 1917–1924

CHAPTER 5. Banks and the Reinstitutionalization of the Mexican State

CHAPTER 6. The Struggle for the Fields: The Strange Case of Juan Felipe

CHAPTER 7. Gentlemen’s Agreement and Recognition

CHAPTER 8. The United States and the De la Huerta Rebellion

CHAPTER 9. Conclusion

Notes

Bibliography

Index

MAPS AND ILLUSTRATIONS

Oil fields of Mexico, circa 1923

Venustiano Carranza

Inauguration of Adolfo de la Huerta

The Committee of Five

Albert B. Fall

A fire in the Potrero del Llano field

Earthen tanks at Potrero del Llano

Thomas W. Lamont

Oil seep at Cerro Azul

A well in the Dos Bocas field

Alvaro Obregón

Calles, Obregón, and de la Huerta

Plutarco Elías Calles

ACKNOWLEDGMENTS

A scholar accumulates many debts, and I am no exception. The first ideas for this volume took shape in a National Endowment for the Humanities seminar on American foreign relations, conducted by Charles Neu at Brown University in the summer of 1986. The fine historians and political scientists gathered there challenged my thinking and suggested new approaches. At the end of the process, as the manuscript was nearing completion, I was fortunate to be a visiting scholar at the Center for U.S.-Mexican Studies at the University of California, San Diego. That community of scholars, particularly Vivienne Bennett, John Lear, Kevin Middlebrooks, and Aníbal Yañez, provided a wonderful, if critical, environment in which to work. I am more grateful to these two groups of scholars than I can say.

I am indebted as well to those archivists and bibliographers who have helped me throughout my research. Particularly notable in this regard are Russ Davidson of the University of New Mexico Library, the fine staffs at the Archivo General de la Nación and the Archivo de la Secretaría de Relaciones Exteriores in Mexico City, and Norma Mereles de Ogarrio, Carmen Aguilar Zinser, and Doña Hortensia Calles de Torreblanca of the Fideicomiso Archivos Plutarco Elías Calles and Fernando Torreblanca. I would also like to thank the Fideicomiso for permission to publish portions of Chapter 8, which appeared in a somewhat different form in Obregón y De la Huerta, Boletín 8 (December 1991).

An earlier version of Chapter 5 was presented at a conference on the Mexican Revolution sponsored by the Mexico/Chicano Program at the University of California at Irvine. I thank the scholars assembled there for their helpful critiques as well as for the insights that their own work provided. The Regents of the University of California have been kind enough to grant me permission to republish portions of my essay, Banks, Oil, and the Reinstitutionalization of the Mexican State, 1920–1924, which appeared in the conference volume The Revolutionary Process in Mexico: Essays on Political and Social Change, 1880–1940, edited by Jaime Rodriguez (Los Angeles: UCLA Latin American Center Publications, 1990), pp. 189–211.

Another privilege that I enjoyed was the opportunity to work in the excellent research collections at the Huntington Library and to profit from yet another community of scholars. My few months as a visiting fellow at that institution were an enormous pleasure. I especially thank Martin Ridge, then director of research, for all his good counsel on matters scholarly and professional.

A number of historians have read various versions of this work and have helped me refine and develop my ideas. To them—Waldo Heinrichs, Gerald Nash, Karen Miller, Richard Salvucci, Enrique Semo, Sandra Lauderdale, Richard Graham, and Gilbert Joseph—my thanks as well. Their willingness to take time out from their own heavy schedules and research agendas is something for which I am profoundly grateful, and I feel my work has been enormously enhanced by their help. Thanks are due as well to the graduate students with whom I have been privileged to work at the University of New Mexico—Michael Stanfield, Samuel Brunk, Suzanne Pasztor, Alfred Brichta-López, Aaron Mahr, and the many others—for the ideas they have shared with me and for the inspiration I find in their own work.

To Betsy Lewin and my friends at the Westside Academy, my gratitude for their help in staying healthy and sane through the months of writing.

And, of course, my thanks to Robb, Billie, and Eugene Corrigan, whose friendship, support, and encouragement help me through much more than manuscripts.

1

INTRODUCTION

With the events of World War I and the peace conference that followed, the United States moved into the forefront—politically, economically, and militarily—of world power. During the same decade, its southern neighbor had been undergoing a violent and prolonged series of upheavals of its own. Revolution had brought political change to Mexico, along with social and economic shifts and dislocations. In 1917, with the promulgation of its new constitution and the inauguration of Venustiano Carranza as president, it had begun the process of reinstitutionalization and recovery. At the same time, petroleum had emerged as the key to both industrial and military power, and Mexico had a great deal of it. The story at hand, then, is of an emergent world power dealing with a much less powerful neighbor in possession of an immensely valuable resource as it began to institutionalize its revolution. Relations with the United States affected in important ways both the relative standing of political actors in Mexico and the nature of its political and economic reconstruction.

Between 1917 and 1924, the governments of Presidents Venustiano Carranza and Alvaro Obregón would make significant strides toward the establishment of a new political system. The process begun during these years led to a stability unmatched by any other Latin American nation in the twentieth century. This result was accomplished in spite of and sometimes because of the activities and pressures of various interests in the United States.

Two of the major issues affecting relations between the countries were the Mexican external debt and the status of foreign holdings of Mexican oil deposits, and these issues were closely related. Petroleum exploitation was the only hope for repayment of Mexico’s foreign debt. In order to gain recognition from the United States, which would give Mexico access to foreign loans for the rebuilding of the war-torn country, Mexico would have to initiate payment on its debts and make its petroleum available for foreign exploitation. Recognition, petroleum, and the debt were intertwined problems that are at the center of the question examined in this book: how revolution, subsequent reinstitutionalization, resource control, and political stability in Mexico were influenced—though certainly not exclusively determined—by the United States.

Reinstitutionalization is here defined as the reconstruction of both the executive authority and the legitimacy of the state and its organizations and procedures. It includes developing structures and functions and encompasses the emergence of political symbols as well as the rules of the games of politics. State is defined as a set of administrative, policing, and military organizations headed, and more or less well coordinated by, an executive authority that controls, or tries to, territories and people.¹

Theda Skocpol, in her fine comparative analysis of the French, Russian, and Chinese revolutions, has pointed out the importance of careful attention to the international context. She states that all modern social revolutions, in fact, must be seen as closely related in their causes and accomplishments to the internationally uneven spread of capitalist economic development and nation-state formation on a world scale.² Certainly, in the latter years of the nineteenth century and the first decades of the twentieth, Mexico, along with the rest of Latin America, was, in the words of Friedrich Katz, pulled increasingly into the frenetic development of world capitalism. Katz goes on to say that this process solidified foreign dependency.³ The extremely rapid development of the oil industry between 1910 and 1920, despite the violence of the Mexican Revolution itself, tied Mexico ever more closely into the world system. The involvement with international banking institutions was likewise an important connection.

But the terms of these links were by no means a foregone conclusion, and the actions of Mexican governments significantly affected the nature of the relationships that the Mexican government developed with foreign capital between 1917 and 1924. These relationships, in turn, had an impact on Mexico’s internal politics. It is therefore important, in order to understand Mexico’s reinstitutionalization, to focus precisely on how transnational relationships based on oil and banking developed in the postrevolutionary period and on what political effect they had. Within this process, U.S. interests and the U.S. government were of particular importance.

This book, then, explores the relationship of a powerful post–World War I United States with the politically radical, economically devastated country with which it shared a 2,000-mile common border. It also considers attempts within the Mexican government to balance economic recovery, to control its own resources, and to obtain capital from foreign sources. It examines the ways in which U.S. interests vied for influence in shaping the U.S. government’s Mexican policy, often through direct contacts with various actors in the Mexican government. Finally, it analyzes the political consequences for Mexico of this economic and political involvement with the United States.

As Mexico was just emerging from a major revolution, the political rules of the game were not yet firmly established; and the rewards of success, either political or material, were not yet definitively allocated. Political power—within the government; between the government and various opponents inside and outside of the country; and at and between the national, state, and local levels—was in constant contention, although with less violence than during the preceding years. The Constitution, which was promulgated in 1917, set ideal goals rather than enforceable laws. In fact, its precepts would not be functional in any significant way until they were put into force in organic laws by the legislature. The most important and disquieting of its precepts, from the point of view of U.S. interests, was Article 27, which asserted that all lands and waters of the republic were vested in the nation itself and reserved the right of the nation to use those resources for the well-being of the entire society. Although it recognized that private property could be created by the conveyance of title to individuals by the nation, it declared that only surface rights were affected. The rights to the subsoil, including specifically petroleum and all hydrocarbons, were held in direct dominion by the Mexican state itself.

Article 27 was to lay the basis for a twenty-one-year struggle between the two countries, culminating in Mexico’s expropriation of almost all foreign oil holdings in 1938. The initial and very intense period of this dispute spanned the two presidential periods on both sides of the border and involved politicians, oilmen, spies, bankers, businessmen, journalists, cabinet members, crooks, and diplomats. The controversy delayed the recognition of one Mexican president for several months and another for almost three years, spawned vicious invective and actual violence, and led to a continuing bitterness that gives the issue of control over oil resources powerful currency in Mexican politics today.⁴

In economic terms, petroleum was the only bright spot for the Mexicans in 1917, and as production and profitability increased, it became brighter. The oil industry, located close to the Gulf Coast so that its products could be immediately and conveniently exported, was able not only to continue functioning during the years of civil war but actually to experience phenomenal growth. However, at that time the benefits to Mexico from the industry were minimal, as the petroleum region shifted between various national factions and local leaders and the business itself was completely dominated by foreign companies. In 1917 much of the area was still effectively beyond the control of the new central government of Venustiano Carranza.

During the next seven years, the Mexican government would struggle to gain authority over its oil regions and its products. A return on this resource was absolutely necessary for the Mexican government to function; it had no viable alternative sources of revenue. The percentage of government revenues derived from petroleum taxes varied from 21 percent to 34 percent in the years between 1921 and 1924, and, as Alan Knight has succinctly pointed out, Reconstruction—the theme and slogan of the day—required cash.⁵

At the same time, oil had been recognized as a major strategic resource throughout the world, and the profits for those individuals and firms that could gain access to oil supplies were enormous. The stakes in the game were high, and the ruthless strategies and tactics that would be adopted reflected the enormous potential gains for the winners.

Among the interests on the U.S. side there was by no means complete agreement about which policies should be pursued in Mexico or which individual leaders or groups should be supported. There were at least five significant sets of actors. Presidents Woodrow Wilson and Warren Harding, some of their upper-level cabinet members, and the State Department constituted the first group. Particularly important here was Albert Fall, Harding’s secretary of the interior, who was immensely influential as a senator during the Wilson administration as well. Wilson, during the latter part of his presidency, was heavily focused on events in Europe and took less of a role in Mexican affairs than he had earlier; his illness at the end of his term also limited his activities. However, actions such as the occupation of Veracruz by American forces in 1914 and the Pershing Punitive Expedition in 1916–1917 were deeply resented by Constitutionalist leader Venustiano Carranza, despite other moves by Wilson that had actually helped his cause. The notorious Zimmermann note, in which Germany had offered Carranza an alliance against the United States in early 1917, obviously made Wilson himself less well disposed to the Mexican regime as well.⁶ Still, he tended to resist becoming embroiled in Mexico again. Warren Harding was only rarely directly involved in Mexican matters and left a good deal of room for action for his cabinet members, who were not always in agreement. Therefore, the U.S. presidents were less significant in the day-to-day course of U.S.-Mexican relations than their cabinets and other actors, although of course their attitudes were important in setting the context within which events unfolded.

Another group that was deeply involved and interested was the financial community, in particular the International Bankers’ Committee, led by Thomas W. Lamont of J. P. Morgan. This assemblage was concerned about the resumption of payments on the foreign debt. Therefore, it had to be concerned about Mexico’s overall economic condition, as a devastated Mexico would not have the resources for payment.

Venustiano Carranza, president of Mexico, 1917–1920. Carranza took a hard-line stance against foreign interests in the Mexican oil fields, attempting to bring subsoil rights directly under government control. Source: Center for Southwest Research, General Library, University of New Mexico.

The third group, the major oil companies, were concerned with the application of Article 27, which might threaten property rights they had acquired prior to 1917. They had become accustomed to operating quite autonomously during the 1910–1917 period, and most resisted strongly any attempt by the Mexican government to regulate or tax their activities. In fact, one scheme rumored to be popular in oil circles was the possibility of breaking the Gulf fields away from Mexico either to form another country with a controllable leader or to merge them into the United States. Whether or not the oilmen actually had such a scheme in mind, they certainly favored strong measures, including intervention to protect their access to petroleum resources, linking the issue directly with questions of state sovereignty.

In general, the companies were not at all concerned with Mexico’s overall economic well-being, as oil could be pumped regardless. They were most closely connected within the U.S. government with Senator and then Secretary of the Interior Albert B. Fall, and their direct importance waxed and waned with his influence. It was probably strongest during the period of Woodrow Wilson’s illness, which largely coincided with Fall’s Senate Investigation of Mexican Affairs in 1919 and 1920. It diminished along with Fall’s own when, as secretary of the interior, various mistakes and miscalculations led him to lose credibility with Secretary of State Charles Evans Hughes and probably eventually with President Harding as well. It is important to note that the large oil interests were never successful in influencing either Wilson or Harding to intervene in Mexico, although they were a significant factor in the withholding of recognition of the Mexican government between 1920 and the middle of 1923.

They were, however, always important and very powerful in their direct dealings with the Mexican government. Oil revenues were a fiscal mainstay of the regime, as noted above, and the only highly productive sector of the Mexican economy during the period. The U.S. oil industry was crucial to the reconstruction of the Mexican state, and it could invest or go elsewhere. In the years considered here, it had fewer options because it had fewer alternative sources of oil, and those were largely within the United States itself. However, as Venezuela and other world areas developed as potential sources of supply, options increased, and the oil companies saw their already strong bargaining position vis-à-vis the Mexicans improve at the same time that their influence with the U.S. government was diminishing. They were also, however, still concerned that no precedents be set in Mexico that might affect their negotiations in other areas.

A fourth group, less important for the purposes of this study, was composed of border interests. They were interested in the economic rehabilitation of Mexico so that trade could be resumed and expanded and so that the border region as a whole could thrive and prosper. Still, they became influential from time to time and were able to work with border governors and state legislatures for more moderate policies toward Mexico.

A fifth group, which cut across the former groups and frequently had conflicting interests, were American politicians of various kinds, ranging from members of the national and state legislatures to governors and even local officials; the most important of these were the border politicians mentioned above. The preferred outcomes and policies of these actors varied widely, of course, and depended on a multiplicity of factors, such as the geographical proximity of their areas to Mexico, the nature of business dealings within their constituencies, and even their own personal interests and investments.

In fact, none of these groups was completely united within itself, let alone with the others, and differences on the U.S. side of the line had significant outcomes on the relationship with Mexico. However, it is important to note that there was constant communication within and between groups. Although their actions had different effects at different times, they were not operating in ignorance of one another’s concerns or even necessarily at cross-purposes.⁷

On the Mexican side, the significant actors were all related in one way or another to the emerging Mexican state. There were no Mexican capitalists with funds sufficient to support the development of the oil regions. Although there were banking interests from the old regime, the financial system of the country was in shambles, and only through cooperation with the new government was any hope of reorganization possible. The oil business, as it developed during the Revolution, was entirely dependent on foreign entrepreneurs and capital, principally U.S. and British. No private Mexican interests could stand up to foreign competition and pressures without the help of the Mexican government, and that government itself was just beginning to be established. All aspects of the relationship with the United States—economic, political, military—were asymmetric, with the preponderance of power on the northern side of the border. Mexico, however, was not entirely helpless. After all, it had the oil.

Skocpol suggests that the political leaderships involved in revolutions must be regarded as actors struggling to assert and make good their claims to state sovereignty.⁸ This approach is particularly appropriate for this study. Mexican political actors repeatedly framed their responses to U.S. pressures in terms of the preservation of Mexican sovereignty. The protection and observance of those aspects of the Constitution of 1917 that asserted the rights of the nation, in particular Article 27, quickly assumed a strength, both symbolic and affective, that was never completely understood or appreciated by either the U.S. government or by foreign businessmen dealing with Mexico during this period. However, by 1923 the U.S. government at least was more aware of the power of the sovereignty issue and had become more flexible and skillful in dealing with it.

Skocpol further asserts, To regard political leaderships in revolutions as would-be state builders means to take their activities more seriously than their social backgrounds. This point also seems appropriate for the Mexican case. What is essential in understanding outcomes, as she observes, is an analysis of "that which political leaderships in revolutionary crises are above all doing—claiming and struggling to maintain state power. This approach leads away from a consideration of such issues as class and ideology, which are important, to be sure, but not as important for this study as actions and results. She adds, During revolutionary interregnums, political leaderships rise and fall according to how successful they are in creating and using political arrangements within the crisis circumstances that they face. Struggles over the most fundamental issues of politics and state forms go on until relatively stable new state organizations have been consolidated; thereafter political struggles continue about how to use state power in its broadly established form."⁹ Certainly Mexico during this period was engaged in just such struggles over politics and state forms within a context of state and regime survival; to analyze these struggles as if they were about using state power in its broadly established form before state power was firmly consolidated would be a mistake. The highly fluid—and highly vulnerable—nature of the state in Mexico strongly influenced the actions and limited the possibilities of Mexico’s political leaders and must be kept firmly in mind. Above all, as Skocpol notes, these men were people who created administrative and political institutions to replace those of the old regime.¹⁰

The two presidents of Mexico were, of course, key to the outcome. While he was first chief of the Revolution, Venustiano Carranza had suffered the indignities of the occupation of Veracruz by U.S. forces in 1914 and Pershing’s Punitive Expedition into Mexico in 1916–1917. He viewed Wilson’s involvement in Mexico, well intentioned or not, as unwarranted and dangerous meddling in the sovereignty of his country. During World War I, he had flirted with Germany, and he was the intended recipient of the infamous Zimmermann Telegram, which had offered the return of Mexican lands lost to the United States in 1848 as a reward for an alliance. Resentful of the United States, this austere northern landowner put economic and political nationalism at the forefront of his agenda and was unwilling to make any major concessions to foreign oil interests.¹¹

His successor, the victorious northern general and middle-class entrepreneur Alvaro Obregón, emphasized economic reconstruction of the devastated country. This priority necessitated a change of attitude toward foreign involvement in Mexican resource development. Obregón, however, did not intend to give up Mexico’s rights to its own resources, although he was forced into a much more pragmatic posture than Carranza had maintained. The United States, moreover, was no longer at war in Europe and was in a position to apply more pressure south of the border. Obregón was not recognized by the United States when he became president, and recognition became an issue that would have profound internal as well as external consequences. Nevertheless, oil production during Obregón’s presidential years soared to a level that Mexico would not achieve again for many decades, although the circumstances of that production were constantly at issue throughout his term. He was finally able to achieve a gentleman’s agreement on oil in the famous Bucareli negotiations in the summer of 1923, and recognition quickly followed. U.S. aid would then help his administration survive the challenge of a rebellion by his own secretary of finance and much of the army in late 1923 and early 1924.

Inauguration of Adolfo de la Huerta as interim president of Mexico in 1920. Source: Fideicomiso Archivos Calles-Torreblanca.

Other major actors on the Mexican side included political and military figures at all levels, many of whom had been involved in the Mexican Revolution. The contention involved not only personal power and access to resources but also the genuine effort by some of these leaders to gain the means to carry out important social and economic programs. Some of the individuals involved had been winners, others losers; some resided in Mexico, some in the United States. Most of them had or developed some relationship to government or private interests in the United States, testimony to U.S. power on the one hand and the importance of the Mexican situation and particularly Mexican resources on the other. Obregón’s fellow Sonorans, Adolfo de la Huerta, his secretary of finance, and Plutarco Elías Calles, secretary of government and chief political officer of his administration, were significant.¹² Also important were state officials in the oil regions, particularly Adalberto Tejeda of Veracruz, and military chiefs such as Guadalupe Sánchez of the same region. Another figure from Veracruz who moved in and out of the story was Manuel Peláez, former caudillo of the oil region who, for a fee, protected foreign holdings and then later conspired with the oil companies and other dissidents against the government.

Although the United States was not suffering political changes as profound as those occurring in Mexico, the situation there was dynamic as well. Of course, there were significant differences between the administrations of Democrat Woodrow Wilson and Republican Warren Harding. As the United States emerged as the world’s foremost power, its own vision of its interactions with the rest of the world was still in question. The developments in U.S. dealings with Mexico between 1917 and 1924 reflect that uncertainty even as they moved in particular directions, especially toward resource control. Mexico also influenced the relationship between the United States and other world powers, particularly Great Britain, whose nationals had an important stake in Mexican oil in 1917.

The chapters that follow develop the themes discussed above. Chapter 2 initiates the discussion of oil as an issue in U.S.-Mexican relations in the years 1917–1922. It focuses principally on the relations between the oil companies and the Mexican government. The following chapter investigates the role of Albert Fall, as senator and secretary of interior, in the recognition of the postrevolutionary Mexican government, the oil controversy, attempts at private diplomacy, and destabilizing activities toward the Obregón government. The fourth chapter looks at the involvement of British interests in Mexican oil, including the resulting competition with U.S. companies, and the effects of this involvement on U.S.-British relations. The role of the banking interests, particularly their influence in negotiating the Mexican external debt with the International Bankers’ Committee, is the subject of Chapter 5.

Chapter 6 takes a close look at the actual struggle on the ground between competing U.S. interests for particular Mexican oil fields. It is focused largely on Juan Felipe, an undeveloped field in Veracruz’s Golden Lane, at that time the most productive oil region in the world. Chapter 7 moves to the Bucareli negotiations and the recognition of Obregón’s government by the United States. Chapter 8 details the political repercussions of the controversies of the early 1920s, in particular Obregón’s problems with his secretary of finance, Adolfo de la Huerta, who had been responsible for most of the negotiations with U.S. banking and oil interests up until Bucareli, and de la Huerta’s subsequent rebellion. The last chapter contains my conclusions about the effect of Mexico’s interactions with the United States on economic development, political institutionalization, and stability in the period 1917–1924 and the continuing relationship between the two countries.

2

THE STRUGGLE FOR MEXICAN OIL, 1917–1922

As World War I came to an end, the violence of the Mexican Revolution was subsiding as well. By far the most urgent issue between the two countries at this time was the question of subsoil resources. Article 27 gave subsoil rights to the nation, returning to the traditional system that dated back to the Spanish monarchy.