Mexican oil expropriation

In accordance with Article 27 of the Constitution of 1917, President Lázaro Cárdenas declared that all mineral and oil reserves found within Mexico belong to the nation.

On August 16, 1935, the Petroleum Workers Union of Mexico (Sindicato de Trabajadores Petroleros de la República Mexicana) was formed and one of the first actions was the writing of a lengthy draft contract transmitted to the petroleum companies demanding a 40-hour working week, a full salary paid in the event of sickness, and the payment of 65 million pesos towards benefits and wages.

In July, as instructed by the arbitration board, a commission of financial experts was formed that investigated the petroleum companies' finances, concluding that their profits easily permitted them to cover the demands of the workers.

In response, Jesus Silva Herzog (present in the meeting) responded with a financial newspaper from London that cited a report from the Royal Dutch Shell of 1928: "Our Mexican subsidiary, Oil Company El Aguila, has obtained good returns during the last fiscal cycle."

On December 18, 1937, the board gave a verdict in favor of the union by means of a "laudo" (binding judgment in arbitration) which demanded that the companies fulfil the requirements of the petitions and pay 26 million pesos in lost salaries.

The petroleum companies initiated a lawsuit on January 2, 1938, before the Mexican Supreme Court to protect their property from the labor union and arbitration board, which denied the request.

On January 29, 1936, this union joined the Comité de Defensa Proletaria ("Committee of Proletarian Defense") which would become in February the Confederation of Mexican Workers (CTM).

On July 20, the union celebrated its first convention, in which it was proposed a project of general contracts for each oil company and it was decided on a strike to push towards an agreement.

On April 12, 1938, a crowd of thousands of all classes gathered in front of the Palacio de Bellas Artes to make donations to pay the debt to foreign companies.

On June 7, 1938, President Cárdenas issued a decree creating Petróleos Mexicanos (PEMEX), with exclusive rights over exploration, extraction, refining, and commercialization of oil in Mexico.

[9] Saturnino Cedillo, a cacique from San Luis Potosí and former Secretary of Agriculture, showed the strongest opposition to Cárdenas's measures.

On May 15 of the same year, the state congress of San Luis Potosí issued a decree where it refused to recognize Cárdenas as president and declared that the expropiación petrolera did not benefit the economy of Mexico.

The key to the success of the measures taken by Cárdenas was not just to control the opposition, but to develop and train qualified domestic personnel who could keep afloat an industry that had been maintained thus far by foreign management.

In spite of technical challenges, the local workers who replaced the foreign technicians succeeded in making the new nationalized oil industry work.

[10] A tug of war continues between capitalist strategists who favor privatization and popular support for PEMEX as a nationalization success and the backbone of Mexico's economic independence from manipulation by foreign owners and investors.

Fountain of Mexican Petroleum (Monument), in the Paseo de la Reforma and Anillo Periférico , Col. Hills of Chapultepec , delegation Miguel Hidalgo of Mexico City, D.F., Mexico.
Venustiano Carranza , President of Mexico, on the recommendations of the Petroleum Technical Commission, promoted the restitution of the wealth of the subsoil to the nation, which had been yielded during the Porfiriato to the land owners by issuing the issuance of the Code of Minería of 1894 and the law oil company of 1901, both regulations were contrary to Spanish legislative system inherited since colonial times, that had remained in force in Mexico.
Lázaro Cárdenas del Río , president of Mexico from 1934 to 1940, implemented a nationalist policy, interceded during the conflict between workers and companies repeatedly, on March 18, 1938, through a speech directed by radio to the nation, released the expropriatory decree.