Oil, War and Anglo-American Relations: American and British Reactions to Mexico's Expropriation of Foreign Oil Properties, 1937-1941 (review)

The Mexican expropriation of the major foreign oil companies in March 1938 has already attracted a considerable amount of scholarly attention. Recent work by historians such as Jonathan C. Brown and Thomas F. O'Brien has reappraised the reasons behind it, Lorenzo Meyer has considered it in the context of Mexico's relations with both Britain and the United States, and others have analyzed the subsequent evolution of PEMEX as a state-owned oil company. Catherine Jayne takes a slightly different approach, concentrating on the formation of policy towards Mexico in Washington and London following the expropriation. Sticking closely to the documentary evidence of the official files, she shows how the British and U.S. governments reacted in quite different ways. For the United States, whose policy was largely controlled by Sumner Welles, considerations of national defense dictated a rapid softening of early demands for the restitution of the companies' properties, toward suggestions of a new arrangement under which they would manage the oil fields and cream off a compensation payment. However, the settlement of outstanding land claims against Mexico in November 1938, prior to the pan-American conference in Lima, and the unilateral agreement for compensation negotiated by Sinclair Oil in April 1940, further weakened the position of the larger companies. Not without difficulties, the United States included an agreed-upon formula for limited compensation in a general settlement of claims against Mexico in November 1941; although the companies initially resisted this, there was little they could do about it given the administration's lack of sympathy. Strategic needs also dictated the British response, but here, in contrast, the overriding factor was the fear of this "nationalist contagion" spreading to other oil-producing countries such as Venezuela and Iran. The Petroleum Department in Whitehall was effectively a mouthpiece for the interests of Royal Dutch Shell, and the British ambassador in Mexico City, unlike his U.S. counterpart, was antagonistic rather than placatory towards the Cárdenas regime. The result was a boycott of Mexican oil exports and the rupture of diplomatic relations, harming other business interests and making British officials even more dependent on the U.S. government for support. The latter was never forthcoming; Welles and the State Department deliberately kept the British in the dark. In the broader interests of U.S.-U.K. cooperation, Britain restored diplomatic relations with Mexico in August 1941, taking matters out of the hands of the more myopic officials in the Petroleum Department and the Foreign Office, although it took until 1947 to agree to compensation.

This book originated in a Ph.D. thesis at the London School of Economics. It is very much a diplomatic history that remains tied to the narrative of the official documents. Wider contextual material is often lacking. Readers are assumed, for example, to know already about the precise relationship between Royal Dutch Shell and its Mexican Eagle associate, as well as the U.S.-Mexican agreements on oil in the 1920s. Since fear of nationalist contagion was so important in the British mind, one might have thought it worthwhile to consider what the same officials were minuting on the reports they received from Caracas as war approached. (They were, in fact, increasingly frustrated with Shell's failure to learn the lessons of Mexico.) And since Shell was so important in British governmental thinking, some analysis of the firm's corporate culture, strategic planning, and negotiating abilities might also have been appropriate. Though this is a solid study, its lack of attention to the broader questions it raises hampers its appeal to the general reader outside this area of...