Later, under the Obregón government, moves against the petroleum interests were made through the taxing power, under a decree to become effective July 1, 1921. The alleged purposes of the new regulation were to stabilize the world's oil market, to conserve the national resources, and to furnish funds with which the government could again begin payment of interest on the national debt. The rates of taxation were so high that they were alleged to be confiscatory.
As the negotiations for recognition of the Obregón government proceeded this question became bound up with the older controversy. The oil producing interests protested to the United States government that recognition should not be granted unless the alleged confiscatory program of the Mexican government, under whatever guise presented, should be abandoned.
On June 7, 1921, Secretary of State Hughes issued a statement outlining the fundamental position of the United States. It pointed out that the matter at issue was much more important than the question of the recognition of any particular government in Mexico and declared: [1]
- ↑ New York Times, June 8, 1921.
