(ate 013fr;ibe pre$#CAMBRIDGE . MASSACHUSETTS

U S . A

A PETROLEUM CAMP IN MEXICO

THE MEXICANPROBLEM

ByCLARENCE W. BARRON

WITH INTRODUCTION BYTALCOTT WILLIAMS, LL.D.

BOSTON AND NEW YORKHOUGHTON MIFFLIN COMPANY

(dtbe tliberfibe lDres# Eambrihge1917

COPYRIGHT, 1917, BY CLARENCE W. BARRON

ALL RIGHTS RESERVED

Published July lgi7

"A AMERICA LOCA"By SANTOS CHOCANO

Peruvian, and Colonel in the Constitutionalist Army in Mexico(Late 1913)

Peoples tumultuous. Feverish countrysides .Latin America, sunstruck and mad .

(Prehistoric)Empires decked in the pomp of the warrior, blinded with

luxury, deafened by sound,Stolid priests hacking out entrails and viscera - wild

sacrifices to Gods of the mound .Martinet masters who drag out the hours in low sensuali-

ties foreign to Love,Fatuous peoples all, like to their posts : heartless, whom

only their fancies can move .

(1520)Then arrives Spain with her cross and her sorrows, after

her centuries seven of strife .Phantomlike multitudes (fair gods on horses) lay waste

the Andes and strip them of life .Pizarro and Almagro cross their keen rapiers in fratricide

strife that runs on till to-day -Hernan Cortez in the arms of Marina, mingles two bloods

that are marked for decay .Offspring, a Gryphon ; futile, insane -Eagle of feather, and lion of mane .

Moorish depression comes out of the desert, clinging alltime to the strange Spanish horse.

Wailing, its sadness finds echo in Andes, mountains nowsilent and dumb with remorse .

vi

A AMERICA LOCABack of the priest and his furious ritual, Inquisitorial phan-

toms arise .Then, amid suffering, hunger and misery, flourishes Caste,

built on terror and lies .

(1580)Fray de las Casas by mad liberation loads on America

burdens more great ;Blood of the African now is commingled with that of the

Gryphon, the curse of the State .This new decadence gives flowers anaemic, rich in their

color, but odorless, stale ;Women inspiring but sensual agonies ; bards who in all

but their fantasies fail .

(1520-1810)Cycles of history reading like fairy tales ; viceregal bril-

liance of color and tone .0 the adventures of silvery eventides! Silken rope-ladder

and Moorish balcon -Falsest of vows given - furtivest coquetry - heads nod-

ding "Yes" to the tryst of the slayer -Swords sacrilegiously hiss from their sheathes in the very

Cathedral and break off the prayer .All the vile elegance, then of Don Juan -Piety, decency, sanity, gone .

(1810)Prophets, self-styled, raise the grito of Liberty . Over one

century, lost are their cries.

(1913)Comes, now, this meaningless, bloodletting orgy, from

which our Lord God turns his pitying eyes .Peoples tumultuous. Lands of hot fever.Latin America, sunstruck and mad.

FOREWORD

THIS old globe is now belted with battle, in thegreatest war that ever was or ever can be, tosettle the problem of the brotherhood of manand of nations .When the smoke shall have cleared away,

there will be a new day for the whole world, anda new meaning to Christian brotherhood, asthere will be a brotherhood of nations for thefirst time in human history .

In the future, national disorder must not beallowed anywhere in the world, for it leads tointernational disorder .

The idea that Mexico is a land to be exploitedby foreign princes passed away with Maximilian .The idea that it is to be exploited for the bene-fit of the United States must soon go by theboards, if it has not already gone .

What is wanted is a clear path to extend helpto Mexico - Mexico in its normal disorder,moral, social, financial, and political .

As a student of the war and human progress,I went to Mexico to study the oil situation. Icame back with something more important -

vni

FOREWORD

"The Mexican Problem ." Seeking its solution,where I had failed to find it in railroad, agricul-tural, or mining development, I found it in oil,because oil at the seacoast could give develop-ment from high wages without making suddenupset of the economic structure of the country .

The United States had the first Mexican prob-lem when it acquired from Mexico the PacificCoast. It found the solution in gold; "gold atfoot of tree," in the river-beds and banks andvalleys. Gold paid high wages to him who couldwash it out . It returned high wages for supplies .It invited roads across the continent, knittingthis old Mexican territory into civilization andthe Union .

The solution was Business with a big B . Agri-culture followed . Agriculture is not business .Agriculture is just existence . Business is ex-panding wages all around, - wages to labor,wages to capital ; incentive to labor to accumu-lation, to luxury - luxury of freedom in bodyand mind -freedom to move the body fromplace to place and exercise the mind by humantouch and contact !

Economic production is production in quan-tity. Exchange of surplus follows . This is com-merce. But the fruit of commerce must not be

FOREWORD ix

wholly sordid accumulation . There must befruitage and interchanged ideas and customs .There must follow mental development .

Man if alone on the ground is below the brute .He is slave to the soil, which will yield him foodonly by the sweat of his brow . Then he muststore it and cook it and clothe and shelter him-self. Nature clothes and shelters all other ani-mals and satisfies their taste with raw food .Why so cruel to man? Only to be kind .Man must work. God works; angels work ;

devils work. There is no redemption for man,there is no progress for man or woman, exceptby labor - labor of heart, mind and hand . La-bor of the hand must be first ; it purifies theblood coursing through brain and heart . Laborof the mind must follow that the hand may bedirected ; and labor of the heart must come inthat hand and mind, by commerce and thought,may rightly touch its fellow . Only thus mutu-ally can there be health, help, and progress .

No other animal has luxury, better food, orbetter shelter, whether there are thousands ormillions more. But man may have progress byevery other man. The more thousands the bet-ter each may be, and the more millions in hu-manity the greater and the more important the

x

FOREWORD

individual man . Negative this proposition andthe universe of man, of humanity, is ended .

All other animals in pairs, families, or groupsmay be independent ; men and likewise nationsnever can be . The chick chips its shell and in-stantly picks its food . Man must be led andtaught. Animals have instinct . Men are deniedit that they may know their fellow men .

Independence, individually and nationally, ispassing away. The inventions, the mechanism,the arts, for man's progress are all here . Theway is now open. Human slavery, serfdom,peonage, are passing. Democracy is rising. Thelast great struggle is on and fourteen nations andforty problems are in it . But it is all one, - hu-man freedom that man may know his fellow andthat mutual helpfulness may arise, individu-ally, collectively, nationally.

Independence Day must take on a new mean-ing. National independence is hereafter pos-sible only by national interdependence .

America was opened in the desire for mentalfreedom . Here was born political freedom, des-tined to encircle the world in little more than ahundred years . Here, too, were struck down theshackles from human hands laboring in slavery .From freedom of hand and mind America must

FOREWORD

xi

go forward, is going forward, in freedom, withheart pulsating for universal political freedom .Human liberty can be maintained on this

planet only by coordination of hand, of mind,of heart .

The heart of America is now expanding, east,west, and north ; Japan and Australia, west ;Canada and the British Isles to the north ;France, Italy, Russia, our Allies, east! Can weforget Mexico, our nearest brother south? Andshe has so much to give us ; fruit of the tropics,mineral and oil, wealth of a continent compressedinto an isthmus, capacity for the happy, health-ful, helpful labor of, not fifteen million, but fiftymillion people! And we so much to give her,the fruit of our political, social, mental, andmachinery progress ; our arts, chemistry, andfinancial and commercial systems! Of naturalwealth she has abundance . Of helping hands,kindly direction, and organization she has woe-ful need. And who is neighbor to him that hathneed ?

After studying on both sides of the Atlanticthe foundation causes for the war beginning in1914, I presented the economic truth in The Au-dacious War : tariff causes, desire for territory and

xu

FOREWORD

spheres of influence, dominion of overland andwater routes that trade might expand ; lack ofnational morality, and "The Will to Power ."I thought I knew and understood it all .

Late in 1916 I dropped in upon Dr . TalcottWilliams, as he spoke at the civic forum inBrookline.. Massachusetts . I wanted to get hismeasure and divine what line of talent he mightbe turning out at Columbia for financial jour-nalism. To my astonishment I got a new anglefrom which to view my own ignorance as to thecauses of modern wars . I had thought that,while economic conditions were basal under Ger-many's most audacious war and Russia's long-continued preparation for defense, certainly raceand religion were at the root of troubles in theBalkans, in Turkey, and the Far East . But hereagain was the everlasting "bread-and-butterproblem" or bread, even without butter, prob-lem .Dr. Williams showed from first-hand knowl-

edge, and fifty years' reflection thereon, thatour boasted Christian civilization, whatever itmight be in its endings, was in its beginningsthe disrupter of states and nations ; that wherevillages and communities in the Balkans, in Tur-key, in Africa, and in the Far East had existed

FOREWORD Kill

in comparative peace for centuries and had theirparchment records and title deeds older thanany in modern Europe, their whole economicbread-and-butter fabric had been upset by goods"made in Germany" ; cheaper manufacturesfrom Vienna ; the Armenian had let in the Chris-tian banker and out went the home-current waresto foreign markets, while back came the foreigngoods destroying local hand industries, with noeconomic substitution giving local employment.The Mohammedan traced the trade connectionand started to kill the Armenians, whose Chris-tian friends had taken away their livelihood .Vienna and Berlin goods also upset the businessbase in the Balkans . The people could not paythe Turkish tax exactions . On came the lash ; andGermany found profit in selling the guns thatresponded . The outside world opened Man-churia, and where peace had reigned for hun-dreds of years nobody had since been able tomaintain law or order . The Boxer Rebellion wasa similar economic protest .

There was only one possible remedy . The oldorder could not be put back . The nations mustunite and go forward. They must insure develop-ment by organization, capital, and modern ma-chinery, which could exist only with courts of

xiv

FOREWORD

justice enforcing laws, order, and contracts . Noother route was visible for either national or in-ternational peace .When the demand became emphatic that my

articles on Mexico, its oil fields, and its so-cial, political, and economic problems take bookform, I naturally turned to Dr . Williams to askif he would set this forth in a preface with theconclusions he had reached for the problemMexico presents to-day before the world .

C . W. BARRONBOSTON, July 4 1917

PREFACE

THESE articles on, the "Mexiean Problem," byMr. C. W. Barron, are to my mind a clearand wise economic picture of Mexico, beyondany others that I have read - and there is verylittle of the recent literature of Mexico whichI have not read or examined .

Not one so grasps the clear, strong fact thatMexico is a hell on earth because Mexico has nolaw, save here and there fdr the brief seasonthat some man keeps law and order to feed hisown ambition to be an irresponsible ruler andpossess present power and the possibility offuture wealth.

It is forty years, to a few weeks, since, as thecorrespondent of the New York Sun at Wash-ington, I walked of e night into the house of theMexican Minister at Washington, and told him- he had n't had the final news - that all wasover with Lerda, the new successor of Juarez,who had sent him to Washington, and that Diazwas in control. I saw once more the most bittersorrow, the most bitter pang of hopeless grief aman's face can mirror - despair for the future of

xvi PREFACE

one's own land . In my life I have seen this lookin the face of Hungarian, Italian, Pole, Cuban,through a long list of lands, down to a Mexicanon the day I write these lines .

In the forty years since I saw Senor Mariscalgrip the arms of his chair, his knuckles whiteningand his dark face turning a paling gray, I havenever in all the many pages I have written onMexico, and many another troubled land, had ashadow of doubt that Mexico would be whereMexico is to-day, as these letters tell, with car-tridges for currency, because my boyhood andthe dawning fact, thought, and writing which ledto journalism were passed in southern Turkeybetween the Tigris and Euphrates, where thegrim problem, which has wrapped the world inuniversal war, was at its beginning of the mani-fold hopes which have left but ashes .

I was a missionary's son and my father, theReverend W. F. Williams, sent forth by theA.B.C.F.M., had that unusual thing in a mis-sionary, an engineer's training with the knowl-edge of the mineralogist.. The wide world wasfull of the rosy belief that, as in the UnitedStates and in Europe west of the Vistula, theeconomic basis of life was visibly rising like anew continent of human cheer and happiness,

PREFACE

lifted by the forces of invention, steam power,and individual initiative, so all the world was torise in like manner and measure . When in ourlong rides over the mountains which rim Meso-potamia north and east, whose valleys feed itsboundary rivers, boy-like, I brought him a splitpebble of malachite, the rhomb of carbonateof iron, the shining black cubes of galena, theshort staple of a cotton boll borne breast high aswe camped by a rushing stream, and he workedout its possible water power, or I took lessons ata village loom -he was prophesying the eco-nomic expansion to come. I do no despite tohis flaming zeal for souls when I record that Inever saw his face beam as when he taught one ofhis converts how to make sulphuric acid with theunmined sulphur deposit of Mosul, and the marlimproved on the process in Ure's Dictionary,that compend of fifty years ago .

The copper and the lead, he pointed out to me,the oil which rainbowed some streams on what isnow the edge of the Kerkuk oil fields, are stillundeveloped. This convert's tiny plant wasstopped because it might lead to the easiermaking of explosives . But the good man's twosons are thriving business men - not in Mosulopposite Nineveh, but in Providence, Rhode

xviii

PREFACE

Island . My father's economic vision has nevertaken solid shape. Like visions, the world over,have been blasted. Why? Because economicdevelopment necessarily rests on courts thatenforce contracts and on order that makes sav-ings safe and provides better currency thancartridges, Mexico's popular legal tender to-day. Credits are only possible when contractsare enforced. Men will work with industryonly where wages and property are protected .See how Mr. Barron describes the fashion inwhich the brief and uncertain economic protec-tion of an American plant has turned the peoninto a steady oil-producer, self-directed, in agreat and complex plant.

If there are no courts that men can trust, therecan be no credits or contracts. If these are not,neither capital nor wages come . Once, in theseventeenth and eighteenth century, even for athird of the nineteenth century, before steam onsea and land swept space aside, it was possible inisolation for some industrial community to gatherstrength, as in islanded England or in early or-ganized France, and this development gavestrength and power to the English King's Benchwrit and to the French King's " Parlement."

Apart, China had, a century ago, a sound in-

PREFACE six

dustrial system, narrow but stable, with a popu-lation overcrowded on the coast, but possessingin the interior peace and comfort, as Abbe Huehas testified. Alone, this development mighthave gone on. When steam brought English andAmerican. competition, China would have reor-ganized its industrial system if it had had courtsand a judicial system possessing integrity and anefficient government to enforce judicial decrees ;but competition destroyed its industries, and theabsence of the foundation of all economic sys-tems, justice, prevented China from advancing .First, in the south of China, earliest affected byEuropean competition, came the Tai Ping Re-bellion, and the new European arms of precisiongave the central tyranny of the Manchu a newpower. Later, North China broke out in theBoxer revolt, economic in origin . For fifteenyears past, the interior has been aflame, risingfirst where the great rivers bring closer Europeantrade. China is to-day a derelict, a hulk adrifton the ocean of history, where it has weatheredso many storms, its industries, two centuriesago giving lessons to Europe, to-day deterio-rated or destroyed .

This is the history of all Asia and of all NorthAfrica, of much of Latin America . So long as the

xx

PREFACE

Turkish Sultan and the Moslem commonaltyhad the same arms, despotism could not go morethan so far. When the Turkish army, a centuryago, was new-armed and organized on the Euro-pean model, naught could stay the despotism ofConstantinople. The rugs of Anatolia and thewares of Kutaiyeh, ninety years ago the bestfaience of the West, have fallen from old stand-ards. So with the solid colors of Peking wares,and the porcelains of the interior . Persia in thelast fifty years has seen the art of four centuriescease as all its great caravan roads fell into dis-order and the caravans carried European goodsto the undoing of native industries unable todevelop for lack of courts .

This has been a world movement . The inexo-rable principle that you cannot build a sound eco-nomic structure unless credit and contracts aresustained by courts that can be trusted, worksas pitilessly as the attraction of gravitation onthe bowing wall and the tottering fence, thearch of untempered mortar and the door jambswhose sill is heaved by frost . Sixty years ago Isaw the process beginning in Turkey, first on thecoast, later in the interior . Thirty years ago Isaw the same forces at work in Morocco, in themediaeval capital of Fez, whose old Andalusian

PREFACE

xxi

potters and patterns were being ruined by Ger-man crockery .

Latin America has faced the same drasticpressure. A century ago all the world, whenCanning called a new world into being to redressthe balance of the old, looked to see the economicdevelopment of the revolted colonies of Spainand Portugal. Bad as Spanish administrationwas and relentless as was the censorship ofthe Inquisition, the printing-presses of Mexicoturned out, relative to the mechanic art of theday, better work two hundred years ago thanto-day. It is the older pottery of Mexico towhich one turns for the far-flung influence ofthe faience of Spain fashioned out of the lightvolcanic clays of Mexico . It is not the recentedifices of Mexico our architects study to giveus what we call "Mission" architecture . LetCourts be absent and justice dubious, and thesure end of the investment of $1,000,000,000which Mr. Barron sketches was predetermined .When "Boston people had great hopes of trafficin the Mexican Central line they built from ElPaso to connect with the City of Mexico," theywere themselves so familiar with the courts ofMassachusetts that they looked on the justicemen trust as a normal natural product of so-

xxu

PREFACE

ciety . They forgot that rails must rest on morethan rock ballast to be safe for profits .Cuba, under the Platt Amendment, is secure

and produces, year after year, a sugar crop nearlytreble the best of the Spanish past, with ris-ing wages because we insisted on order, courtsthat enforced contracts, and a sanitation whichexcluded pestilence. Economic prosperity, rail-roads that pay dividends, factories whose prod-ucts meet competition, and a growing popula-tion can only come where courts are justly trustedand enforce contracts ; when public health and alow death-rate maintain the vigor of the laborer,and his life, his property, and the schooling of hischildren are protected by a sound and efficient ad-ministration. Let these be absent and rule willbecome a gamble for power and money, men willbuy concessions first and protection for themlater, perennial disease will sap industry, and youcan neither secure capital from abroad nor pro-vide labor at home .

Japan, islanded and long able to shut out for-eign competition, first by a policy of general ex-clusion and later by adroit internal administra-tion, was able to reorganize its industries beforethey were sapped and destroyed . Its ruling classcreated a new judicial system which commanded

PREFACE

such respect that exterritoriality and its courtswere abolished at the opening of this century andnative and foreigner trusted to the same justice .In other Asiatic lands special consular courts givethe foreign merchant a standing advantage whichdestroys native credit and paralyzes native en-terprise. Japan is a signal proof of the way anAsiatic land, if it be for a season protected, canreorganize its industry and create stable condi-tions out of which a new system can come, safe-guarded and fostered by public order, courtscreating confidence, and efficient sanitation .

It is no answer to say that the Japanese havespecial powers and a personal aptitude . Ask anyman who knows the Far East as to the personalcredit of Chinese and Japanese . Compare Per-sian and Japanese art when both were at workunder similar conditions in the seventeenth cen-tury. I have known, boy and man, closely andintimately, a wide range of human beings . I havehad at my table and been honored by the closepersonal friendship of men black, yellow, red,white, and many shades between . The Near EastI know as do only those who speak its tongues,have known it in childhood, and mature years,read its literature, thrill to the genius of its va-rious arts, and have the open heart and mind for

xxiv

PREFACE

its faiths. At bottom, men are alike . Human be-ings make Humanity . Under like conditions, allact alike. Give any land and any race a fairchance and it will be as others and not otherwise .

But after old systems, industrial and econo-mic, are undermined and overthrown, this chancecan only come by building anew under protectedconditions. See how English courts are bringingIndia closer and closer to self-government . Wherewould Cuba be but for our aid? Give Mexicoprotection for order, courts, contracts, industries,and sanitation for a brief space, - one, two, orthree decades, and what is this span in the lifeof a nation? - and the splendid qualities of theMexican people would do the rest . Keep order,create courts, educate a generation, turn outtyphus and tropical diseases which scourge theMexican home (some of the worst maladies arenot tropical), and the courage, the loyalty, thepatient industry, the quick teachableness of theMexican can be trusted to maintain what it se-cures under tutelage, and to add to it .

Mexico is to-day like the great oil wells ofwhich Mr. Barron gives so vivid a picture, af athomless resource for the light and power of theworld, and needing only the mechanism whichwill enable it to set a thousand keels and ten

PREFACE

xxv

thousand wheels in motion and light millions ofhappy homes.

How can the necessary order, effective courts,and national sanitation be provided for suchgreat ends of justice?

The United States brought these things toCuba and see the result, peace and prosperitywithout annexation and with complete autono-mous independence for the Cuban people. Givethe Mexican people the same chance, the sameopportunity, a like period in which new institu-tions, new courts, new security, new sanitationcome into being, and Mexico will show the samemarvel of abounding progress .

The United States just a half-century agosaved Mexico from the foreign invader . To-dayMexico must be saved from the internal de-stroyer. One task was accomplished withoutinvasion. The other may be . Accomplished itmust be. Moral responsibilities know no bound-ary lines .

TALCOTT WILLIAMSCOLUMBIA UNIVERSITY

NEW YORK July 1, 1917

CONTENTS

I. THE CONTRAST .

. .

.

XII. DOHENY - LORD OF OIL

1

. NO

II. AMERICAN INTERESTS NO BASE OF DISORDER 15

III. BUSINESS AND NOT POLITICS CAN REDEEMMEXICO 27

IV. WHO SHALL HELP THE ENGULFED PEOPLE? 39

V. WHY No AID FOR MEXICO? . . . . 52

VI. THE FINANCIAL BENEFITS OF DISORDER . 60

VII. THE LAW OF COMPENSATION 67

VIII. THE "EFFECTIVOS" IN MEXICO 77

IX. OIL EXPANSION 86

X. PIONEER WORK FINISHED . . . . 94

XI. WHY THE PAN-AMERICAN COMPANY CONTROLSMEXICAN PETROLEUM104

ILLUSTRATIONS

A PETROLEUM CAMP IN MEXICO . . . Frontispiece

CLEARING JUNGLE FOR PETROLEUM CAMP . .

CHRISTMAS DAY AT EBANO. UNVEILING STATUE OFJUAREZ 94

THE GUSHER POTRERO 4, BEFORE BEING CAPPED . 36

STORAGE RESERVOIR AT POTRERO - 2,500,000 BAR-RELS .

.

20

48

SOME OF THE 55,000-BARREL STORAGE TANKS, MEXI-CAN EAGLE OIL COMPANY48

VIEW OF TUXPAN, SHOWING STORAGE TANKS ANDSTEAMER LOADING CARGO OF MEXICAN OIL FROMDEEP-SEA LOADING LINES

58

A BARBECUE WITH AMERICANS WAITING ON THEMEXICANS

.

HUASTECA PETROLEUM COMPANY SUPPLYING NATIVESWITH FOOD BROUGHT BY ITS TANKERS FROM THEUNITED STATES, DURING WAR TIMES IN MEXICO . 132

MAP SHOWING LANDS OF MEXICAN PETROLEUMCOMPANY At end of book

70

Two BRITISH DESTROYERS - ONE RUNNING ON COAL,THE OTHER ON OIL 88

PEON HOUSES BEFORE OIL DEVELOPMENT BEGAN 96

RESIDENCES OF PEONS 100

NEAR TRES HERMANOS 124

THE MEXICAN PROBLEMCHAPTER I

THE CONTRAST

APPEALS in behalf of Mexico have been beforethe people of the United States for more thanone generation .

Fifty years ago the appeals were from re-turned missionaries collecting money to helpspread truth and light before our fellow manand brother over our southern border .

Nearly forty years ago came the appeal forrailroads. The good people of the North, andespecially of New England, responded with mil-lions and declared : " We think the investmentwill be profitable, but we take pleasure in thethought that the railroads will be the best mis-sionaries. They will open opportunities for mu-tual and profitable development in trade, com-merce, mining, and manufacturing. There ismuch that we can do for Mexico, and muchthat she can do for us."

The nickels and dimes of my early savingsthat had not gone to the Mexican missionary in

2

THE MEXICAN PROBLEMresponse to Bishop Butler's heart-moving ap-peals were now taken from the savings bank andsubscribed for bonds of the Mexican Central andSonora Railways - the one to open up the greattableland of Mexico from El Paso to Mexico Cityand the other to carry the Atchison developmentof the Southwest to the beautiful mountain-locked port of Guaymas on the Gulf of California .Here opened vistas for New England capital andCalifornia enterprise down the Pacific Coast andthrough the heart of Mexico.

SOUTHERN CALIFORNIA AND MEXICO

In conjunction with Thomas Nickerson, thegreat pioneer builder of the Atchison and the rail-roads of Mexico, I journeyed to California ; and atSan Diego listened to one of the best addressesI ever heard, and from a man who never madeaddresses. Thomas Nickerson told the Chamberof Commerce at San Diego that he was not inagreement with the Southern and Central Pacificpeople whom he had visited in San Francisco andwho had declared that there was nothing in SanDiego or Southern California except invalids,"one-lungers," and bees, and that the onlyprospective traffic from the harbor of San Diegowas a few boxes of honey in the comb . Nicker-

SOUTHERN CALIFORNIA AND MEXICO 3

son declared his faith and the faith of the peopleof New England in the development of SouthernCalifornia and closed by saying that he was sureof one thing : that if the road did not pay, thepeople who had put in the money could afford tolose it .There was no such doubt regarding the rail-

roads of Mexico. In Mexico were mines withlong records of production, fertile soils, tropicalfruits, millions of people. In Southern Califor-nia there were no mines, few people, and onlysunshine and honey bees as a basis for Americanenterprise .

Although Thomas Nickerson was well along inyears, we took to the saddle and rode up throughTemecula Canon and the Temescal Valley overthe line of the proposed Southern California Rail-way and on to the irrigated gardens of Riverside,with not a house or habitation between thattown and the seacoast, although sheep grazedpeacefully in the broad valley of Temescal .

A few days later I was in Sonora, journeyingtoward Guaymas. We made " Uncle Thomas,"as we affectionately called him, a pallet of strawin the stable of the ranch of Jesus Maria, andthen outside, before we said good-night to thestars and rolled up back to back in our blankets

4

THE MEXICAN PROBLEM

on buffalo robes, I interrogated the engineers,not only concerning mines and mining history,but as to how they knew the volume of water thatmight one day, in Southern California, seek topass through that seventeen-mile narrow gorgeknown as the Temecula Canon. They explainedin detail how they determined the watershedarea in those hills and the probable rainfall andthen built the bridges and tracks at elevationsin the valley well above future waters .

DISASTER AND RECOVERY

Not long after our little party reached homethe rainy season began in Southern California,and the beautiful valley where the sheep hadbeen so peacefully grazing was a lake, severalfeet deep and twenty miles long ; out of whichroared through the Temecula Canon a river,twenty and forty feet deep, vomiting forth ties,spikes, rails, and bridges, as man's poison to becast forth upon the plains by the seacoast .

The California Southern Railroad was gone,but the energy of the white men who built it re-mained. More rails were ordered, a new loca-tion, or pass, through the mountains found, andto-day the Southern California is the bright gemof the great Atchison system .

GREAT EXPECTATIONS 5

In Sonora we shot blackbirds and jackrab-bits, where grasses waved high as cornfields andthe hills showed mineral values. The people atHermosillo and Guaymas welcomed us as open-ing for them and their country the opportunitiesof a broader civilization . The rails were alreadylaid for forty miles from Guaymas, which has aharbor more beautiful than California's GoldenGate.

GREAT EXPECTATIONSA few days later we went out on the Mexican

Central from El Paso to the end of the track,which was just then starting on its path towardthe City of Mexico, to lift this great land ofthe Aztecs and its people into fellowship andcommercial life with the "Big Brother" of theNorth. The future of Mexico seemed as clearas the sunshine, although Southern Californiaseemed a doubtful proposition .

Returning to Boston, I published as follows,February 15, 1882, thirty-five years ago :-

No one realizes what government, or the ab-sence of government, can do for a people untilhe sees Mexico, in comparison with the UnitedStates. Arizona and the Southwest, upon analmost waterless and comparatively barren soil,are prosperous from extensive grazing and min-

6

THE MEXICAN PROBLEM

ing interests, while Sonora, just across the bor-der, far richer in water and soil and mineral, hasslumbered for years, devastated by incursions ofIndians from the North, and then rent with in-ternal political dissensions, yet all the while hop-ing for the morrow to bring forth peace and pros-perity. No wonder the Mexicans love the wordmanana, for in to-morrow has lain their hope foryears. But Sonora and Mexico are rapidly pass-ing into a new day whence all that has been willbe as yesterday, and to-morrow will be brightwith promise .

The world now touches the sunshine ofSouthern California, eating its sun-kissedoranges, its sun-dried figs, its new seedless rai-sins, and the fruit of its alligator pear trees,transplanted from Mexico . Its deep valleys areraising the finest cotton ; its motor highwaysare jewels in the crown of a State promoting in-tercourse over wide reaches betwixt its peoples .

HONEY AND THISTLTr .S

The honey of human bee life is in California .In Mexico are yet the thistle, the nettle, andthe hornet, the prickly cactus, sheltering theserpent, the poisonous herb shading the centi-pede - and the political centipede .

I was surprised a few years ago to be notifiedthat the Mexican Central forty-year bonds, to

RESTRICTED BUSINESS

7

which I had so early subscribed, were comingdue. They had been scaled down from sevenper cent interest to five per cent, then to a lowerrate, and now whatever has succeeded them is awanderer in Europe with no return, and theproperty they are supposed to represent is slid-ing backward . Its rolling-stock goes into themire, and bandits tear up the rails, shooting thesoldiers of Carranza and looting and shootingthe native and foreign passengers .

Scarcely a day passes that reports do notreach my desk from personal and sometimesconfidential sources, of banditry, looting, andshooting, concerning which not a line can befound in the general press of the day . The al-most daily occurrences in Mexico would be sen-sational and call for glaring headlines if thehappenings were north of the Rio Grande; butnobody will buy a paper to read about lawless-ness in Mexico .

RESTRICTED BUSINESS

It is generally known that the copper minesand smelters are only partially operating in thenorth, that travel is nowhere safe in that country,and that only in the oil fields around Tampicoand south is there any real business progress .

8

THE MEXICAN PROBLEM

Even at Tampico every oil refinery has thisspring been closed down for a greater or lessnumber of days, interfering with oil suppliesnow so necessary in the world's progress throughwar.

It is difficult to place the blame as betweenI.W.W. agitators drawing pay from Germanagents and petty Mexico authorities, some ofwhom do and some of whom do not recognizeany national authority .Washington and Mexico City do not want

these disturbances reported ; nor do the businessinterests dependent upon American credit, andwhatever protection may be afforded Mexico, in-vite publicity concerning Mexican disturbances .

Ask any director or official of a foreign enter-prise in Mexico concerning the situation and hewill give evidence only behind locked doors orwith the understanding that his statements areconfidential and his company is not to be men-tioned. He knows that he is managing the prop-erty of others in a country where there is to-dayno constitution and no law ; but he dare not sayso publicly, for there are several alleged consti-tutions in Mexico, many alleged laws, and verymany decrees, and there is to-day the powerto suspend every constitution, law and decree .

A SIMPLE PROPOSITION

9

Taxation has become only a matter of pressureto get something from anybody who has it .

A SIMPLE PROPOSITION

Yet, aside from the question of order and jus-tice, Mexico is a simple proposition . The na-tional expenses are less than $100,000,000 Amer-ican gold, yet a little more than half must go tothe national defense . The revenues have beenbut seventy-five per cent of the expenses, andbecause it never had any credit it never piled upany outside debt. Diaz not only built up Mex-ican foreign trade from $15,000,000 Americangold to $9.50,000,000, but he built up the na-tional treasury from emptiness to $30,000,000American gold .More than thirty years ago John Bigelow

warned us that, notwithstanding the apparentpeace and prosperity in Mexico under Diaz, itwas a republic only in name, a slumbering vol-cano with a government by gunpowder only . Atthat time I refuted many of Mr. Bigelow's er-rors in his citation of facts, but history provedhis main indictment . The people of Mexico havenever had a chance, and the moment Diaz at-tempted to'broaden the governing base in Mexicohe was overthrown. The people have ever since

10

THE MEXICAN PROBLEMbeen ground between political and social theo-rists both in the United States and their owncountry .

There are seventeen million people in Mexico- ten million pure Aztecs, five million of par-tially Spanish origin, and two million pure Span-ish and other foreigners . Where formerly it wasestimated there were fifty thousand Americansthere are not now five thousand .

The fact that the Spanish invader married theAztec woman is not the curse of Mexico . Thecurse of Mexico is the faith that might makesright. Every schoolboy has heard the phrase"Conquest of Mexico ." The idea of conquests,nationally and individually, is so strongly rootedin the world that Europe is now bathed in bloodto uproot it .

THE RULE OF MIGHT

When Dr. Dernberg, formerly Colonial Min-ister in Germany, was in New York after thebreaking-out of the Great War, he tried to con-vince me of the injustice of denying to Germanythe right of conquest in foreign parts . He said :" What did England do a hundred years ago?What have they all done? Because Germanycomes late into the family of nations, are w*e to

GOVERNMENT BY JUSTICE

11

be denied our part in conquering the earth, in theacquisition of new territory, in colonial empire?"

The idea was so barbaric to my freeborn Amer-ican blood that I could only laugh at Dr. Dern-berg and refer him to the dark ages . Yet the onlyarmy in Europe that has ninety-nine per cent ofits soldiers able to read and write supports theright of conquest and territorial expansion . Havenot Paris and London within three years beenpromised as compensation to a fighting people,that they might possess them or hold for ransom?What is the difference when Villa promises lootas compensation to those who will attack underhis leadership? Sound government is by char-acter and not by intellect. The redemption ofMexico can never be accomplished by conquestor loot.

GOVERNMENT BY JUSTICE

India is taxing herself and fighting for Euro-pean justice because this alone has given hersecurity where before in a hundred years a hun-dred different dynasties rose up and attempt-ed rule by might. That country was redeemedonly when government by justice came in .

It is said that between 1821 and 1868 morethan fifty rulers attempted the government of

12

THE MEXICAN PROBLEM

Mexico. Mexico is too large a territory to behandled by legislative enactment from one city .Diaz himself never really ruled the whole of it .Mexico is largely composed of territories mis-named states . In these distant territories, of late,especially in the north, revolutions start and getunder way before they can be reached or dealtwith by the central authorities .A just and lawful government should be es-

tablished in the heart of Mexico with insuredsafe connection with the seacoast . From this,groups of states can be knitted in and distantparts should be treated as Mexican territoryuntil its people can be educated and trusted withlocal self-government and show capacity to dealwith the larger problems of nationality .

THE MEXICAN CHARACTER

At the present time the larger part of the goodpeople of Mexico are children who want to be indebt and at the same time care-free. They wantto work laughing. If they cannot laugh as theywork, fighting is the next best thing . They haveno other understanding of a revolution than thatit is a sporty lark . They are exactly in the stageof the American country boy who on attendinga new school must first find out who among the

DEBT AND CITIZENSHIP

13pupils can "lick the teacher ." If the teacher isthe stronger - sometimes by moral force andsometimes by brute force - there is order anddiscipline. But if the teacher enters a con-test and is downed, he is no longer head of thatschool and, if he is to remain, some "big boy "must keep law and order for him .

On many a hacienda in Mexico, and over manyyears, a skirmish, even with pistols, between themanager and his peon workers was regarded asa proper lark. If the manager got the better of it,the belligerents went peacefully back to workand everybody was happy because the boss hadsustained his position.

Mexico is not a difficult proposition when onceyou understand the Mexican character . He isthe same childlike, dependent, trusting fellowwhether at work, play, or revolution . He issimply in need of a strong helping hand .

DEBT AND CITIZENSHIP

The Mexican peon is not thirsting for land orrule. There never yet were twenty thousandvotes cast in Mexico for a president . The ballotwill not redeem the Mexican from the peonagesystem in which alone he has confidence . Sin-gular as it may appear, his independence and

14

THE MEXICAN PROBLEMhis self-respect he finds in this system . If youtry to give him financial independence, he isfearful and rebellious. He is afraid that you aregoing to discharge him ; that he will lose his jobwithout being transferred to another .

In brief a Mexican peon in agriculture, or on ahacienda, is a self-sold slave . He will not accu-mulate and spend his money . He must borrowof his employer and spend ; and when his moneyis gone he is contented and happy to work underdebt. But if you deny him credit or try to gethim out from under the debt system, he becomessuspicious, will not work, and loses his own self-respect ; you have not trusted him, you haveno confidence in him; you are not his realfriend, and he would like to be transferred withhis "account" to some other hacienda or em-ployer where his credit will be unquestioned .

While the peonage system may be the safetyof agricultural Mexico, it can never produce in-dependence, citizenship, and self-government .The redemption of Mexico must be from the

invasion of business, forcing upon the natives -the good people of Mexico - technical train-ing, higher wages, bank accounts, financial in-dependence, and the rights of citizenship andaccumulation .

CHAPTER II

AMERICAN INTERESTS NO BASE OF DISORDER

THE Mexican problem can be studied better atTampico than elsewhere in Mexico. Here thecivilization and business forces of Europe andAmerica have opened the jungle and the prairie,tapped the greatest oil basin in the world, har-nessed it, piped it to the Gulf coast, and herelight and enlightenment, work and wages, invitehuman development . Here is the Americanboom town of Mexico, grown to fifty thousandpopulation, with asphalt-paved streets, businessblocks, markets, and parks .

Here in turn the warring factions of Mexicofight for the privilege of protecting and taxingthe developing properties about Tampico . Herethe new order meets the old . The native Mexican,more than two-thirds the population of the coun-try, gladly accepts the extended helping hand .The Anglo-Saxon, the European and the

American, are welcome throughout Mexico ."Gringo" is only a border term .

What, then, is the Mexican problem?

16

THE MEXICAN PROBLEM

It is the problem of one civilization and oneorder, one rule and procedure, in contact withanother civilization, another order, procedureand morality .

A WORLD PROBLEM

This is the problem belting the world . It isthe problem of China, it is the problem inEgypt, it is the whole of the southern-easternquestion. It is the issue that blazes in northernEurope.

Here the issue is complicated because the on-coming order finds not only one but two civiliza-tions already in the field and more or less in con-flict for four hundred years .Governments in Europe are breaking up .

Governments in Mexico are one after anotherbreaking down; but the breakdown in Mexicohas no more relation in its causes to the UnitedStates than has the European war, as the factswhen ultimately presented before the Americanpeople must clearly demonstrate .

But it was not with any purpose to theorize onthe Mexican problem that the writer took a tripacross the country and the Gulf to Tampico andstudied the resources of Mexico in the Tampico-Tuxpan oil field to get the facts of the existing

THE AMERICAN PIONEER

17

situation and note the factors springing there-from related to American investments .

Tampico has a broader meaning in the Ameri-can investment field than is yet generally real-ized. The development of the gold fields of SouthAfrica has been important, not because of theSouth African war costing England $1,200,000,-000, but because the output of South Africangold affected the civilization and the economicand social order of the world .

Vera Cruz, Mexico City, and the west coast ofMexico are to-day as Mexican as ever - both inorder and disorder. But Tampico and Tuxpanare international and are basic in the economicand social progress of both Europe and America,and possibly of Asia.

Here is the British naval oil base . Here, beforethe war, were the German experts studying thefuture relations of German commerce to the oilsupply of the world, which later may center inMexico .

THE AMERICAN PIONEER

American pioneers, however, were first in thefield and American business talent and Americancapital have maintained leadership without gov-ernment invitation, support or even recognition .

18

THE MEXICAN PROBLEM

It is a popular misconception in the UnitedStates that the people of Mexico have been, are,or are about to be exploited in the interest of theStandard Oil refineries, the Guggenheim smelters,or the Hearst ranches . Nothing could be furtherfrom the facts as related to the present situation,although both in Texas and Mexico, StandardOil interests attempted years ago to arrest the oildevelopment.The wealth of the world is planetary wealth

until it is lifted by human discovery, humanforces, and human hands into human uses . Theagricultural wealth of the world giving food toman is from the sun through the soil by labor .The mineral and oil wealth of the world isby human discovery, engineering, machinery,finance, and complex forms of human labor . Al-most universally have the nations of the earthrecognized right by discovery in undergroundwealth, and thus invited its discovery and de-velopment .

Under the administration of President DiazMexico was opened to the outside world, whichwas invited to pour in its talent, money, and skillto lift to the surface the undeveloped resources ofthe country, teach the unskilled labor of the land,,and put Mexico, its people and its resources,

THE AMERICAN PIONEER

19

in the way of modern development and civili-zation .

What are now the oil fields of Mexico wereformerly the " bad lands " of the jungle and theplain. The black asphalt oozes softened the soiland enmeshed and swallowed up cattle, horses,and wild animals. They were in 1900, as theyhad been for nineteen hundred years, worse thanvalueless .Edward L. Doheny, American engineer-pros-

pector, miner, and pioneer developer in the oilfields of Los Angeles, California, was more thanmillionaire, and so also was his partner Can-field, when they entered Mexico in 1900 toprospect for petroleum . They were not freeboot-ers, seeking conquest or the exploitation ofpeople, laws, or government . They were lookingto do in Mexico what they had done in Califor-nia and with their own fortunes lift values of thisold planet to the surface, under Mexican laws,treaties, and customs and with the aid of Mexicanlabor. Diaz and Mexico had invited outside tal-ent and money; Boston money had built therailroad from Arizona to the port of Guaymas onthe Gulf of California and from El Paso to theCity of Mexico, with a branch to Tampico .Into the jungle from Tampico to Tuxpan

20

THE MEXICAN PROBLEM

went Doheny and Canfield by foot and on horse-back. They located the oil seepages. Theysought out the owners of the lands . First theybought 450,000 acres thirty-five miles west ofTampico and later 170,000 acres in various tractssouth toward Tuxpan. They paid from sixtycents per acre upward and astonished the Mexi-can people by the prices paid for such unproduc-tive lands . They were advised against such largeprices by the Mexican lawyers, landowners, andstatesmen .

But the Americans retorted that the price wasimmaterial if they found what they were after ;they would not hesitate or haggle. The Mexicansnamed their own terms, took the cash and de-livered title deeds running back through gener-ations, some titles making a heavy volume .

The Americans cleared the jungle and made ita ranch. They built blacksmith shops, ware-houses, water lines, and hospitals . They boredfor oil, developed the Mexican Petroleum Com-pany, and brought forth the biggest oil gush-ers in the world . Pipe lines and railways pre-ceded and followed the gushers . British, Dutch,Waters-Pierce, and some Standard Oil andSouthern Pacific interests came in, but theAmerican interests stand at the head .

CLEARING JUNGLE FOR PETROLEUM CAMP

NO DISPUTE WITH GOVERNMENT 21

NO DISPUTE WITH THE GOVERNMENT

Nowhere have these interests disputed withthe government, or refused their due taxes or co-operation with the local and national authorities .The only complaint against them was that theyraised wages from less than twenty cents a dayto a minimum of one dollar a day and madenative Mexicans into blacksmiths, carpenters,shipbuilders, and engineers at three dollars andfifty cents a day in gold .

It has been a new economic era . It has been adevelopment. It has not been a conquest or anexploitation either of peoples or of governments,and the same may be said of all the other inter-ests, British and American, in mining and inagriculture, in Mexico .

The fighting in Mexico has not been with orconcerning American or foreign interests . Thefighting has been between local factions, leadingfamilies, political parties, the ins and the outs .

The strife has been for the possession of thecitadel and the reins of government at MexicoCity. There has been danger to the Americaninterests only by reason of their location at timesbetween the conflicting forces, but neither theAmerican nor the foreign interests have so much

QQ

THE MEXICAN PROBLEM

as possessed arms for their own defense. Noguns are allowed on any of these oil propertiesnor are they desired. Their possession would bea menace, because they would be desired andfought for by the politically contending forcesand the roving bands that at times overrunMexico from north to south and east to west.

TAMPICO HARBOR

When a generation ago the Boston peopleploughed the railroad line from Atchison to SantaFe and across the great American desert intoCalifornia, they had great hopes of traffic fromthe Mexican Central line they built from ElPaso to connect with the City of Mexico, a thou-sand miles distant. They believed it would be agreat feeder to the Atchison.

In this they were disappointed, but they stillhad the courage to build a branch to Tampico,hoping therefrom to make a new port for the de-velopment of the interior of Mexico. They hadno thought of oil and no other thought than thewealth of the great high plateau in the center ofMexico.

For years the Atchison folders printed theMexican lines almost as their own . To-day onthe Atchison folders connections north even into

TAMPICO HARBOR

23

Canada may be traced, but Mexico is a foreigncountry upon which the railroads need not wastepaper in maps or time-tables. A thumb-nailcorner in the Santa Fe map shows Mexico, andon it from Mexico City to the Rio Grande on thecoast is a wilderness broken only by the harborof Tampico.

To all American lines meeting at El Paso thebusiness in and out of Mexico has been for morethan thirty years a disappointment .

It is now clear that the greatest developmentin Mexico may take place from the coast andthrough her oil wealth. From the Rio Grande toTampico the Gulf coast of Mexico is largely anunpenetrated jungle, rich in natural resourcesand capable of maintaining a population of manymillions.

Tampico harbor is simply the mouth of thePanuco River and the city is nine kilometers fromthe jetties, which defend the river mouth fromthe lashings of the Gulf waves. Tampico is ca-pable of indefinite development as a port . It hasa large water basin to the south and another tothe northwest, while from near the mouth of theriver runs a government canal almost due south,defended from the Gulf by a narrow strip of land .This Chijol Canal enters the great lagoon of

24

THE MEXICAN PROBLEMTamiahua, which is continued by another water-way near the coast almost to Tuxpan. There-fore, for almost the entire one hundred milesbetween Tampico and Tuxpan there is inlandwater transportation for barges and shallowsteamers just inside the coast line.Between the Chijol Canal and the Panuco

River are the termini of the Mexican Petroleumpipe lines " tank farm " and Tankville, withaltogether one hundred and three tanks, eachfilled with 55,000 barrels of oil . There is also astorage basin carrying more than 800,000 barrelsof oil. Here are the machine shops, carpentershops, and shipbuilding plant, piers that will au-tomatically load the largest steamers in a fewhours, and a topping plant to take the gasolene ordistillate from the crude oil . About ten per centof the oil is gasolene and its removal does notimpair the fuel qualities of the ninety per centremaining.

Here also on the east side of the river are theStandard Oil and Royal Dutch works and a re-finery and topping plant of the Mexican EagleCompany. On the other side of the river are thePierce Oil refinery, the railroad terminal, and amagnificent government wharf.

The mouth of the river is being dredged by co-

CHRISTMAS DAY AT EBANO. UNVEILING STATUE OF JUAREZ

PICTURESQUE EBANO

25

operation between the Carranza government incontrol at Tampico and the oil interests, morethan a dozen American companies cooperatingto advance the money, the same to be repaidfrom taxes on a part of the increase of their busi-ness. Under this arrangement the Mexican EagleCompany, Lord Cowdray's company, advancestwenty-five per cent and the Mexican PetroleumCompany thirty-three and one-third per cent .

PICTURESQUE EBANO

The first oil developments began at Ebano,thirty-five miles west on the railroad from Tam-pico. Here the Mexican Petroleum Company hasnow 450,000 acres bounded on the north by theTamesin River, and reaching almost down to thePanuco River, the general direction of which isparallel with the Tamesin River. Here is theheaviest oil, while as one goes south the oil islighter and increases in commercial value.

Ebano is one of the most picturesque townsin Mexico, an American creation, of Mexicanarchitecture, covering a beautiful mound risingnearly two hundred feet above the plain, now afertile ranch, the whole reminding one of thebeautiful Italian villages set on a hill ; butranch and hill were seventeen years ago a jungle

~s

THE MEXICAN PROBLEMthicket with no life but that of the panther, theserpent, the parrot, and all the other animal andbird life of the jungle .

From this point the National Railways ofMexico are furnished their fuel oil. With therailroads working at their capacity in a settledcountry they would be consuming twelve thou-sand barrels a day, but at present less than sixthousand barrels is taken and the proceeds arecredited on the company's tax bill. The tax isabout five cents per barrel for exported oil .

Until Mexico has settled down, it is not worthwhile to dwell upon the oil or agricultural wealthor the few millions here first invested, for thewells farther south are abundantly sufficient tofill four times the present pipe lines and fourtimes the available ocean tonnage .

CHAPTER III

BUSINESS AND NOT POLITICS CAN REDEEMMEXICO

THE United States can never take its proper atti-tude in cooperative democracy toward its sisterrepublic until two "popular, yet absolutely false,impressions of Mexico are removed . These popu-lar fallacies are : -

First, that the natural wealth of Mexico hasfurnished a base for contending business inter-ests from the United States to promote Mexicanquarrels .

Second, that the land question is at the bottomof the Mexican troubles .

The writer must frankly confess that for manyyears he believed these popular superstitions, andonly his recent trip into Mexico dissipated them .

The history of the Standard Oil Company aspopularly presented has been that of a record ofoil monopoly checked intermittently by courtsand legislatures, - a monopoly overriding indi-vidual and popular rights and promoting peaceor war for financial ends.

28

THE MEXICAN PROBLEM

Suspicions concerning the Standard Oil Com-pany in Mexico have been prevalent on bothsides of the Atlantic.

Many times the representatives of Americanoil interests at Mexico have been interrogated atWashington as to their relations with the Stand-ard Oil Company, and each time the response hasbeen emphatic that the Standard Oil Companywas neither openly nor secretly promoting the oildevelopment in Mexico or behind any importantindependent producing companies .

THE POSITION OF THE STANDARD OIL COMPANY

The fact is that the Standard Oil Companyhas aimed at a monopoly of markets, a monopolyof transportation, and a monopoly of refining . Ithas always avoided ownership in the producingfield . The late H. H . Rogers used to declare thatthe Standard Oil Company wanted no more thanan eighty-five per cent monopoly in oil ; but thatits fifteen per cent interest in the productionwas more than it desired in that line . TheStandard Oil Company has prospected or minedfor oil only where others could not be inducedto take the risk. The hazard of mining theStandard Oil Company has always endeavoredto avoid .

STANDARD OIL COMPANY

29

The Amalgamated Copper Company was afailure under Mr. Rogers because he was not aminer and hesitated to take a miner's risk inopening the Butte copper district at depth .

The men who opened the Mexican oil terri-tory were prospectors and miners and neversought the manufacturing or distribution endsof the business . Even to-day E . L. Doheny bothin California and in Mexico declares he prefersthe profits of production on a large scale to thedetails of manufacturing or the business of re-tailing, which he regards as distinct fields fromoil production .

The Standard Oil people are buyers of oil atTampico and are building a refining plant thereto become larger buyers of oil, and they havesome producing interests south of Tuxpan . ThePierce Oil Company also has a refinery at Tam-pico and the British, or Lord Cowdray, interestsship from both Tampico and Tuxpan and re-fine at Tampico and Tehuantepec .

The Mexican Petroleum Company is the larg-est producing interest in Mexico, with a presentproduction of fifty-five thousand barrels per day .The Cowdray interests are second with aboutthirty thousand barrels a day on present re-stricted shipping facilities. Other interests rep-

30

THE MEXICAN PROBLEMresented at Tampico are the Pierce Oil Companyand the Royal Dutch or Shell interests andthe Standard Oil Company of New Jersey . Theoutlook is that the Shell interests will soon bethe third largest producers . But the major in-terests of the Pierce Oil Company and the Stand-ard Oil companies here are in the refining of oil .

A WORLD MAGNET IN MEXICO

It is because of these interests, American andEuropean, in the Tampico field, both as pro-ducers and refiners, and because such evidencesof underground wealth can command the capitalof both Europe and America and because petro-leum fuel is working revolutions on both landand sea, that the development, the regeneration,and the hope of Mexico and of the Mexicanpeople must have their base at Tampico, andnot in the commerce of Vera Cruz or the inlandproductions of Mexico, mineral or agricultural .

No redivision of lands in Mexico, no partitionof haciendas or ranches, can solve the problemsof Mexico or bring her forward to the positionshe is entitled to occupy by reason of her naturalwealth and millions of human hands ready forwork .

Land is cheap in Mexico and is to be had

A WORLD MAGNET IN MEXICO 31

almost for the asking, but of what use is anacre or a hundred acres to a peasant withoutplough, animal power, or machinery, and, aboveall, without transportation or near-by markets?

In the oil regions of California, rich in soil andmarkets, the underground wealth is reckoned atjust twenty times the value of the soil wealth .

From Tampico to Tuxpan is a tropical junglebut not, as often assumed, a miasmatic marsh .It is a jungle of luxurious foliage over soil thatcan grow anything in the world ; but where arethe markets and where the incentives for thenative population to labor?

The beginnings of markets, the beginnings oftransportation, the beginnings of incentive, thebeginnings of accumulation, are in the uncover-ing of large natural or planetary wealth. Out-side capital will take the risk for the prize, willemploy the labor, will create the transportation,the markets, and the interchange of commoditiesthat make foundations for modern civilization .Natural wealth outside the path of developmenthas no value. The Mexican petroleum fieldshad absolutely no value in 1900 and, undevel-oped, will have the same value in two thousandyears that they had two thousand years ago .

To him who would study fundamentals, the

SQ

THE MEXICAN PROBLEM

future of Mexico is already on the map atTampico because there is here exactly whatEuropean and American civilization are de-manding for the world's progress, and whatevercomes, whether the development is by GreatBritain or Germany or by North or South Amer-ica, the wealth that thence can give light andpower to the world will never be surrenderedback to the chemistry of Mother Earth .

The writer traveled thirty-five miles west intothe oil fields and ninety miles south : beside par-allel pipe lines carrying oil, gas, and water; vis-ited the terminals, machine shops, carpentershops, tanks, reservoirs, and shipping wharves,and saw the Mexicans with work and wagesnever dreamed of half a generation ago .

THE CONTRAST

Boston people put the Mexican Central Rail-road into Tampico more than thirty years ago,and between that railroad and the banks of thePanuco River are still the half-naked Mexicanbabies, the wan mothers, the listless boys andgirls, without opportunity, and the fathers with-out ambition to keep in repair the roofs of theirlow huts .

A dug-out cedar log for a canoe with a red

FAITHFUL MEXICANS

33

blanket for a sail is picturesque, but not indus-trially expansive. The fishing is good, and exist-ence calls for but little energy . On the other sideof the river are well-dressed Mexican familieswith comfortable homes, pure water, electriclights, moving pictures, wages, and opportunityfor more. There are great possibilities of savingsin these wages and of personal developmenttherefrom ; but throughout all Mexico there isnot yet a savings bank.

The Mexicans are good workers when toolsand instruction come to their hand. So far asoperated, the railroad lines of the country andthe railroad repair shops are manned entirely byMexicans. There are several independent Tam-pico shipbuilding and repair yards all owned andoperated by Mexican graduates from the repairplants of the Mexican Petroleum Company onthe other side of the river .

FAITHFUL MEXICANS

When in 1913 all the Americans were calledout of Mexico, the native employees of theMexican Petroleum Company, who had beenassisting in the pumping stations and in theshops, saw to it that never a stroke was missed,nor was there a barrel less oil produced, nor any

34

THE MEXICAN PROBLEM

damage or harm to the company's propertyentrusted entirely to its own faithful Mexicanworkmen.

When in June, 1916, the military governor ofTampico declared war on the United States andthe Mexican Petroleum Company took out ninehundred Americans on two oil steamship carriersand the yacht Casiana, again the pumps nevermissed a stroke and the Mexican employees inabout ten days put 461,000 barrels of oil in thetanks and also loaded two steamers for export ;nor was there any thought of interference or ofattack upon the property .

Superintendent Green declared that after suchfaithfulness the Mexicans should continue torun the pumps and the machinery .

It is no wonder, therefore, that the party ofAmericans visiting Tampico in March, 1917,were everywhere welcomed with smiles or that aMexican youth in sandals, mistaking the writerfor a company manager, applied in Spanish forwork, declaring that he had a wife and babiesand that he needed food and clothing .

That is the need of Mexico to-day - oppor-tunity to labor, opportunity for the family, op-portunity for food, clothing, better shelter, andbetter social conditions .

INTO THE JUNGLE

35

And this is exactly what American and Euro-pean capital and organization have brought toTampico, attracted by its underground wealth,and this is what will ultimately redeem Mexicoand forward her people by industrial oppor-tunity .

INTO THE JUNGLENowhere in the tropics can one make a more

interesting trip than to take a swift launch or alazy stern-wheel barge and at daybreak stir theflying-fish and the jungle parrots of the ChijolCanal, pass on through shallow Tamiahua Lake,where the waterfowls before their migration maybe seen spread out in all directions for twentymiles, note the electric light of the oil pumpingstations, contrasting with the distant dark moun-tain peaks, and glimpse through the jungle thecleared hillside fields where the British oil in-terests, represented by Lord Cowdray, haveplanted the mark of English thoroughness infield and building construction .

The water trip now terminates sixty milessouth at San Geronimo, but later may reachTuxpan, forty miles beyond . Here at a smallinlet dividing the British and American develop-ments you mount motor handcars and fly like

86

THE MEXICAN PROBLEM

the wind through the canebrake and the bambooof the jungle up hill and down and around sharpcurves. Before you can get your breath you areamid the oil derricks of several American andEnglish companies drilling on their border linesas in Texas and California.

But here the contests between contending in-terests must be sharper, for no man knows in thiscountry to what extent at two thousand feet indepth a neighboring oil well may exhaust hisland .The Mexican Petroleum Company would ap-

pear to have the advantage at this point, as noother American company has yet a pipe line .

MEXICAN GUSHERSPausing before Chinampa Number 1, the oil

was found bubbling up around the drill, andorders were given by Mr . Doheny to entertainthe American party if possible on the return tripin the afternoon with the bringing in of the well .A few more strokes on the drill and the gas andoil bubbled higher, but it did not flow that day .

In this entire territory there is no pumping ofwells as in California . Every well flows or gushes .Two days later, or Friday, March 16, Chin-ampa Number 1 "came in" and flowed for two

THE GUSHER POTRERO 4, BEFORE BEING CAPPED

MEXICAN GUSHERS

87and a half minutes over the crown pulley, eighty-two feet high. Then they shunted the flow intothe pipe line and the later report was ten thou-sand barrels per day from this well, with expec-tation that she would later "drill herself in ."This means that when cleared for action shemight be a third great ;well for the MexicanPetroleum Company with capacity of severaltimes ten thousand barrels per day .

As this is the one well in competitive territory,the supply at other wells of this company mustbe still further shut in to permit full flow here .

On the hilltop, high above the surroundingcountry, blaze day and night twelve gigantic gasflames relieving the pressure on the famousCasiano well of the Mexican Petroleum Com-pany which is in the valley beyond, with beauti-ful surrounding hills, and probably geologicallyisolated in this oil country .

You climb in and out of this valley by teamor in saddle and a clearer picture one would gofar to see - cultivated fields, neat houses, pump-ing machinery moving like clock-work, but setin a tropical fruit and flower garden .

"Casiano Number 7" came in September 10,1910, at seventy-five thousand to eighty thou-sand barrels a day and is now shut down to

38

THE MEXICAN PROBLEM

twenty-five thousand barrels a day under twohundred and sixty-five pounds pressure ; butmore than double this amount could be takenfrom the well were there shipping facilities fromTampico. "Casiano Number 6" was flowingfifteen thousand barrels a day when it wasclosed in a month before Number 7 came in .

It is possibly immaterial from which well theCasiano district is tapped, for no man knows towhat extent in this valley Number 7 is drawingfrom the territory of Number 6, as the geologyin these oil fields is not analogous to anythingelse known on the continent . Number 7 cannotbe shut in more closely without danger, for anyincreased restraint causes the ground to breakforth with oil a few hundred feet distant .

Nearly twenty miles farther south by the Mex-ican Petroleum Company's railway and pipe,water and gas lines is the greatest oil well in theworld to-day, - Cerro Azul, which means "bluehill," and which "blew in" February 9, 1916,and shot 1,400,000 barrels of oil into the airbefore it could be capped . One half of this wassaved by a quickly constructed reservoir . Thecolumn of oil measured six hundred feet, andwhen it was shut in the delivery was at the rateof more than 260,000 barrels per day.

CHAPTER IVWHO SHALL HELP THE ENGULFED PEOPLE?

WHEN you have traveled nearly twenty-fivehundred miles by land and water to reach atCerro Azul the greatest oil well in the world,you see in the jungle only a cleared field, nearthe center of which is a mound of earth nottwenty feet high, set against "mountains ofblue," and the only evidence of human interestis an ordinary pressure gauge embedded nearthe top of this earth mound .

But you stand on the top of this little moundand feel the pulsation of something almost hu-man beneath your feet - a crater of energy thattaxed the ingenuity of man for days to harnessit and cap down a gas and oil pressure measur-ing above one thousand pounds per square inch,and flowing oil at a rate equaling about onequarter of the oil production of the whole world .

POSSIBILITIES OF DEVELOPMENTOne can but reflect that the Almighty per-

mitted the tapping of his reservoirs of oil only

40

THE MEXICAN PROBLEM

when the whole world was coming into line toreceive the benefits .The City of Mexico is one hundred and sev-

enty miles distant southwest . With the coun-try at peace and holding the confidence of thecredit markets of the world, an easily con-structed pipe line could be delivering daily sev-eral million cubic feet of gas in Mexico City forwarmth, light and power to quickly obliteratethe ravages of internal wars . But there the twomillion dollar gas plant is shut down after losingone hundred thousand dollars a year for fouryears, and the threat comes from the Carranzagovernment that this plant will be confiscatedunless it is put in operation . Confidence withcredit is not commandeered overnight . Through-out the whole oil region, and for the safety ofthe country and its inhabitants, ten millioncubic feet of gas are daily burned in high flam-ing torches .

It is not what Mexico is now doing, but theworld possibilities in it, that one may see andpractically feel as he stands with his feet on theCerro Azul mound of earth and notes the forcebeneath that is delivering into the pipe linetwenty-five thousand barrels of oil per day and ispulsating to deliver ten times this amount .

OIL VERSUS COAL

41

The world now needs it as never before, andMexico needs, as never before, the outside helpthat this magnet of wealth can bring to it .

OIL VERSUS COAL

The English have thoroughly experimentedwith fuel oil and demonstrated that, used ina Diesel engine, one ton of oil, or 6.8 barrels,does the work of six tons of coal ; and the normalprice in England is about five dollars per tonfor each, although present war prices are nearlydouble. Burned under boilers three tons of oilequal six tons of coal .

The demonstration was clear that the Dieselengine ship can be operated at fifty per cent ofthe cost of the coal burner . The war has inter-rupted the conversion of the world's ocean ton-nage from coal to oil, but the future of oil onland and sea has been proved and can be seenfrom the pressure gauge on Cerro Azul ; andfrom the same point can be seen the redemptionand regeneration of Mexico, the moment abrotherly hand can be extended to her .England and Germany both see it, for in

these countries business and government worktogether for national development and the up-lift of the people. In time Mexico and the

42

THE MEXICAN PROBLEM

United States also should see it, and demandthat government and business cooperate andthat Mexico and the United States be mutuallyhelpful .

We have no right to strike down the govern-ments of Mexico one after another and refuseto the government and people financial, busi-ness, and political assistance .The only assistance the people of Mexico

have had from the United States has been busi-ness assistance in railroad, mining, and oil de-velopment.

THE GERMAN POSITION

Is it any wonder that Mexico reaches out fornational assistance, first to Japan and lastly toGermany? Since returning, I have had con-firmation from European sources of the reportthat two large deposits of German money havebeen made for the account of Carranza . Thisdoes not mean war upon the United States bythe people of Mexico .

It is difficult to predict regarding Germany .I saw the German war machine after Sedan andGravelotte . I visited the country a few yearsago and printed that Germany was preparingfor a European war and to strike both Russia

THE GERMAN POSITION

43

and France. Few Americans would believe it .I returned to Germany again in 1913, noted themilitary and financial measures, the decrees for-bidding any new enterprises, and then declaredthat Germany could not afford a world war .Germany got her war, but says England is toblame, because if England had declared her in-tention to come in, Germany would never havethrown down the gage of battle .

Although plans have miscarried, it shouldnot be forgotten that Germany is one vast busi-ness organization, intertwined with tariff, gov-ernment and military power. The Germanswere experting the Cerro Azul oil field and con-templated millions of investment therein beforethe war. It is good business for Germany togive Carranza financial assistance with a viewto a standing after the war. It would be poorbusiness for either Germany or Mexico to laythe gage of battle on the Rio Grande, forthereby the business aims of both would bedefeated .Germany looks ahead and wants business

after the war. Mexico needs financial assistanceand will need business development for manyyears to come .

44

THE MEXICAN PROBLEM

OUR GOVERNMENT'S WOBBLES

The United States has had no steady businessor political policy toward Mexico. It has been"Go in!" "Come out!" "Go back!" "Stayout!" The Washington declaration has been,"Down with the tariff and into the export field,"and when hands have been uplifted fromMexico, our nearest and most needy field forexport, Mr. Bryan has responded, "Why don'tyou stay at home?"

I heard it declared in Mexico, "Every Wilsonpolicy toward Mexico has been wrong . Neverhas the right thing been done at the right time ;but in extenuation of Mr. Wilson it must be ad-mitted that nobody can now say what wouldhave been the correct policy toward Mexico ."

The strong policy was when Evarts wrote toour Minister Foster in Mexico in August,1878 :-

The first duty of a government is to protect lifeand property. This is a paramount obligation .For this governments are instituted, and govern-ments neglecting or failing to perform it becomeworse than useless . This duty the government ofthe United States has determined to perform tothe extent of its power toward its citizens on theborder. It is not solicitous, it never has been,

THE WILSON REVERSE

45

about the methods or ways in which that protec-tion shall be accomplished, whether by formaltreaty stipulation, or by informal convention ;whether by the action ,of judicial tribunals orthat of military forces. Protection in fact toAmerican lives and property is the sole pointupon which the United States are tenacious .

This practical order from the United Statesenabled Diaz to keep the peace in Mexico forthirty years. He was able to tell his generals,"You will maintain order and protect life andproperty or somebody else will ."

THE WILSON REVERSEThen both Taft and Wilson, by words and

acts, reversed the Evarts policy . "As long asI am President, nobody shall interfere withthem," said Wilson at Indianapolis .The national government in Mexico became

powerless. Wilson's words were posted overMexico. It was "open season" for all who couldget the guns .Mr. Wilson announced that it would take

more than four hundred thousand men fromoutside to restore order .

I have reason to believe that the military re-port to Mr. Wilson was, "Four hundred thou-sand men cannot do it if directed from Wash-

46

THE MEXICAN PROBLEMington . But forty thousand men would be toomany if directed by the army officers alone ."

Having blundered in and out of Mexico, it isnow clearly the duty of the United States toreflect upon the situation and determine uponwhat basis it can extend a cooperative and effec-tive helping hand to that unhappy country .If we do not do it, somebody else will .

There is no possible reading of the MonroeDoctrine that forbids Germany or Englandmaking the business development of Mexico orrendering financial assistance to the Mexicangovernment and people . But when Mexico hasto turn from her natural guardian and protec-tor to European powers, the United States willbe deservedly "counted out," both north andsouth of the Panama Canal .

THE MAN WITH THE HOE

No country in the world needs closer rela-tions with the oil development of Mexico thanthe United States . The future demands notonly redemption of the Mexican man of thesoil, but the redemption of the American farmeras well .

Agriculture is basal in the world's progress .All industries, in both peace and war, rest upon

THE REDEMPTION OF AGRICULTURE 47

it. But "the man with the hoe" still indictsChristian civilization .

He has no eight-hour day; he competes withwomen and children who put no price on theirlabor ; his surplus products are dumped, almostas refuse, his milk to the milk contractor, hispotatoes to the starch factory . He has no stor-age for apples when, in an abundant season,they are not worth the price of the barrel .Heaven's sun itself appears to compete withhim. He has never been taught that there isonly one wealth for the farmer, and that is largestorage backed by broad acres, quickly culti-vated by machinery. His great machine, thehorse, for spring and fall ploughing, "eats hishead off " in an idle winter .

THE REDEMPTION OF AGRICULTURE

His redemption cannot come through the par-cel post or oil-smoothed roads for city motors,or by state and national agricultural bureaus .

The redemption of "the man with the hoe"will come through the gasolene motor that willplough spring and fall, cultivate all summer, chopwood in the winter, and not "eat its head off ."

The ambition of Henry Ford is a gasolenetractor within reach of the farmer. Success here

48

THE MEXICAN PROBLEM

would mean more for the world than all gaso-lene motor development to date .

It would solve the labor problem on the farm ;enable the individual farmer to hold broad acres,by quick cultivation and crops quickly stored .The result from such prosperity for the farmerwould be great stores of food, steadying pricesfor the world .The farm power, the food power, the sea

power, the world power, cry out for gasoleneand fuel oil. The Pennsylvania and Indiana oilfields are failing . California is exhausting pocketafter pocket. The great oil area of the worldto-day stretches from Kansas to Tehuantepec.The lightest oil is at both these extreme points .The appearance is that the great central reser-voirs are in the Mexican field .

Their conservation is a world-wide necessity .Their protection is the duty of all nations .

NO OIL SANDS IN MEXICO

Very few people in the world know the geolog-ical structure of these oil fields . No one in theworld to-day knows it perfectly . Nothing yetuncovered in . the United States resembles theunderground formation in Mexico . In Californiayou pump from well-defined areas of oil sands

STORAGE RESERVOIR AT POTRERO-2,500,000 BARRELS

SOME OF THE 55,000-BARREL STORAGE TANKS, MEXICAN EAGLEOIL COMPANY

THE DOS BOCAS CATASTROPHE 49two to three thousand feet deep . The porosityof oil sand is fourteen per cent, and those wellsdo not average two hundred barrels a day .

Yet there are no oil sands in Mexico. Abouttwo thousand feet below the level of the sea theoil drills strike the bed of ancient oceans andfrom coral reefs with sixty per cent of porosityspurt the greatest oil wells in the world. Nopipe line yet constructed has been able to re-ceive the full measure of one of these gushers .

South of Cerro Azul is the great Potrero oilwell of the Mexican Eagle or English company .It gives the entire forty thousand barrels perday that this company can export on presentshipping facilities, but this is not half its ca-pacity. Lord Cowdray is giving his whole timeto his country at the head of the British avia-tion department, so essential on land and seain winning the war, and his pipe lines and re-fineries work automatically on this coast . Whenthe war is over this field may compete for hisgreat organization and engineering talent .

THE DOS BOCAS CATASTROPHE

Above to the north, near the terminus of theMexican Petroleum Company's railroad at SanGeronimo, on the borders of the Tamiahua

50

THE MEXICAN PROBLEM

Lagoon, still rises a cloud of, steam from theruins of the famous oil well Dos Bocas .

Here, in 1909, came in unexpectedly theworld's greatest gusher . Through an eight-inchpipe line shot a column into the air fifteen hun-dred feet high by actual theodolite measure-ment; then the earth heaved and belched threehundred million barrels of liquid per day . Howmuch of it was oil nobody could say . The tor-rential flood reached the boiler fires and soonin place of that eight-inch pipe was a heaving,seething mass, one hundred acres in extent .Soldiers as well as civilians fought the flow andflames to restrict the area of damage, but formany nights Dos Bocas lit up sea and shorefor one hundred and fifty miles around .

THE HUMAN CATASTROPHEWas this an advanced flash picture of the

Mexico to follow? At Dos Bocas they workedeven to save the fish of the river and the lagoon ;but Mexico, abandoned by its friends and withnotice to everybody else to keep out, was tobecome a politically heaving mass, with Mexi-cans, Americans, and Chinese massacred in theMexican war flames .

China got promises . Americans, Germans,

THE HUMAN CATASTROPHE 51

and English filed claims and the strongest na-tions of the world filed theirs at Washington ;but where will the millions of the good peopleof Mexico who want work, wages, and humanprogress lodge their claims or cries?

I shall never forget the sincere, earnest em-phasis of Edward L. Doheny, controlling ownerin the Mexican Petroleum Company, as onMarch 16, 1917, he declared, on his yacht Casi-ana heading into the "northers" on the Gulf ofMexico : "I would sink all my interest on thiscoast ten thousand feet deep in the sea to givethe good people of Mexico right, justice, andfreedom in a modern system of civilization."

CHAPTER VWHY NO AID FOR MEXICO?

IT is difficult to interest the people of the UnitedStates in the sufferings of the people of Mexicowhen our sympathies and pocketbooks are en-gaged in behalf of five million men in the hospi-tals of Europe, six million in prison camps, andseven million war cripples, a total of eighteenmillion daily sufferers, all making the strongestappeals through war-relief movements organ-ized in the United States .

This is an appalling number of sick, maimed,and in prison, aggregating more than the totalpopulation of Mexico . There are forty millionmore headed in the same direction and behindthere must be two hundred million in sufferingfamilies .

This is the only explanation I can give for thedulled and deaf ears upon which fall the appealsin the name of humanity to give sympatheticaid to the people of Mexico now adrift in politi-cal, financial, and social seas with no chart orcompass and no directing voice except that of

THE NEW CONSTITUTION

53President Wilson, who declares, "They mustfight it out among themselves ."

GERMAN TROUBLES

Nobody in this country desires any militaryintervention in Mexico, and the only thing thatcan at the present time invite it would be theGerman activities. All governments and formsof government in Mexico must understand thedanger in this. German dynamite would domore damage to rulers and would-be rulers inMexico than it would to the military forces ofthe United States .

It is said that the new Carranza constitution,with its confiscatory measures, in effect May 1,1917, is primarily an attack upon Spanish, Brit-ish, French, and Belgian interests in Mexico andonly incidentally an attack upon the interestsof citizens of the United States in that country .

While the new constitution decrees that thereshall be no retroactive measures it declares thatall wealth beneath the surface, mineral and oil,is the property of the State .

THE NEW CONSTITUTIONThere are also provisions in the new consti-

tution dealing with the amounts of land any

54

THE MEXICAN PROBLEM

one individual or corporation may own . Noforeign corporation may acquire land or prop-erty or water rights within fifty kilometres ofthe seacoast or within one hundred kilometresof the border . Any outside corporation desir-ing to acquire property in Mexico must underthe new constitution renounce all foreign citi-zenship in relation to that property and agreeto be subject to the constitution and laws ofMexico without right of appeal .

It will thus be seen that under the new con-stitution the way is open for the reigning powersin Mexico to deal with foreign interests prettymuch as they please . There are unlimitedpowers of taxation, regulation, and of decreesconcerning ownership, and the penalty for non-compliance is confiscation .

The result to British, French, Belgian, UnitedStates, and all other foreign interests must besteadily exerted "pressure," and it may be as-sumed that this "pressure" will be exerted farenough to produce revenues and regulationslooking toward nationalization of present for-eign-owned properties .

WAR ALLIANCES

55

WAR ALLIANCES MAY HELP IN MEXICO

But self-interests or the law of self-preserva-tion will cause a halt when the "pressure" facesdanger in the powers of resistance .

The safety for foreign interests in the presentsituation is the entry of the United States intothe war as an ally of Great Britain. All theallies are, therefore, now joined in the protectionof the British naval oil base in Mexico .

General Joffre and that calmly poised, well-balanced brain of statesmanship in Balfour,with their military and economic associates, onthe soil of the United States, mean very muchfor Mexico . Joffre, the heart of France touch-ing the heart of America, and Balfour, the far-sighted, economic statesman, link the civiliza-tions of two continents in a way that means notonly peace for Europe, but peace for Mexico .

Balfour declared two years ago, when I wasin England : "The world needs industrial Ger-many ; that must not be crushed, but Prussianmilitarism must be blotted out that the trueGermany may live." This will soon be the sen-timent of the entire globe, and Mexico will notbe neglected in the enfolding arms of a futureuniversal peace.

56 THE MEXICAN PROBLEM

MEXICAN PRESSURE

How Mexico "is pressing foreign interests"is illustrated in a decree from Mexico City morethan doubling all the taxes on oil . The big Eng-lish company and the Oil Fields of Mexico Com-pany, incorporated in New Jersey, but sellingits oil to Lord Cowdray's concern, have each intheir concessions the promise of immunity fromexport tax for fifty years . They and all othercompanies are now paying about five cents perbarrel American gold as an export tax, and by na-tional decree must from May 1, 1917, pay abouteleven cents per barrel export tax, or nearlytwenty per cent of the gross value of the crudeoil as exported . The average price of exportedoil at the coast I figure is about sixty cents perbarrel. Many contracts are higher and manyare lower. Many interior oil wells would beglad to sell at ten cents per barrel to anybodywho would build a pipe line to them .

The decree also places an export tax of onecent a gallon on crude gasolene and of one half-cent a gallon on refined gasolene . Some of thelate contracts for export, notably those of theMexican Petroleum Company, have a provisothat the buyers under contract must pay anyincreased taxes .

THE PEACE OF CARRANZA

57

The British interests have paid their taxesunder protest and will probably continue so todo. This is another claim mounting up atMexico City and Washington, for it will be filedat both places .

THE PEACE OF CARRANZA

The claim is constantly made from MexicoCity that Carranza has quieted Mexico exceptin mountain regions or distant places and shouldhave financial support from the United States .Without desiring to make trouble, let me nar-rate some instances that refute this claim .

Riding on a flat car toward Cerro Azul inMarch, 1917, and within two hundred miles of theCity of Mexico, the telegraph poles were notedupon which, a few days preceding, the anti-Carranzistas had hanged six Indians in reprisalfor the raid of their tribe upon a village near by .The claim was that the Carranzista people hadgiven this Indian tribe arms and enabled themto raid, pillage, and burn the village of Amatlan,the ruins of which were visible on the mountainside as we passed on the railroad a few milesaway.

This apparently had been the largest nativecity or village between Tampico and Tuxpan .

S8

THE MEXICAN PROBLEM

I have never been able to find any account inthe papers of its destruction, but the report atthe railroad station was that Amatlan con-tained three hundred and fifty Mexican famil-ies, nearly of all whom perished . Those whowere not shot were burned in the firing of thevillage .

Yet on this trip I met only two soldiers andtwo rifles; one an anti-Carranzista guard at arailroad station, and the other a picturesqueanti-Carranzista general who rode with ourparty through the hills after we left the railroadtrain. It was said that he had associated withhim thousands of anti-Carranzistas .

When the government troops appear, therebels are just plain Mexican people with noarms and no organization . When the armydivides into small bodies, the plain Mexicanpeople are suddenly in the bush with plenty ofcartridges and the government soldiers are am-bushed or perhaps given opportunity to changesides .

Similarly, when the soldiers surround theopposition, the anti-Carranzistas are either re-cruited or shot. It is astonishing how manyMexican prisoners, when the question is asked,"Carranzista or anti-Carranzista?" will respond

VIEW OF TUXPAN, SHOWING STORAGE TANKS AND STEAMER LOADING CARGO OFMEXICAN OIL FROM DEEP-SEA LOADING LINES

THE PEACE OF CARRANZA 59

"anti-Carranzista" and receive their dose ofcold lead without a murmur. Those who respond"Carranzista" are handed a musket .

.In the latter part of April, 1917,1 received wordthat a personal friend of mine, the manager ofone of the oil companies in Mexico, had thatmonth had a terrible experience. He startedfrom the coast for the City of Mexico, goingfirst north to Monterey, as the southern rail-road route was interrupted by disorder. On themain line, and nearer Mexico City than thenorthern boundary, the escorted train was as-saulted by one hundred brigands, and thirty ofthe passengers and their defenders were killed .There can be no denial of my report. But Ihave again had the news records of this countrysearched only to find that no one has now anyinterest to gather or print such news.

Carranza is still appealing for financial helpnorth, south, east, and west when he should askthe military cooperation of the United States .

CHAPTER VI

THE FINANCIAL BENEFITS OF DISORDER

WASHINGTON notes, words, sentiments, and ac-tions have produced quicker results in Mexicothan in any other country in the world .

From various parts of Mexico, between theborder and Mexico City, comes word that sinceCongress voted billions of money for war ex-penditure and began plans for an enormousarmy, all the "generals" in Mexico have sud-denly become very polite to foreigners, espe-cially Americans . All the threatenings fromGerman sources in Mexico likewise suddenly be-come non-explosive .

There is one thing that talks in internationalrelationships and that is the loading up of theguns. It does not make any difference in whichdirection the guns are aimed . Uncle Sam hasnot a thought about Mexico at the present time ;his guns are all aimed for Germany . But for thefirst time all the Mexican generals and would-begenerals know that Uncle Sam has got a gun,has started to load it, and is putting so manymillions of men behind it that nobody can now

NATURE'S RESERVES

61

say with safety how much of a squint he maytake around the horizon when he gets reallyfighting mad in the interest of universal peace .

Meanwhile, it may be well to point out forfinancial interests the benefit to oil producersin that country of the American policy to dateof non-intervention and of general disorder .

The great oil gushers of Mexico are near thecoast. They are thus of world-wide value, butthere is no storage capacity in the world thatmight not be quickly exhausted by a full runfrom one of these gushers. The Mexican Petro-leum Company has storage for nine million bar-rels, and it is full. The Cowdray interests like-wise are full up to their six million storagecapacity .

NATURE'S RESERVES

Nature is wonderful in concealing her naturalresources until the world is prepared for them .Then it is discovered that she has all the whilebeen hanging out invitation signs for man to digand produce .

To-day, however, the world can see and scien-tifically figure the possibilities of both coal andoil exhaustion for all known sources of supplyon this planet .

69.

THE MEXICAN PROBLEM

When petroleum was first discovered in Penn-sylvania the rivers carried it to waste . Rocke-feller laid the foundation for the biggest fortunein the world by borrowing money to store oilwhen oil had no value but was running towaste .

But Rockefeller, seeking a new stomach tobear up the burden of his hundreds of millions,must trust to "experts" and to "expert" reportson Texas and Mexican oils. The result was thatTexas oils were officially condemned by theStandard Oil people upon expert testimony andthe oil gushing from Spindle Top sold be-low three cents a barrel, with few people havingthe Rockefeller courage to buy storage capacityfor it .

The popular superstition is that the StandardOil interest has sought to grab the oil wealth ofMexico. If any one, however, had outside keysto 9.6 Broadway, he could find therein threesuccessive "expert" reports condemning theearly samples of Mexican oil as fakes .

The Standard Oil chemists reported that theoil sent from Mexico could not be nature's com-pound ; somebody was attempting to imposeupon them by injecting gasolene and sulphurinto worthless bitumen or asphalt, but they

THE SHUT-IN OIL WELLS

63

had not been chemically combined and the fraudwas easily detectable.

Mexican asphaltum had no value and Mexicanoils as first discovered and analyzed were largelyMexican pitch or asphalt and were officiallydeclared good for neither kerosene nor gasolene .It was with difficulty that the railways of Mexicocould be induced to change their engines fromhigh-priced coal to cheap Mexican fuel oil .

THE SHUT-IN OIL WELLSWhen farther south the gasolene values of

Mexican oils were proven, the compound wasshown to be just another new one of MotherEarth with the gasolene and sulphur more de-tached. When the day of the oil gusher axrived,one can only conjecture the result to the worldhad there been tranquillity in Mexico and capitaland shipping easily available . It might havebeen the story over again of "ten thousand tonsof gold" to be dumped into the ocean to savethe investment base of the world.

To-day there is a proven daily capacity ofone million barrels of oil between Tampico andMexico City and there are neither pipe lines norships to take away one-sixth of it . A year's drill-ing would multiply the present drilled capacity,

64

THE MEXICAN PROBLEM

and with the high porosity in the "reefs" everyoil land owner would have to quickly drill hisboundaries for self-protection .

A few gushers might be in position to sell theiroil to a pipe line at three cents a barrel and makea million a year . It would be a wicked world-waste. The Tampico oil fields could equal thetotal production of the United States on aboutforty-eight hours' notice of facilities for stor-ing the product .

But Mexico, politically unsettled, with onlytwo pipe lines in operation, has her oil wealthconserved, and Lord Cowdray can report to theEnglish shareholders of the Mexican Eagle Com-pany that earnings are ten million dollars perannum Mexican gold, or five million dollars perannum United States gold; and the MexicanPetroleum Company can report to its Americanshareholders net earnings of about the sameamount - six millions for the $39,000,000 com-mon stock the past year .

THE SHUT-IN EARS

Always hoping for the best, I can see possiblebenefits arising from the "shut-in" policy forMexico - the shutting-in of its oil wells and theshutting-in of the ears of President Wilson to

THE SHUT-IN EARS

65

all appeals for help . The oil forces of naturehave been conserved not only in the interest ofworld development but of Mexico's slower andmore substantial progress .

President Wilson has so turned his back uponthe Mexican situation that his most intimatepolitical advisers will not mention the subject ofMexico in his presence . His mind appears tothem absolutely closed on the subject . There isno "watchful waiting" policy about it. Thatwas Mr. Bryan's phrase and policy .

When one looks at the flaming war fires inEurope, he may see a reason or a Providence inthe Wilson attitude toward Mexico .Mr. Wilson may have been better informed

concerning the seriousness of the European sit-uation than the public has been led to believe.The people who have had his confidence on thissubject have not had his confidence as respectsMexico, and it may be well doubted if any-body knows exactly Mr . Wilson's real positiontoward our suffering neighbor to the South .

There is just one American financial interestwith millions in Mexico that is in thoroughagreement with the Wilson policy, which is thatof news suppression and the quieting of all agita-tion concerning Mexican affairs . But I do not

66

THE MEXICAN PROBLEM

think it judicious at the present time to furtherenter that phase of the subject .

The United States can have no well-definedpolicy toward Mexico the public announcementof which would be helpful at the present time . Itshould be sufficient for one to reflect that theUnited States has girded on its armor in anAnglo-French alliance, the end of which cannotbe in sight while either two of these three greatnations remain alive .

CHAPTER VII

THE LAW OF COMPENSATION

THE problem of value with any investment isdetermined according to the aim of the manage-ment, otherwise the soul of the proprietor,owner, or manager.

An elephant and a jackass were born on thesame day in the same stable, drank from thesame spring of water, and ate from the samebale of hay. At the end of several years everyphysical fiber of each had come from the samewater and the same hay, but the elephant wasstill more of an elephant and the jackass moreof a jackass -because one was born with thesoul of an elephant and the other with the soulof a jackass .One of my newspaper associates was recently

en route from Winnipeg to meet me in Montreal ."What did you learn?"He replied : "I visited all the smoking-cars

en route to mingle with the people . They werejovial and light-hearted in the third-class smoker,but in the first-class smoker sullen, morose,

68

THE MEXICAN PROBLEM

thoughtful. I believe that of all my friends inWinnipeg the war has slain four out of five .

"In the first-class smoking compartment aCanadian asked : `What is the compensation toCanada for all her sacrifice?'

"And a British officer growled, `There is inthis world no compensation in sacrifice ."'

"Did you refute him?""How could I, with eighty per cent of my

friends in Winnipeg dead in the war and my ownmemories of a -struggle when as a youth of tento protect my school-books, snatched from myhand by a little negro girl, I rolled in blood anddirt, for she buried her teeth in my flesh to thecheek-bone, and I carry the scar to-day? Whatcompensation to me or to Canada?"

I had to respond : "I have never forgotten theslow, solemn words of Ralph Waldo Emerson inthe Old South Meeting-House at Boston, as hedrawled forth : `The Sandwich Islanders havea proverb that the strength of the slain entersinto the arm of the conqueror .'

"Was your arm weakened or your fightingsoul for right shrunken by your youthful com-bat? Did I not tell you two years ago that thewar had rejuvenated France and raised in her anew soul? Is she not to-day the proud treasure

CARTRIDGES ARE CURRENCY 69

of the world? There are many rich men in theUnited States who would like to swap theirmoney and position with the men of Englandwho have given up their fortunes in defense oftheir country but have found their souls ."The sum of human happiness to-day is

greater in the British empire united and at warfor liberty and humanity than ever before; andit will increase with the sacrifice ."

Then I went down into Mexico and studiedan empire of natural wealth and resources, buta nation that has never yet found its soul, or aflag which represents service to humanity .

CARTRIDGES ARE CURRENCY

When the Mexican soldier finds Carranzamoney will not buy food, he or his woman takesthe government cartridges and buys their provi-sions. Cartridges are currency in Mexico .

Zapata has maintained himself supreme in hisstate against six administrations in the City ofMexico and never imported arms or munitions .He holds a rich territory, the food of which canbuy the arms and cartridges of his opponents .

Seventeen million people on the richest min-eral territory of the world, that can grow any-thing in the world and produce food in abun-

70

THE MEXICAN PROBLEM

dance every month of the year, use their cart-ridges for currency; and their national soul cannever be born under that miserable motto of self-interest, " Mexico for the Mexicans," whichmeans Zapata for Zapata, Carranza for Car-ranza, Pelaez for Pelaez, Villa for Villa, untilevery part is for itself and nobody for the whole .

Returning north, I find Canada, seven mil-lion of people, on a soil that works only three orfour months of the year, sacrificing state andnational treasure to develop national transporta-tion, and until this war dependent upon foreigncredit, now summoning all her resources, not forCanada, which needs :no defense, but for civili-zation and the empire of which she is a part ;giving more than four hundred thousand of herbest men to the battle line and over a billion ofher treasure and earnings for the funds of war ;and men, women, and children working everypossible hour of the twenty-four .

Mexico is still seeking compensation for some-thing she never knew she had until Americanenterprise developed it and with it lifted herlabor toward modern civilization .

Canada, like France and Britain, has foundher soul, not in the motto, "Canada for theCanadians," but in Canada for world defense.

A BARBECUE WITH AMERICANS WAITING ON THE MEXICANS

OUR CRIME AGAINST MEXICO 71Canada is young but has the soul of an ele-

phant.Mexico will never be for the Mexicans or for

humanity until American and European enter-prise has had fair play in that country and beenpermitted to pay fair wages to her willing peoplewho are longing for light, enlightenment, andeducation. Without education leading to useful-ness there can be no patriotism .

OUR CRIME AGAINST MEXICO

Carranza is in a difficult situation . We of theUnited States have struck down all credit forMexico .

Had we deliberately gone about a diabolicalscheme to wreck a billion of foreign capital inMexico, to give forty thousand foreigners overto plunder, and to decree misery, poverty, andsorrow for more than fifteen million Mexi-cans, we could have conceived of no more effec-tive plan than that which we have executedtoward her without ever planning anythingagainst her .

Because the Guggenheim smelting interestscould make some millions of dollars more a yearwith peace in Mexico, nobody must speak aword for peace in Mexico, for the Guggenheims

72

THE MEXICAN PROBLEM

represent capital and the securities of their com-panies are in Wall Street. Because the StandardOil people with peace in Mexico might build pipelines therein and buy Mexican oil and makemoney refining it, it is better to have anarchy inMexico than that the Standard Oil Companyshould have any more capital, wealth, or earn-ings .

Therefore, Mexico must be cut asunder, Car-ranza must rule or tumble down in Mexico City ;Villa may overrun Chihuahua and even raidinto the United States ; Pelaez may govern inthe oil fields, Felix Diaz may operate from VeraCruz, Zapata may rule to the south of MexicoCity, and Cantu may run Lower California .

If we had meditated a diabolical plan to ruinMexico, and all the friends of Mexico, how suc-cessful would have been the most wicked machi-nation if it could have accomplished the presentdisunited and hopeless situation!

If Mexico had been permitted to be truly freeby an assisting hand from the United States,what a power to-day would be her food and min-eral resources in health and help for the wholeworld !

We have declared ourselves brother-keeper ofMexico and have imprisoned her; and as she

THE COMPENSATION OF LOOT 73

tears herself within her own prison walls, we stuffcotton in our ears and give her over to the I.W.Wand the crazy, illogical brains of such as LincolnSteffens.

With many of the richer states in Mexico cutoff from support to the central de facto govern-ment, where shall Carranza raise revenue to payhis soldiers and maintain law and order?

THE COMPENSATION OF LOOT

It is a mystery to everybody in and out ofMexico how Carranza can exist . I have very re-liable reports from abroad that some Germanmoney has come into his hands . Only recentlyhe took $38,000,000 Mexican silver from thebanks in Mexico City, and it was figured thatthis would last him only so many weeks andthat then Villa would again be raiding over thecountry. When Carranza has troops and money,Villa takes to the hills, but when the money isgone and his soldiers clamor for pay, Villa ap-pears on the scene and promises the compensa-tion of loot ; and our Mr. Wilson says that thesegood patriots, both of whom have been his allies,must fight it out as did our forefathers .

I wonder if Mr . Wilson's forefathers wouldreally have sat up on the top rail of a fence and

74

THE MEXICAN PROBLEMcheered on the Indian tribes against the Ameri-can pioneer bringing the white man's civilizationinto the jungle? Would they have called out,"Bully for you, old Puritan, over goes yourmeeting-house and some children in the flames!Buck up there, old Sioux, there are more scalpsfor you! more women to torture! more fields toburn! more plunder ahead! fight it out!"

Now, individual reader, please don't blameMr. Wilson; he represents you, calloused andhard to the sufferings of your neighbor, rejoicingin the sacrifice of your fathers and the prosperityof your present position. You have not and youdo not take any more interest in Mexico thanyou do in a famine in India . You think Mexicois a good joke on the Guggenheims, the StandardOil Company, and Wall Street, but when a longwar in Europe, where you are now to take theforefront of the battle, has softened your heartand the income taxes have come down to thesmallest savings, you will be less of an Indian,less of a savage, less of a Mexican, yourself . Youwill be more thoughtful, more tender of heart,and a more worthy son of the men who firstbrought freedom and true democratic govern-ment into the American jungle .

The pity about it all is that Mexico was

THE DUZ RECORD

75

brought so near to modern civilization underDiaz ; then an explosion and a political andsocial catastrophe, the like of which no man inor out of Mexico had ever dreamed! Yet I don'tbelieve there were ever two hundred thousandmen under arms in Mexico . As to any invasionby the Gringos, there were never fifty thousandAmericans in the whole of Mexico, and to-daythere are only about five thousand .

THE DIAZ RECORD

I first met Porfirio Diaz nearly forty years agowhen he was inviting New England capital intothe railroad development of Mexico. He ruledMexico with an iron hand and invited the capitalof the world into its development . His policynever varied. It was to promote in Mexico everyenterprise that would give his people opportu-nity for work, wages, and education. I havetalked with all interests that ever had to dealwith him and I have never heard a charge thathe had the taint of graft or personal ambition .Every business interest that ever appealed tohim for support found him fair and forceful forthe right .

I was pleased to learn on this trip to Mexicothat when he died, an exile in France, he was not

76

THE MEXICAN PROBLEM

the absentee ruler with treasured or hidden mil-lions at his command. He left seventy milliondollars in the Mexican government treasury, butdied a pauper, as befits an exiled patriot ; andhis funeral expenses were paid by sympatheticAmerican friends who still hope that the nativeblood of Mexico will produce more of his kind .

CHAPTER VIII

THE "EFFECTIVOS" IN MEXICO

NEITHER oil, mineral wealth, nor concentratedland ownership has been responsible for thebreak-up in Mexico . Outside capital and out-side engineers built first-class steel railroadsthroughout Mexico, opening up her natural re-sources to the world. Talent enough in Mexicohas been developed to operate them with fairefficiency when the rifle bullets are not ringingover the rails .

All attempts to give land on shares or in feesimple to natives who would cultivate it havebeen failures. The mineral resources have de-veloped a fine middle-type Mexican labor, com-petent to run stationary engines and do second-grade engineering work . But the Mexicans willnot work well under their own countrymen .Whether it is native jealousy or desire to learnfrom the Anglo-Saxon race, or whether it is thatinnate recognition, universal over the world, ofsuperior leadership, one cannot as yet clearlydeclare .

78

THE MEXICAN PROBLEM

THE MEN WITH THE " SWING " AND THE " BING"

I was surprised at the high type of Americansdirecting affairs in the oil fields . They are thebig fellows of the physical and mental stamp ofour pioneer western railroad builders . They lovethe life, the climate, the excitement and the op-portunity to do things in an expansive way .They must be quick, resourceful, and diplo-matic, and they are. The natives admiringlycall them the "effectivos"- the people who dothings .

One could readily see that Edward L. Dohenywas the driving force of the Mexican Petro-leum Company, and he is this whether on theAtlantic or the Pacific, in California or NewYork ; whether planning expansion at Tam-pico or expressing himself forcefully in MexicoCity.

Later I shall write of this remarkable Amer-ican pioneer, but at present I wish only tosay that he and John D. Rockefeller share incommon the one transcendent quality thatmakes a business strong and great. It is saidthat Rockefeller in his judgment of men neverselects a round peg for a square hole . His menalways fit their places. In this respect his judg-

THE " SWING " AND THE " BING " 79

ment is almost uncanny. Doheny shows thesame remarkable quality in his selection of men .Is there a new engineer just located somewhereon the work: Doheny must run across him, ask acouple of questions, learn the correct spelling ofhis name, and it is all over in two minutes. Hewill tell General Manager Wylie a little later theseven qualifications of that engineer and his twodeficiencies which are to be watched .

And Wylie is the man with the "go" and the"swing" and the "bing ." He inspires and firesthe whole line. His eye will detect a misplacedculvert on a railroad, a small leakage, or a largewastage. He knows his cost sheets in detail ; butDoheny knows the round result in every quarter .No long letters and no correspondence arewanted by these head men . Results only areasked for, and the correspondence is telegraphicat a cost of somewhere between ten thousandand twenty thousand dollars a year .

Americans are not born for position ; theymake them. The ambitious young man shouldseek his opportunity near the left-hand of power .The right-hand man of Wylie is Paddleford, buthe began on his left as physician . He demandedactivity and Wylie sent him down the line -" Flick is the boss driller, but you can help in

80

THE MEXICAN PROBLEMdetailed reports ." The result was Paddlefordas General Superintendent, building railroads,pipes lines, and pumping stations .

Captain Green, the local superintendent atTampico, is rightly titled . He was formerly withour army in the Philippines, where he masteredSpanish, and, therefore, in Mexico he can talktwo languages at once - polite Spanish to thecourt and officials, and forceful English at thesame time to the men under him . He is twohundred and fifty pounds of effective dynamiteand a jaw that means fight if necessary .

MINTING OILThe expanding part of the Mexican Petroleum

Company's property at the present time is thetopping plant at the Tampico terminal of thepipe line, said to be the largest topping plant inthe world . Smith, at the head of it, was formerlywith the Waters-Pierce refinery . He is severalinches over six feet and the Mexicans under himlook like children . Of the more than fifty thou-sand barrels produced daily half goes throughthe topping plant, which, without impairing thevalue of the oil fuel, takes a half-dollar's worth ofgasolene - wholesale price of distillate at Tam-pico - right out of the crude oil barrel and at

DINING OR REFINING

81ninety per cent profit . This plant should soonbe topping all the oil production . It is betterthan a gold mine so long as gasolene keeps upin price; it is a mine with the gold minted as aby-product. Yet the buyer who transports it,further refines it and makes distribution, getsalmost as much more out of it . Doheny believesin division as the proper way to attain results inaddition .

Nevertheless, the Mexican Petroleum Com-pany is completing a two-million-dollar refineryat New Orleans, which should soon be in opera-tion .

MINING OR REFINING

And, speaking of oil refining, my mind is stillworking over the problem of where the wealthfrom oil in the future is to be, whether from themining or the refining end .

The Standard Oil people, operating only inAmerican territory and desiring to mine onlyten or fifteen per cent of the oil they transportand refine, have taken in dividends, and createdin value, more than five billion dollars from thetransportation, refining, and marketing of oil .This is a sum five times our recent national debt .It is also the sum of the cost of prosecuting our

82

THE MEXICAN PROBLEM

Civil War. It would dig a dozen Panama Canals,and it represents more than one-third of thevalues that legislation has permitted to remainin the entire transportation system of the UnitedStates. But where are the "Coal Oil Johnnies,"the original diggers for oil and their early mil-lions?The Standard Oil Company made its mil-

lions where millions are always made, in materialservice to the widest number of consumers . The"independent producer in the United Statesformerly had one main customer . He never hadhalf a dozen people bidding for his oil. The pro-ducer of fuel oil to-day has the world for his cus-tomer so far as he can reach the world by pipelines or ships. Still his customer must be a refineror a fuel oil burner . But it is a wicked waste to-day to burn the unrefined crude oil from any oilfield in the world .

A forty-two gallon barrel of crude Mexican oilis worth only about sixty cents on the Gulf ofMexico. Ten per cent of it is gasolene and thereare many Mexican oils from which a good dealmore than ten per cent in gasolene can be taken .In the topping plant at Tampico it is separatedat a cost of less than one cent a gallon for thegasolene, and the wastage in handling this gallon

SHIPPING

83is only one-half of one per cent . Gas from the oilwells heats the oil to a temperature of threehundred and twenty-five degrees, and in thecondensation the gasolene is drawn off. Somecontracts with the Mexican Petroleum Com-pany have run below sixty cents, but the averagereceived at Tampico for a barrel of oil can bebrought up to above ninety cents by the toppingplant, which, when finished to top all the oil, willhave cost far less than one million dollars. Acrossthe river the Pierce Oil refinery takes in crudeoil from the Mexican Petroleum Company andgets two per cent in beautiful paraffin cakes . Inall there are thirty-five commercial products inpetroleum, and they sub-divide into many morecommercial uses .

There is a great future for Mexican oil in therefining business . There is yet more money nowin the transportation and refining and merchan-dising of Mexican oil than there is in the valueof the oil itself at the seaboard .

SHIPPING

The Mexican Petroleum Company has putmore than twenty millions in cash into devel-opment within Mexico, and with its majorityowner, the Pan-American Petroleum & Trans-

84

THE MEXICAN PROBLEM.port Company, will soon have a like sum inshipping. Building plans at present under waywill round out a fleet of twenty-two ships withtwo hundred thousand total tonnage, costingabout seventeen million dollars, and the wholecould be sold to-day, lock, stock, and barrel,completed and uncompleted, for a good dealmore than thirty million dollars . There are, be-sides, five chartered ships abroad promised forthe close of the war, bringing the fleet up totwenty-seven ships .

The Mexican Petroleum Company does notown its ocean-going oil carriers, but has put morethan three million dollars into refining andstorage plants in the United States.

Such is the demand for ships in oil transpor-tation that the Union Oil Company of Cali-fornia is relieving the situation by filling itsSouth American contracts at Tampico insteadof Southern California, as the Panama Canalso shortens the shipping distance.

DIVIDENDSThe demands upon the Mexican Petroleum

Company for expansion, for increased shippingfacilities, for storage, and for refining are so tre-mendous that in my judgment the stockholders

DIVIDENDS

85

ought to be fully informed of the rich possibilitiesbefore them and invited to forego all dividendsuntil these can be declared as Standard Oil divi-dends have always been declared - from over-flowing treasuries . Money in oil ships, oil refin-ing, and oil storage facilities will in the end returnto the patient holders from twenty-two to fiftyper cent per annum. When competition in trans-portation and refining has lowered this return,Mexican Petroleum stockholders should taketheir dividends . Meanwhile, the profits will beadded to the value of the shares. There is onlyone place in the world where a gold dollar isworth and is quotable at two gold dollars, andthat is in the treasury of a profitably expandingcompany.

CHAPTER IX

OIL EXPANSION

THE submarine, the aeroplane, the modern war-ship, the pleasure automobile, the motor truckand the oncoming farm tractor are all possibili-ties from petroleum development .

War is a tremendous consumer of oil and gaso-lene and is drawing down the stocks of oil aboveground throughout the world. War's demandhas doubled the retail price of gasolene this sideof the water and multiplied it three- and four-fold on the other side, where it is permitted to beused in peaceful pursuits only to a limited extentand under government regulation .

In England no oil is permitted to lay thedust on the highways . If you have official busi-ness, you are permitted a limited amount ofgasolene at seventy-five cents per gallon . Itshould thus be measurably clear that industrialdevelopment from oil is held back by the war .The world has use, outside the war area, for allthe oil that can be produced and transported fora long time after the arrival of peace .

Nevertheless, it may be useful to note a few

NAVAL OIL DEVELOPMENTS 87

facts concerning naval development under oilsupplies, because such development opens theway to tremendous merchant shipping develop-ments from oil after the war . Without fuel oil theUnited States government could never have de-signed for its first line battle cruisers a boiler in-stallation with one hundred and eighty thou-sand horse-power .

NAVAL OIL DEVELOPMENTS

The projected battle cruisers of the UnitedStates could not be reproduced if required to usecoal nor can they be remodeled for burning coal .

One of the modern monster war cruisers mayuse fourteen thousand barrels of oil in twenty-four hours. Although the United States Navyis now using but a million and a half barrels perannum, the estimate of the Navy Departmentis that it will be using nearly seven million bar-rels within six years . It was declared six monthsago at Westminster : "If we could describe whatthe recent push has meant in the way of petrol,it would stagger Parliament."

Assistant Secretary of Navy Roosevelt hasdeclared : "It may be set down as a definite con-clusion that the navy cannot revert to coal-burning vessels ."

88

THE MEXICAN PROBLEM

Fuel oil for the navy, he says, has given in-creased speed and cruising radius, control ofsmoke-screens, reduced fire-room forces byfifty-five per cent, increased the efficiency ofrefueling at sea twenty-five per cent, given abil-ity to sustain maximum speed for long periodsof time without clogging the furnaces, flexi-bility in speed, and finally greater safety fromsubmarines, as in modern American ships thefuel oil is disposed along the bottom to cushionthe blow of exploding torpedoes .

Considering this subject, the United Statesnaval consulting board has reported that "theMexican oil fields are probably the most ex-tensive deposit of oil anywhere in the westernhemisphere, if not in the world. To-day GreatBritain renews her oil fuel from Mexico, and isassured thereof only so long as she maintainsundisputed control of the seas ."

OIL STATIONS FOR SHIPS

Some economists and financiers figure thatthe development of the oil industry is measur-ably dependent upon the development of oilsupply stations throughout the world, notablyat the great shipping ports .

You may contract in London for annual sup-

TWO BRITISH DESTROYERS-ONE RUNNING ON COAL, THE OTHER ON OIL

EXPANSION IN MEXICO

89plies of coal at any shipping port in the world,and the price before the war was not far fromfive dollars per ton.

Coincident with the building of Diesel engineships must be the establishment of oil supplystations around the globe, so that steamshipowners and shipping agents may contract foroil supplies as they now contract for coal .

The Daniels idea of an oil base in Californiafor the United States is an absurdity . What iswanted for our navy is American commercial oilstations. No navy can use oil in amount com-parable with the uses of commerce, and onlycommerce can sustain oil stations around theglobe .

EXPANSION IN MEXICOBefore the European war the eyes of the world

outside of the United States were focused uponthe Panama Canal and the nearest oil basethereto for ships .

The United States has officially opened itseyes a bit to the question of oil for its navalships, and not long ago appropriated sixty thou-sand dollars to investigate fuel oil and gasolenefor naval requirements and naval storage ; butwhile the United States now is, and has been

90

THE MEXICAN PROBLEM

from the beginning, the biggest oil producer inthe world, nobody seems to have taken theslightest interest in building up a mercantilemarine for the United States on the basis of thecheapest and largest oil supplies on our side ofboth oceans .

While the British government announces inParliament that its mercantile shipping is withinfive or ten per cent of what it was at the begin-ning of the war, except so far as it is comman-deered for war service, and at the same timedeclares that its naval forces are so rapidly ex-panding that at the close of this war it will havea tonnage equaling the entire naval tonnage ofthe rest of the world, it is not unmindful of thefuture in its mercantile shipping, especially inrelation to improvements and developments inconnection with oil supplies .

While the British navy is probably takingtwenty thousand barrels a day from the Mexi-can Eagle Company, a British steamship com-pany is negotiating with the Mexican PetroleumCompany for a very considerable part of itsproduction in the future .The Mexican Petroleum Company may elect

to deliver the oil at Tampico or elsewherearound the world on six months' notice . Of

EXPANDING SHIPMENTS

91course no producing company would now con-tract to ship around the world . When peacerelieves the shipping situation, the developmentin oil shipping and in fuel oil ships will be tre-mendous .

EXPANDING SHIPMENTSThe Pan-American Company now has twelve

steamers working for the Mexican PetroleumCompany, and nine more are due this year .Six should be delivered this summer and tenthousand tons a month should be steadily addedto the company's shipping facilities . Threeships aggregating thirty-two thousand tons aredue next year .

The Union Oil Company has seven steamerstaking Mexican Petroleum Company oil throughthe Panama Canal to South America, and theStandard Oil Company of New Jersey has fiveships taking its oil north .In 1916 the Mexican Petroleum Company

produced 12,400,000 barrels of oil and sold10,600,000 for $8,825,000, or a little aboveeighty-three cents per barrel . The cost, includ-ing bond interest, taxes, and depreciation, wastwenty-five cents per barrel . The productionfor 1917 should equal fifty thousand barrels a

92

THE MEXICAN PROBLEM

day, or 18,250,000 barrels and it should realizenot far from one dollar per barrel .

If I were writing a financial article, I shouldimmediately figure that, deducting the intereston Mexican Petroleum eight per cent preferredstock, there should remain for the $40,000,000Mexican Petroleum common stock, and UnitedStates government war taxes, not far fromthirty per cent ; but as I am not writing a finan-cial article, but on the Mexican situation in gen-eral, I give the following as the best estimate Icould get in Tampico of the probable movementof Mexican Petroleum Company's oil in 1917 :-4,000,000 barrels to South America by the Union

Oil Company .3,000,000 barrels into New England .3,000,000 barrels to the Standard Oil Company of

New Jersey .2,500,000 barrels to the Magnolia Oil Company (a

Standard Oil subsidiary in Texas) .2,000,000 barrels to New Orleans and Florida .2,000,000 barrels to the Atlantic Refining Company .1,000,000 barrels to the Prudential Company .1,000,000 barrels in "tops ."

I give the above table to show the wide dis-tribution of this expanding company, whoseproduction is, in my judgment, only in its be-ginnings.

EXPANDING SHIPMENTS

93

The contracts for the "tops" or distillate callfor barrels of fifty-gallon capacity .To date the Mexican Petroleum Company has

produced about eighty million barrels of oil, ofwhich more than fifty-five million barrels havecome from the Casiano well at a pressure oftwo hundred and sixty-five pounds and withthe valve unchanged during the seven years ofits operation and the pressure undiminished-and Cerro Azul is younger and greater, but canbe more closely shut in .

CHAPTER X

PIONEER WORK FINISHED

THE expansion of the Mexican Petroleum Com-pany in its beginnings was by land acquisition .Such expansion may now be considered asended. Some people figure that more thanthree-quarters of the oil values in this Mexicanfield are under the Mexican Petroleum Com-pany's six hundred and twenty thousand acresand that they represent a potentiality of atleast five billion barrels in production, a sumten times the world's annual consumption . Butno man can set limits or boundaries upon thisoil territory .

Doheny truthfully says, "Geology is a jokein Mexico ; values are where you find them . . . ."And Doheny has led in finding values both inCalifornia and Mexico .

His first purchases in Mexico were in August,1900, although prospecting was begun by Do-heny and Canfield in the May and June pre-ceding. They were American pioneer inventorsand soon found a cheaper method of prospect-

EXPANDING ENGINEERING 95

ing than in crawling and cutting their waythrough the jungle . They announced theywould pay five pesos to anybody pointing outthe location of "tar spots ." They were inun-dated with "tar spots" and readily took leaseson thousands of acres . So pressing were theMexicans to realize money that royalties weresometimes paid several years in advance, andwhen they would no longer pay extended ad-vance royalties, titles were forced upon them .

EXPANDING ENGINEERINGThe same forces that engineered the construc-

tion are still engineering the company's expan-sion in and out of Mexico. How successful thisengineering has been to date may be illustratedby the fact that Manager Wylie estimated forthe first eight-inch pipe line a capacity of twelvethousand five hundred barrels a day, withpumping stations twenty miles apart . By put-ting the pumping stations fourteen miles apart,the pipe line capacity was advanced to twentythousand barrels a day ; then the pumping sta-tions were improved and the oil was a little thin-ner than expected and the eight-inch pipe line'was soon carrying thirty-five thousand barrels aday. But improvements and expansioncontinued .

96

THE MEXICAN PROBLEM

Now the two pipe lines carrying oil are de-livering seventy-five thousand barrels a dayat the Tampico terminal, and sixty thousandbarrels a day are being exported, along withmore than one hundred thousand barrels ofgasolene per month . Orders have just beengiven to burn oil at the pumping stations andthe topping plant, releasing the third pipe line,which is now used as a gas line, so that it canbe used to t ansport oil. This may bring thecompany's capacity for delivery at Tampico toabove one hundred thousand barrels per day .The engineering enterprise in the Mexican

Petroleum Company resembles the history ofour western railroad pioneers, who laid theirrails on the prairies in advance of the settlers .The Mexican Petroleum people actually hadthe audacity to build railroads and pipe linesin advance of their wells and upon the basisonly of the oil seepages .

A million and a half dollars went into thefirst pipe line and two million and a half dollarsinto the railroad and pipe lines to Cerro Azul,all in advance of any oil well .

When the great Casiano well came in, Sep-tember 11, 1910, a million and a half barrels ofoil had to be burned to keep it from the rivers,

PEON HOUSES BEFORE OIL DEVELOPMENT BEGAN

EXPANDING ENGINEERING 97

where it might have done incalculable damage,but the company's engineering forces put upfifty-five thousand barrel tanks at the rate ofone every four and a half days. Last year CerroAzul shot a million and a half barrels into theair before it could be controlled . But here againthe company's forces saved, by earth dams,more than half of this, and then for safetyburned the overflow. There is no evidence asto the number of oil gushers that may burstforth in the future, but knowledge of how tohandle them has increased .

And speaking of the standard fifty-five-thou-sand-barrel steel oil tanks, the reader may be in-terested to know that they are thirty feet highand one hundred and fifteen feet in diameter,are usually surrounded by an earth dam to savethe oil in case of accident, and have usually abottom valve through which the oil may bedrawn off if a bolt of lightning fires the tank .The Mexican Petroleum Company on its

thousand acres of ground at "Tankville" and atits Tampico terminal has one hundred and threeof these tanks, but the eye will meet them atalmost any railroad shipping point in the UnitedStates .

The first complete monthly shipments were

98

THE MEXICAN PROBLEM

in January, 1913, when two hundred and forty-seven thousand barrels left the wharf at Tam-pico. By October, 1916, the shipments hadreached eight hundred and ten thousand barrels .Now they are above a million and a half barrelsa month .

PIPE LINES, RAILROADS, MOTOR WAYS, ANDWATERWAYS

This American concern has nearly half thepipe-line mileage in the country. It has threeeight-inch pipe lines from Tampico to theCasiano well, sixty-five miles distant . Thencetwo eight-inch lines to Cerro Azul, twenty-twomiles, and an eighteen-mile line to Tres Her-manos, a total of two hundred and sixty-fourmiles. The oil is kept moving by seven pump-ing stations operated by gas from a line to theCasiano well, but the stations are equipped withoil-burning apparatus, now to be put in com-mission as already noted above . The oil gushesat such a temperature that it flows withoutreheating .There are one hundred and nineteen miles of

four- and six-inch water mains, and the com-pany is opening other water supplies .

Over these lines, well buried in the earth, runs

PIPE LINES AND RAILROADS 99

the company's fenced-in private motor road,for eighty miles, with surveyed right of way tothe Tuxpan River, one hundred and twenty-five miles in all .

There is no speed limit on a private line andthe company's officials claim their trucks andmotors do business over this road cheaper thanthe business could be handled on a railway; butbe it remembered this company makes its owngasolene of sixty-three specific gravity, at a costof less than a cent a gallon .

The company also parallels this highway mostof the distance, or to San Geronimo, by its ownmotor boat line and water route . From SanGeronimo south it operates a thirty-five milerailroad to Cerro Azul, and has nineteen milesfurther surveyed for construction . It has alsofive miles of standard gauge road at Ebano; butnot a passenger coach on any line . It is all busi-ness. The pleasurable way of travel in thiscountry is by the company's motor boats, forit has a very complete line of marine equipment,including the yacht Casiana, usually at handto take out all Americans when so ordered bythe United States or Mexican de facto govern-ments.The company has been as far-sighted and

100

THE MEXICAN PROBLEM

ahead of its rivals in its Tampico terminals as.in its oil land acquisitions . In tanks, storage,river-frontage shops, machinery, and loadingequipment it holds the ground and leadership .I figure it has more oil in pipe lines and storagethan it sold last year, and perhaps as much asits 1916 production - twelve million four hun-dred thousand barrels .

The great pioneer work of acquisition, pro-duction, construction, finance, and organizationhas been accomplished in seventeen years, andthe patient owner should reap handsome re-wards in the next seventeen years .

A CAUTION

But there is one caution I may give him, andthat is not to be alarmed concerning reportsfrom Mexico and Tampico, whence there isvery little reliable news in the despatches ofthe day. Indeed, the two worst informed coun-tries concerning each other's affairs are thosecountries lying either side of the Rio Grande .

The American hears little that is good or trueconcerning Mexico, and the Mexican hears littlethat is good or true concerning the UnitedStates. The governments of both countriesseem equally interested in suppressing the real

RESIDENCES OF PEONS

A CAUTION

101

news. All the foreigners interested in Mexicoand its development are afraid to speak con-cerning their properties or their operations forfear of misconstruction either at Washingtonor Mexico City, and harmless, inane, or weaklystupid news reports are allowed to pass censor-ship . We have all sorts of "frightful" Germanreports ; now it is Villa moving on Tampico and,as I write, comes the report that shipping istied up at Tampico by a strike of oil handlers .One would think, to read the press reports, thatthere was a similarity between the work of long-shoremen loading ships in New York harborand thousands of Mexicans loading oil ships atTampico .

I stood at the loading-station on the east sideof the Panuco River at the Mexican PetroleumCompany's terminal opposite Tampico and wit-nessed one of the big oil ships slowly draw upto the wharf for its load of oil . There must havebeen a very large party on the pier, for it con-sisted of myself, two Mexicans, and Dr . W. W.Hills and his wife . The doctor was explainingto me his remedies for resuscitating the men atCerro Azul when in the fumes of that gusherthe American engineers were working day andnight to shut in the torrent of oil, - how as fast

102

THE MEXICAN PROBLEM

as a man began to stagger he was grabbed bythe doctor's assistants and quickly dragged awayfrom the well so that the doctor might promptlyrestore him by gas antidotes, - and before hehad finished his explanation the two Mexicanshad moved a giant hose to the ship's side andthe ship was being filled by gravity from a tankon the hill, some fifteen hundred feet away .The next day the ship departed with her sixty-five-thousand-barrel load .

But what is the poor newsman to do with apress report when it arrives . It may or maynot be true. In this case there was no strike ofoil ship loaders, but for a few days there wastrouble and a labor strike at the Pierce Oil re-finery and at the Mexican Eagle refinery, butthe true news could not be given . Now, if youwere a newsman on the firing line, would yousend forth a report, if permitted, indicating de-lays in some oil shipments from Tampico, orwould you wait till order had been restored, thecensorship lifted and then telegraph a history ofno value?

NORMAL DISORDER

The point, however, I wish to make for in-vestment interests should be clear . Mexico as

NORMAL DISORDER

103

a country is not in a state of normal peace, butof normal disorder -disorder that has prevailedmore or less for a hundred years, except duringthe reign of Porfirio Diaz . Correct news reportsare not readily available, and the business in-vestor should know his risks, should understandthat he cannot be guided by newspaper reports,and should fully understand that Mexican valuesare selling at large discounts in the world mar-kets, but that in the end they will be properlydemonstrated and properly protected by Ameri-can or European interests, and will some daybe properly quoted .

CHAPTER XI

WHY THE PAN-AMERICAN COMPANY CONTROLSMEXICAN PETROLEUM

AMERICAN financial interests are now morekeenly alive than ever before as respects theirresponsibilities toward investors . The opening-up in Alaska of the greatest copper bonanza theworld has ever seen sent Kennecott Coppermining shares into the fifties and made a widedistribution . J . P. Morgan & Company and theirassociates might have been tempted to disposeof all their shares to the public and let the publictake the risk of a continuation of the bonanzaore, which could be mined and marketed at lessthan five cents per pound when it was being soldat above twenty-five cents a pound .

Morgan & Company, however, realized theirresponsibilities and sought insurance for Kenne-cott's future by acquisition of the Braden Coppermines of South America, which, when developed,will insure a large copper output at low cost, andalso by acquisition of more than one-third of theshares of the Utah Copper Company, the world's

CONTROL OF MEXICAN PETROLEUM 105

greatest copper mine, whether measured by out-put or by earnings. It is no longer consideredsound American finance for shareholders aspartners to run away from each other, especiallywhen the partners are the managing owners .The Mexican Petroleum Company has a bo-

nanza in Mexico, the life of which no man canlimit, but insurance of property in Mexico, andespecially insurance of stability in political,social, and government conditions would carrya high premium rate .Mr. Doheny believed the best way to attain

the desired insurance for an investment futurefor his associated interests in Mexican Petro-leum was to merge the control of the companyin a new organization, which could open up abroad base of oil production in California andsupply ships and shipping facilities for bothCalifornia and Mexican oil around the world.

It was also in contemplation at the time thePan-American Company was organized to makecombination with other oil companies that theiroil distribution might be combined . At present,however, the proposed union with the UnionOil Company, the Associated Oil Company, andother oil interests has been laid on the shelf, andthe Pan-American Company has started a very

106 THE MEXICAN PROBLEMextensive development in California, opening uptwo big properties there, the Bell Ranch often thousand acres and the Ojai Ranch of eightthousand acres .

THE INVESTMENT BASEWhile the Mexican Petroleum Company has

$12,000,000 non-cumulative eight per cent pre-ferred stock, about $40,000,000 of commonstock, and about $4,000,000 of bonded indebted-ness, the Pan-American Petroleum & TransportCompany is organized with a large outline forexpansion as occasion warrants .

It has outstanding $10,500,000 seven per centpreferred stock, convertible into common at therate of $115 par value for $100 par value of com-mon stock, but the amount of authorized pre-ferred stock is $25,000,000 . It has an authorizedcommon stock (par $50) of $125,000,000, but atpresent there is outstanding only $30,494,750.

The Pan-American Company is the part ofthe enterprise expanding by ocean transporta-tion, California development, etc ., and has in itstreasury seventy-five per cent of the eight percent preferred stock of the Mexican PetroleumCompany and forty-five per cent of the MexicanPetroleum Company's common stock.

THE PAN-AMERICAN IN CALIFORNIA 107

With its shipping interests it is in position topay dividends upon its common stock withoutwaiting for dividends upon Mexican Petroleumcommon. It will thus be seen that the invest-ment basis in this combined oil enterprise is inPan-American and the speculation is in MexicanPetroleum . Indeed, it is figured that for Mexi-can Petroleum to pay more dividends than Pan-American, Pan-American must first pay sixteenper cent, or eight dollars upon its fifty-dollarshares. There is present expectation that Pan-American will begin dividends upon its commonstock this year. The Pan-American Companyhas three sources of revenue and the MexicanPetroleum Company substantially one.

THE PAN-AMERICAN COMPANY IN CALIFORNIA

In southern California gasolene is used withgreat liberality. The broad state highways andasphaltum roads invite it . To visit the BellRanch of the Pan-American Company I took alittle motor trip of two hundred and sixty-fivemiles, going from Los Angeles to Los Alamos,which is on the Bell Ranch property, and backto Santa Barbara in a day. I learned that four-hundred-mile motor trips for a single day werenot uncommon in southern California. The

108

THE MEXICAN PROBLEM

ladies think nothing of going fifty or one hun-dred miles as a morning drive for a distant noonluncheon .

Doheny bought the Bell Ranch for $1,800,000and turned it over to the Pan-American Com-pany. Boston people previously had an optionon two thousand acres of this property at $1666per acre and forfeited on it . Doheny bought thewhole for less than the previous price of a part .This was the largest untouched oil propertyin the State of California . Derricks are beingerected here one thousand feet apart, or one der-rick to twenty-five acres . There are known to befour thousand acres of oil lands in the propertyand oil has been proven the full width at one end .The balance has not yet been proven . The wholeis two and a half to three miles wide and sevenand a half to eight and a quarter miles long .The Union Oil Company is on the west, theStandard Oil Company on the east, and on thenorth the Palmer Union brought in a fifteen-thousand-barrel gusher, for which, of course,they were unprepared, as gushers in Californiaare not common . They shut it in and later foundthat it had departed as a gusher. Most of theCalifornia oil is obtained by pumping . It isexpected that the wells here will do two hundred

CALIFORNIA OIL STATISTICS 109

barrels a day . Number 3 well was visited, whichis down twenty-nine hundred feet and is doingone hundred and fifty barrels a day. Elevenderricks have been started . Oil sands here haveabout fourteen per cent porosity. The UnionOil Company pays eighty-five cents per barrelon the ground for oil and takes it into its ownpipe line .

SOME CALIFORNIA OIL STATISTICS

The cost of a well and equipment here is fig-ured at fifteen thousand dollars, and at presentprices for oil it may net forty-five thousanddollars the first year. Figures have been madethat show possibilities of four hundred wellsdrilled on this property in two years to cost sixmillion dollars, but to earn three times this sumper annum. This would be more wells than wereever drilled on any one property in the State .

The Ojai Ranch, several miles farther south,cost about seven hundred and fifty thousanddollars. Oil was discovered in California in 1859,and Thomas A. Scott, of the Pennsylvania Rail-road, was interested in this property about 1865,but he was looking for kerosene, and the heavyoil found here was not then of value . Scott wasinterested in the first projected railroad from

110

THE MEXICAN PROBLEMSan Diego, and construction was begun there inthe sixties, but no rails were ever laid by thatrailroad enterprise. When the Boston peoplecame to build the Southern California road theyavoided litigation by keeping outside the oldScott right of way .

Senator Bard of California was interested inthis Ojai property, and it is from the Bard OilCompany that the Pan-American now gets titleto about two thousand acres of surface and allthe mineral rights of the valley, about sevenmiles long and two and a half miles wide . Onthe Sulphur Mountain side of this valley are oilseepages that are declared to be the greatest inthe State . On the other side of the valley thecleavage of the hills reveals the entire geologicalformation so that it can be followed for manymiles. The oil in this territory varies from four-teen to thirty-four gravity and the wells arefrom four hundred to four thousand feet deep .

PRODUCTION COSTS IN CALIFORNIA

The average California oil well will yield fromone hundred to two hundred barrels per day, andsix hundred barrels is a big well . Oil wells run-ning from five to fifteen barrels have been auto-matically pumping in southern California for

PRODUCTION COSTS IN CALIFORNIA 111

many years - something of a contrast to whatone sees in the Mexican oil field . Old oil wellsare being remade here and new machinery willbe installed and new wells driven . Well number36 on the side of Sulphur Mountain already fur-nishes a beautiful lubricating oil with gasoleneand no asphalt . It is thirty-four gravity and isworth at the present time about two dollars perbarrel, although most of the heavy oil in thisdistrict is worth about seventy-five cents abarrel .

Whether an oil well is large or small, the costof oil production at the well cannot be over tencents per barrel; and oil can be pumped one hun-dred miles at a cost of one cent a barrel .The Pan-American people are at work on

experiments to make a cheaper gasolene motoroil and also on improvements to the "cracking"process. Cracking oil is not a new invention butit is the basis of all the reports and promises fromWashington for cheapening gasolene . A heavycrude oil is cracked by being heated to a tem-perature of eight hundred degrees under pres-sure with hot steam. Oil of eight and a halfgravity is thus converted into an oil of sixteengravity and will flow like water . In the processoxygen and hydrogen are separated and new

112

THE MEXICAN PROBLEM

chemical compounds are formed so that in re-ality a new combination produces a new andlighter oil . It is said that oil can now be crackedat a cost of three and a half cents per barrel .

The Pan-American people realize the obliga-tion resting upon them to expand the market foroils in every possible direction .

The report of the Federal Trade Commission,that found Standard Oil interests still dominat-ing the price of gasolene, should again emphasizehow so-called anti-trust laws are responsible forthe abolition of competition and really preventthe lowering of prices .

The Washington report shows the division ofgasolene marketing into eleven territorial areas,nine of which are said to be dominated by vari-ous Standard Oil companies, which producedmore than sixty per cent of the gasolene in 1915and made sixty-five per cent of the total sales .

I have always been annoyed in shifting mymotor gasolene purchases from one oil companyto another to find that very soon the price formy gasolene was regulated by the Standard Oilprice and that, notwithstanding any marketconditions or supplies, when the independent oilman had hooked me on as a customer he wasvery shortly giving nothing but Standard Oil

PRODUCTION COSTS IN CALIFORNIA 113

prices, yet claiming no connection with StandardOil .

I noted that in California gasolene had fluctu-ated from twenty-two to twelve and back totwenty, and in southern California I declared,"Here I shall find the truth," as gasolene is soldon street corners by more than a dozen inde-pendent producing and refining companies com-peting with more than one hundred Standard Oilstations .

Yet when I inquired as to prices and conditionsof competition, I found that prices were uniformand that competition was geographical - a manbought his "gasolene at the nearest gas corner .Gasolene users do not, as in the East, maintainunderground gasolene tanks in or out of thegarage to any considerable extent . They buyat the gas corner and it does not pay to run acar very far to buy its fuel .

Throughout California, and most notably inLos Angeles, the most conspicuous store is thegasolene supply store. It is almost always on acorner vacant lot, often set in a small attractivegarden, into which the car moves for its supply,the curbstones being cut down on both sides ofthe corner. These houses are one-story buildingsof glass and wood, similar to the headhouse or

114

THE MEXICAN PROBLEM

potting-room of a green house. Roof and sidesare painted conspicuously - the Standard OilCompany's always in red, white, and blue colorsand other companies' in uniform trade-markcolors. All kinds of oil supplies are attractivelyarranged on the shelves within, and polite at-tendants in white suits remind you of a combi-nation between a certified milk dairy and a well-kept green house .

COMPETITION BY SERVICE

What interested me most was the problem ofhow all these corner oileries could compete withthe Standard Oil Company, with its organiza-tion, system, and unlimited capital . I promptlyfound the answer - they did not compete at all .The Standard Oil Company fixed the prices andeverybody else made the same price . There is nodifference in gasolene of the same specific grav-ity, whether made by the Standard Oil Companyof California or the Ventura Oil Company ofBoston and Los Angeles. The California peoplebrought up in the oil regions know the fraud ofany advertiser who declares that his gasolenewill carry a car more miles than the gasolene ofhis neighbor, if it is of the same gravity.

The competition was entirely in the service

INDEPENDENTS AND OIL PRICES 115

and by location, and I was astonished that theVentura and a dozen other companies couldmaintain oil supply stations over so wide a terri-tory in competition with unlimited capital. It isa matter of enterprise in management ; but theprices are fixed by Supreme Court decisionsand anti-trust legislation, both practically for-bidding price competition .

Every oil producer and every oil seller knowswithout any argument what he is up against -that the Standard Oil Company can sell oil in aslarge quantities, as well refined, and at as low aprice as he can afford and if need be a littlelower .

INDEPENDENTS NOW HOLD UP OIL PRICES

The safety of the independent, therefore, isthe umbrella price of the Standard Oil Company .He cannot hope to cut out the Standard OilCompany business . He has neither the capacity,the supply, nor the capital for a contest of endur-ance. Self-interest requires that he sell at thesame price. He cannot get more. He may there-fore hold his own by the location of his supplystations. If he attempts to get less he only lowersthe general price and hurts himself and everyother independent producer, and does not bring

116 THE MEXICAN PROBLEM

a frown or a wrinkle upon the face of smilingStandard Oil .

The "trust octopus" is seconded and sup-ported in price and service by all the independ-ents. Any one of them can put the price down ifhe wishes. In that case, his enemies would bethe suffering independent producers and not theStandard Oil Company, which usually finds astill larger profit in lower prices and broadermarkets .

The position of the Standard Oil Company isexactly that of the big copper producer, the bigsteel producer, or any other large vendor of araw article. The producer knows, if he knowsanything about business economics, that theadvancing price restricts the consumption anda lower price enlarges it. What he wishes isthe largest possible distribution consistent withprofits. Distribution is governed by the minor-ity and the accumulation of supplies loweringthe price which all producers are mutually inter-ested to sustain . At the lower price consump-tion is broadened, the supply is decreased, and ifthe leading producer does not advance thequotation, exhausting supplies will do it auto-matically .

On an advancing market producers accumu-

DON'T ROCK THE BOAT

117

late supplies which automatically check theadvance .

There is perfect action of the law of supplyand demand at top and bottom, but intermedi-ately there is the law of self-interest placing theso-called trust and the independent upon ex-actly the same basis - mutual maintenance ofprice and profits; with competition only inservice.

"DON'T ROCK THE BOAT"The Supreme Court decisions, the regulations

by state and United States governments and"anti-trust" laws, all pressing from the outside,force all producers into absolute mutual under-standing without any agreement written ororal .

They absolutely boycott the government de-cree and that without conspiracy or combina-tion. They understand the law, "Don't Rockthe Boat."

When the government shakes its finger at thelarge company and tells it to compete and de-stroy the smaller companies and decrees aid andcomfort to the smaller producing company to de-stroy the larger one, it makes impossible the com-petition which under the law it seeks to enforce .

118 THE MEXICAN PROBLEM

COMPETITION BOYCOTTED

There is little difference in human actioneither side of the world . On the western side ofthe Pacific the Japs have attempted to dictateto unarmed China . The Chinaman does n't somuch as wink. He just lays down his chopsticksand refuses to buy, serve, or eat a piece of Jap-anese fish, and the Japs see the point of distressand starvation before the Chinese feel it . TheJaps threatening the Chinese make them a unitwithout other understanding than that of mu-tual self-interest .

Throughout the United States the oil pro=ducers and selling agencies boycott the govern-ment edict and refuse to cut each other's throatsin price competition . The Standard Oil Com-pany can laugh at all Supreme Court decrees .They continue to live under the law which bythe same breath demands that they competeand destroy the small man and go to jail fordoing it .

The result throughout the United States ishigher prices for oil ; for when the Standard OilCompany had a monopoly, it had a responsi-bility concerning rising prices, and would con-serve supplies, pass them from surplus territories

COMPETITION BOYCOTTED 119

to exhausted territories, stimulate production toprevent erratic movements, and balance themarkets to prevent wide fluctuations .

Now the government has stepped in as a reg-ulator, and the Standard Oil Company has noresponsibilities ; its valuations have multipliedfivefold, and Mr . Rockefeller is worth morehundreds of millions than he ever dreamed of,and this by legislative and Supreme Court de-cree and his own helplessness .

Washington has decreed in the oil business,the copper business, and the steel business acapital socialism - where the weak protect thestrong and the strong must permit it .

CHAPTER XII

DOHENY - LORD OF OIL

MORE than sixty years ago two boys were bornabout twenty miles and three years apart in theState of Wisconsin. They were destined to bethoroughly American boys, but the parents ofboth were born in Ireland. One became LordShaughnessy, the head of the Canadian Pacific,and the greatest power for good to-day, both inwar and peace, in the northern half of the NorthAmerican continent. The other was EdwardL. Doheny, lord of oil in the southwest of NorthAmerica. Shaughnessy and Doheny, althoughborn in the same State and so near each other,and of parents from the Emerald Isle, nevermet until within a year . Yet for many yearsShaughnessy had watched Doheny's progess inthe Southwest, for Shaughnessy wants oil in thefuture for one hundred Canadian Pacific ships.

I pen these lines in absolute independence ofboth, for if they had any power over me or anyknowledge that I am writing this, the full limitof censorship against any personal encomiums

DEVELOPED BY PLAINS AND HILLS 121

would be placed upon me . I asked Doheny inMexico what I might say concerning the situa-tion, and he replied : "Nothing about me orespecially about my properties . We can takecare of ourselves, but help the people of Mexicoif you can ."

DEVELOPED BY THE PLAINS AND THE HILLS

Edward L. Doheny is of public interest be-cause he spans in his life and activities thewestern pioneer, bivouacking on the prairiesand seeking the development of wealth fromthe mountains and the plains, and the new eraof heat, light, and power which is coming frommineral oil .

When Doheny graduated from the high schoolin Wisconsin, he knew his botany and his miner-alogy like the American youth of advanced edu-cation; but to-day he knows it as do few peoplein the world. His life on the plains taught himto know the sage brush of the desert for its rootsholding the sands against the winds and itsblossom yielding up to the bees the most deli-cious honey. He knows all the flowers of the hillsand the mountain side and he knows the rocksand the minerals they cover as do few men . Heknows how these minerals were deposited, their

122 THE MEXICAN PROBLEMdips, the sedimentary deposits, shales, and sands,and the basaltic and volcanic upheavals .

He dwells in a garden with one of the largestcollections of palms that any man ever gathered .He knows every palm whether he sees it in hisgarden or on the desert. Somehow he respectsthe botanical names of more than a hundredpalms, probably because they have no commonnames, but he manifests a contempt for thegeological names as applied to minerals . Hedeclares that geological names never yet foundminerals or oil, nor have the geological professorsbeen very successful in directing any one how tofind them .

INDEPENDENT OF MAN OR BEAST

For many years Doheny slept on the plains andin the mountains with his rifle by his side, andhe always knew exactly where his boots were,where every piece of his pack lay and what werehis resources and the journey before him . Henever carried water or timber if he knew whereto find it . But he carried the tools in his kit thatcould cut or file a piece of steel, mend a rifle, andinsure him independence of any man or beast ontop of Mother Earth .

He believes that the minerals were originally

INDEPENDENT OF MAN OR BEAST 19.3

deposited almost universally on the earth's sur-face and were then ploughed by glaciers and tornby upheavals and leached and redeposited intocracks or deposits of various forms ; yet you getthem where you find them . But when you reachthe end of the deposit, don't gamble too muchmoney in looking for a continuation of that de-posit or for the next one . He says that when youdig a well and get water, you won't find oil, andwhen water comes in, that is the end of your oil .Frank A. Vanderlip, of the National City Bank,

about a year ago paid a million and a half, orone hundred dollars an acre, for fifteen thousandacres covering the San Pedro mountain, an oceanpoint on the Pacific not far from Los Angeles . Ithas beautiful views from the hilltop into valleysboth sides and out over the ocean . But Dohenyhad first looked at it for several days and paidone thousand dollars a day for the privilege . Hefound there were some oil seepages on the prop-erty, but the district did not indicate to hispracticed eye that he could get his money backwith a profit from either oil or land sales . ButDoheny could slip over the mountains to thenortheast and buy the beautiful Ferndale Ranchfor another summer home for Mrs . Doheny, withits running waters, palms and orange groves,

i%4 THE MEXICAN PROBLEM

and consider it a good investment because it wasworth it without regard to the oil derricks loom-ing on the hillside in the distance .

SUPREME FAITH IN OILBetween the Ferndale Ranch and Sulphur

Mountain we rested for a few moments to notethe oil-bearing shale on the face of both moun-tains at the head of Ojai Valley ; one dippingsouth and the other dipping north . Some of theparty looked for trout in the brook, but Dohenynoted a ten-inch curl of black oil ooze out fromthe spring by the brookside and flow downstream .

"Look at that," he shouted. "That is worthmore than all the trout in all the springs andstreams in America . You can put trout in thestream, but you can't put oil in the ground ."

Then we passed on through the cypress andthe yew trees and filled our pockets and mouthswith sun-kissed oranges, and then down thevalley of the Santa Clara, noting the oil derrickson the south mountains across the valley, someof them belonging to the Ventura Oil Companyand some of them to Doheny, for Doheny's in-terests in California about equal his interests inMexico.

NEAR TRES HERMANOS

SUPREME FAITH IN OIL

1915

The main ranch or home farm of Doheny isten miles out of Los Angeles, eight hundred acreson the mountain side, and still it is not the ex-tensive gardens, orange groves, fish hatchery,duck ponds, cemented driveway up the moun-tain, or his developed underground river, or thebeautiful blue lilac bushes, that interest Dohenyto the greatest extent ; nor yet the opportunityhere for a vigorous outing, a seven o'clock break-fast, and a beautiful view across the valley . It isthe little seepage of oil in the sidewalk that in-dicates that again Doheny sits atop of wealththat he can sometime at his good pleasure mintinto gold and human uses .

Doheny not only knows men, but he believesin men of the right sort. T. A. O'Donnell, adirector of the Pan-American Oil Company,Doheny declares to be the best oil operator inCalifornia. He says he will get twice as much oilout of a well as other operators. When an oilwell stops with O'Donnell it is going again in anhour. With some other people an oil well maybe going again within two or three days, butthe fellow that keeps his oil well going will getthe oil, because the oil is all the time flowingtoward him .

126

THE MEXICAN PROBLEM

YOUTH AND ENTHUSIASM STILL WITH HIM

Doheny is an enthusiast . When he goes intoa thing, he is in all over, hands and feet . He willtravel longest with the swiftest and the strongest,swim or ride with the youngest, and sleep moreor less in any part of the twenty-four hours . Hewill absorb more and his interest and his sym-pathies will be of the broadest because his stud-ies and his sympathies reach from the stars ofheaven to the lowest mineral deposits and hisinterest is all the while in humanity and its on-ward progress .

In the forenoon, over on the side of SulphurMountain, he dipped his fingers in the thirty-four gravity oil oozing from well Number 36 andexclaimed enthusiastically : "Is n't that fine?Is n't it better than soup or something to eat?Just smell it! It is a soft, lubricating oil with noasphaltum." And he dipped up a pan of it andwe all had to note it, smell it, and admire it .Then he took a wisp of oil waste from the auto-mobile and wiped his hands as clean as those ofa woman and was off in the motor to dip intoanother oil well and note its color, its thickness,and its gravity .

As I write this in the East, comes the report

EARLY IN BUSINESS

127

from that Number 36 oil well that its flow hasincreased to twenty-five barrels a day ; and it isjust what Doheny said it was, -pure, lubricat-ing oil, with no asphaltum, but a little highergrade at thirty-seven gravity .

EARLY IN BUSINESS

At seventeen years of age Doheny was with aUnited States government surveying party inthe Indian Territory . As a side line, he tookto trapping wild animals. Many a wolf-skinhe cashed in at the trading-post, but he earlyshowed his independence . When trapping onewinter with a friendly Indian, one of Doheny'spelts was claimed as taken from a wolf nearestthe Indian's trap . Doheny protested . He saidthe hunting law might well be that a dead ani-mal belonged to the nearest trap, but snow onthe ground showed that that animal came fromhis, Doheny's, trap .The Indian stood by the law and Doheny

stood by the fact and they separated . Dohenydeclared that no rule of the hunt could give hiskill to another trap when it was clearly shownby the snow tracks it did not belong there .

Doheny was soon again in business for himself .With a partner he bought at auction over sev-

128

THE MEXICAN PROBLEMenty head of government horses for about fivedollars each and drove them into Kansas ; andall through the summer months he was break-ing in the horses and selling them to farmersat twenty-five dollars a head . Doheny and hispartner felt sure they had done the greateststroke of their lives . Each then thought that ifhe could get an income of one thousand dollarsa year he would be rich .

But the lure of the mines followed the lure ofthe forest, and Doheny was soon up north pros-pecting for gold, and for many years he minedand prospected through the Rocky Mountains,especially in New Mexico and Arizona. He wasrunning a good sized mine in New Mexico andmaking ten dollars a ton when the McKinleytariff put him out of business .

His ore had a value of about fifteen dollars aton, and he could smelt it at El Paso at fivedollars a ton and get ten dollars a ton profit .The McKinley tariff put a duty on lead ores andmade Monterey in Mexico the greatest smeltingcenter in the world. The El Paso people couldnot get their lead flux except at heavy duty andtherefore had to charge Doheny fifteen dollarsa ton .

This sent Doheny to southern California . His

NO GAMBLING

129

quick eye detected some black stuff beinghauled over the streets to a furnace . He madeinvestigation, and soon he and Canfield hadleased ground and with shovel and hand wind-lass were opening the Los Angeles oil field . Itwas hard work and there was a long fight aheadof them, but they won out and the Los Angelesoil field proved up exactly what Doheny had de-clared it would yield ; and many of Doheny'sold Los Angeles wells are still automaticallypumping .

INTO OIL

This was Doheny's first venture in oil, and oilhas been in his blood and bone ever since.

Doheny is distinctively a prospector and nota gambler. He would not play a game of cardsfor a ten-cent piece . He never took a drink inhis life, and he never smokes . But as a prospectorhe will hit the rock and do his drilling to the endof the lead ; but when he reaches the end, theprospect is determined and no blind gambling orgroping in the dark follows - he quits .

NO GAMBLING

I could take you to one place in Californiawhere the Standard Oil Company has spent

130

THE MEXICAN PROBLEM

$2,500,000 with not a cent to show for it .Doheny was previously in that district and itcost him just $8000 to put down his well andlearn that any further expense would be gam-bling. He had paid his $8000 and gotten hisinformation. The Standard Oil Company put$2,500,000 in the same district later and stillhas no further information .

But just afterwards Doheny heard of a prom-ising piece of oil land offered for option . He in-quired and learned that an adjoining propertywas known to be better . He took a third ob-servation and learned that the cream of thedistrict was held for $2,250,000, while the poorerpart could be had for one or two hundred thou-sand dollars. He promptly took the option onthe best part, paid down his ten per cent, drovehis wells and paid the balance, $2,000,000, out ofthe product from the wells. He quit that district$8,000,000 to the good .

Then he opened another district and took outanother $8,000,000 . He was the pioneer in theBakersfield district, drilling the first well andselling the first product from the district . In theearly days of Bakersfield he was selling oil at$1.25 a barrel to twenty-one other drilling out-fits. With the two oil fields he is now opening up

STANDING BY

131for the Pan-American, Mr. Doheny will haveopened up eight oil fields in California .

STANDING BY

From the Fullerton and other districts inCalifornia he got the money to make his startin Mexico, where at the beginning he had onlyan eight per cent interest, but assessments of$750,000 from 1902 to 1905 did not trouble him .When the Texas oil gushers made Mexican oilpractically worthless for a few months, Dohenystood by, just as Rockefeller did in Cleveland,and bought when nobody else would buy, believ-ing that the future would demonstrate the val-ues. Doheny's Mexican Petroleum interest wentup to nearly forty per cent as his associates soldout.

Doheny has always stood by . In the panic of1907 he kept millions on deposit that his prop-erties might be protected against any accident .Five years ago he disposed of some properties formore than $10,000,000, and half of the moneywent into Mexican Petroleum . I don't think thathe values his Mexican interests financially ashigh as his California interests, but the socialproblem in Mexico interests him more and takesgreatest hold upon his sympathies .

i

1

132

THE MEXICAN PROBLEMTampico was a cattle shipping point with less

than twenty thousand people when he beganoperations there . To-day it has a population offifty thousand, and wages that were twelve andone-half cents are now one dollar for ordinarylabor and three dollars and fifty cents gold forskilled labor. When in June, 1916, nine hun-dred refugees were taken from Tampico on twotank steamers and the yacht Casiana, the ex-pense was sixty-seven thousand dollars and theAmerican government offered to repay, butDoheny refused to accept. From October 14,1915, until April 15, 1916, there was famine inthat land for the native population . The war-ring forces had taken all the food out of thecountry and sent it to Vera Cruz, whence it hadbeen shipped to Texas and sold for war supplies .

Doheny bought it in Texas and shipped itback in the same packages to Tampico and fedthe native Mexicans with it so far as the Ameri-can consul certified they had need for food .

Doheny is a delver in statistics, and theseground him in his faith in the great future for oilin the uses of the world . He believes that thetime will arrive when coal locomotives can beused profitably only in the coal regions . It hasbeen demonstrated that an oil-burning engine

HUASTECA PETROLEUM COMPANY SUPPLYING NATIVES WITH FOOD BROUGHT BYITS TANKERS FROM THE UNITED STATES, DURING WAR TIMES IN MEXICO

STUDIES PAST, PRESENT, FUTURE 133

can carry a train from New York to the PacificCoast and back to New York without refueling .

Of course the expected railroad developmentin the oil line cannot take place during the wartime, when the American oil reserves are beingdrawn down two million barrels a month . Never-theless, oil-burning locomotives are operatingin twenty-one States on fifty-three roads, andon thirty-two thousand miles of road, and con-suming forty-two million barrels of oil per an-num.

STUDIES PAST, PRESENT, AND FUTURE

It is not only oil in the future and the man inthe future that interest Doheny, but the oil ofthe past, the man of the past, and the animaland mineral life of the past.Five years ago Doheny and Canfield used to

note deposits of bones in asphalt about eightmiles out from Los Angeles, whence tons ofasphalt had been taken for road making . " Whata fool rancher to lose so many sheep in tar beds,"they said; "why did n't he fence out the sheep?"Then somebody noted that there was not asheep bone in the lot. In came the scientiststo solve the riddle .

Now bones of the elephant, the ground sloth,

134

THE MEXICAN PROBLEM

the mastodon, the bison, the horse, the camel,the bear, the coyote, and the giant wolf aremounted or are being mounted for the Museumof History, Science and Art in the ExpositionPark of Los Angeles, and there are fifteen thou-sand boxes of bones still unassorted. As manyas thirty skulls of the saber-tooth tiger or cat,together with fifty skulls of the giant wolf,were found in a space of less than four cubicyards .

Mother Earth here hermetically sealed upthe animal life of many hundred years ago, andthe museum and the ranch La Brea, of twenty-five acres, now the property of the State, willbe of interest to the scientist and the student formany hundred years to come . From this placecame the skull and skeleton of a woman eightthousand years old . Many animal contestsmust have occurred about this water and tarhole, for animal bones are found chewed, andsome partially healed .To Doheny, the man of the plain and the

mountain, deep and broad delver in MotherEarth, these bones, the life of the past they re-veal for man,- beast and vegetable life,- havethe deepest interest ; for Doheny seems to havethe genius's insight into the history of the past,

WATCHMAN! WHAT OF THE NIGHT? 135

the meaning of the present, and the hope of thefuture .

Yet Doheny does not work altogether by eye-sight. His associates note that he will not makeimportant moves on the chessboard of businessuntil the time or something within him seemsto be right, and then he moves swiftly, surely,and independently. But until the spirit moveswithin him, nothing can stir him .

WATCHMAN ! WHAT OF THE NIGHT?

Working within his soul at the present timeis the question of the future of Mexico . He can-not see it clearly . He can see Los Angeles, inthe center of the uncounted wealth of southernCalifornia, reaching toward a million popula-tion, and note the meaning of an automobile toevery five people in the town . He can rejoiceas telegrams come from Tampico reporting thatthe dredging and the river current in the threemonths this spring have deepened the bar chan-nel from seventeen feet to over twenty-six feet .He is pleased that men of Tampico are nowgetting more than ten times the wages perday they received before he went there . He ishappy to note that every one of them was sowell cared for at the Mexican Petroleum Com-

136 THE MEXICAN PROBLEM

pany terminal that, when in April the I .W.W.workers stirred up revolt in four oil refineries atTampico, there was not a whisper of troubleamong his men. They told me at the Tampicoterminal that under proper direction, with goodfood and care, the Mexican workers could berelied upon for anything, and in an emergencywould work thirty-six hours or forty-eight hourson a stretch with their meals brought to them,and that they were loyal and true .

What troubles Doheny is how these good peo-ple of Mexico, speaking one hundred and fifty-three tongues, can be merged into a nation,with soul life, prosperity, and family and na-tional happiness .That is the Doheny problem! That is the

United States problem! That is the Mexicanproblem l

THE END

Pas

Coo°

22°

lan°uayalab~ n 7uan

T .q.-

9 S

9 V

9

'I' UIYICIJ ~

Z. r d,

C

obos

. .

20'

9 °

0

9 I 8°Nmanlo

licadores

.Cer antesY'ega

~1 a"J°

I Pill,

uami.aon

~~Iliera

-)lano Eihla

II AC' IF ND .t

It AI'IL :A1111,I 'ILLICLU

cu,I'O U)450,00

CFES,'L, .

C

Buen a Vista

T"""- l

5

.10

15

20Scale of Miles

endee

am°.Yale,__

t

1910

LCOU

anjuw

oV

V

,g Paso

L. Moraa

° El Mouse

Tr,n ;aadEl Agua°a e

Ten Palmas °Aquiche Chicayan

San RafaelRorcon o

0

°Carbon PeceroMesa de Santiago

Chda

1® PuenteCo ..:

nectatot

H. Loa?

M ICO

a P r

Ln C0ba

T Illn .' 1oplla Esc I „o

BA

ATASH. P 1 A af,

1 b

OOU A(, RE,

Hu Pan..R.1' . TERMINAL,1'a+ek Farm ,lb,

ra

tt,

CebadiilaROI CONCITOS

H.P. Po,np

tiou Ao. 5

Enoiual.4gua Marina

,El Bejacso

f~LA LAJA

11.10 Poop ."(oboe Ao.IOzuhraala

ESYEIIANZA

IEl-:'.?X(1A11111

k2.t

IiI'll'V

ACINLIEMSL

U,IA ACRCS~//I

kti,{IL{

II1CASTO~t1 1, I F ~j

0

4b''mpa

,pS4.1

T

lin

__L,,.

77J-

Citlaltep

1~

PI-

Ijo de Bre'aI

'I'al1CUl`

-0alI N I PaI0 -

i

:11.10 Pomp Italic A'o-52,000ACa

ll1i0e[VISTA.ft

uliILi,

'('111)1(1- dl'3O 4ELLI'S, .

CG

22 °

1'cmcieLa Soled d o

C

9 s°

to 1

eo.omb e

R100 VIEJO

1)

11 ltl'Si'S1T

'ELNl' .{l

C betZL(o

njeeLands of Mexican Petroleum CompanyLimited of Delaware, and Subsidiaries .

- Shows Pipe Lines & Pump Stations fromTerminal to Cerro Azul ; also RailwayLine from San Geronimo to Cerro Azul .