OIL: Soap for Harry

Blue eyes gleaming, Harry Ford Sinclair, 67, posed for the press photographers in his vast paneled Manhattan office.

Lightly held in his big fingers was a check for $1,500,000 that had not yet quite left the hand of Mexico’s Ambassador to the U.S., Dr. Francisco Castillo Nájera (see cut). In the heart which other oilmen think pumps oil instead of blood, was the knowledge that once again Sinclair Oil Corp. had struck a gusher while the rest of the industry struck rock.

When Mexico expropriated all U.S. and British oil properties back in 1938, tough old Harry Sinclair suspected that the old days were gone forever. After an appropriate wait, while the State Department harrumphed and other U.S. oil companies stood on their legal, unenforceable rights, he made his own direct deal with Mexican realists. For $8,500,000 on the barrelhead, plus enough crude to net Sinclair a tidy profit, Mexico could have the whole Sinclair properties with no legalistic strings attached. Last week’s check from good Don Francisco was the final payment.

Good Neighbor necessities changed Cordell Hull’s tune on expropriation. By 1941, the U.S. had to make a face-saving deal to wash out the rest of its oil mess at a payment by Mexico of $24,000,000 plus interest—a metaphysical figure arrived at by a joint two-man commission of experts.* Last week the State Department announced that Mexico, now fat with U.S. dollars, had made final arrangements to settle its debt in full. With the final annual payment in September 1947, Mexico will own all U.S. oil properties outright for a total of $29,137,700.84. Chief loser: the die-hard anti-expropriationist Standard Oil Co. (N.J.), whose 75% share in the settlement is an accurate index of its onetime much greater stake in Mexico.

While Harry Sinclair has his “soap” (his favorite word for cash in the bank), Standardthus has lost in both pride and purse. Meanwhile, to add insult to injury, it looks as if the British—whose original stake in Mexico (mainly Shell’s) was estimated at more than that of the U.S.—may get back into booming Mexico. While the British Foreign Office still maintains a correct and haughty silence about the principles of expropriation, the oil industry is buzzing with rumors that British oil companies may make a realistic new deal to go in and operate their former properties on a long-term contract.

* Independent estimates of the value of U.S. oil properties in Mexico have run to well over $100,000,000; one politically-inflated Mexican estimate (before expropriation): $500,000,000.