On national radio, at 10:00 p.m. on March 18, 1938, President Lazaro Cardenas del Rio decreed the expropriation of the oil companies. The government legally appropriated 17 foreign companies that controlled the industry. In his message to the nation, he made it clear that, according to the situation of the country, the industry and the workers, there was no other option; “Having been broken the employment contracts between the companies and their workers, because the labor authorities have so decided, if the Government does not occupy the facilities of the companies, the immediate paralysis of the oil industry would come, causing incalculable harm to the rest of the industry and the general economy of the country”.
The Mexicans took to the streets to celebrate with banners that supported the presidential decision, 200,000 people gathered spontaneously in the Zocalo of Mexico City and brought all kinds of donations to comply with the corresponding compensation that Cardenas had agreed with the companies foreigners.
As a next step, the National Economic Redemption Center and the National Women’s Committee for Propagation of Oil Indemnity were created. On April 12, they received donations in cash and in kind from citizens of all social strata and of all kinds, “from jewelry to animals brought from the farms,” according to Lorenzo Meyer’s story. This episode in modern Mexican history became an example “of the ideological dimension of Cardenista practice,” according to historian Eitan Ginzberg.
The Mexican economy during the Government of Lazaro Cardenas
As the historian Arnaldo Cordova mentions, “neither before nor after that period has there been a statesman who had as clear an idea as Cardenas had, of the founding role of a true political power in the 20th century played by the working masses, especially everything when they are organized”.
In the electricity industry, foreign companies were indifferent to the key needs that citizens needed, such as service improvements and expansions. Thus, the government decided to invest directly in the industry, according to the researchers Aboites and Loyo.
The rise of worker mobilizations
At the same time, there were labor movements that spread rapidly throughout the country. The great mobilizations of workers and organizations led to the unity of the workers, not only in this sector, but also included the adherence and consensus of rural and urban employees.
The oil workers were famous for being independent and combative, which was strengthened in 1935 when the Union of Oil Workers of the Mexican Republic (STPRM) was created. Starting in 1936, when it already had more than 20,000 members in its ranks, it began to demand new labor rights and a collective contract.
In 1936 the Confederation of Mexican Workers (CTM) was created, an organization that brought together several key industrial unions. This labor organization gained a lot of union and political power, so much so that, according to the confederation itself, it had 3,594 affiliated unions and 946,000 members. The STPRM joined the CTM.
By 1936, the El Aguila company controlled 56% of the production, refined 71% and exported 65%. There was an irrational exploitation of the oil deposits, according to the researcher Jose Rivera Castro. The maneuvers to drill the wells and exploit the resources were incorrect, which caused fires, problems in agricultural properties and ecological consequences.
The CTM expressed support for the unions and the regulations proposed by Cardenas, who said that workers’ rights were simple labor justice and assured that without social justice, any progress in Mexico would be impossible. This fever and union of organizations with the government allowed the collective contracting of workers and worker support for government decisions.
By 1937, the union organizations assured that they would go on strike if the private companies did not accept their petition. “Foreign oil companies, especially American ones, were opposed,” according to what Aboites and Loyo related.
Although the bosses wanted to make the resolution impossible, its implementation was condemned in order to comply with the payment at the beginning of 1938. The companies challenged and demanded that the government settle the conflict, alleging that they did not have sufficient economic resources to comply with the demands of the bosses. workers, although according to historian Alan Knight, “it was financially feasible.”
The workers stopped work again until they had a clear answer. The next move would be to enter the plants to control them. In Minatitlan they prevented British employees from entering the refinery.
The oil expropriation
The historian Eitan Ginzberg assures that Lazaro Cardenas orchestrated the oil expropriation since he became president, although, as he himself clarifies, many other historians such as Lorenzo Meyer, Tzvi Medin and Alan Knight assure that it was rather an unplanned event.
For Ginzberg, one of Cardenas’ first movements was in 1935, when during his annual speech in Congress he declared inconsistencies between the 1925 Oil Law and Article 27 of the Constitution, for which he proposed, a new law would be created, which in 1936 it became the Public Utility Expropriation Law whose main argument revolved around granting the government legal rights to expropriate goods of social value in exchange for compensation.
That night of March 18, 1938, Cardenas gave his decree on national radio. He asked for the support of citizens to “save Mexican oil and the trampled national honor of Mexico.” In the capital, citizens paraded with coffins that had the name of the oil companies “Standard, Huasteca, El Aguila” They donated money, jewelry, sewing machines, wedding rings.
The State was left with machinery, facilities, buildings, refineries, distribution stations, boats, oil pipelines, storage tanks, communication routes, furniture and real estate.
The businessmen spread rumors in which they said, the workers would stop receiving a salary, that the State was not capable of operating the machinery and the oil production, that there would be an economic catastrophe. Indeed, there were difficulties at the beginning of the government operation, especially in terms of logistics, distribution and handling of machinery.
According to the ambassador’s testimonies, abroad the anger of investors and industry directors demanded that the United States intervene, use force and even go to war to force Mexico to give in to foreign investment.
Foreign companies blocked the sale of Mexican crude. With a global crisis that polarized opinions on, for example, the sale of oil to Germany at the beginning of World War II, the Mexican government had to sell oil to this country, Italy and Latin America until Franklin Roosevelt broke the veto.
On June 7 of the same year, the parastatal Petroleos Mexicanos (Pemex) was founded, whose operation was based on the collaboration of the government with the union. It was tasked with exploration, mining, refining and marketing, but problems seemed to be mounting. Cardenas tried to organize the new company to stabilize it. The economic conflicts were not minor and austerity measures, salary reductions and greater effort had to be taken.
