Lázaro Cárdenas and The Expropiación Petrolera

The Oil Expropiation March 18th

Mexico is a country rich in natural resources with oil being the nation’s most precious commodity. President Lázaro Cárdenas (1934-1940) is the man responsible for securing Mexico’s vast oil profits for its citizens. His act of nationalizing the nation’s oil fields remains in place today.

The calendar date of March 18th, 1939, is remembered throughout the country as the day of “Expropiación Petrolera” (Oil Expropriation). Today, the topic of the country’s most valuable natural resource remains controversial. Currently, there is renewed discussion concerning the prospect of foreign companies drilling for oil in Mexico. Many are adamantly opposed to the suggestion, as it conflicts directly with Mexico’s Constitution.

In 1938, President Cárdenas expropriated all the nation’s oil production from foreign entities, namely the United Kingdom, the Netherlands and the United States. Up to this time, only international companies were drilling for oil in Mexico. The president was led to this bold move because the people of Mexico were being taken advantage of. Mexican workers were being paid only a portion of what their international counterparts were being paid and understandably, this situation created a great deal of labor unrest. Indeed, strikes were occurring regularly, disrupting production and causing widespread havoc.

In addition to these significant labor concerns, there was also an important underlying resentment growing towards foreign oil companies operating in Mexico. The populace was becoming increasingly aware that their country was not benefiting from its own resources. The foreign oil companies had been enjoying unprecedented profits from Mexico’s “black gold”. This basic discrepancy combined with the gross labor injustices being committed finally reached a crescendo of intolerable proportions. President Cárdenas met with representatives of the foreign companies operating in Mexico to try and resolve these issues.

These meetings, however, were not fruitful and the parties involved were unable to reach an agreement. On March 18th, 1938, President Cárdenas officially expropriated all oil assets from the international companies operating in Mexico. Drawing upon Article 27 of the Constitution of 1917, President Cárdenas declared Mexico’s oil belonged to the country and the people of Mexico. He made this announcement on national radio to the country’s citizens before he told members of his own cabinet. This incredible decision by President Cárdenas had profound consequences.

The people of Mexico were thrilled with the president’s bold course of action. Tens of thousands of the country’s citizens celebrated in the streets of Mexico to honor this historical event. Women donated their jewelry and silver to the government to help compensate the foreign companies whose assets had been seized. Naturally, the international companies affected by the sudden turn of events had a much different response than that of the nation’s populace. Outrage was followed by retaliation. An international boycott against Mexican oil was implemented. The intent was to punish Mexico and to bring ruin to Petróleos Mexicanos (PEMEX), the newly founded Mexican oil company instituted by President Cárdenas. Both Mexico and PEMEX however survived the international boycott and today, PEMEX continues to be Mexico’s sole petroleum operator.