Business & Finance: Mexican Wages

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"Put the wage increase through and we'll leave," was the gist of the response last August when a committee backed by Mexico's President Lazaro Cardenas ordered 17 U. S. and other foreign oil companies to pay a wage increase of some $7,000,000.

The proposed increase was the Mexican Government's way of settling a strike by 18,000 Mexican oil workers which seriously threatened Mexico's depleted Treasury, greatly dependent upon taxes paid by foreign oil interests. Oilmen, already spouting over vigorous President Cardenas' expropriation of 850,000 acres of undeveloped oil lands leased by foreigners, objected vigorously and the wage problem was referred to a Mexican board of arbitration and conciliation. Even friendly U. S. Ambassador Josephus Daniels protested.

Last month President Cardenas neatly split the opposition by a deal with Mexican Eagle Oil Co. (an affiliate of British Royal Dutch-Shell, which controls 60% of Mexican oil production), yielding it full control of the rich Poza Rica field in return for royalties of 15% to 35% of the petroleum produced (TIME, Nov. 22).

Last week, having thus strengthened his own position and his Treasury's prospects, President Cardenas put the next move squarely up to the 15 U. S companies. He decreed that the $7,000,000 wage increase should go into effect. While Ambassador Daniels muttered, the U. S. companies pondered whether they really would abandon their $175,000,000 Mexican investment.