Wading in Oil up to the Knees

It is not known exactly how many different companies and oil interests came to operate in Mexico during the great oil boom, but they were numerous. Much depends upon what is counted: leaseholders, drilling and production, or exporting. One source mentioned

that 400 companies owned Mexican oil rights in 1916, 75 percent of which were American. A second source places the number of companies drilling wells in 1919 at 155. "Of the total investments in the oil industry of Mexico," the U.S. Department of Commerce reported in 1920, "97 percent is held by foreigners. . . . Of the total of 63,828,326 barrels produced in Mexico in 1918, the American interests produced 73 percent, British 21 percent, Holland 4 percent, and Spanish Mexican 2 percent."^[49]

These companies came in all varieties, all shapes. Lord Cowdray's El Aguila company was not the only British oil interest in Mexico. In 1916, the Foreign Office compiled a list of twenty-three other companies, whose capitalizations ranged from £ 100 (for the Mexican Selected Oil Estates, Ltd.) to $1 million (for the Tuxpam Oil Company). Other lists abound with the names of individuals and small companies. By the end of the boom, most big U.S. companies had at least some representation in Mexico. The Texas Company, Sinclair, Gulf, and Standard Oil of New Jersey existed alongside the big producers like Huasteca and El Aguila, the host of small firms like the Cortez Oil Corporation and Lot Seventeen Oil Company, and individuals like Charles Rathbone and Mr. Carrie Yates.^[50] Given the high prices during the First World War, small companies could get started by virtue of one or two good wells. The Port Lobos Petroleum Company (an oil transport company) and Cortez Oil Corporation (a producer) together owned one hundred thousand acres of leaseholds in 1916 but had only two wells. In 1917, The Texas Company was completing construction of its refinery at Tampico. The Gulf group of Pittsburgh began exploration in 1913. Mexico was to remain this company's only source of foreign crude supplies until it entered Venezuela in 1925.^[51] Naturally, the competition among so many interests was bound to be keen. In 1912, The Texas Company had applied to Mexico's Chamber of Deputies for a pipeline concession to carry crude oil from Tampico to Texas refineries. Apparently, the Doheny interests fought the measure, successfully raising the specter of the Standard Oil trust, for whose benefit the pipeline was attributed.^[52] The important companies in Mexico were not transporters nor refiners, but producers of oil.

Several medium-sized firms also began operations in Mexico by combining capital, experience, and contacts from numerous U.S. sources. The Penn-Mex Fuel Company is a fitting example. Its founders, J.C. Trees and M.L. Benedum, had once contributed critical financial support to Doheny but fell out with the owner of Mexican Pe-

troleum and Huasteca. They made a considerable profit when they sold their stock in "Mexican Pete" and decided to reenter Mexico on their own account. From Pittsburgh, they sent John Leonard and Eddie Gilmore, both Pennsylvanians with experience in the oil industry, to look over the Alamo Hacienda twenty miles west of Tuxpan. Wined and dined by the Núñez family, Leonard and Gilmore eventually secured options from them for their twenty-thousand-acre estate. Benedum traveled up the Tuxpan River and liked what he saw at Alamo. "You could see oil everywhere," he said later. "There were places where you could have waded in it up to your knees."^[53] The partners of Benedum and Trees put up the $450,000 to exercise their options.

Back in Pittsburgh, Benedum and Trees organized a new corporation, the Penn-Mex Fuel Company, in 1913. They secured the backing of Pennsylvania oilmen and financiers and buyers in Jersey Standard. As soon as the Pennsylvania drillers brought in the oil at Alamo, the Penn-Mex became plagued by the same difficulty experienced by the other independent producers, Doheny and Cowdray: the need for capital. Penn-Mex constructed a pipeline to the Gulf Coast. They also built a railway, wharfs, warehouse, roads, and camps to support the entire operation. But the cost was beyond the means of Benedum and Trees. Just as the prices began to rise in 1916, therefore, Benedum and Trees sold out. They were never sure, but they suspected that the buyers had acted for the South Penn Company of Pennsylvania.^[54] They were correct. But they also thought that the South Penn belonged to Standard Oil Company of New Jersey. That was wrong: it was then part of Socony, Standard Oil New York, but Jersey Standard would eventually absorb it.

Nonetheless, despite the rapid rise of Penn-Mex and other one- and two-well firms, the Doheny and Cowdray interests remained very much the leaders of the Mexican petroleum industry. Their success, of course, attracted many companies to challenge the near monopoly on oil production they had enjoyed in 1911. Other companies were drilling more oil wells in 1920 than were El Aguila and Huasteca.^[55] Other companies also combined to wrest some 50 percent of production from the early arriving Doheny and Cowdray interests (see table 5). Yet, Huasteca and El Aguila were the largest and most important enterprises.

The flurry of activity sufficed to elevate Mexico, by war's end, to the second largest producer of petroleum in the world. It had surpassed Russia, whose oil production in the Baku had suffered from war, revolution, and Bolshevist expropriation. The United States remained the

premier oil producer, responsible for more than two-thirds of the world's production. In 1919, Mexico produced nearly 16 percent of the world's oil, a dramatic increase during the war years, according to these figures (in millions of barrels) on the world's leading producers:^[56]

(Table continued on next page)

(Table continued from previous page)

The oil boom was one of the few growth industries during the Mexican Revolution. Tax collections on the production of Mexican petroleum, and after 1921 on its export as well, came to be the mainstay revenue producer of the fragile governments of revolutionary Mexico. Under the circumstances, the domestic authorities did not ignore the formation of a most American-like industry in Mexico, but there was little they could do about it. In the meanwhile, the oil boom fostered the growth of some large foreign interests.