The Tango War

by Mary Jo McConahay

  Roosevelt was enthusiastic about the idea: an important New Deal commodity law was in trouble because U.S. cotton farmers would not voluntarily limit production, and the administration desperately wanted to offload the crop. It was a time—the mid-1930s—when U.S. banks, businesses, and Washington traded with Nazi Germany as they did with any government, dictatorship or not. After his White House meeting, Davis made donations that added up to the single largest contribution to the Democratic Party in the 1936 elections. Roosevelt sent Davis a photo signed “To Major W.R. Davis, from his friend,” which Davis prominently displayed on a mantel in his New York office. The president took the oilman’s calls.

  In the end the cotton deal didn’t go through because U.S. ambassador to Mexico Josephus Daniels argued effectively against it, on the grounds that it would not benefit U.S. companies enough. Daniels had been secretary of the navy during World War I when Roosevelt served as assistant secretary, and the president valued the older man’s judgment and friendship.

  But Roosevelt did not put a stop to Davis’s oil business in Mexico, or anyone else’s, often heeding counsel from Ambassador Daniels. Once a South Carolina newspaper editor—and at age seventy-five, an even-tempered elder statesman—Daniels advised flexibility and a hands-off attitude toward the oil crisis when it came to respecting the Mexican president. Daniels believed that if Cárdenas fell, Mexican fascists would take over. State Department hard-liners disparagingly called Daniels “more Mexican than the Mexicans,” which was an irony given that it was Daniels, in his former role as navy secretary, who had issued the orders to U.S. Navy ships to fire on Veracruz in the wake of the Tampico Incident, carrying out President Wilson’s policy of “moral diplomacy.”

  OILING THE FASCIST WAR MACHINES

  Secretary of State Hull, Ambassador Daniels’s superior, referred to the Mexicans as “those Communists.” He took the side of the oil companies in the dispute with Cárdenas, just as he took the side of American property owners fighting the terms of Cárdenas’s land reforms. Americans possessed vast tracts in Mexico, and for some, the deeds came with an astonishing sense of entitlement, mirroring the attitude of some oil firms. Newspaper tycoon William Randolph Hearst owned a twenty-five-hundred-square-mile “ranch” in the northern state of Coahuila, inherited from his father, as well as timber and mining interests; visiting the spread as a young man, Hearst wrote to his mother, “I really don’t see what is to prevent us from owning all of Mexico and running it to suit ourselves.”

  Roosevelt believed that Hull’s legalistic hard line in defense of Americans’ Mexican property was outmoded in the middle of the twentieth century, and he thought the terms of indemnification that Mexico offered the oil companies were not unreasonable. The companies erred when they insisted their compensation should include the value of oil still in the ground, he told reporters in April 1938, using the example of the “Little White House,” his residence in Georgia. “If I have a piece of land at Warm Springs that is worth $5000, and the Government, or the State of Georgia wants to take it over, I ought to get $5000 out of it,” he said. “I ought not to be able to say, ‘In a few years this is going to be worth $20,000, so you have got to pay me $20,000.’”

  Nevertheless, even though Roosevelt did not intervene directly for the companies, he stood by and allowed them to hold their uncompromising stand on claims, enabling their private proprietary concerns in Mexico to override concern for strengthening America’s enemies in the coming war. Mexican oil was shut out of the United States, even as it flowed to the Axis.

  That was not the way Cárdenas might have wished it. In his radio speech announcing the expropriations, he said that Mexico would not “depart a single inch from the moral solidarity maintained by Mexico with the democratic nations.” He sent the head of the Bank of Mexico to sell oil to democratic France and the Spanish republic, but the effort did not succeed.

  Meanwhile, almost all independent companies besides that of Davis shied away from Mexican oil out of fear of angering the international corporations. Independents relied on shipping extra loads for the big companies for a significant part of their business, and knew that part of their trade would dry up if they marketed Mexican petroleum. Also, the independents had to count on speedy loading and offloading at ports where most traffic came from the major companies; they did not have the money or legal infrastructure to fight Standard and Shell, which threatened confiscation of Mexican oil as “illegal” cargo. At the same time, besides sending oil to mainland Spain, the Rockefellers’ Standard Oil Company was shipping to the Reich through the Canary Islands, using German crews on some of its tankers.

  Five months after he nationalized the production of Mexican oil, Cárdenas was still looking for a way to sell it to democracies and align himself with the enemies of fascism. He entrusted the United Mine Workers president John L. Lewis, who was visiting Mexico City for a mass meeting of the International Congress Against War and Fascism, with a coded message for Roosevelt. Hitler had just annexed the Sudetenland of Czechoslovakia; Cárdenas proposed a Pan-American economic boycott against aggressor nations to deprive them of raw materials for their international arms buildup. He suggested the move even though he knew it would destroy Mexico’s German market, now in place thanks to Davis. But Roosevelt, Ambassador Daniels later wrote, was under too much pressure from the oil companies to pursue the proposal.

  Meanwhile, William Davis was exporting half of Mexico’s monthly production; in 1938 and 1939, Germany and Italy were the biggest customers. A company called La Laguna, owned by a naturalized Mexican citizen of Japanese descent, Kiso Tsuru, sent smaller quantities to Japan. Isoroku Yamamoto, who would one day lead the attack on Pearl Harbor as admiral of the Japanese fleet, was Tokyo’s naval attaché in Washington in the late 1920s, and he visited the Mexican oil fields with Tsuru. Yamamoto, who studied the petroleum industry as a student at Harvard, saw oil’s potential for fueling a modern navy. Eventually Tokyo found that importing oil from California directly across the Pacific was more cost-effective than shipping Tsuru’s crude from Tampico through the Panama Canal.

  When war broke out in Europe in September 1939, Great Britain established a naval blockade of Germany, halting the flow of Mexican oil across the Atlantic. So Davis rerouted his tankers across the Pacific to the edge of Russia at Vladivostok, then shipped the oil by train on the Trans-Siberian Railway. Around the same time, Washington, intent on improving frazzled relations with its southern neighbor, quietly began allowing a small amount of Mexican oil (handled by Davis) to enter the United States. The big companies stuck to their boycott.

  Davis obtained refineries in Texas, from which he sent oil to Spain, nominally neutral but now in Franco’s hands; from Spain the Texas-refined oil was clandestinely rerouted to Germany or used to refuel U-boats off Spain and Portugal. But the U.S. company Texaco and Standard held a near monopoly on this shady trade with the “neutrals,” so Davis was disappointed to do little business in their ports.

  As war in Europe curtailed profits, Davis looked for more ways to sell Mexican oil in the United States. By then Washington was becoming impatient with the blustering position of Standard and Shell, a stand that only benefited the Axis and appeared increasingly unpatriotic as U.S. involvement in the war came closer. Davis entered secret talks in New York with Mexican officials and Harry Sinclair, owner of Sinclair Oil, one of the smaller expropriated companies. Sinclair decided to break with the major companies and came to a separate agreement with Mexico, weakening the Big Oil boycott. By the end of 1940, Davis and other American buyers were purchasing more than 75 percent of total Mexican exports.

  By this time, however, damage had been done to the Allies’ cause. Germany and Italy procured 94 percent of Mexico’s petroleum exports between the crucial months of March 1938 and September 1939. The Axis achieved a powerful head start on the war thanks to Mexican oil.

  The oil gave Germany a jump on France and England, especially in the manufacture of fighter aircraft. The Reich
had little hard currency to pay for the imported raw materials necessary to turn out tanks, ships, arms, and planes; by using a barter system with Mexico, trading machinery and other manufactured goods for oil, Hitler procured the vital petroleum supplies without spending the funds that went instead to the accelerated arms buildup. Mexican shipments provided the Reich with a six-month supply of oil at the start of the war, enabling Hitler’s invasion of Poland in September 1939, which brought a still-unprepared Britain into the conflict. The oil also enabled the invasion of France the next spring. It filled Admiral Karl Doenitz’s storage tanks to feed the fleets of marauding U-boats. For years Hitler’s victories were fueled by the advantages that Mexican oil gave him early in the war.

  * * *

  On November 19, 1941, the long-protesting oil companies accepted Mexico’s offer for their expropriated property. They realized that Mexico was not going to change its mind about oil nationalization and had found ways to market its petroleum without them, through William Rhodes Davis and others. The probability of U.S. entry into the war lent urgency to the resolution. Even Secretary of State Hull, who had hung on to the hard line favoring the companies longer than anyone else in the administration, became eager for a settlement given “world conditions and especially those of our hemisphere.” The administration, not wanting to repeat the Mexico experience, pushed for agreements with other oil producers such as Colombia and Venezuela that would preempt unilateral expropriations.

  After Pearl Harbor, Roosevelt encouraged Great Britain to renew its relations with Mexico, broken off when Shell lost ground in the nationalization. The times demanded alliances among democracies wherever they might be.

  Roosevelt had long tried to convince Americans, especially political conservatives, that his Good Neighbor policy was not a free pass for Latin American extremists to confiscate property and take advantage of foreign businesses. He was required to make that argument less at home following Pearl Harbor, but he still had to impress Latin American countries with the Allies’ friendship. Good relations with Mexico would show the others that rancor over economic imperialism was a thing of the past with Washington’s nearest Latin neighbor.

  On an April evening in 1943, President Roosevelt and Mexico’s president Manuel Ávila Camacho sat side by side in high-backed, hand-carved chairs at a banquet table festooned with roses in the northern Mexican city of Monterrey. Ávila had succeeded Cárdenas in 1940 and declared war against the Axis in May 1942 after U-boats sank two Mexican tankers. The meeting with Roosevelt would help his popularity, Ávila hoped, which was flagging with wartime inflation and rumors of a military draft. Panic and demonstrations, especially in the countryside, had broken out with rumors that young Mexicans would be sent to die in foreign lands for someone else’s war.

  Back in 1909, when the first foreign oil companies were digging into Mexican soil, U.S. president William Howard Taft and Mexican president Porfirio Díaz had met on the Texas–Mexico border at El Paso in “a veritable pageant of military splendor … and patriotic fervor,” a Texas paper reported. On that occasion Taft demanded assurances of support for U.S. investments, and Díaz gave them. This time the presidential summit would be more give-and-take—a mark of how the war had shaken the bilateral relationship. Roosevelt and Ávila could dine like comrades knowing the oil dispute had been resolved. But they could not dine without worry.

  A look at the newspapers during the week that Ávila and Roosevelt met shows what the Allies were up against: in North Africa, British shock troops fought hand-to-hand with German and Italian soldiers led by Reich field marshal Erwin Rommel, the Desert Fox; the Russians claimed Hitler was preparing to use poison gas, and the British threatened that if he did, London would launch massive gas attacks on Germany. On the day of the Monterrey meeting, Roosevelt announced that Japan had just executed several U.S. airmen captured the previous year in raids over Tokyo. Japan warned it would give future captured pilots a “one way ticket to hell.”

  Even so far from the battlefields, the atmosphere was full of war. Ávila was constantly reassuring the Mexican public he was sending no troops to fight, yet he saw himself as a wartime president. A stocky former army officer, Ávila had never left behind his fascination with military strategy and tactics. In the capital’s presidential residence, Los Pinos, he ordered several war rooms arranged with detailed maps and model battlefields of World War II engagements, where he privately moved around figurines of soldiers.

  Seated next to the U.S. president in Monterrey, Ávila might have regarded himself at a pinnacle of shared responsibility for the future of democracy. He pledged allegiance to Roosevelt’s recent controversial demand in Casablanca for unconditional surrender of the Axis powers.

  Yet the Mexican president kept certain decisions for himself. He declined to allow U.S. troops to be stationed in Mexico, as Washington desired. Neither would he accede to U.S. wishes to transfer Mexican Japanese—whether they were Mexican citizens or not—to concentration camps in the United States alongside Japanese American inmates. Instead, Ávila moved hundreds of families away from their homes near the U.S. border and the coasts into Guadalajara and Mexico City. The oilman Kiso Tsuru, the highly respected Matsumoto family, and other prominent Mexican Japanese helped to look out for the welfare of the displaced for the duration of the war. The families suffered from their forced dislocation inside Mexico, an episode largely unknown among the Mexican public. But almost seventy-five years later some elderly Japanese Mexicans still speak of Manuel Ávila Camacho as a champion who refused to send them to the American camps.

  In Monterrey the presidents expressed satisfaction with their pact signed six months earlier, arranging for Mexico to send more than three hundred thousand workers to the United States to aid the wartime agricultural economy. U.S. growers faced a sudden and urgent need for manpower to replace men who went into the service. The Mexicans, often desperate for work, provided cheap labor. During the war, the bracero program was a vital source of assistance to the United States, helping to ensure an uninterrupted food supply for population and troops. Meant to be temporary, the program saw some 4.5 million Mexican workers take part until it ended in 1964.

  Oil had brought the relationship between the neighboring countries to a point of crisis, and the exigencies of war spurred its resolution—but only after a delay that benefited the enemy. Roosevelt was determined that such calamity should not happen again. “We have all of us recognized the principle of independence,” Roosevelt told his Mexican hosts. “It is time that we recognize also the privilege of interdependence—one upon another.”

  Roosevelt listened as the Mexican president recast the geographical proximity of the countries in a bright, positive light. Being so close to the United States was not necessarily a bad thing. Instead, the border between Mexico and the United States, unfortified and undefended, was a positive symbol.

  “Geography has made of us a natural bridge of conciliation between the Latin and the Saxon cultures of the continent,” Ávila said. “If there is any place where the thesis of the good neighborhood may be proved with efficacy, it is right here in the juxtaposition of these lands.”

  The war did not smooth differences between Washington and Mexico City forever. But no more would gunboats be dispatched to impose U.S. will on its southern neighbor. Terms of trade would be hashed out over a table, not with a Big Stick.

  As Roosevelt and Ávila met in Monterrey, Lázaro Cárdenas, who had chosen the middle-of-the-road Ávila as his party’s candidate to succeed him, was serving as minister of defense and navy. William Rhodes Davis, the oilman who had made Cárdenas’s hallmark reform—oil nationalization—viable at a critical moment, had left the stage.

  * * *

  The summer before Pearl Harbor found Davis in Houston, as hale and active as ever, tending to company business. At two o’clock in the morning on August 1, 1941, he stumbled down a corridor at the apartment he kept at the Lamar Hotel and knocked on the bedroom door of his longtime executive
assistant, Erna Wehrle. Agitated and unnaturally talkative, Davis told her he was “really sick” and terribly thirsty. As Wehrle called Davis’s local doctor, Davis went to the kitchen for water, returning back down the corridor once more to the door of her room. He stood there as she hung up the phone. Without a word, he collapsed on the floor, blood running from his mouth.

  The official cause of Davis’s death was given as “a sudden seizure of the heart.” But it may have been murder. At age fifty-two, Davis had recently received a clean bill of health from his regular doctor. The description of his last moments appears to be inconsistent with coronary occlusion—“a sudden seizure of the heart”—and consistent instead with some kinds of poisoning, a biographer suggests, such as atropine (belladonna). Postmortem procedures were cursory; there was no autopsy, and the body was cremated. J. Edgar Hoover’s FBI had discouraged further police investigation on a request from the British Security Coordination led by William Stephenson, “Intrepid.”

  Among BSC files is a record of Davis’s business deals with the Nazis, including a project “to ship oil through Mexican charter vessels” to hidden fuel drops for U-boats on Atlantic and Caribbean islands. Davis had reached the end of his trail. The British intelligence file on the putative U-boat fuel-drop project closes tersely: “The swiftest way to put a stop to this scheme was to remove Davis from the scene.”