# Mexican Oil Expropriation On **March 18, 1938**, Mexican President Lázaro Cárdenas signed a decree expropriating the assets of nearly all foreign oil companies operating in Mexico — roughly seventeen American and British firms, including Standard Oil of New Jersey and Standard Oil of California (see [[Standard Oil]]) and the Anglo-Dutch Mexican Eagle. Invoking Article 27 of the 1917 Constitution, which vested subsoil resources in the nation, Cárdenas nationalized the industry after the foreign companies refused to comply with a Mexican Supreme Court ruling on back wages for oil workers. The state oil monopoly Petróleos Mexicanos (Pemex) was established by decree that June. It was the first major non-Communist seizure of foreign natural-resource assets of the 20th century, and "Oil Expropriation Day" remains a Mexican national landmark. In this KB the event matters less for its own (considerable) significance than for what it set in motion: **the boycott that pushed Mexican oil into the arms of the Axis, via [[William Rhodes Davis]].** ## The Boycott and the Axis Pivot The expropriated majors retaliated with a global embargo on Mexican crude — refusing to buy it, blocking access to tankers, and pressuring other buyers to stay away. Mexican oil exports fell by roughly half, and Mexico was left desperate for customers at the precise moment the Axis powers were desperate for fuel. Into that gap stepped [[William Rhodes Davis]]. Already operating the [[Eurotank]] refinery in Hamburg, Davis brokered a barter arrangement: Mexico supplied crude to Davis, who refined and delivered petroleum products to Germany (and Italy), with Mexico receiving machinery and goods in return. The boycott meant to punish Mexico thus had the perverse effect of making **Nazi Germany one of Mexico's principal oil customers** in the run-up to World War II — and of deepening Davis's role as a private conduit of fuel to Hitler. ## Why It Matters in This KB 1. **It is the mechanism behind the Davis–Axis oil pipeline.** Without the majors' boycott, there is no obvious reason Mexican crude flows to Germany; the expropriation is the upstream cause of Davis's most consequential wartime profiteering. 2. **It is a clean case of a corporate boycott backfiring into a strategic gift to an adversary.** The oil majors' attempt to make an example of Mexico handed the Axis a fuel supplier and handed Davis his fortune. 3. **It connects the Koch–Nazi refinery story to a larger geopolitical event.** The [[Eurotank]] plant [[Fred Koch]]'s firm built needed crude; the expropriation helped determine where that crude came from. ## See Also - [[William Rhodes Davis]] — the broker who moved expropriated Mexican oil to the Axis - [[Eurotank]] — the Hamburg refinery that processed it - [[Standard Oil]] — among the expropriated majors that organized the boycott - [[World War II]] — the war the redirected oil helped fuel