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18 March 1938Reputable source · 2 sourcesWell documented

Cardenas Nationalizes the Oil Industry

A labor dispute with foreign oil companies ends with their assets seized and a state monopoly born

On the timeline · around 18 March 1938 · Modern MexicoThe Porfiriato and the RevolutionModern MexicoCardenas Nationalizes the Oil Industry192019301940195019601970

Quick facts

Expropriation order
18 March 1938
PEMEX established
7 June 1938
Companies affected
17 foreign oil firms
Cooke-Zevada settlement
18 April 1942, c. $29 million

What happened

After foreign oil companies, which controlled the large majority of Mexico's petroleum production (Royal Dutch/Shell's Mexican Eagle Company alone accounted for over 60%, with U.S. firms Jersey Standard and Standard Oil of California around 30% combined), rejected a government labor commission's proposed wage agreement and challenged it all the way to the Mexican Supreme Court, President Lazaro Cardenas signed an order on 18 March 1938 expropriating nearly all foreign oil company assets in the country. He created Petroleos Mexicanos (PEMEX) that June to hold a state monopoly over the industry and barred foreign oil companies from operating in Mexico. The move proved immensely popular domestically, and March 18 became an unofficial national holiday. The U.S. government, while backing American firms' right to seek compensation, also affirmed Mexico's right to expropriate foreign assets provided compensation followed, and the two countries settled the dispute through the Cooke-Zevada agreement on 18 April 1942, under which Mexico paid roughly $29 million to the affected American companies.

Why it matters

The 1938 expropriation, grounded in Article 27 of the 1917 Constitution asserting national ownership of the subsoil, remains one of the Mexican Revolution's most concrete and lasting legacies: it created a state oil monopoly that endured for over 75 years and turned the date into a symbol of Mexican economic sovereignty against foreign capital.

How we know

The Office of the Historian's account of the expropriation documents the companies involved, the date of Cardenas's order, and the terms of the eventual 1942 settlement between the U.S. and Mexican governments.

Sources

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Part of a timelineHistory of Mexico34 events · From the Olmec's colossal stone heads to a modern republic, told through the conquest that ended one empire and the revolution that remade the nation twiceView all →
Cardenas Nationalizes the Oil Industry · History of Mexico · SourcedStory