In 1938, Mexico seized its oil back from foreign companies that had defied its own Supreme Court. When the compensation bill came due, thousands of ordinary people lined up outside the Palacio de Bellas Artes to help pay it themselves.
On March 18, 1938, President Lázaro Cárdenas nationalized Mexico's oil industry, expropriating seventeen foreign companies, including Shell and Standard Oil, after they refused to comply with a Mexican Supreme Court ruling ordering them to pay roughly 26 million pesos in back wages. Five days later, some 200,000 people rallied in the Zócalo to support the decision. On April 12, thousands gathered outside the Palacio de Bellas Artes to voluntarily donate money, jewelry, and livestock, including chickens, to help the government pay the foreign companies the compensation it owed them. Cárdenas created the state oil company Pemex by decree on June 7, 1938, and it began operating on June 20. The expropriation is still marked every March 18, and Pemex remains one of Mexico's largest state institutions.
On April 12, 1938, thousands of people lined up outside the Palacio de Bellas Artes in downtown Mexico City, waiting to give the government their jewelry. Some brought coins. Some brought livestock. A country that had just picked a fight with some of the largest oil companies in the world was, for a few weeks, being bailed out by its own citizens, one wedding ring and one chicken at a time.
The fight had started over wages. In December 1937, Mexican oil workers demanded better pay and conditions from the foreign companies, mostly British, Dutch, and American, that controlled the country’s oil industry. A labor board sided with the workers, ordering the companies to pay roughly 26 million pesos in back wages and benefits. The companies appealed to Mexico’s Supreme Court. The Court upheld the ruling anyway. The companies refused to pay regardless, betting that Mexico wouldn’t enforce a judgment against foreign firms with that much money and political weight behind them.
President Lázaro Cárdenas called that bet. On March 18, 1938, citing Article 27 of the 1917 constitution, the same constitution written in the chaos right after the Revolution, he nationalized all seventeen of the foreign oil companies operating in Mexico, Shell and Standard Oil among them. In his address to the nation that night, he said the government had “no means less drastic” left, after the companies’ own defiance of the country’s highest court.
The public reaction wasn’t quiet. Five days later, on March 23, roughly 200,000 people packed the Zócalo to show their support, a crowd big enough to fill the square from edge to edge. Expropriating the companies also meant Mexico now owed them compensation, a bill the government didn’t have the cash to cover on its own, so on April 12 the First Lady, Amalia Solórzano de Cárdenas, personally headed a women’s committee formed to collect it, the Comité Femenino Nacional Pro Pago de la Indemnización Petrolera, receiving donations outside the Palacio de Bellas Artes from citizens of every social class: wedding rings, gold coins, family jewelry, silverware, chickens, whatever people had that might be worth something toward the debt. The response was big enough that the collection ran for three straight days. Everything went into a fund created specifically to hold it, the Centro de Redención Económica Nacional, the National Center for Economic Redemption.
The donations went toward the property debt. The wage dispute that had started the fight, the workers’ 26 million pesos, was already settled under the original ruling. The property debt was far larger, and settling it turned into an international standoff fast. Britain called the expropriation illegal, and Mexico broke diplomatic relations with London that May, a rupture that lasted years. Washington suspended a monthly agreement to buy Mexican silver and had the Export-Import Bank cut off financing, while an informal boycott discouraged Americans from buying Mexican oil or even visiting the country. It took until 1942 for a joint commission to settle the remaining balance owed to the American companies specifically: roughly 24 million dollars, plus interest, on top of 9 million already credited, split between Standard Oil’s New Jersey and California arms. Mexico paid that off gradually over the years that followed. The chickens and wedding rings hadn’t covered the whole bill, but they were real money toward the same debt, freely given at the exact moment the government needed the country to prove it meant this.
On June 7, 1938, Cárdenas signed the decree creating Petróleos Mexicanos, Pemex, giving the new state company exclusive control over Mexico’s oil exploration, extraction, and refining. It began operating on June 20. March 18 isn’t an official day off in Mexico, but Pemex and schools across the country still mark it every year, and the company it created remains one of the largest state-owned institutions in the country nearly ninety years later. It started, in part, with a line of people outside a concert hall, handing over whatever they had.
Sources: Historical accounts of the December 1937 labor board ruling and the oil companies’ refusal to comply with the Mexican Supreme Court’s decision; the text of Lázaro Cárdenas’s March 18, 1938 address to the nation; contemporary accounts of the March 23, 1938 Zócalo rally and the three-day April 1938 donation campaign led by Amalia Solórzano de Cárdenas and the Comité Femenino Nacional Pro Pago de la Indemnización Petrolera outside the Palacio de Bellas Artes; historical accounts of Britain’s 1938 break in diplomatic relations with Mexico and the US response, including the 1942 compensation settlement; historical records of Pemex’s founding decree and start of operations.
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