The second issue in the oil controversy is taxation. Until the 1921 temporary increase, export duties on oil were collected at a theoretical rate of 15 per cent of its value. This valuation is supposedly on the basis of sales of oil in Mexico. There are hundreds of such sales, but their prices are not taken, and arbitrary estimates ostensibly based on the prices for which oil is sold abroad, less another arbitrary allowance for transportation, are the criteria. The results of this system have been confusing to the exporters, to say the least. Some of the lower grades of oil, for instance, were actually paying, not 15 per cent of their value, but 40 or 50 per cent. The valuations fluctuate also according to government caprice and the need of tax money; the result is another difficulty in making close prices to consumers, which in the end all must feel in the price of gasoline. A peculiar tax difficulty of the oil companies was over an exact doubling of the valuations and thus of the taxes, made by the Carranza government a few days before it fell--an increased tax which the de la Huerta and Obregon governments have sought to collect. Still more recent is the virtual doubling of oil taxes which shut in many of the wells during July, 1921. The direct oil taxes are now about $2,000,000 a month, so that the doubling is an item of no small moment. At present no immediate solution of the tax difficulties is in sight, and the companies have been split by favoritism into two camps. One is largely British, which finds it profitable to accept the decrees. The other is largely American and finds the enforcement of the new regulations oppressive. Some plans for relief have been discussed. One of the proposed oil bills based on Article 27 interprets it not as nationalizing petroleum, but as nationalizing the right of taxation, taking all tax privileges from the states and vesting them in the federal power. The idea would be to provide a single direct tax on petroleum extracted from the soil instead of upon that exported. Apparently this tends toward a solution of the tax question. But here again enters the difficulty of dealing with Mexicans, for such a direct tax would be without recourse, until its provisions became confiscatory, while at present the companies have at least a chance of defense in protests against arbitrary valuations. The outstanding fact in the tax situation, as in the nationalization question, is the bad faith of Mexican government. The much discussed reforms are non-existent, and government in Mexico is for the benefit, not of the governed, but of those who rule, and taxes fill not the treasury but the pockets of officials, and appropriations are not for schools and civic welfare, but for the army and “public works,” where graft is so colossal that it passes the conception of citizens of simpler lands.