Mr. Corwin to Mr. Seward.

No. 20.]

Sir: The monthly British courier offers a safe conveyance to Vera Cruz, of which I avail myself to advise the department of passing events here.

Since my last despatch a dispute has arisen between the allies and Mexico, concerning the possession of the custom-house at Vera Cruz, and the disposition of the revenue accruing there. Unfortunately, nothing was said or agreed on touching this point in the preliminary treaty, a copy of which I sent some time since to the department. Two commissioners on the part of Mexico, a week ago, went to Orizaba, to meet Sir 0. Wycke and General Prim, to endeavor to arrange this matter. I have this moment learned by telegraph from Puebla that the commissioners are on their return to Mexico, having arranged this question to the entire satisfaction of all parties.

Another matter threatening disturbance of friendly feeling is a tax of two per cent, on all capital, including foreigners, recently levied. All foreigners here seem to think that property owned by them is to pay no taxes, especially if they can make out plausibly that such tax is, in their own favorite phrase, an “extraordinary [Page 734]tax.” The British, Prussian, and French ministers, object to this tax, and write angrily and vehemently to their fellow subjects here, as well as to the government, against it. I have thought it my duty to hold a different opinion on the subject, and wrote to the American consul at Acapulco (at his request) an opinion, giving also to American citizens here the same opinion. I send herewith copies of my correspondence with the consul at Acapulco. As the arguments of the other foreign ministers on this subject had been published by themselves, at the earnest request of the minister of foreign affairs, I allowed the government to publish my opinion given to American citizens resident here.

I hope the course I have judged it proper to take in this business may meet the approval of your department. It has brought upon me the universal censure of all foreign residents here, including our own Americans, who, with few exceptions, look upon Mexico as a place wherein to make their fortunes as rapidly as possible, and carry them to some other country as soon as possible.

The minister of foreign affairs here expressed much regret that my instructions in your despatch No. 37 were so stringent in regard to the terms on which a loan could be had from the United States. This government wants money now more than it probably will a year or two hence. Its great effort now is to show the allies that they are able to crush out the remnant of the reactionary bands that still roam over the country, dashing into the more fruitful and well cultivated portions of it unexpectedly, robbing and assassinating wherever they go, for a brief time, and then suddenly retreating to some of the inaccessible mountain holds which abound in this country. The reactionary chiefs yet remaining, aware of this necessity of the government, recently united all their forces, numbering about three thousand. An expedition was set on foot by the government designed to surround and capture or kill this entire force. Five thousand men were assembled for this purpose, and I know they were detained here for a whole week, for want of funds to feed them on, their march. The requisite amount was only obtained five days since, by a forced loan. During this time the minister of foreign relations frequently assured me he could raise this money from capitalists here readily, if he could assure them that a loan of a few millions was to be expected from the United States. It is quite impossible for any one, not having the knowledge which I have acquired by one year’s close observation, to estimate the depth to which the exhausted resources of this country has fallen by forty years of civil war, and our own invasion and conquests in 1847 and 1848. Now when three powerful nations are here, threatening to precipitate half of Europe upon them unless they treat on terms such as they dictate, Mexico, with all her faults and follies, is an object of sympathy to all who regret to see weakness trampled in the dust by strength. I do not believe that some of the allies intend to deal harshly with Mexico, but I am not satisfied that this is either the feeling or intention of one at least of the three powers. More light will be thrown upon the pdint by the events of the next month.

I have the honor to be your obedient servant,

THOMAS CORWIN.

Hon. Wm. H. Seward, Secretary of State of the United States, Washington, D. C.

C 1, with No. 20.]

Mr. Van Brunt to Mr. Corwin.

Sir: There has been published at this port a decree of the general government of Mexico, authorizing a tax of two per cent, on all property, whether native or foreign.

[Page 735]

I send an especial courier to know your opinion on the same for my guid ance, as I shall be called upon by citizens of the United States for protection in case the tax be enforced, which has not been at the present writing, but I have authority to state will be, and believe is only deferred by the presence of a United States vessel-of-war in port, whose protection I shall seek in case the necessity arrives to stay proceedings until I have your reply.

I would state the Pacific Mail Steamship Company have a large amount of valuable property here, and this tax would fall heavily and injuriously on them, this being merely their depot, granted to them by the general government as such.

By the wording of the decree, it would fall upon them equally with others.

Begging a speedy reply, I have the honor to be, very respectfully,

D. B. VAN BRUNT, United States Consul.

Hon. Thos. Corwin, United States Minister, Mexico.

C 2, with No. 20.]

Mr. Corwin to Mr. Van Brunt.

Sir: I have just received your letter of the 26th of February, asking my opinion as to the legality of the tax of two per cent, on all capital owned by citizens or foreigners in Mexico.

I have carefully considered the subject some time since, and have come to the conclusion that American citizens are obliged to pay this tax. Congress, at its last session, by a decree of that body, conferred upon the cabinet all the powers of government, legislative and executive. I have entertained serious doubts whether, under the constitution, this act was valid; but on full consideration, I am satisfied that is a question for the supreme judicial authority; and as the present government is accepted as the only legitimate one, and been so recognized by all foreign powers represented here, its acts must be regarded as legal, and binding upon the citizens of all nations resident in or claiming property within the territory of Mexico.

The taxing power is one belonging to all organized governments, without which it is obvious no political organization could exist. The limits of this power over foreigners are fixed either by the law of nations or by treaty.

National law on this point is positive and universally recognized by all modern writers.

One of the most accurate and learned treaties in modern times on national law has thus defined this power: “Every independent state is entitled to the exclusive power of legislation in respect to the personal rights and civil state and condition of its citizens, and in respect to all real and personal property situated within its territory, whether belonging to citizens or aliens”— (See Wheaton’s International Law, page 112, part II, chapter II, section 1.)

The legislative power here given over the property of foreigners has always been considered as including the power to tax the property of foreigners. It has been the constant practice of the United States government, as well as the governments of the separate States, to tax the property of foreigners just as they tax the property of citizens. This power may, however, be limited by treaty. The only treaty stipulation on this subject between the United States and Mexico is to be found in the ninth article of the treaty of 1831, which is now in full force, that treaty having been revived by the treaty of 1848. That [Page 736]article reads as follows: “The citizens of both countries, respectively, shall be exempt from compulsory service in the army or navy; nor shall they be sub-jected to any other charges or contributions or taxes than such as are paid by the citizens of the States in which they reside.”

This treaty, in my judgment, obliges citizens of Mexico resident in the United States to pay in the United States all “charges or contributions, or taxes” which are paid there by the citizens of the United States, and as clearly binds all citizens of the United States resident in Mexico to pay all “charges or contributions, or taxes” which are paid here by the citizens of Mexico. If, therefore, a Mexican citizen is bound by law to pay this tax, then, by the treaty of 1831, the American citizen resident here is bound to pay it also. The treaty makes no distinction between ordinary and extraordinary taxes, between local or general taxes. I have no doubt that at this moment taxes that may well be termed “extraordinary” are levied, both by the federal and State goverments, in the United States, which operate alike upon the property of the citizens of the United States and Mexicans resident there.

With these views, I cannot consent to any forcible opposition to the payment of this tax on the part of American citizens. The citizens of other governments will regulate their conduct by the opinions of their own diplomatic representatives. The tax may be too high, or it may be in other respects impolitic; but these are questions to be determined by the power having the right to tax. So long as American citizens are taxed in the same way as Mexican citizens, I am satisfied that, under our treaty with Mexico, to which I have already referred, the government of the United States cannot interfere to shield American citizens from the payment of such tax. If other nations have treaties forbidding such taxation on their citizens here, of which I am not aware, all that can be said is that they are more fortunate than the United States in this respect. Our citizens, in common with citizens of Mexico, may remonstrate in respectful terms against this tax as being onerous or impolitic, but they can claim no exemption from its payment which a Mexican citizen might not claim with equal propriety.

As to the steamship company’s property, no part of it afloat is subject to taxation. Only land, houses, or other property located on Mexican soil within the territorial limits of the Mexican republic, can be subject to this or any other tax levied by the Mexican government, whether state or national.

If, however, any American citizen shall believe that he is not bound to pay this tax, he can pay it under protest and make it the subject of reclamation if he chooses, but in my judgment such payment would form no just ground of claim on the Mexican government.

THOMAS CORWIN.

D. B. Van Brunt, Esq., United States Consul, Acajpulco.

C 3, with No. 20.]

Mr. Corwin to Senor Doblado.

Sir: The undersigned has the honor to enclose herewith a copy of a letter from the United States consul at Acapulco, with reference to the tax of two per cent, lately levied by the Mexican government. The undersigned also encloses his reply to this letter, in order that your excellency may know the advice which he has given to the Americans residing in this republic. Similar letters have been sent by the undersigned to other American consuls in different parts of Mexico. But as Sir Charles Wycke, her Britannic Majesty’s representative in Mexico, has addressed to the undersigned a private letter from Vera Cruz, requesting [Page 737]him to remonstrate against the collection of this tax from foreigners, he would be glad if your excellency would inform him what course the Mexican government proposes to pursue in reference to this matter; whether or not it proposes to collect this tax from foreigners and Mexicans indiscriminately.

The undersigned renews to your excellency the assurances of his high consideration.

THOMAS CORWIN.

His Excellency El Sn. Don Manuel Doblado, Minister of Foreign Relations, Mexico,

[Translation]

Mr. Doblado to Mr. Corwin.

C 4—Despatch No. 20.]

The undersigned, minister of foreign relations, has had the honor to receive the note of his excellency Mr. Thomas Corwin, envoy extraordinary and minister plenipotentiary of the United States of America, dated on the 1.0th instant, and the copies which he encloses of a communication from the consul for Acapulco, in relation to the law which imposed a tax of two per cent, upon capitals, and of the reply which his excellency was pleased to make to him.

The undersigned has not failed to perceive but with the most positive satisfaction the prudence, learning, and probity of his excellency Mr. Corwin, in the matter under consideration, and for which he returns to him his most sincere thanks. And in reference to the suggestion of his excellency Mr. Wycke, which has also been particularly addressed to the undersigned, there has been addressed to him in reply that which was given by this department to his excellency Mr. Wagner, under date of the 12th of January last past.

In replying with this statement to the aforementioned note of his excellency Mr. Corwin, it is gratifying to the undersigned to renew to him the assurances of his very distinguished consideration.

MANUEL DOBLADO.

His Excellency Thomas Corwin, Envoy Extraordinary and Minister Plenipotentiary of the United States of America.

D 1, with No. 20.]

Mr. Corwin to Senor Doblado.

Sir: In the negotiations now pending between the governments of the United States and Mexico, it becomes necessary that the government of the United States should be satisfied on the following points:

First. Can the United States make a loan to Mexico, in the present state of the relations between Mexico and the allied powers, without departing from the duties of a neutral, which is the relation my government now sustains towards the three powers and Mexico in the conflict now existing between the two latter.

To resolve this proposition it is necessary to ascertain whether the present relations of Mexico with the three powers is one of war or peace. If the former, then a loan of money by a neutral nation to one of the belligerents, to be used in carrying on a war against the other, would be considered a violation of neutral obligations.

[Page 738]

If, however, the present relations of Mexico with England, France and Spain are not of a warlike character according to international law, then the United States government would he perfectly justified in making the loan proposed, and the undersigned is authorized to assure the government of Mexico that it would give to the government of the United States great satisfaction to do so. The government of the United States, as is well known, has been and is anxious to do everything in its power to aid Mexico in extricating herself from the difficulties which have brought her into her present unhappy relations with the allied powers. But she is bound by obligations which she cannot disregard to maintain peaceful relations with those powers. For these reasons I have to ask your excellency to state in what light the Mexican government regards her present relations with the allied powers, whether they are that of peace or war, or whether the present state of things is merely a temporary armistice, which, should the proposed negotiation terminate unfavorably, would result in the resumption of warlike operations by both parties.

Should your excellency be able to satisfy the undersigned on these points, then it is indispensable that the value and amount of the lands and property proposed to be hypothecated by Mexico to secure the payment to the United States of the loan proposed should be authoritatively made known, in a form as authentic and satisfactory as possible.

Your excellency cannot fail to perceive and estimate truly the importance of the information most respectfully asked in this note, in facilitating the negotiation to which it refers, and which the undersigned is most anxious to bring to a speedy and favorable conclusion.

The undersigned takes great pleasure in renewing to your excellency the assurance of my distinguished consideration.

THOMAS CORWIN.

His Excellency El Sn. Don Manuel Doblado, Minister of Foreign Relations.

[Translation.]

D 2—Despatch No. 20.]

The undersigned, minister of foreign relations-, has received the note which his excellency Mr. Corwin, envoy extraordinary and minister plenipotentiary of the United States of America, has been pleased to address to him on the 13th instant, for the purpose of explaining certain points relating to the pending negotiations between the government of the United States and Mexico, and in reply he has the honor to inform his excellency that the Mexican government has made no declaration of war against the allied powers, and that after the preliminaries signed at La Soledad, on the 19th day of the past month, the probabilities of a peaceful solution of the pending questions have so increased as to become a fact.

Thus, therefore, the citizen president thinks that the United States do not fail in the obligations of a neutral nation by making a loan to Mexico, the more so since its employment can never be shown to be for the purposes of war, and on the contrary, this aid helps the government of the republic to comply with its engagements, and, consequently, to fulfil one of the conditions to obtain a firm and lasting peace.

With respect to the second point referred to in the note now being replied to, the undersigned cannot transmit, for reasons well known to the minister, an arithmetical statement of the value of the lands and property of the Mexican government, but he does positively state, under the faith of an official communication, that those values exceed by far that of the loan which is being negotiated, and [Page 739]that they fully guarantee the same. But if the case should arise that any sum should be wanting the Mexican government would promptly pay it, insuring the same now to the satisfaction of the United States.

The undersigned avails himself of this opportunity to reiterate to his excellency Mr. Thomas Corwin the assurances of his very distinguished consideration.

MANUEL DOBLADO.

His Excellency Thomas Corwin, Envoy Extraordinary and Minister Plenipotentiary of the United States of America,