Mr. Plumb to Mr. Seward.

No. 44.]

Sir: In dispatch No. 32, of the 9th ultimo, I called the attention of [Page 382]the department to a decree recently issued by this government establishing what is termed a protective duty upon foreign flour.

I also mentioned that the duty so established consisted of a specific duty, fixed according to the value of flour in the United States and of certain “additional duties,” charged under that name, upon the amount of the direct duties imposed.

As this system of additional duties is one probably not well understood in the United States, and as it is a system which the decrees herein referred to give reason to apprehend it is the intention of this government to adhere to, some remarks regarding it may not be out of place.

The tariff of 1856, which, as I stated in the dispatch referred to, is, in general, still in force, established certain direct duties upon all foreign effects, as specified in the schedule named therein, imported into the republic.

These duties were made payable, one-half in forty days, and one-half in eighty days, counting from the day following the conclusion of the discharge of the vessel. Of each payment, one-half was to be made at the ports, and the other at the capital of the republic.

In addition to the foregoing direct duties, there were established what were termed “additional duties.” These were five in number, and were as follows:

1. A municipal duty of twelve and one-half cents upon each package of two hundred pounds, to be collected by the maritime custom-houses and kept in a separate account, and designed for the use of the municipalities of the ports, as might be directed by the government.

2. A duty of public improvements of twenty per cent. upon the amount of the duties of importation, to be applied to the payment of interest upon capital raised for the construction of railroads, as might be specially assigned by the government.

3. A duty of internacion, or inland duty, consisting of ten per cent. upon the amount of the duties of importation, and to be paid on the departure of effects from the ports or frontier custom-houses for places in the interior.

4. A duty of counter register, consisting of twenty per cent, upon the amount of the duties of importation, and payable upon the arrival of effects at the capital or principal point of destination in the interior.

5. A duty of amortization, or sinking fund of the public debt, consisting of twenty-five per cent. upon the amount of the duties of importation, and payable at the general treasury of the nation in bonds of the public debt.

There was also imposed, by article five of the same tariff, upon all effects embraced in the free list, (which includes coal, quicksilver, railroad iron, machinery, salt, &c.,) a municipal duty of twenty-five cents on every two hundred pounds weight of such effects, payable one-half at the ports, and one-half at the place of final destination in the interior.

Since that period these several and numerous additional duties have been varied from time to time, and either changed in character or the total amount increased or diminished by various special decrees. This has been done to such an extent that the merchants, and even the government officials, are often in doubt as to what is the total amount of the duties actually in force. This fact is well illustrated by the circumstance that, when writing the dispatch to which I referred at the opening of this communication, I applied to the chief officer of the section in the treasury department from which the decree in question had emanated, to learn what the total amount of the additional duties now in force actually was, and after sending specially to [Page 383]the custom-house to have a liquidation made, being in doubt himself, he informed me by note that the amount was sixty-eight and one-half per cent., and I so made the calculations given in that dispatch. Yet, a few days afterwards, and when my communication had already gone, I received another note from the same gentleman advising me that a mistake had been made, and that, as the duty of counter register had been augmented by a federal contribution of five per cent., the additional duties now amounted to seventy-three and one-half per cent., instead of sixty-eight and one-half per cent., as he had before informed me.

The calculations I made in dispatch No. 32 are, therefore, too low by five per cent. Since the date of that dispatch, also, the additional duties have been still further modified by three several decrees upon subjects not directly pertinent to the tariff, which have been issued by this government.

One is a decree, issued under date of the 19th ultimo, which, while it establishes a much-needed reform in the abolition of the old Spanish system of tolls on all the highways of the republic, yet perpetuates the system of additional duties, and of treating subjects pertaining exclusively to the tariff in special decrees having no direct connection therewith, by imposing, to supply the place of the revenue from tolls abolished, a new duty upon all foreign effects introduced by the maritime or frontier custom-houses of the republic of one dollar for every two hundred pounds weight of such effects; and this duty is to be applied also to such articles as machinery, agricultural implements, &c., that have heretofore been free of duty, except the twenty-five cents per two hundred pounds before mentioned, as imposed by article five of the tariff.

This new decree, therefore, increases the duty upon flour from the United States by a further amount of $1 per barrel, which is to take effect from the 1st of January next.

The second decree to which I refer as affecting the existing tariff rates is the concession revalidating the rights of the railroad company from this city to Vera Cruz, which appeared under date of the 27th ultimo, and is issued in the form of a general law.

By this decree the additional duty of public improvements, of twenty per cent., is to be payable hereafter, not in money, as heretofore, but in a public paper which is to be emitted for that purpose by the department of Fomento, and is to be sold by agents of the railroad company in all the ports and in the capital of the republic, to a sufficient extent to secure to the company the receipt of an annual subvention of $560,000 for twenty five years. The merchants, therefore, will now have to buy this paper before they can make the settlement of their duties.

By article 40 of the same decree there is also a further provision made by which, until the 31st of December, 1871, or an earlier period if the railroad is sooner completed, the duty of amortizacion (sinking fund) of the public debt is reduced from twenty-five per cent. to fifteen per cent., and is made payable, not in bonds of the public debt, as heretofore, but in shares of stock in the railroad from this city to Vera Cruz. The foreign importer, therefore, before he can adjust this portion of his duties, has to search for and purchase shares of stock in a railroad company and to pay such percentage of his duties with said shares, rather than in bonds of the public debt or in money.

The duty of amortizacion, as heretofore payable in bonds of the public debt, really amounted to but some two and one-half per cent., for the bonds could be purchased at from seven to ten cents on the dollar, while, as now made payable, in the shares of the railroad company, it will amount to the full rate of fifteen per cent.

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The third decree was issued under date of the 28th ultimo, and establishes a special tariff of duties, which are to be collected by the federal custom-house at this city for the benefit of the municipality. These duties, besides certain specific rates, as $4 50 per barrel on cider, $2 25 per barrel on vinegar, &c., consist of 40 cents on every two hundred pounds of foreign groceries and 75 cents per two hundred pounds on all other foreign effects, except machinery, which is to pay 20 cents per two hundred pounds. This decree, therefore, not only establishes a further additional duty, but appears to look to a continuance of the system of interior custom-houses.

It is easy to see that with this complicated system of different duties, and the changes that are so frequently made, and as, for instance, in the decree establishing the new rates of duties on foreign flour, sometimes without any previous notice, that commerce with this country must labor under very great disadvantages and uncertainties, and that the most beneficial part of trade—numerous shipments in small amounts— must be entirely shut out. If I find it difficult myself, when on the spot, to ascertain what the fixed amount of the duties that have to be paid actually is, how can a merchant or small shipper abroad, who thinks of making a venture to this country, make any calculation as to what he has got to pay, and whether the adventure will be desirable or not. On the contrary, the moment he comes to investigate what the charges will be he finds himself involved in an uncertainty so great that the idea of making a shipment to Mexico is at once abandoned. The result is seen in the fact that the foreign commerce now carried on remains in the hands of comparatively a few, who dedicate themselves, as to an intricate profession, to a study of the manner and means of getting merchandise from abroad into the interior of this country, and accessible to consumers.

As the liquidation of the duties has now to be effected part at the ports and part in the interior, merchandise is followed from the ports with custom-house passes and inspection, and, arriving in the interior, as at this place, has to undergo for the second time custom-house formalities, and again, for a third time, when passing from this point, or any other central market, to the interior states.

A merchant in this city, desiring to send geods from his own warehouse to a customer in the interior, has to go through all the customhouse formalities attending the shipment of goods to a foreign country. These trammels, while embarrassing and costly in the extreme to foreign commerce, also rest a heavy burden upon the consumption of the country, by which, in the end, all charges have to be borne.

Since commencing to write this communication, I addressed a note to the chief clerk of the treasury department, asking him for a statement of the present number and denomination, as well as amount, of the different additional duties now in force, and have received from him a reply, in which he incloses to me the following list as showing the various duties that have now to be paid upon foreign merchandise imported into the republic, viz:

1st. Important duties according to the tariff.

2d. Internacion, or inland duty, ten per cent. upon the foregoing.

3d. Public improvements, twenty per cent. upon the same.

4th. Railroad, fifteen per cent. upon the same.

5th. Counter register, twenty per cent. upon the same.

6th. Municipal, for Vera Cruz and Tampico, three and one-half per cent, upon the same.

7th. Municipal, at the other custom-houses, twelve and one-half cents per package, and the other duties annexed to this as beneficencia, hospital, &c.

[Page 385]

8th. Federal contribution of twenty-five per cent. upon the duty of counter-register.

This statement should be considered as final and conclusive, as it emanates from the chief clerk of the treasury department, but it does not include two local duties of eight per cent. and of twelve per cent. made by the summing up of several local charges, which I am informed merchandise arriving in this city has to pay before it can reach the warehouse of the merchant and pass thence to customers in the interior. The total of the additional duties upon merchandise coming to this city would therefore appear to be ninety-three and one-half per cent. upon the amount of the duties of importation.

In order that commerce with this country may be placed upon that footing of liberality which it may properly claim, it is very evident that some reforms in the Mexican customs system which will unify and simplify it, and render it everywhere equally applicable throughout the republic, are vitally necessary, and without such changes it would appear to be very difficult for a healthy or enlarged commerce to be established. Such modifications would unquestionably be as much for the benefit of Mexican consumers as of foreign shippers, inasmuch as by generalizing and simplifying commercial intercourse trade is not only increased but consumers are supplied at lower rates; while at the same time the national revenue of the country, which so encourages commerce, is largely augmented over the amount realized while pursuing the opposite policy.

The first necessity, in my judgment, for the increase of commercial intercourse with this country, now that a period of peace has arrived, is the simplification and unification of its customs regulations. It is not so much what rate of duties may be imposed, for this burden will fall eventually upon the consumer, as it is that the duties should be fixed in one precise sum, be everywhere equally applicable, and that the liquidation be made once for all at the port or frontier custom-house of entry, and merchandise then be allowed to move freely into the interior of the republic, instead of being followed by passes and permits, and customhouse inspection, as now.

The moment when commerce between the United States and this country should be built up appears to have arrived; but unless the Mexican government can be induced to adopt some such changes in its customs-regulations as those that have been indicated, the existing trammels are so vexatious and the embarrassments so numerous, that there would appear to be great danger that they will constitute an almost impassable barrier to any extensive or satisfactory commercial intercourse.

This must be evident, I think, from the analysis of certain features of the present regulations that I have made in this communication.

What the amount of duty to be paid shall be is a question that every country has a right to adjust according to the exigencies of its financial, position, under a wise regard, it is to be trusted, as to what rates will prove most beneficial in all respects; but it is surely a proper subject of friendly international solicitude that unnecessary formalities not sanctioned by the commercial customs of the present day shall be removed and legitimate commercial intercourse be facilitated.

Certainly our immediate neighborhood and a common commercial interest, that should tend to strengthen the ties of peace between the two countries, makes this subject one of interest to the people of the United States.

I have the honor to be, very respectfully, your obedient servant,

E. L. PLUMB,

Hon. William H. Seward, Secretary of State, Washington, D. C.

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