Mr. Plumb to Mr. Seward.

No. 232.]

Sir: I had the honor on the 3d ultimo to receive your dispatch No. 105, of the 30th of September last, relating to the existence on the Mexican bank of the Rio Grande of a belt of country which is free from import duties on commerce, and inclosing a copy of a note addressed to you by the Secretary of the Treasury on that subject.

In compliance with the authorization contained in your dispatch to confer with the Mexican minister for foreign affairs upon this subject, I had interviews with Mr. Lerdo de Tejada on the 6th and 25th ultimo, at which the existing arrangement on the Rio Grande frontier was fully discussed; and at an interview on the 2d instant it was again referred to,

By the same mail which brought me your dispatch I received from the department a copy of the published diplomatic correspondence for 1867, in which (vol. if, p. 412) is inserted the letter I addressed to you from New Orleans, on the 7th of June, 1867, upon the subject of this objectionable arrangement on the Mexican frontier, and especially as relates to the facility thus given to the port of Matamoras to become simply a port of free deposit for effects from Europe for the purpose of [Page 627] their illicit introduction across the narrow Rio Grande into the United States.

This communication, presenting fully the views I could now only reiterate verbally, I brought to the attention of Mr. Lerdo in our first interview, and I left with him the volume that he might, as he proposed, have the letter translated and laid before President Juarez.

I also communicated to him at that interview the substance of your dispatch, and of the note of the Secretary of the Treasury, with the communication thereto annexed.

Subsequently I thought it desirable to communicate to Mr. Lerdo, unofficially, a copy of your dispatch and its accompaniments, and did so on the 27th ultimo, with a note, of which a copy is inclosed herewith.

I also communicated to him, unofficially, in a note under date of the 28th ultimo, a printed slip containing the resolution relating to this free zone adopted by the House of Representatives of the United States on the 9th of June last.

A copy of my note and inclosure is herewith transmitted. I also transmit a copy and translation of Mr. Lerdo de Tejada’s two notes in reply.

Since my arrival here in October of last year, I have, on frequent occasions, as the opportunity has offered, made reference, in my conversations with members of the government and with their public men generally, to the desirability and justice to commerce of having their national tariff, whatever it might be, made equally applicable over all parts of the republic, that the importer of foreign effects at one point or port might be placed on a just and fair equality with those at all others; and I have urged, so far as I properly could, the propriety, both in the interest of Mexico and from comity to the United States, of the termination of the arrangement now existing on the Rio Grande frontier.

I have, also, since the appointment on the 24th of January last of a commission to revise the tariff, sought such opportunities as I properly could to present these views to the members of that commission.

The ground, therefore, had been well prepared for a direct conference upon the subject with this government, and your instruction was most timely. In my interview with Mr. Lerdo on the 6th ultimo, I referred to the statement, published in the Diario Oficial of the day before, of the receipts at each of their different custom-houses, both maritime and frontier, by which it appears that the total receipts at all of the frontier custom-houses of the republic and at the port of Matamoras, for the first six months of the present year, amount only to less than $400,000, or at the rate of say $800,000 per annum.

Assuming the average rate of duties under the existing tariff to be fifty per cent., the above sum of duties would therefore represent a legitimate commerce of only about $1,600,000 per annum, while it is notorious that the commercial movement on that frontier and from Matamoras into the interior of the republic must be of vastly greater amount. A large contraband trade from the free zone into the interior of Mexico, to the detriment of the national revenues of the republic, appears, therefore, to be evident.

I also referred to the fact that the authorities of the State of Nuevo Leon, which is just without the free zone, have petitioned the general government for its abolition, representing its evil effects upon their commerce and the public revenue, as have also the ports of Tampico and Yera Cruz, whose importations are necessarily placed at great disadvantage by the evidently fraudulent introduction into the interior, by [Page 628] way of Matamoras and of the free zone, of merchandise there held free of duty.

Mr. Lerdo replied that he was aware of these representations that had been made, and was sensible of the disadvantages to their revenue, to which I had alluded; that the subject of this free zone was now under consideration by the government in connection with the reform of their tariff; and that while he had borne in mind the observations that on several previous occasions I had unofficially made to him upon this subject, full consideration would be given to what I had now, under the authorization of my government, brought to his attention.

That one difficulty that had weighed against terminating this system on the Rio Grande was the entire destruction that, it was urged, it would bring upon Matamoras, but that perhaps that effect might be avoided by the establishment of a system of bonded warehouses, such as maintained in the United States, and allowing merchandise to remain in the same for a certain time before the payment of duty. I replied for the first point that I could hardly believe it probable that the result he apprehended with reference to Matamoras would be realized; that legitimate commerce must in the end be a benefit, rather than an injury, to any place, and there seemed to be a positive necessity, in justice to commerce at the other ports of the republic, to have a common tariff maintained equally applicable everywhere.

Mr. Lerdo made some reference to the feeling that might be raised on the immediate frontier against the government by the abolition of privileges that had been so long conceded.

On the 17th ultimo the report just made of the commission to revise the tariff, a translation of which I transmitted to the department with my dispatch No. 224 of the 20th ultimo, was published. In it the commission recommend the abolition of the free zone.

In my interview with Mr. Lerdo on the 25th I referred to this report, and I inquired whether the position thus taken by the commission would be sustained by the government.

Mr. Lerdo replied that the report had not yet been fully considered by the cabinet, and he could not say what the decision would be, but he thought the feeling in congress, and the tendency of public opinion generally, was inclining towards the suppression of the free zone.

So far as the subject had been discussed in the cabinet and between himself and the President, the inclination was such as to lead to the probability of final action in the matter, so far as it might depend upon the executive being in accord with the recommendation made by the commission. That if the tariff should be taken up exclusively by congress, he could not say what its action might be upon this point. Nor if the new tariff should be left, under some general authorization, to the executive to conclude, could he yet positively say that it would be determined to abolish the free zone entirely, or what means of meeting the conflicting interests involved would be finally adopted. There was a very strong opposition from Matamoras against any change, and the evening before a representative from there had had a conversation with him of over two hours, in which some arguments, which were new to him and which appeared to have weight, were urged in support of the existing system. They were more of a local character, however, and of detail, and could not fully weigh against the general principles and the international bearings of the question which I had laid before him.

I then went over the ground again of the various arguments in favor of the equal application of the tariff of the country to all parts of the republic alike; to the fallacy of the representations made by interested [Page 629] parties that contraband trade could be more easily prevented under the present arrangement than if the free zone was abolished, and to the grave inconveniences arising to the United States from the liberty now extended to the merchants in this free zone to land and hold merchandise there from Europe without the payment of any duty, and the facility thereby afforded of fraudulently introducing the same into the United States across the slight barrier of the Rio Grande.

I also urged, that as the conviction had been created in the United States, on the part of our public men generally, that this arrangement maintained by Mexico, while it was of no advantage to the republic at large, was one of serious detriment to the United States, it became a question of mutual concern on the part of the governments of the two countries to endeavor, if possible, to remove this cause of undesirable prejudice.

Mr. Lerdo, at the conclusion of our conversation upon this point, stated that the government would earnestly seek to find such solution of this matter as, while not altogether occasioning the evils apprehended by some from the entire suppression of the free zone, would yet meet the views I had expressed, and also satisfy the principle of uniformity in their new tariff. He was inclined now to think that this might be obtained by establishing, in Matamoras and at the other points of entry on the frontier, a system of bonded warehouses such as prevailed in the United States, and that thus the systems on the two sides of the frontier might be made identical. If authorization should be given, as he thought probable, to the executive to conclude the adjustment of the new tariff after the project shall have been submitted to congress, it would then be in the power of the executive to treat this subject in the final framing of the tariff regulations, and the desires of the executive would be as he had indicated.

In my interview with Mr. Lerdo on the 2d instant I inquired if any decision upon the subject had yet been arrived at by the cabinet which I could communicate to my government as final. He replied that there had not.

My impression is that, with the influence that has now been brought to bear, the suppression of the free zone of the Rio Grande, and the application there of the national tariff the same as in all other parts of the republic, may be effected, unless some political obstacle shall intervene, either in the adoption of the new tariff or at the session of congress, which takes place in April and May of the coming year.

The continuance much longer of the existing arrangement does not now appear to be probable.

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

E. L. PLUMB.

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

Mr. Plumb to Señor Lerdo de Tejada.

Dear Mr. Lerdo: Although, as you will observe, I am not especially instructed to do so, there may be no impropriety, but, on the contrary, it may be of convenience to the Mexican government that I should give you a copy of the note addressed to me by the Secretary of State of the United States, and of the note inclosed therewith from the Secretary of the Treasury, upon the subject of the free zone on the Rio Grande frontier, regarding which I have had the pleasure to confer with you in our interviews of the 6th and 25th instant.

[Page 630]

I have, therefore, the honor unofficially to inclose to you a copy of the said notes herewith.

I am, with the highest respect, your most obedient servant,

E. L. PLUMB.

Hon. Sebastian Lerdo de Tejada, &c., &c., &c., Present.

[Translation.]

Señor Lerdo de Tejada to Mr. Plumb.

My Dear Sir: I have received the copies which you have been pleased to send to me unofficially with your letter of to-day of the note addressed to you by the Hon. Secretary of State of the United States, and of the note annexed of the Hon. Secretary of the Treasury, upon the subject of the free zone on the Rio Grande frontier, with reference to which we conferred in our interviews of the 6th and 25th instant.

As I had the pleasure to state to you in those interviews, the government has been occupied, and will continue to give its attention to this matter with the serious consideration that it merits.

I am, sir, very respectfully, your obedient servant,

S. LERDO DE TEJADA.

Mr. Edward Lee Plumb, &c., &c., &c.

Mr. Plumb to Señor Lerdo de Tejada.

Dear Mr. Lerdo: As a matter of information I beg to inclose to you, unofficially, the herewith slip, containing a resolution which appears to have been adopted by the House of Representatives of the United States, on the 9th of June last, touching the subject of the zone libre on the Rio Grande frontier.

I am, with the highest respect, your most obedient servant,

E. L. PLUMB.

Hon. Sebastian Lerdo de Tejada, &c., &c., &c,. Present.

[Untitled]

THE FREE PORTS ON THE RIO GRANDE.

Mr. Blaine (Rep., Maine) offered the following resolution, which was adopted:

Resolved, That the Committee on Foreign Affairs be instructed to inquire whether the action of the Mexican government in establishing free ports at Matamoras and other points on the Rio Grande is not in violation of treaty stipulations, and unfriendly to the commercial rights of the country.

[Translation.]

Señor Lerdo de Tejada to Mr. Plumb.

My Dear Sir: I have received your letter of to-day, with which as a matter of information you have been pleased to inclose to me, unofficially, a printed slip, containing a resolution that appears to have been adopted by the House of Representatives of the United States of America on the 9th of June last, upon the subject of the free zone on the Rio Grande frontier. As I stated to you in my letter relating thereto of yesterday, the government has considered and will continue to occupy itself in considering this subject with that attention its importance requires.

I am, sir, very respectfully, your obedient servant,

S. LERDO DE TEJADA.

Mr. Edward Lee Plumb, &c., &c., &c.