No. 208.
Mr. Hoyt to Mr. Hunter.
Sir: In reply to your circular letter of August 19, I have the honor to inform you that in my opinion the diminution of commerce between the United States and Mexico is not traceable to political causes, past or present, between the two countries, but finds its source in the extravagant tariff on importations, the consumers having become aware that they pay the principal part of the revenue; hence the limited consumption of articles of commerce that formerly were imported from the United States.
The entire system of taxation is indirect, and consequently falls on the consumer; therefore the general revenue from importations depends upon his will and pleasure.
Formerly the principal importation into this consular district from the United States was flour, but has now decreased to almost nothing, occasioned by the decree of President Juarez, dated October 31, 1867. That this decree refers directly to flour produced in the United States is evident from the fact that the duties on flour are regulated by the cost of the article in the United States, as the decree sets forth, and it has been the wonder of merchants why this decree was promulgated so soon after the fall of the empire, considering the measures of sympathy for the republic adopted by the Government and people of the United States.
Dry goods, wines, liquors, and ales can be produced in England and other countries and imported into this country at a lower cost than in the United States, and exchange made in the productions of the country, some of which are Brazil wood, indigo, and mahogany, for which better prices are obtained and a larger quantity consumed than in the United States.
Another cause of the decrease of the commerce with the United States and Mexico is the heavy taxation on agricultural pursuits, which discourages the producer; consequently he only cares to produce sufficient for his actual wants. The tax on rum and sugar was recently abolished, and a tax of six dollars put upon one hundred square yards of sugar cane.
The absence of any bonded warehouse and drawback system, and the requirement of payment of duties the moment goods are landed, is another impediment to legitimate commerce, the duties on a general cargo averaging eighty-five per cent, on the original cost, which excludes any surplus, the importer only keeping on hand enough to supply the immediate wants of his customers. This enormous tariff entirely excludes the legitimate commission merchant from the market, he requiring as much capital to do business as the shipper.
The present depressed condition of the finances of this government obliges it to raise a revenue from any source within its reach and control, and to the Mexican congress commerce seems to them the only available source from which to derive it, direct taxation being strongly opposed by the majority of that body, notwithstanding the estimation of about seven millions deficiency to defray the current expenses of the coming year, without public credit to meet the demand, either at home or abroad. Permit me to make a few suggestions with a view to increase the American dry-goods trade with this country. It is a well-defined [Page 289] law with the merchant of any country that he makes his purchases where he can buy lowest and procure goods best adapted and most salable in his locality. My experience informs me that dry goods salable in one part of this country, of a particular fabric, prints in particular, are unsalable in another locality, the tastes of the people being entirely different. If the American manufacturer can furnish as good an article as the British manufacturer can, at as low a price, and at the recommendation of the importers of the different parts of this country to print their cottons in such figures and colors as will suit the people, I am convinced a fair proportion of this branch of commerce would be diverted to the United States.