to Mr. Evarts.
Mexico , June 7, 1879. (Received June 26.)
Sir: In my No. 966, of the 31st ultimo, on the adjournment and action of the Mexican Congress, I referred to the revenue laws passed levying new taxes upon textile fabrics of domestic manufacture, and in regard to smuggling.
For many years past it has been the settled policy of all administrations of the Mexican Government to encourage home manufacturers, and especially those of cotton and woolen goods. To this end they have been in great measure exempted from taxation and are protected by a tariff on the importation of similar foreign goods so heavy that in most cases the duties exceed the cost of the articles. For instance, the following are some of these duties in the existing tariff: Unbleached domestics, 9 cents per square meter; bleached domestics, 16 cents; prints or calicoes, 14 cents; white cotton-thread, 60 cents per kilogram$ colored thread, 96 cents; cassimeres and similar woolen goods, $1.40 per square meter. I inclose herewith an extract from the revenue law passed at the recent session of Congress, which levies a tax upon all this class of goods of domestic manufacture. It is estimated that the total annual production of the cotton and woolen manufactories aggregate $20,000,000 at the least, and that the tax levied thereon will yield the government, say, $500,000, so that the rate of the levy on the total product is about 2½ percent. It will be noticed that to prevent this tax from operating [Page 813] favorably upon the importation of foreign goods, the same rate of taxation is also levied upon all similar articles imported through the customhouses, so that the foreign goods, whose duties are above stated, are to be burdened in addition with the same tax as that levied on domestic fabrics. This measure has evoked the most strenuous opposition, not only of the manufacturers but also of the trade unions and the protectionists generally, and nothing but the most urgent necessities of a government with an exhausted treasury could have secured the passage of the law. Some of the factories threaten to stop when the law goes into effect on the 1st of July, and labor demonstrations unfriendly to the administration may be anticipated.
I also inclose a translation of the law making smuggling a penal offense punishable by imprisonment. The contraband trade has become so general, as I have heretofore had occasion to notice, as to very seriously affect the revenues of the government, and it has been thought necessary to resort to the present law in the hope that its vigorous provisions may materially restrain this illicit commerce.
I am, &c.,