No. 456.
Mr. Foster
to Mr. Evarts.
Mexico, December 26, 1879. (Received January 13, 1880.)
Sir: In your dispatch No. 669, in which instructions were given me in reference to my recent visit, my personal views were solicited, derived from immediate observation, concerning the state of affairs on the Texas border, with special reference to the zona libre and its commercial effects on the United States.
In previous dispatches at various times during my residence here I have given the Department the history of the zona libre, and shown that it was forced on the country by the Mexican frontier towns; that both the ministers of foreign affairs and of finance have acknowledged that it was unconstitutional and unjust, in conceding to one portion of the nation franchises not allowed to the other inhabitants; and that it is recognized as a serious injury to the Mexican treasury. I do not deem it necessary to do more than refer to these dispatches.
This zone was established in the year 1858, when the American tariff was lower than that of Mexico, and much below what the American tariff was a few years later. Until the zone was created the Mexican population on the right bank of the Rio Grande found it greatly to their interest to make their purchases on the Texas side of the river, and take the chances of their clandestine introduction into Mexico; hence the towns on the American bank were enjoying more trade than those on the Mexican side. To overcome this inequality the governor of the State of Tamaulipas, without any constitutional authority to do so, established the free zone, which permitted the free introduction of foreign goods into all the towns on the right bank of the Rio Grande, and his act was, three years afterwards, approved by the Federal Congress.
During our civil war, when it became necessary to greatly raise our tariff, and for a number of years thereafter up to a recent period, this zone has been the seat of operations of bands of smugglers, whose occupation it was to introduce foreign goods clandestinely into the United States.
[Page 725]Owing to the derangement of business and the increase of the American tariff, occasioned by our civil war, almost the entire trade in manufactured goods and foreign products of the Rio Grande frontier was transferred to Europe, and these goods being admitted free into this zone, there was inducement for them to be smuggled across into Texas, to the serious injury of the United States revenues. Hence, for years past, this has been a source of grave complaint on the part, of our government, and during President Grant’s administration the attention of Congress was directed to the subject in his messages.
In the past two or three years the situation has materially changed. The decline in price of manufactured goods in the United States and our increased spirit of commercial enterprise enables the American merchants on the Texas side of the river to compete successfully in many classes of goods with the merchants in Mexico who import from Europe. The practical result is that, in cotton fabrics and many other articles, the Mexican frontier is supplied almost entirely from the United States, and the inducements for smuggling into Texas have greatly diminished. Our customs authorities along the Rio Grande, as well as the citizens in general, informed me on my recent visit to that region that the smug gling of foreign merchandise from the Mexican free zone had almost entirely ceased. On the other hand, my observation led me to the conclusion that this zone was made the base of operations for quite an extensive system of smuggling of American (as well as European) goods into the interior of Mexico. It is the practice of Mexicans to cross the river to the American towns and purchase our cotton and other goods, and introduce them without hinderance into the zona libre, whence they are clandestinely taken into the adjoining States of this republic; so that the measure which was originally intended to be a protection to Mexican interests and an obstruction to American commerce in its practical workings is just now proving to be the contrary. While I cannot regard the continuance of the zona libre as a friendly act toward the United States, my recent visit satisfied me that it was a much greater evil to Mexico itself than to our country. The existence of such a discriminating territory must always be a source of annoyance, and ought to be abolished if we are ever to have a legitimate and cordial commercial intercourse between the two countries, but at present it is the occasion of greater damage to the government and people who created it than to its neighbors.
The inhabitants of the free zone are most strenuous advocates of the measure, and the people of the adjoining regions in Mexico who do not enjoy the same privilege are earnest advocates of the extension to include them in its limits. In a protest adopted by the State legislature of Coahuila last month against the creation of a federal district for the Sierra Mojada mining region in that State, it is stated that when General Diaz was organizing his revolution in that State, in 1876, he promised its people that when he attained to power he would extend the zona libre to the whole territory of Coahuila, and in said protest he is arraigned for not fulfilling his promise.
This incident is cited to illustrate how desirous the inhabitants of the Mexican frontier are to continue and extend its franchises, and how embarrassing it would be for the present administration to restrict or abolish it, although it sees and acknowledges its unjust effects upon the rest of the country and its injury to the national treasury.
I am, &c.,