File No. 812.512/258.
Consul Letcher to the Secretary of State.
Chihuahua, May 14, 1914
Sir: Having reference to the Department’s instruction No. 268 of April 23, 1914, which has just been received at this Consulate, I have the honor to report that I am making appropriate representations [Page 739] to General Carranza regarding the attempted second collection of mining taxes already paid the de facto Huerta Government through means of a note bearing even date with despatch. General Carranza is now reported at Durango, in the course of a visitation to the various state capitals in territory dominated by the Constitutionalists.
In the interest of American citizens generally who would be affected by the acceptance of the principle involved in the demand on the part of the Constitutionalist authorities for a repayment of taxes paid after the manner required by law to the Huerta Government, I have to express the hope that the Department will cause the Carranza Government to recede from its position in the case in hand and thus establish a precedent for the future protection of American citizens in the manner indicated. I may observe that the “pertenencia” tax on mining properties is in itself of small importance, being at the rate of six pesos per annum, payable in quadrimestral installments of two pesos each. The pertenencia is the unit of mining grants under the Mexican law and consists of a horizontal square measuring 10,000 square meters, or one hectare (2.471 acres). All mining taxes are collectible by the Federal Government, and these include, in addition to the fixed tax upon the superficies of a mining claim, a per centum of the value of the metal contents of ore extracted and another charge for the exportation of the smelted metal. The various taxes upon a mine and its products average, according to an estimate made by the undersigned, approximately 16% of the value of the total output. If it is permissible to collect the insignificant pertenencia tax, it must also, ad eundem, be permissible to collect the extraction and the exportation tax, which have been uniformly paid to the Huerta Government continuously to the present time in regions dominated by the present Federal authorities, the payment of which to the Constitutionalist authorities would constitute a hardship of great magnitude.
I may note, further, that many mining companies make it a habit to pay their pertenencia taxes, as well as the extraction tax, to the Federal Government a year in advance, the latter being possible under an arrangement known as an “iguala.” It is within the authority of the Treasury Department to receive such taxes, as well as the regular quadrimestral pertenencia taxes, at the National Treasury, rather than at the principal or branch mining agencies in each state.
I have [etc.]