File No. 812.63/45.

Consul Letcher to the Secretary of State.

No. 604.]

Sir: I have the honor to forward herewith for the Department’s information copies of a decree reforming the mining laws of Mexico which has just been issued by the Villa Government from the office of the Department of Fomento. A translation is also enclosed.

This decree constitutes the most radical measure touching the mining interests that has been advanced by any faction engaged in the present revolution, and a close study of its provisions will reveal its character to be no less than a measure designed to bring about the practical confiscation of mining properties throughout Villa territory, since it is practically impossible for owners of claims and developed mines to comply with the requirements laid down. The action indicated realizes one particular of a prediction the undersigned has privately been making for more than a year past, and puts into a practical shape what he has believed to be and has pointed out as being the ultimate aspiration of the present movement in this country.

A further report upon the general effects of this decree will be made so soon as it is possible to give appropriate study to the question. In advance of this prospective report, I venture to call attention to the following paragraph from the Introduction to the Mining Laws of Mexico (Lic. Rodolfo Reyes: 1910: American Book Co.) page 4, which epitomizes the relation between grantor (the Mexican Federal Government) and grantee, which has formed the basis of all past transactions in ore-bearing properties (oil and coal excepted), the provisions of which are entirely abrogated now by this new decree. The paragraph indicated is as follows:

Once the mineral patent or title is issued, the grantee acquires what is known to the common law as a base, qualified, or determinable fee in the deposits. In plain language, he is the absolute owner of the mining grant so long as the mining tax is paid punctually. The nation, on the other hand, is the direct owner of all mineral deposits until actually granted; and upon grant, retains therein a contingent reversionary interest, conditioned upon a failure at any time to pay the mining tax.

It may be noted that the great majority of mineral claims held by foreigners—and principally by Americans, who are the leading developers of mining properties in Mexico because of their superior methods both in the technical operation of the mines as well as in systematic business management of them—have been bought from Mexicans at good figures; and, in addition, that large sums have been expended in the payment of what are known as “pertenencia taxes,” the pertenencia, a hectare in extent, being the unit of mine grants. There are many Americans who have bankrupted themselves in the mere payment of taxes on their mining claims, and the application of [apparent omission] their claims at this time will work better [bitter] hardships upon them.

I have [etc.]

Marion Letcher.
[Page 894]
[Inclosure—Translation.]

Mining decree issued by Francisco Villa at Monterey, March 19, 1915.

decree no. 5.

law relating to the forfeiture of mining properties.

I, Francisco Villa, General-in-Chief of Operations of the Conventionist Army, do hereby make known to the inhabitants of the Republic:

That by virtue of the extraordinary powers conferred upon me by the Decree of February 2, 1915,75 issued in the City of Aguascalientes, and

Whereas the voluntary suspension of mining operations without sufficient reason therefor is prejudicial to the nation, since sources of wealth necessary to the general welfare are thereby withdrawn from use, and because the public revenues are thereby lessened through the nonpayment of taxes that would accrue in case of permanent exploitation; and

Whereas the payment of the present tax on mining claims should not, according to the Constitution of the Republic, imply a monopoly of the properties involved, which would be the case if the grantee of a mining claim were to base his title only on the payment of the said tax, since thus, merely by the payment of a small fee, a source of wealth could be withheld from the commerce of the world for the exclusive enjoyment of the grantee; and

Whereas the foregoing considerations are just now of an importance all the greater because, in view of the condition of the country, it is necessary, on the “one hand, that the Treasury lose none of its income, indispensable to the discharge of its obligations, now increased by war, and, on the other hand, that the Revolution realize as far as possible its aspirations, one of which is the abolition of all monopoly; and

Whereas not only on account of the public utility—recognized by the mining laws—which the exploitation of the claims promotes or which is derived from the transactions arising from exploitation, should the Government endeavor to prevent the decay of the mining industry, but also on account of the notorious injuries resulting from a falling off of mining activity, which might at the present juncture cause fresh disorders in addition to the sufferings of the needy—

Therefore I have seen fit to decree the following:

Article 1. Article 51 of the Mining Law76 is amended to read as follows:

Article 2. The terms “voluntary suspension” and “abandonment” shall be construed to mean cessation of mining operations for sixty days or more except in case of accident or force majeure, to be defined by the Secretary of Fomento. The maintenance of a watchman or a corps of employees in charge as caretakers of a property shall not be considered to be mining operations unless at the same time interior work is being done in the mine.

Article 3. Every individual or company at present holding a mining claim, or to whom in the future a mining claim may be granted, must maintain in activity at least one exploitation work within each five contiguous pertenencias or fraction thereof, it being understood that such an exploitation work is a shaft, pit, tier, tunnel or other works, whatsoever its name may be, which is required for the process of extraction, and not such as serve merely for access to the works.

Article 4. The provisions of the preceding articles shall not prejudice the maintenance in good order of the timbering and other necessary work to insure safety and health in the interior of the mine.

Article 5. In mines now abandoned, or in which work is now suspended, work shall be renewed in the manner prescribed by Articles 3 and 4 hereof, within one hundred and twenty days from the date of the promulgation of this decree.

Article 6. A period of one hundred and twenty days shall also be allowed to each person or company possessing a claim of more than five pertenencias [Page 895]which have not been exploited as abovesaid, within which to put them in working order in conformity with this decree, except in case of forfeiture of the property because of failure to pay the taxes thereon.

Article 7. If such person or company shall have failed to pay the taxes on such property, a period of ninety days shall be allowed, from the date of the promulgation of this decree, for the payment thereof and the initiation of work on said property.

Article 8. No individual may hereafter denounce more than fifteen contiguous pertenencias; and no company may denounce more than one hundred and fifty pertenencias in the same mining district; provided, that when the Secretary of Fomento, upon expert information, ascertains that the nature of the minerals or lands to be exploited is such as to require for their exploitation a greater number of pertenencias than herein specified, the number thereof may be increased.

Article 9. For the purposes of this decree that relate to forfeiture on account of voluntary suspension or abandonment whether recent or longstanding, or because of the inadequacy of the exploitation, the mining Agent shall inform the Department of Fomento of each case in which the aforesaid period of sixty, ninety, or one hundred and twenty days shall have passed without the prosecution, renewal or increase of work, as the case may be; and the said Secretary shall, upon expert information, declare the causes of such suspension, abandonment or inadequacy, and shall declare the forfeiture of the property involved, in the same manner as forfeitures for failure to pay taxes are declared in the Department of Hacienda.

Article 10. The Mining Agents, in order to comply with their duties as stated in the foregoing article, shall keep themselves informed of the progress of work in the mines within the district in their respective charge.

Mine owners, when prevented from working their mines, whether by accident or force majeure, shall immediately give notice thereof to the Mining Agent, who shall ascertain, through experts appointed by him for the purpose, the cause of the cessation or abandonment of work.

Article 11. Every resident of the Republic shall have the right to denounce, by application to the Department of Fomento through the appropriate Mining Agency, any mining property on which work has ceased, or which has been abandoned or is not being fully exploited by the individual or company that had denounced it, whether continuing to pay the taxes thereon or not.

Transitory Article 1. All provisions of law in conflict with this decree are hereby repealed.

Transitory Article 2. This decree shall go into effect on the first day of next April.

Done at the City of Monterey, Nuevo Leon, on the 19th day of March, 1915.

Francisco Villa.
  1. See, under Political Affairs, the third inclosure with Mr. Llorente’s communication of March 8, 1915.
  2. The law of December 11, 1909, which defined the condition under which mining property could be forfeited, namely, non-payment of the mining tax in accordance with the provisions of the law.

    Article 51. Mining property shall be forfeited by non-payment of taxes in accordance with the law pertaining to such payment; by voluntary suspension of working the mines, by abandonment of such works; and by inadequate exploitation.