File No. 812.63/65.

Vice Consul Coen to the Secretary of State.

No. 16.]

Sir: I have the honor to transmit herewith as enclosure No. 2 a copy of the new mining law as published in “La Vida Nueva” the semi-official newspaper of the Convention Government in Chihuahua.

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Mr. Harold McLeod Cobb has filed a protest against the confiscatory nature of this new mining law, which I take pleasure in forwarding to the Department as enclosure No. 1 to this despatch.

As a matter of fact if this law is put into effect and carried out according to its terms it will mean the confiscation or, at least, the loss of a great deal of mining property in this consular district upon which the owners have paid taxes for many years and which they believe they had good title to. The law is clearly a breach of faith with the mining interests.

I have [etc.]

Homer C. Coen.
[Enclosure No. 1.]

Mr. Harold McLeod Cobb to Vice Consul Coen.

My Dear Sir: The writer, an American citizen, the owner of mines and following the vocation of mining for the last 12 years at Guanacevi, Durango, Mexico, wishes to protest to you as United States Consul against the new mining law signed on the 19th day of March 1915, and dated at Monterey, N. L., that you may place my protest before the proper authorities of the State Department at Washington. This law works an injustice, is confiscatory, and in practice is absolutely impossible to comply with, no matter how much the foreign mine owner might desire to do so. All this will be explained by me in detail at another place, when the various articles of the law are analyzed. I might also point out that the U. S. Government has repeatedly warned its citizens to temporarily abandon the Republic of Mexico, until such time as conditions become normal and peace is restored, and life and property secure.

This new mining law makes it compulsory to actively operate all mines, naturally necessitating the return of foreigners owning mines; for in what other manner may a mine be actively operated unless the owner is present to arrange the financing and the thousand and one details incident to mining operations. To do this, American citizens will either have to disobey President Wilson’s instructions, or lose their properties. But let us carefully analyze and study this new law, copy of which I hereto attach translated into the English language.

I respectfully call your attention to article 1 of the new law, reforming article 51 of the old mining law under which foreigners acquired their mining interests in Mexico and expended hundreds of millions of dollars of their capital; the only manner in which their mines could be forfeited under the old law, after once acquiring title from the Mexican Government, was by failure to pay the Impuestos Mineros or mining tax to said government on each hectare (equivalent approximately to two and one half acres). Now under the new law of reformed article 51, mines are to be forfeited for additional causes, as for example:

If work is paralized or abandoned voluntarily during a period of 60 days or more, and as I have said, considering President Wilson’s instructions to foreigners, this new law, if complied with will force Americans to disobey their President’s orders and return to Mexico. But what I regard as the hardest, I might say most unjust portion of article 1 of the new law, is that portion that states that all mines will be declared forfeited on account of insufficient work, no matter if we have complied with all other requisites of the Mexican Mining Law and have paid our taxes and are working our properties at the risk of our lives, and doing the very best we can, yet if we do insufficient work, our mines are null and void as far as the title from the Mexican Government is concerned.

Now the question arises, what constitutes insufficient work? This is a very ambiguous term, and it is left with the mining agents of the different camps to state what constitutes this insufficient work, or in other words, when a mine is to be declared forfeited. This seems to me to be placing very arbitrary [Page 898]powers in the hands of said mining agents, and should any of these mining agents be venal, it would be a very easy matter to declare a valuable mine, on which foreigners have expended hundreds of thousands, or millions of dollars, forfeited, so that friends of theirs (the mining agents) may subsequently acquire title to the same; it is this portion of the law that seems to me to be the hardest, and impossible to comply with. If a specific amount of work was stated, Mining Companies and mine owners could and would use every effort to comply with the law, but at the present no one knows how little work constitutes insufficient work and how much labor constitutes sufficient work.

I also wish to call especial attention to article 3 of the new mining law, where it says that each owner of a mine shall maintain in activity at least one work of exploitation for each five hectares of surface. Even assuming there be ore to extract, this is impractical as the Mexican Mining Law is one of vertical side lines, and mines having an ore body with a dip from the vertical to the horizontal take up additional hectares or pertenencias of surface to protect their veins on the dip from passing out of their territory as depth is attained; therefore these extra surface holdings can not possibly be operated until the ore body reaches these extra side line surface holdings, due to the further deeper mining operations necessitated by the company; which work may take six months or may take ten years to consummate. This portion of the law is absolutely impossible to comply with as may be seen at a glance.

The object of this new law has apparently the idea of stimulating mine owners to commence active operations on their properties. But mine owners do not need such measures; the main stimulant that they have and always have had is the desire to make money out of their properties. No mining company or owner would maintain watchmen and a crew of employees in idleness; pay mining taxes to the government which is a loss or drain on their resources, if by working they could by the extraction of ores pay these dead expenses. Why are the mines shut down?

a.
For lack of mining supplies, due to poor transportation facilities.
b.
For lack of cars or railroad facilities for the transportation of ores to the smelters.
c.
For lack of smelting facilities.
d.
Why are only 10 per cent of the smelting capacity of the smelters in Mexico in operation? For lack of coal and coke. Why is coal and coke lacking? For want of transportation facilities.

It will be readily seen that the basis of all mining stagnation is due primarily to the lack of railroad transportation for supplies, which should go directly to the mines, or to their allied industries “the smelters.”

What is the cause of this lack of railroad transportation? The disturbed condition of the country due to the revolution; a condition that we foreigners are not responsible for, nor over which we have any control. Therefore it seems very unjust to me to make new laws that are impossible to comply with, due to the disturbed political condition of the country, and threaten our mines with confiscation if we do not comply with same.

Another cause of the shutting down of many mines having mills for the beneficiating of their ores, is lack of cyanide. This chemical is absolutely necessary for the treatment of the bulk of the low grade ores containing either gold or silver, or both of these metals, and the great source of supply of cyanide for Mexico has, in the past, been Germany. Due to the fact that Germany is at war and not exporting this article, many mines can not secure cyanide at any price and in consequence can not operate their mills, and without the mills in operation they have no way to treat the ores extracted from the mines.

Résumé: I will say in closing that if this new law is enforced, a large proportion of the mines of Mexico will become forfeited, as it is a physical impossibility to comply with same.

1st.
For lack of transportation facilities due to the fact that railway service is intermittent and in some portions of the country, out of service entirely.
2d.
Lack of cyanide for the mills.
3d.
Smelters out of commission.
4th.
Risk of life attendant to the operation of mines in isolated sections of the country.
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I therefore request, that the State Department of the United States use its good offices to try and persuade the Conventionist Government of the hardship this new law will work on all foreign held mines, and request that the law be modified.

Respectfully submitted,

Harold McLeod Cobb.
[Inclosure 2.]

[Untitled]

[This is a translation of Villa’s Decree No. 5, of March 19, 1915, printed ante.]