File No. 812.63/99.

Vice Consul Coen to the Secretary of State.

[Extract.]
No. 27.]

Sir: I have the honor to report upon the recent decrees affecting mines and mining property promulgated within the past two months by the Chihuahua seat of government, copies of which are enclosed with this despatch. * * *

No information to date has been received at this office of any modification of the decree of March 19, 1915, as a result of the protests of [Page 912]the American Government and the English Government against the confiscatory nature of the decree, except the explanation credited to Manuel Bonilla and made by authority of the Secretary of Fomento, Licenciado Francisco Escudero, which appeared in the El Paso Morning Times of April 15, 1915, copy of which is hereto attached. * * *

The payment of taxes in Mexican gold and the payment of wages of employees in Mexican silver or gold (enclosures No. 2 and No. 3) are manifestly impossible, for such money is not of circulation and cannot be bought in sufficient quantities in the country. * * *

One possible motive for the decrees may have been that it was hoped that foreign interests could be forced to bring in outside capital and spend it within the country in order to save their property from confiscation, thus materially aiding the de facto government, which is moving heaven and earth to obtain gold with which to buy war supplies from the United States. This theory was tenable until the promulgation of the last decree requiring all mines to pay wages in silver or gold, or its equivalent in paper money of forced circulation. When this last decree of May 4, 1915, (enclosure No. 4) was issued, the motive for the entire series at once became evident, and the conviction clearly confirmed, that the intention and motive was confiscation by seeming legal requirements but which in reality are absolutely physically impossible to comply with.

The great amount of American capital honestly and in good faith invested in the mining industry in this consular district makes this subject of immense importance to American citizens.

I have [etc.]

Homer C. Coen.
[Inclosure 1.]

Manuel Bonilla’s explanation of Villa’s New Mining Law.

I have been authorized by the Minister of Fomento to make a statement to the press for the purpose of dispelling the incorrect impressions which seem to exist in the minds of the people of the United States, as well as those of other foreign countries, in regard to the reforms decreed by General Villa’s Secretary of Fomento, Licenciado Escudero. My ideas are in conformity with those of Mr. Escudero and I make this statement in pursuance of a conversation had with the Secretary regarding these laws.

The principal objection which most of the American periodicals and the people interested in properties in Mexico seem to have, and which upon its face appears to have some foundation, is the fact that on account of changed circumstances, such as the state of war and military operations existing in Mexico, it will be impossible or impracticable for some miners to work their properties for some time. There is, however, no foundation for any fear in this respect, because there is a clause or article in the new law which provides that any owner who for some just or plausible reason is not able to work the property owned by him in accordance with the requirements of said decree, may apply to the Government with a fair exposition of his case, and his reasons for not working his claim or mine, and in the event the reasons stated are reasonable from a business, economic or other standpoint, he will be afforded an extension or some concession, so that his rights shall be protected and in no way injured. It has been the policy of the Government and the Department of Fomento, and it will in future be their policy, to grant such privileges and extensions, and no bona tide application based upon fact will be refused, and no interest which in justice should be protected will in any way be injured.

[Page 913]

The miner with means to work his property or a desire to work the same in a bona fide manner need have no fear that he will be unjustly deprived of his rights. However, the person who dreams about holding a property to the exclusion of others until someone with money comes along and pays him a royalty for that which he has not earned or developed, and the person who holds large tracts of pertenencias as a land owner, holds big tracts of farming land unused without developing the natural resources of the country, certainly would receive no encouragement of their dreams, Let the mines be exploited by actual work, and if you claim that some harm is done you because the law sets at naught the realization of dreams of becoming, rich by exploitation of others and without work, think of the claim of these people whom you are depriving of their right to work and who are debarred from the inalienable right to live by the avaricious monopolies of land and wealth. * * *

The ancient mining law of Mexico provided that in order for one to keep his rights to a certain mine, the owner should not only file his claim as discoverer of a new ledge, or as willing to work some abandoned property, but he was also required to start and maintain actual work in the mine. The Government has eminent domain on each and every portion of its territory, and is sovereign to fix such conditions precedent or subsequent for granting the right to work or own a ledge as it may deem meet and proper.

Later on, under General Diaz’s Government, his Minister of Finance, Mr. Limantour, changed the system, and the new mining law came into existence, providing that in order to maintain the right of property in any extension of mineral ground it was not necessary to work the fundo minero, and the only condition was the payment of six pesos a year for each hectare constituting the ground.

Since the Diaz Government seemed to have had the undisputed right to change and amend the mining laws, why should the right be disputed of the present Mexican Government to change or amend its laws by what amounts to a repeal of the Limantour amendment, and thus place the law in the status which from the standpoint of political economy was to the best interests of the people? The Limantour amendment or change in no way benefits either the Government or the country, and any speculator could, under that law, hold a promising ledge in his grasp indefinitely, provided he has the money to pay six pesos for each two and a half acres contained in his grant.

The man next to him who starts work and carries the same on in a bona fide way, pays salaries to the employees and increases the wealth of the country and the circulation of money is handicapped by the provision of the Limantour amendment, and he bears a larger burden economically than the man who merely pays the annual tax. The man who works his property provides for the payment of duties on exportation and other taxes derived from the production of ore and bullion.

[Inclosure 2–—Translation.]

Circular Order requiring all mining taxes to be paid in Mexican or American gold.

To the Mining Tax Collector at_ _ _ _ _.

In view of the frequency with which consultations are had with this Department concerning the form in which it is necessary to make the payments of the annual tax upon mining claims, I state to you, in order that through you the knowledge may come to those interested in making the payments corresponding to the four-month periods in accordance with the law, that these payments ought to be made commencing the 15th day of this month, in Mexican gold or in its equivalent in American gold, at 2 for 1, that is to say, the rate of exchange that existed before the Constitutionalist Revolution.

You will please bring this knowledge to your subordinates and the agencies under your jurisdiction.

Please acknowledge the receipt of the present circular.

Francisco Escudero.
[Page 914]
[Inclosure 3—Translation.]78

Statement regarding General Urbina’s order of April 14, 1915, relating to payment of mine employes in coin.

A drastic mining decree affecting the properties in the State of Durango, it is reported, has been issued by General Tomas Urbina R., which if enforced, mine owners declare, will force them to suspend operations. The decree is said to require the payment of all employees of Durango mining properties in Mexican silver or its equivalent in American gold, instead of the Villa currency which is now the medium of exchange in northern Mexico. The penalty for failure to comply with the provisions of the alleged decree is confiscation of the mining property by the State Government of Durango, and mining men declare that some mine owners have been notified by Urbina’s officers that if they do not comply, execution will be the penalty.

In addition to requiring payment of employees in silver, Urbina’s decree is said to make it obligatory for mine owners to give a thirty-day notice to any employee whom they wish to discharge; the provision applies to day laborers as well as other employees.

The decree, according to Americans arriving from Durango yesterday, was issued on April 14, at Auza, State of San Luis Potosi, where General Urbina was then operating with his troops. Copies of it were received here yesterday from mining men residing in Durango. Urbina, by virtue of his being military commander of the State of Durango, has power to issue the order.

American and foreign mine owners of Durango who are now in El Paso said yesterday that it is impossible to carry out the provisions of Urbina’s decree. Silver is no longer in circulation in northern Mexico and to pay employees on a gold basis, they say, is beyond reason.

[Inclosure 4—Translation.]

Villa decree of May 4, 1915, requiring payment of mine employees in coin.

Francisco Villa, General in Chief of Operations of the Conventionist Army, unto the inhabitants of the Republic, makes known:

That by virtue of the extraordinary powers contained in the Decree of February 2, 1915, issued in the City of Aguascalientes, with which I am invested; and

Considering: That the fluctuations of value to which the paper money of forced circulation is subject are not natural since the time when the changes in value became so rapid and extensive and lead to the supposition that they are chiefly due to speculation;

That such speculation injures all classes of society but very specially injures the laboring classes, who see the articles of prime necessity daily increasing and their ability to buy with the product of their labor daily decreasing;

That it is the absolute duty of the undersigned to look after the interests of the community, attacking the disease by which it is assailed in its most notorious symptoms;

That, finally, since the class of laborers employed in the mines is the one most exposed to the harmful effects of such speculation, and the paper of forced circulation with which the payment of this class of labor is made is the subject of such great fluctuations, in justice to the miners I am compelled to free the said wages from the effects of the rise and fall of the value of paper money;

I have seen fit to decree the following:

  • Article 1. The wages or salaries which the mining companies or individuals working mines have agreed to pay their workmen in that part of the Republic controlled by the Army under my command shall be considered to be upon a basis of silver or gold of the national coinage, or its equivalent in American money of silver or gold at the rate of two for one, the minimum daily wage to be one peso of Mexican silver or gold or its equivalent as stated above.
  • Article 2. The payment of the salaries or wages shall be made in coin or in paper money of forced circulation at the rate agreed upon between the parties, and in case of disagreement the rate of exchange on that day shall be used.
  • Article 3. Commissary stores, workmen’s stores, or any other plan which may have for its purpose the obligation of the workmen to buy at a certain place articles of prime necessity and articles for his use, are strictly prohibited. Establishments, private or public, clearly philanthropic, and entrance to which shall be absolutely free and voluntary, are the only exceptions to this prohibition.
  • Article 4. This decree shall commence to take effect on the 5th day of the coming June.

Done in the City of Aguascalientes on the 4th day of May, 1915.

Francisco Villa.
  1. See the text of the decree here discussed, post, inclosure with Inde Gold Mining Company’s letter of May 20.