Papers Relating to the Foreign Relations of the United States, With the Address of the President to Congress December 7, 1915
File No. 812.512/789.
Special Agent Silliman to the Secretary of State.
Sir: Referring to the Department’s unnumbered instruction of May 18, 1915, regarding mining decree, I have the honor to enclose herewith copy of my representation to the Foreign Office, and replies thereto.
I have [etc.]
Special Agent Silliman to the Secretary of Foreign Relations.
My dear Mr. Secretary: I have the honor to inform you of the receipt of the following cablegram, dated Washington, June 30, 1915.
[Quotes the text of the telegraphic instruction of June 30, 1915, from the Acting Secretary of State to Mr. Silliman; see ante.]
In compliance with my instruction, I have the honor to present the above matter to the earnest attention of General Carranza, and to say that I respectfully await his reply in order that I may duly convey it to the Department of State.
I have [etc.]
The Secretary of Foreign Relations to Mr. Silliman.
Vera Cruz, August 4, 1915.
Mr. Representative: The Department of the Treasury and Public Credit, in a communication of July 29, informs me as follows:
Article 10 of the Law of March 25, 1905, relating to stamp taxes and taxes on mining franchises, says:
“The annual tax on mining property will be as follows:
- “A. For each mining pertenencia, six pesos annually, or two pesos for each four-month period or tercio, regardless of the substances exploited.
- “B. If the number of pertenencias belonging to a single mining company exceed twenty-five, and if these pertenencias are contiguous, the tax of six pesos will affect only the first twenty-five pertenencias, and will be reduced to three pesos for each pertenencia in excess of twenty-five.”
By virtue of the Decree of March 1, 1915, Article 10 was amended to read as follows:
“The annual tax on mining property will be as follows:
- “A. For each mining pertenencia, twelve pesos annually, or four pesos for each tercio, regardless of the substances exploited.
- “B. If the number of pertenencias in one holding, or in several holdings belonging to a single owner and situated in the same mining district, exceed ten pertenencias, the tax will be at the rate of twelve pesos for the first ten pertenencias; for those in excess of ten and up to twenty, at the rate of fifteen pesos; for those in excess of twenty and up to fifty, at the rate of eighteen pesos; and for those in excess of fifty, at the rate of twenty-four pesos.”
As your Department will see, the amendment made in the Law of March 25, 1905, tends to comply with one of the promises of the Revolution, favoring the small property, since according to the original law a mine Owner who had ten pertenencias paid annually the sum of $60, and another who had twenty paid $120; that is to say, he paid proportionally to the number of pertenencias. But according to the new provision a mine owner having ten pertenencias will pay annually $120, and a mine owner having twenty pertenencias will pay, not double the other amount, but $270, which is a little more than double. And the proportion is more and more accentuated as the number of pertenencias increases under a single proprietorship.
The product of the mines is sold abroad, and is naturally paid for in foreign money. As a result, and in view of the present depreciation of our money, mine owners who pay their workmen in Constitutionalist currency now obtain a magnificent profit. They will therefore suffer no injury whatever in paying their mining taxes in gold, as required by the Decree of March 1, 1915. They get gold abroad for their product, and are more than compensated by paying their workmen in our currency. Formerly there would have been no object in requiring payment in gold, because Mexican money enjoyed perfect legal parity with foreign money.
All the foregoing fundamental considerations influenced the issuance of the Decree of March 1, 1915, which is in every aspect more just and equitable than the former law. But this Department, taking into account the abnormal circumstances at the city of Monterrey, has telegraphically instructed the Tax Collector there, as a special favor, to extend the period within which mine owners may pay their taxes now due, to August 31, 1915.
Finally, I inform you that this Department is disposed to reduce the tax rate in the case of every mine owner who applies directly to this Department before August 31, on the understanding that the reduction will be made solely on considerations of equity in view of the circumstances of each case.
I have the honor to transcribe the foregoing to you for your information, and in order that yon may communicate it to the Department of State in Washington, as a result of the action taken by you in pursuance of the instructions given you by Secretary Adee in the telegram of which you sent a copy to the Department of the Treasury and Public Credit, requesting a modification of the Decree of March 1, 1915, which fixes the annual tax on mining property.
I avail [etc.]
The Secretary of Foreign Relations to Mr. Silliman.
Vera Cruz, August 10, 1915.
Mr. Representative: The Department of the Treasury and Public Credit, in a communication of August 4, informs me as follows:
I have the honor to acknowledge the receipt of your note of July 9, with which you enclosed a communication from Mr. John R. Silliman, Special Representative of the Department of State of the American Union, to which was attached a telegram from the Acting Secretary of State at Washington, Mr. Osborne, instructing Mr. Silliman to make representations to the First Chief of the Constitutionalist Army in charge of the Executive Power, in regard to the injuries which are being complained of by foreigners who have mining properties in this country, from whom in some cases taxes are collected by the lawful authorities and also by other authorities acting for some one of the factions in control in certain regions; adding that because of the required payment of taxes in national gold, often an impossibility, and the various increases in taxation that have been decreed and which are considered to be arbitrary, and because of the interruption of communications, the abnormal labor conditions, and in general the absence of guaranties, the mining industry has become paralyzed; and the note concludes with a request that orders be given that will insure guaranties to the mining interests, and that mining taxes be collected according to the old rates.
In reply I have the honor to say to you that the first of the points above mentioned has already been satisfactorily disposed of by the Decree of June 19, 1915,79 waiving payment of taxes in rebel districts, Conventionist or Villista, and consequently the double collection of taxes is no longer possible.
As to the provision for payment in national gold, it suffices to consider that the products of the mines are sold in foreign parts for foreign money in order to appreciate the motives for that provision, which in no way injures the interests concerned in view of the easy conversion of such foreign money into dollars, which are accepted at one for [Page 938] two, namely at the same rate as obtained during the period prior to the new law. I should add that the complaining taxpayers, in consequence of our present economic plight, are making big profits through the depreciation of our currency; with this currency they pay their workmen, and as this is their chief expense the result is that they are put to an extremely low outlay in the conduct of their business. And not only is the argument unacceptable regarding the alleged impossibility of complying with the law, but even the difficulty thereof is not apparent; because if it is true that there is a scarcity of national gold coin, it is nevertheless also true that provision has been made for payment of the taxes in United States money, in drafts on that country, or in national silver coin at the established rates.
With reference to the increase of the tax rates, which is one of the chief causes of complaint, according to the note under discussion, let me say that the only provision made on this point is found in the Decree of March 1, 1915, which amended the Law of March 25, 1905; the former contains only two modifications: first the tax on the title, provided for in Article 9, which tax is collected by means of stamps affixed to the instruments of conveyance of the mines; this constitutes no new burden nor is it a real increase of the former tax, as is apparent at first glance; for although it is true that the Law of March 25, 1905, reduced to five pesos the tax payable on each pertenencia, the preceding law, of June 6, 1892, had fixed the rate at ten pesos a pertenencia, which is the same as the rate now fixed by the Decree of March 1, 1915. But even supposing that there has been a genuine increase of the burden, there is still no room for the complaint made by the mine owners, nor even by those who, having denounced new claims, are subject to the procedure governing the same; for the reason that this Department, taking into consideration the fact that the period of time consumed in the procedure is not the responsibility of the one making the denouncement, ruled that the tax in such cases should be paid in conformity with the rates in effect at the time of filing the denouncement, and so informed the Department of Fomento. Therefore, if mine owners are in no way affected by this modification of the law, there is, unquestionably, no reason for the objections that have been offered to it. The other modification above mentioned is the one contained in Article 10, relative to the tax on the property, which is slightly increased in comparison with the rates fixed by the Law of June 6, 1892. This law fixed the rate at ten pesos a pertenencia, whereas the present decree fixes it at twelve pesos for small holdings, and established the increase in the rates for larger holdings in direct ratio instead of the inverse ratio established by the Law of March 25, 1905. This modification is a benefit to the small holding and complies with one of the promises of the Revolution, stimulates the mining industry, prevents as far as possible the existence of very large holdings in the hands of a small privileged group, and augments the income of the national Treasury without injuring the interests of tax-payers, since even in view of the small increase decreed and the reformation of the ratio from inverse to direct, the new rates are really too low when one considers the importance of the industry involved.
I transcribe the foregoing in response to your note of July 1, last.
I avail [etc.]
- See inclosure with Mr. D. C. Brown’s letter of July 21, ante.↩