File No. 812.512/582.

Consul Guyant to the Secretary of State .

No. 337.]

Sir: I have the honor to advise the Department that the local government, headed by Colonel Esteban Cantú, of Mexicali, has recently become very active in the collection of taxes, both on real estate and on business, and that the financial situation in this district is causing much dissatisfaction.

Real estate taxes in the district have in the past been collected at the rate of 4 pesos per 1000 pesos assessed valuation. Last July 1 these taxes were paid in advance for the fiscal year ending June 30, 1915; but three days ago an order appeared increasing the tax rate to 10 pesos per 1000 effective January 1, 1915. This means that property owners must pay an additional 6 pesos per 1000 pesos valuation for the half year January 1 to June 30.

The business or commercial tax of the district has been assessed on all mercantile houses according to the nature and size of their business. By law this tax is payable bi-monthly in advance, becoming due between the 1st and 10th of July, September, November, January, March and May of each year. The March payment has just been made by local merchants and now, on March 12, comes an order for the immediate payment of the May tax.

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It is also announced that a poll tax of two pesos per month on all adult males in the municipality of Ensenada will soon be passed by the local municipal council at the order of Colonel Cantú.

As previously reported, Colonel Cantú is flooding this place with Mexican 50-cent pieces, which are not legal tender. This is the only kind of money coming into the town, being sent from Mexicali to pay troops’ and civilians’ salaries. In all government offices, however, tax, stamp and duty payments are accepted only in silver pesos or in American money at the arbitrary rate of one for two. As there are no silver pesos in the district, and as their importation is impossible because of the prohibitive duty, all payments to the local government must be paid in American money. So we have the Cantú officials doing an excellent business in sowing 50-cent pieces (worth about 32 cents to the peso) and reaping good American gold at one dollar for every two pesos. This procedure on the part of Colonel Cantú is slowly but surely killing what little industry and commercial activity is left here.

Threats of penalties and of confiscation are made by the local authorities if the extra payments demanded are not forthcoming, and I have advised those Americans who have made complaint to this office to pay under protest, as being the only possible course under the circumstances.

I have [etc.]

Claude E. Guyant.