File No. 812.512/914.
Mr. Delbert J. Haff to the Secretary of State.
My dear sir: * * * I address this letter to you because of an inquiry addressed to me by various clients whom I represent, and particularly on account of an inquiry received yesterday from the Secretary and Treasurer of The Cananea Consolidated Copper Company in which he asks the question: “What is your opinion as to getting these payments recognized by the Carranza government?”; referring, of course, to the payments of taxes which had been made not only upon mining property but also upon exports of bullion and metals produced by the company, which taxes amount in the aggregate, I may say, to very many thousands of dollars.
The Department of State is aware of the fact that the rates of taxation to all kinds have been, in general, greatly increased by the de facto government of General Carranza during the past year or more by various decrees. This applies particularly to a decree of March 1, 1915, relating to the payment of mining taxes, which the First Chief promulgated and which, in general, increased the taxes upon mining property in the neighborhood of one thousand per cent; that is, on all claims in excess of fifty hectares, and from two to ten times the rate originally prevailing on claims of less than fifty hectares extension. This decree of March 1 was modified by a decree promulgated by the First Chief on the 31st day of August, 1915 which reduced the quota for the first and second terms of the current fiscal year, but provided that the rate established by the decree of March 1, 1915, would apply to all mining properties from and after March 1, 1916. Needless to say that if the taxes that have been paid during the past two years to other de facto authorities are not to be recognized as well paid, it will be a great hardship and will, I may say, in very many of the cases, perhaps result in the loss of the properties because the majority of Americans were obliged to leave the country, abandoning their properties, which in every case entailed great loss and in many cases bankruptcy.
This question is one, therefore, with which the new Constitutionalist Government will have to deal immediately, particularly in the case of mining taxes which are due this current month for the second third of the fiscal year which, if not paid during the current month, are penalized at fifty per cent. It becomes very important, therefore, to know whether the Department of State has any understanding with the Mexican government on this point for the protection of American citizens and, if not, what measures the Department proposes to take in that behalf.
As early as April of this year I addressed a lengthy communication and argument to a member of the government of General Carranza, in which I discussed this question as it then applied and protested against the ruling contained in Circular No. 8 of the 16th of February, 1915, that payments of taxes which had been made to authorities other than those of the First Chief would not be recognized [Page 981] as valid; and I endeavored to point out the injustice which would result if the Constitutionalist Government should exact payment of taxes from Americans upon properties located in territories which the First Chief did not control and in which he was unable to give the protection needed by all industries in order to operate successfully.
It may be useful for me to quote briefly from the aforesaid communication which I made to the representative of the First Chief in April last. Among other things, I said:
[Quotation from his letter of April 27, 1915, to Lie. J. N. Amador.]
The foregoing, I believe, well states the reasons for the rule of international law referred to by the Honorable Robert Lansing in his letter of May 18. [See ante.]
It seems to me that our Government owes a duty to American citizens in this dilemma even higher than that which ordinarily follows from the relation between a citizen and his government, for two reasons:
- First, because in the majority of cases Americans have abandoned Mexico and their properties in pursuance of requests of the Department of State; and
- Second, because of the moral and material aid which our Government has given and will find it necessary continually to give to the present de facto Constitutionalist Government of Mexico to insure the success which it deserves and which is necessary for it to enjoy in order to protect the lives and properties of American citizens and other foreigners who are looking to the United States for protection.
While this communication is addressed to you in behalf of the Cananea Consolidated Copper Company and other clients enumerated herein, I would much prefer that it be treated as a general communication and that the Department act in this matter on its own motion and in pursuance of its general policy for the protection of American citizens, in general, doing business in Mexico, in whose interests an early solution of this problem according to the well-recognized principles of international law is pressing and imperative.
Invoking your early attention to this subject and thanking you for a reply at your earliest convenience,
I have [etc.]