File No. 812.51/418
The Secretary of State to the Ambassador in Mexico ( Fletcher)
Sir: The Department acknowledges receipt of the Embassy’s No. 798 of February 20, 1918, with which were enclosed a letter addressed to the Secretary of State by George W. Cook, 2a Calle de Madrid No. 35, Mexico City, and an opinion of Attorney Julio Garcia, of Mexico City, relating to the new law of payments, partly lifting the moratorium for the payment of money obligations, decreed by President Carranza on December 24, 1917.
In the opinion of the Department the provisions of Articles 1 and 10 of the decree with reference to two classes of obligations, namely, those which by their terms are payable in specie and those which, though payable generally, were contracted in the period of metallic money or prior to April 1913, and therefore intended to be payable in specie or in paper money equivalent in value, are open to objection on three grounds, viz.:
- 1.
- They reduce, on the basis of fixed ratios of equivalence of paper money in national gold, the amount of interest payable, and therefore amount to an impairment of the obligations of contracts, thus working an injustice upon creditors.
- 2.
- They are retroactive in character, and therefore unjust
and also violative of the following provision of Article 14
of the Mexican Constitution, to the detriment of creditors:
No law shall be given retroactive effect to the prejudice of any person whatsoever
and
- 3.
- They deprive creditors of their property without due
process of law, thus working by way of confiscation an
injustice and also violating the following provisions of
said Article 14 of the Constitution:
No person shall be deprived of life, liberty, property, possessions or right without due process of law instituted before a duly created court in which the essential elements of procedure are observed and in accordance with previously existing laws.
You will please inform the Foreign Office of the foregoing, stating that the Government of the United States cannot be expected to recognize the right of the Mexican Government to apply the objectionable terms of the decree to American citizens, and that it will so advise those of its citizens who may seek its advice.
[Page 646]You will also inform Mr. Cook of the nature of these instructions, and in response to his request for an expression of the Department’s opinion or its advice, you may state to him that the Department considers that in pursuing his legal remedies, he has adopted the appropriate course.
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