The Secretary of State to the Ambassador in Mexico ( Sheffield )
264. Embassy’s No. 245 November 20, 7 p.m. Department is of the opinion that you should try to obtain a reply to Embassy’s representations [Page 530] and aide-mémoire of November 17.29 Should your interview disclose the intention to pass the bill, you are instructed to make representations to the Government of Mexico based on the following aide-mémoire which you may leave with the Foreign Minister:30
“Since my aide-memoire of November 17, I have been advised that the bill regulating fraction 1 of Article 27 of the Mexican Constitution has passed the Chamber of Deputies and a copy of the bill in the form in which it was passed has reached me. In these circumstances, I am moved to renew the sentiments expressed in the said aide-mémoire and at the same time to present some further considerations bearing more directly upon the pending legislation which was there only incidentally referred to for purposes of illustration.
I think I should not be acting in a truly friendly spirit if I were to refrain from advising you that this bill, proposed as it is by your Government and passed by the Chamber of Deputies is viewed with genuine apprehension by many if not all American holders of property rights in Mexico. And I should be less than sincere if I did not say to you at this time that in my judgment such apprehension is justified. Numerous appeals and protests have been, and are being, received by me. An examination of the bill in its present form enforces the conviction that in certain of its features the measure operates retroactively with respect to American property interests in Mexico and that its effect upon them would be plainly confiscatory. Rights which have become vested by virtue of the laws and Constitution of Mexico existing at the time of acquisition would be seriously impaired, if not utterly destroyed. Without here entering upon a detailed analysis, let me indicate some of the principal provisions and my understanding of their effect. The requirement that a foreign holder of corporate stock, without regard to when his holdings were acquired, shall consider himself a Mexican national as to such stock, and renounce the right to appeal to his own government or in the alternative forfeit his interests amounts to substantial confiscation. The requirement that stock in Mexican companies for agricultural purposes may not under any circumstances be held, regardless of when the stock was acquired, if such holding places in the hands of foreigners 50 per cent or more of the total interest of the company, is likewise retroactive and confiscatory. The requirement that all companies for agricultural purposes, more than 50 per cent of whose stock is in foreign hands, whether they hold lands directly or indirectly, shall divest themselves of such property within 10 years of the date of promulgation of the law is, by its terms, applicable to existing rights legally vested, and is, therefore, confiscatory of those rights. The subsequent provision permitting present individual owners to retain until their death such rights only mitigates and postpones but does not eliminate the confiscatory feature.
I desire particularly to direct attention to the provision requiring foreigners to waive their nationality and to agree not to invoke the protection of their respective governments, so far as their property rights are concerned, under penalty of forfeiture. In this connection [Page 531] it is my duty to point out that my Government, in accordance with principles generally if not universally accepted, has always consistently declined to concede that such a waiver can annul the relation of a citizen to his own Government or that it can operate to extinguish the obligation of his government by diplomatic intervention to protect him in the event of a denial of justice within the recognized principles of international law.
You will, I am sure, understand that I am impelled to make the foregoing observations which are submitted in the most friendly spirit, because I feel that you are entitled to a frank expression of the views of my Government, and I should not like to leave any room for misunderstanding between us. As I stated in my aide-mémoire of the 17th instant, my Government wished to avoid if possible any criticism of prospective legislation of a neighboring and sovereign State, for it recognizes to the fullest extent the right of any other Government by legislation to regulate the ownership of property as a purely domestic question, unless such regulation operates to divest prior vested rights of American citizens legally acquired or held under the laws of such foreign government, and it is only because of the seeming imminence of the passage of such legislation and because it does so affect the vested rights of American citizens and is in contravention of the understanding arrived at between the two Governments through their Commissioners that I am moved to make these representations.”