Papers Relating to the Foreign Relations of the United States, 1926, Volume II
The Secretary of State to the Ambassador in Mexico ( Sheffield )
Sir: Adverting to my telegram No. 39 of January 28, 1 P.M.,22 I enclose herewith the original of the Note dated January 28, which I desire you to deliver to the Minister for Foreign Affairs. There is enclosed, as well, an office copy for your confidential files.
In this matter you will, of course be guided by the request set forth in my telegram above referred to, especially that you refrain from letting your colleagues know that the Note is about to be or has been delivered, and from communication of any part of it to any foreign representative in Mexico without prior consultation with the Department. As this Note offers a method of solution, it is deemed best for the present to keep its contents confidential, in order that no pressure may be brought to bear from the outside upon President Calles or his Government.
I purpose handing a copy of this Note to the Mexican Ambassador today, and shall notify you when this has been done.
I am [etc.]
The Secretary of State to the Mexican Minister for Foreign Affairs ( Sáenz )
Excellency: This Government, in response to the note delivered by Your Excellency to the American Ambassador on January 20, 1926,23 notes with satisfaction that His Excellency the President of the [Page 614] Mexican Republic proposes to frame the executive regulations covering the application and enforcement of the recent alien land law and the law relating to certain deposits of the subsoil in such manner that the application thereof will not be retroactive in respect of rights legally acquired under laws existing at the time the property or property right was acquired.
This Government expresses its sincere hope that such regulations may so regulate and restrict the application of these laws as to bring them into accord with the decisions of the Supreme Court of Mexico, later herein referred to, with the Agreements of 1923 and within the principles of the law of nations thus preventing their retroactive effect as to rights already legally acquired by American citizens.
The discussion of these matters between the two Governments is not of recent origin but goes back to the time following the adoption of the Constitution of 1917. The entire field was thoroughly covered in the discussion during the negotiations between the American and Mexican Commissioners in 1923 as shown by the signed record of their proceedings. From the beginning this Government in presenting its views has endeavored to call attention to the vital distinction between future acquisitions of property and the status of property rights legally acquired under laws existing at the time of the acquisition of the property or right. Every sovereign has the absolute right within its own jurisdiction to make laws governing the acquisition of property acquired in the future. This right cannot be questioned by any other state. If Mexico desires to prevent the future acquisition by aliens of property rights of any nature within its jurisdiction, this Government has no suggestion whatever to make. When, however, any foreign government seeks to divest aliens of property rights which have already been legally acquired, this Government, so far as its citizens may be concerned, rests under a positive duty to make representations and efforts to avoid such action. This Government has been and is now concerned only with property rights in Mexico duly and legally acquired by American citizens under laws existing at the time of the acquisition and has asked in the past and now asks that the guaranties afforded by the generally accepted principles of international law and equity be afforded by the Mexican Government for the protection of such rights.
Article II of the recent land law provides that any alien who may have acquired or may acquire ownership of agricultural lands, waters, and their accessories or concessions for mining or for the use of waters or for taking combustible minerals from the subsoil in the territory of the Mexican Republic shall agree before the Department of Foreign Relations to consider himself a national of Mexico in respect of his part of the property and shall agree not to invoke in respect [Page 615] thereof the protection of his government with reference thereto under penalty, in case of failing in the agreement, of defaulting his property to the nation.
This conception of the rights of a nation under the rules of international law has never been accepted by this Government and in the past this Government has frequently notified the Mexican Government that it does not admit that one of its citizens can contract by declaration or otherwise to bind his own Government not to invoke its rights under the rules of international law. Under the rules applicable to intercourse between states, an injury done by one state to a citizen of another state through a denial of justice is an injury done to the state whose national is injured. The right of his state to extend what is known as diplomatic protection cannot be waived by the individual. If states by their unilateral acts or citizens by their individual acts were permitted to modify or withhold the application of the principles of international law, the body of rules established by the custom of nations as legally binding upon states would manifestly be gradually broken down.
The right of diplomatic protection is not a personal right but exists in favor of one state against another. It is a privilege which one state under the rules of international law can extend or withhold in behalf of one of its nationals. Whether or not one of its citizens has agreed not to invoke the protection of his government, nevertheless his government has, because the injury has been inflicted by one state against the other, the right to extend what is termed diplomatic protection.
Under Article IV of the recent land law, any foreigner who may own prior to the enactment of the law fifty per cent or more of the total stock interest in any company or corporation owning agricultural property in Mexico is prohibited from retaining such interest in excess of fifty per cent for more than ten years. Thereafter such alien must sell such a portion of his holdings as to divest him of the majority interest in such property.
This provision of the law is manifestly retroactive. It deprives the alien owner of many rural properties legally acquired under the laws of Mexico and requires him to divest himself of the ownership, control and management of his property. Your reference in the memorandum dated December 5, 1925,24 to the Statutes existing in the States of Arizona and Illinois is based upon a misconception of those laws. Both the Illinois law of 1897 and the provisions of the Arizona Civil Code of 1913, relating to alien ownership of real estate, are expressly made to apply to future acquisitions of real property and do not apply to property already acquired. This [Page 616] Government does not understand and would like to be further advised as to the meaning of your observation in the same memorandum that “the limitation imposed by the law upon companies possessing rural property for agricultural purposes tends to preclude possible conflicts in the application of the agrarian legislation since it is considered advisable to reserve ownership and cultivation of the majority of the land to Mexicans.”
Even if a foreigner should be a minority stockholder in a company owning agricultural lands, this Government does not understand how the agrarian law could be applied to the interest of the Mexican citizen therein and not be applied to the interest of an American citizen who might be the owner of less than fifty per cent of the interest therein. The stockholders of a corporation own a proportional interest in its assets and any taking of agricultural property under the agrarian laws of Mexico, so proportionately owned by Mexican and American citizens, would nevertheless deprive the American citizen of some portion of his interest in the property.
This Government has also carefully considered the statement in your note of January 20, 1926, that in accordance with Article 14 of the law relating to the subsoil rights acquired before the going into effect of the Constitution will be confirmed.
This Government heretofore in the discussion of this matter has taken the position that lands acquired by American citizens in Mexico under the laws of 1884, 1892 and 1909 entitle the owners or lessees of the surface to the mineral fuels and oils contained in the subsoil and during the negotiations of 1923 the American Commissioners reserved in behalf of this Government all the rights of its citizens in respect of all lands in Mexico acquired by them before May 1, 1917. Nevertheless, this Government now expresses the hope that the regulations to be issued by His Excellency the President will confirm the rights of the owners of the subsoil who had, prior to the going into effect of the Constitution of 1917, acquired rights in accordance with the decisions of the Supreme Court of Mexico and who had performed positive acts as defined in the declarations and agreements made by the Mexican Government, under date of August 2, 1923, during the negotiations of that year, and in accordance with the repeated assurances of the Mexican Government many times since 1920 and more particularly during the negotiations with the American Commissioners in 1923.
What has disturbed this Government and prompted its recent inquiries as to the construction and interpretation to be placed on Article 14 of the recent law relating to certain deposits of the subsoil is the wording of the article itself. This Government has from time [Page 617] to time recently called the attention of your Government to the threatened conflict between the decisions of the Supreme Court of Mexico, the agreements of 1923 and the terms of the law.
The Supreme Court of Mexico in an amparo case decided August 30, 1921,24a unequivocally held paragraph IV of Article 27 of the Constitution of 1917 not to be retroactive in cases where rights had been legitimately acquired prior to May 1, 1917, the date on which the Constitution went into effect. The same principle was announced in four other amparo cases establishing under the law of Mexico a precedent not to be broken.
The pertinent portion of this decision is:
“These premises being established, it must be ascertained whether paragraph IV of Article 27 of the present Constitution, which nationalizes, among other substances, petroleum and all solid, liquid or gaseous hydro-carbonates, is or is not retroactive. It is absolutely necessary to define the meaning of paragraph IV, because, if it is retroactive, the decrees complained of, which are based on this article, should also be applied retroactively, notwithstanding Article 14 of the Constitution; and if this paragraph is not retroactive, then the decrees are contrary to the said Constitutional text, and, because they are issued by the ordinary legislator, fall within the scope of said Article 14 of the most recent supreme law.
“Paragraph IV of Article 27 of the present Constitution can not be deemed retroactive either in letter or in spirit inasmuch as it does not damage acquired rights.
“By [Not by?] the letter thereof because it does not contain an express mandate to the effect that it shall be retroactive, nor does the wording thereof necessarily convey this idea; nor by its spirit as it is in consonance with the other articles of the same Constitution, which recognize in general the ancient principles upon which rest the rights of man and which grant ample guaranties to such rights, and because, holding it to be non-retroactive, it also proves to be in harmony with the principles expressed in the paragraphs which immediately precede it on the subject of private ownership from its inception, and also with the portions of the text relative to petroleum which immediately follow it as integral parts of the same Article 27 of the Constitution.
“From all this, it is inferred that, in consonance with the rules universally accepted for the interpretation of laws and those imposed by sound logic, it must be held that paragraph IV of Article 27 of our present Constitution is not retroactive, inasmuch as it does not damage former rights legitimately acquired. This precept establishes the nationalization of petroleum and its by-products as well as of the other substances to which it refers, amplifying the enumeration that existed in our former mining laws, but respecting the rights legitimately acquired prior to May 1, 1917, the date on which the present Constitution went into effect in its entirety.
“Considering, third: In view of all that has been before expressed and in strict compliance with the provisions of Section I of Article [Page 618] 107 of the Constitution, it is opportune to determine now whether in the concrete case on which this amparo is based, vested rights have been injured by violating the individual guaranties which the complainants invoke.
“In our Republic there have been in effect in successive periods the mining code of 1884, the mining law of June 4, 1892, and that of November 25, 1909, which latter in its second article granted the owner of the lands the right to explore and exploit oil freely in order to appropriate the oil he might find without the necessity of a permit from any authority, and also enabled him to transmit the said rights as he would any other property either for a consideration or gratuitously.”
In pursuance of this binding construction by the Supreme Court of Mexico of Article IV of Section 27 of the Constitution of 1917, the Mexican Commissioners on August 2, 1923, as a part of the negotiations of that year stated, “in behalf of their Government in connection with the representations relating to the rights of the citizens of the United States of America in respect to the subsoil” as follows:24b
“[I.] It is the duty of the federal executive power, under the constitution, to respect and enforce the decisions of the judicial power. In accordance with such a duty, the Executive has respected and enforced, and will continue to do so, the principles of the decisions of the Supreme Court of Justice in the ‘Texas Oil Company’ case and the four other similar amparo cases, declaring that paragraph IV of Article 27 of the Constitution of 1917 is not retroactive in respect to all persons who have performed, prior to the promulgation of said Constitution, some positive act which would manifest the intention of the owner of the surface or of the persons entitled to exercise his rights to the oil under the surface to make use of or obtain the oil under the surface: such as drilling, leasing, entering into any contract relative to the subsoil, making investments of capital in lands for the purpose of obtaining the oil in the subsoil, carrying out works of exploitation and exploration of the subsoil and in cases where from the contract relative to the subsoil it appears that the grantors fixed and received a price higher than would have been paid for the surface of the land because it was purchased for the purpose of looking for oil and exploiting same if found; and, in general, performing or doing any other positive act, or manifesting an intention of a character similar to those heretofore described. According to these decisions of the Supreme Court, the same rights enjoyed by those owners of the surface who have performed a positive act or manifested an intention such as has been mentioned above, will be enjoyed also by their legal assignees or those persons entitled to the rights to the oil. The protection of the Supreme Court extends to all the land or subsoil concerning which any of the above intentions have been manifested, or upon which any of the above specified acts have been performed, except in cases where the documents relating to the ownership of the surface or the use of the surface or the oil in the subsoil establish some limitation.[Page 619]
“The above statement has constituted and will constitute in the future the policy of the Mexican Government, in respect to lands and the subsoil upon which or in relation to which any of the above specified acts have been performed, or in relation to which any of the above specified intentions have been manifested; and the Mexican Government will grant to the owners, assignees or other persons entitled to the rights to the oil, drilling permits on such lands, subject only to police regulations, sanitary regulations and measures for public order and the right of the Mexican Government to levy general taxes.
“II. The Government, from the time that these decisions of the Supreme Court were rendered, has recognized and will continue to recognize the same rights for all those owners or lessees of land or subsoil or other persons entitled to the rights to the oil who are in a similar situation as those who obtained amparo; that is, those owners or lessees of land or subsoil or other persons entitled to the rights to the oil who have performed any positive act of the character already described or manifested any intention such as above specified.”
On August 22, 1923, after the termination of these negotiations and the return of the American Commissioners, the Secretary of State transmitted to the Minister of Foreign Affairs of Mexico a message in part:25
“I have examined the report of the proceedings of the American and Mexican Commissioners, at Mexico City, closing August 15, 1923, and I have submitted the same to President Coolidge. I have the honor to inform you that President Coolidge approves the statements and recommendations of the American Commissioners as therein set forth. I shall be glad to be advised by you that General Obregon approves the statements set forth in the said report as having been made by the Mexican Commissioners.
“In the event that you are able so to advise me, I beg leave to suggest the following procedure with respect to the resumption of diplomatic relations. It seems to be advisable that we should agree upon a day on which the resumption of diplomatic relations should be formally announced. …”
To this message the Minister of Foreign Affairs of Mexico replied to the Secretary of State:26
“… I have received your courteous message by which you inform me, on the one hand, to have examined the minutes of the work of the Mexican-American Commission adjourned on the 15th of this month at this City, and to have submitted same to the President, and on the other hand, that the President has deigned to approve the declarations and recommendations made by the American Commissioners. You suggest, furthermore, the procedure through which the reassumption of diplomatic relations could be accomplished, [Page 620] should President Obregón have approved the declarations of the Mexican Commissioners embodied in said minutes.
“In reply to all this, upon expressing to you the gratification with which this Chancellery has noted President Coolidge’s approval of his Commissioners’ recommendations and upon informing you that President Obregon has also approved the declarations made by his Commissioners, I take the liberty to submit to your consideration some slight modifications to the procedure you have been good enough to propose—modifications which undoubtedly will greatly facilitate the attainment of the ends in view,—to wit:
“a). That both Chancelleries simultaneously make the following or a similar statement to the press:
“‘The Governments of Mexico and that of the United States in view of the reports and recommendations that their respective Commissioners submitted as a result of the Mexico-American Conferences held at the City of Mexico from May 14th, 1923 to August 15th, 1923, have resolved to renew diplomatic relations between them, and therefore, pending the appointment of Ambassadors, they are taking the necessary steps to accredit, formally, their respective Chargés d’Affaires.’”
The reference by Your Excellency to the termination of the agreement with Japan in respect of immigration was undoubtedly made without recalling what has already been published,—the reservation constituting a part of the Agreement of 1911 between Japan and the United States. That reservation, fully set forth at the time in the Agreement, was “In accepting the proposal as a basis for the settlement of the question of immigration between the two countries, the Government of the United States does so with all necessary reserves and without prejudice to the inherent sovereign right of either country to limit and control immigration to its own domains or possessions”.27
This Government believes that the Mexican Government will surely appreciate that all that this Government has said in connection with these matters arises from a genuine wish for friendliness and cooperation. In this way complete understanding can be arrived at and great and irreparable losses and damages to American citizens possessing property in Mexico be prevented. There exists a profound conviction that His Excellency the President of Mexico will formulate regulations under the terms of Article 14 of the law pertaining to certain property rights in the subsoil in harmony with the decisions of the Supreme Court of Mexico and the Agreements between the two Governments in 1923. This Government has felt great apprehension that the heretofore admitted rights of its citizens in Mexico were about to be disregarded by the terms of the laws under consideration.[Page 621]
The Supreme Court of Mexico, as has been pointed out, declared that in the Republic of Mexico “There have been in effect in successive periods the mining code of 1884, the mining law of June 4, 1892, and that of November 25, 1909, which latter in its second article granted the owner of the lands the right to explore and exploit oil freely in order to appropriate the oil he might find without the necessity of a permit from any authority, and also enabled him to transmit the said rights as he would any other property either for a consideration or gratuitously”. The statement made in behalf of the Mexican Government already quoted asserts the duty of the Mexican Government under the Constitution to respect and enforce the decisions of the judicial power. On behalf of their Government and with the approval of their Government, the Mexican Commissioners stated that in respect of lands where positive acts, fully defined in the agreement, had been performed or intentions manifested to perform any such act “The Mexican Government will grant to the owners, assignees or other persons entitled to the rights to the oil, drilling permits on such lands, subject only to police regulations, sanitary regulations and measures for public order and the right of the Mexican Government to levy general taxes”.
Under Article 14 of the recent law relating to the subsoil the President of Mexico may confirm without any cost whatever these acquired rights in accordance with the decision of the Supreme Court. Indeed Your Excellency stated in your note of January 20, 1926, “in regard to this matter I must advise Your Excellency that the law (Article 14 of the present law) does not modify nor can it modify the decision of the Supreme Court”.
This Government cannot fail to point out, however, that the exchange of a present title for a concession having a limited duration does not confirm the title. Such confirmation can be brought about by regulations in harmony with the Supreme Court decision. Nor can this Government fail to point out that anything less than a confirmation does not grant the owner in the language of the Supreme Court of Mexico, without the necessity of a permit from any authority, the right to appropriate such products of the subsoil and does not enable the owner to transmit his acquired rights as he would any other property.
This Government awaits with deep interest information as to the land law as it affects rural lands and other property rights and as to the nature of the regulations intended to be issued by His Excellency the President of the Republic in accordance with the Supreme Court decisions, the negotiations of 1923 and the rules of international law, equity and justice.
- Not printed.↩
- Ante, p. 605.↩
- Foreign Relations, 1925, vol. ii, p. 540.↩
- For text of decision, see Foreign Relations, 1921, vol. ii, p. 464.↩
- See Proceedings of the United States-Mexican Commission, pp. 47–48.↩
- See telegram No. 119, Aug. 22, 1923, to the Chargé in Mexico, Foreign Relations, 1923, vol. ii, p. 550.↩
- See note of Aug. 24, 1923, from the Mexican Minister for Foreign Affairs, ibid., p. 551.↩
- See note to the Japanese Ambassador, June 16, 1924, Foreign Relations, 1924, vol. ii, p. 403.↩