Papers Relating to the Foreign Relations of the United States, 1926, Volume II
The Secretary of State to the Ambassador in Mexico (Sheffield)
Sir: I am enclosing herewith for immediate delivery to the Minister for Foreign Affairs the original of my Note to him of March 1 in answer to his Note to me dated February 12. There is enclosed as well an office copy for your files. As telegraphed to you, I have today handed a copy of this Note to Ambassador Téllez, who has stated that he will telegraph it to his Government; whether merely a summary or in full, I, of course, am not in a position to say.
I am [etc.]
The Secretary of State to the Mexican Minister for Foreign Affairs (Sáenz)
Excellency: I am pleased to observe that by the terms of my note to you, dated January 28, 1926, and of your courteous reply, dated February 12,34 the two Governments find themselves in accord as to the principle that should be applied in the adjustment of certain of the matters now under discussion between the two Governments. After re-stating the position of this Government set out in the first part of my note of January 28, Your Excellency stated “The foregoing declarations are satisfactory to my Government because they involve points of view which are common to the Governments of Mexico and the United States … , wherefore, the entire question is reduced to determining whether or not the laws under consideration are retroactive in their application or whether they assail or respect rights previously lawfully acquired.”
The position of this Government in respect of property rights of its citizens in Mexico, as fully appears in the Conferences between the American and Mexican Commissioners in 1923 and as stated in my note of January 28, is that Mexico should not enact laws which in their application are retroactive in respect of rights legally acquired by aliens under laws existing at the time the property or property right was acquired. As I have already stated, Your Excellency declares this principle to be common to both Governments.
In view of this accord in principle, this Government is desirous of information from Your Excellency as to how the Mexican Government regards, in their practical application, some of the provisions of the Alien Land Law, promulgated on January 21, 1926.[Page 632]
Is Article 1 of this Law retroactive and in application will it be given retroactive effect? That is, does Article 1 apply to an alien who had acquired, or had an interest in any kind of company that had acquired, direct ownership in lands and waters within the prohibited zones prior to the promulgation of the Law on January 21, 1926? In respect of this same Article, would Your Excellency inform me as to whether your Government considers the Article to apply to mining, transportation, industrial companies and other enterprises not involving the direct ownership in lands and waters?
Is Article 2 of this Law, promulgated on January 21, 1926, retroactive in its application in the sense that an alien who, prior to the promulgation of the Law, had acquired an interest in a Mexican company, will be required to comply with Article 2?
Is Article 3 of this Law retroactive in the sense that it will be necessary for an alien, who possesses an interest in a Mexican company acquired prior to the promulgation of this Law, to apply for any permit?
As to Article 4 of this Law, I now understand from Your Excellency’s note of February 12 that any alien who owned, prior to the promulgation of this Law, a stock interest of fifty per cent, or more of the total interest in any kind of company owning rural property in Mexico for agricultural purposes may retain such interest until his death without any permit or without compliance with Article 2 of the Law and that the right of his heirs as to such interest over and above forty-nine per cent, is determined by the provisions of Article 6 of the Law; but that in the case of a foreign corporation owning stock in a domestic corporation, the Government of Mexico maintains that such corporate interest shall be disposed of on or before ten years from the date of the promulgation of the law.
On the basis of the principle of non-retroactivity, is it the view of the Government of Mexico that Article 5 of the Law under consideration is not retroactive but that the rights, which are sought to be regulated by the Law under discussion, legally acquired by aliens prior to the going into effect of the Law, shall be conserved by their present owners until their death without the seeking of any permit under the terms of Article 2 and by their heirs under the provisions of Article 6?
Reverting to the prior inquiry as to whether mining, transportation, industrial companies and other enterprises not involving the direct ownership in lands and waters are covered by Article 1 of the Law, it is, of course, manifest that any acquired rights of aliens in such enterprises in whatever form held do not come within the terms of Article 5 independent of whether the activities in which the alien had an interest prior to the promulgation of the Law were conducted within or without the prohibited zones.[Page 633]
Am I correct in assuming that the provisions of Article 7 of the Law promulgated January 21 last are in antithesis to the provisions of Article 2 and that an alien who has acquired a right before the Law went into effect, which otherwise would come within the terms of the Law, is only required to make a declaration before the Department of Foreign Relations within one year following the date of the promulgation of the Law which in effect gives notice of his prior acquired rights thus bringing the application of the Law within the principle of the non-retroactivity of legislation? And that such declaration will merely be a statement of his existing right and title?
The provisions of Article 7 only apply to the rights which are the subject matter of the Law.
In view of the foregoing inquiries which are made with a sincere desire to clarify the matters under discussion between the two Governments, I see no occasion for repeating at length the principles set forth in my note of January 28 bearing on the inability of an individual citizen of the United States to make any contract or declaration which would be binding upon his own Government not to invoke its right under the rules of international law to extend diplomatic protection, should there be committed any act of injustice justifying under the rules of international law such diplomatic protection.
In your note of February 12, the statement is made that if the infraction only affects the individual privately, without in any way infringing the rights of the state to which he belongs, it is not understood how it could be contrary to international law. As pointed out in my note of January 28, an injury done by one state to a citizen of another state through a denial of justice, should there be a denial of justice, is an injury done to the state whose national is injured. Even though the individual should make a waiver, that could not estop his state in case of any act of injustice from extending its right of diplomatic protection or seeking redress in accordance with the principles of international law for the injury to the state, inflicted by another state, through an injury to one of its nationals. The injury to one of its nationals by another state is the basis of the right of his state to seek redress for the injury in conformity to the established standards of civilization which modern states have mutually acquiesced in and which have become a part of international law.
In making a reference to the prohibition laws of the United States in your note of February 12, it is probable that Your Excellency overlooked the fact that the liquor business in the United States has not been a property right but a licensed occupation which was subject to the fullest extent at all times to the police powers of the states, to license by the United States, to the war powers of the Federal Government, and now, subject under the Constitutional Amendment, to the police powers of the United States.[Page 634]
It does not seem necessary to discuss further the exchange of notes in August 1923 between the two Governments after the return of the American Commissioners. Inasmuch as you state in your note of February 12 that “this explanation does not mean that Mexico fails to recognize the declarations made by its Commissioners” and in another place state “In this connection I again repeat that the decisions of the Court (Supreme Court of Mexico) cannot be either modified or altered in any manner either by the Executive or by any other authority and, moreover, there is no objection since such is the purpose of the Executive himself to reiterating the declarations of the Mexican Commissioners”.
However, for the purposes of clarification, I do desire to call Your Excellency’s attention to the fact that the proceedings of the American and Mexican Commissioners were approved by President Coolidge and that the request was made by this Government that it be advised that President Obregón approved the statements set forth in the Report made by the Mexican Commissioners and that in the event that the statements were so approved, a certain line of procedure should be followed for the purpose of the resumption of diplomatic relations.
The additional paragraph which you quote from the note of the Minister of Foreign Relations of Mexico in 1923 had reference to the time of the signing of the Conventions, which the American Commissioners and the Mexican Commissioners had agreed, as appears in the formal minutes of the meeting of August 15, 1923, would be signed forthwith by duly authorized Plenipotentiaries of the President of the United States and the President of the United Mexican States in the event that diplomatic relations were resumed between the two countries. The suggestion was made that a time elapse between the resumption of diplomatic relations and the signing of the Conventions, set out in the proceedings of the Commissioners, with which this Government willingly complied.
Your Excellency states in your note of February 12 that
“As Article 14 of the Law regulating Article 27 of the Constitution in the matter of petroleum provides that the rights acquired before it went into effect will be confirmed in accordance with the terms therein set forth, there can be no doubt that the regulations to be issued by the Executive will cause that provision to be fulfilled and, therefore, the rights acquired in accordance with the Laws of 1884, 1892 and 1909 will be confirmed; but it must be understood that those laws gave to the owner of the surface or to the person who had right thereto an optional right, that is, the liberty of appropriating for his own use the fuels, minerals and oils contained in the subsoil and, therefore, until he had performed some act looking to said appropriation, no right was acquired. This was the understanding of the American Commissioners at the Conferences [Page 635] of 1923 and they accepted it and Your Excellency’s note reproduces it when it agrees that the rights which are to be confirmed will be confirmed provided there shall have been executed any of the positive acts enumerated in the said Conferences.”
The declarations of the Mexican Commissioners in the meeting of August 2, 1923, set forth in my note of January 28, specified that paragraph IV of Article 27 of the Constitution of 1917 is not retroactive in respect to all persons who had performed, prior to the promulgation of the 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 and then in detail described the nature of such positive acts or intentions. But in the same declaration of the Mexican Commissioners it was stated in behalf of their Government that “they recognize the right of the United States Government to make any reservation of or in behalf of the rights of its citizens” and specific reference was made to the statement of the American Commissioners in behalf of their Government making such reservations in behalf of citizens of the United States should diplomatic relations between the two countries be resumed.
It was to this reservation made by the American Commissioners that I referred in my note of January 28 when I stated “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, I was only expressing to Your Excellency the hope of this Government that the regulations to be issued by His Excellency the President of Mexico would confirm the rights of the owners of the subsoil who had, prior to the going into effect of the Constitution of 1917, performed positive acts as defined in the Declarations made by the Mexican Commissioners under date of August 2, 1923, during the negtoiations of that year and approved by the Mexican Government.
This hope was expressed with greater confidence by reason of the statements in Your Excellency’s note dated January 20, 1926, that
“The ‘positive acts’ enumerated are: drillings, leases, conclusion of any contract relative to the subsoil, the investment of capital in land with the object of extracting petroleum from the subsoil, the carrying out of the work of exploitation and exploration, the conclusion of contracts relative to the subsoil in which it appears that a greater price was given than had been paid for the surface due to the purchase having been made for the purpose of searching for petroleum and, in general, any other act manifesting an intention of similar character. It will be seen that the above enumeration of ‘positive acts’ is confined to cases in which petroleum exploration work has begun or contracts have been entered into for the purpose of carrying [Page 636] out such exploitations, cases which are precisely those stated in Article 14, in order that rights previously lawfully acquired be confirmed and subsequently respected.”
Your Excellency, in closing your note of February 12, states that the purpose of the President of Mexico in regulating the laws is to conform to the principles of international law, justice and equity, and that the President is convinced that in the regulation of the laws which we have just been considering, there will be covered all points which have been the object of discussions between the two Governments.
This Government would be pleased to be assured that the regulations will confirm the rights of American citizens in whatever form the property may be held without cost or added burdens in all cases where the positive acts enumerated in Your Excellency’s note of January 20 have been performed. This Government cannot understand why reference is made to an exchange of title when the object is to confirm the titles already held in cases where such positive acts have been performed.
Your Excellency refers, in your note of February 12, to the Law of Waters under Federal Jurisdiction of December 14, 1910, which it is stated also provides for the confirmation of rights to waters which have been previously acquired. Were not such rights confirmed by the regulations without any change in the nature of the right or title?
Should a right have been acquired in the year 1885 under the Law of 1884 and the works constructed or the intention manifested in 1885, or by the nature of the contract of purchase or lease, would the Mexican Government think that the rights of the purchaser, or lessee, would be confirmed if not only the very nature of the title were changed but a concession granted limited to fifty years computed from the time the works began or from the date the contract was made or the intention manifested? The result would be to limit the use of property, admitted to be the property of the purchaser, to a beneficial use under new conditions for a maximum additional period of nine years.
This Government expresses the hope in the most friendly manner that in view of the statement in Your Excellency’s note of February 12 that “there can be no doubt that the regulations to be issued by the Executive will cause that provision to be fulfilled and, therefore, the rights acquired in accordance with the Laws of 1884, 1892, and 1909 will be confirmed” in cases where positive acts of the nature specified in the declaration of August 2, 1923, and in Your Excellency’s note of January 20, 1926, have been performed, the Mexican Government will be able to assure this Government that [Page 637] the rights of American citizens in respect of certain products of the subsoil, where positive acts of a nature which Your Excellency has specifically set forth have been performed, will be confirmed.