812.512/3501a: Telegram
The Secretary of State to the Ambassador in Mexico (Morrow)
361. Referring to telegram of May 4, noon, from Consul at Nogales, and to your 239, May 6, 1 p.m., Department submits following observations on matter of double taxation to serve as a basis for representations by you to the Mexican Government, in such form as you may deem best should you again find it necessary to take up the matter with the Mexican officials. In such an eventuality your representations to the Mexican Government should be to the following effect:
International law and custom governing this question is so clearly recognized that it is difficult to understand the seeming insistence of local Mexican authorities in running contrary thereto. In taking the position that taxes and customs paid to de facto authorities in control of an area (whether they be rebel authorities or authorities of a foreign country) must be considered as if they were paid to the regular authorities of a country, this Government is not invoking a principle that has not been recognized by itself. In the celebrated Castine case which arose out of the occupation by British troops of the port of Castine in Maine, the Supreme Court of the United States itself held that goods imported into Castine during its occupation by British troops were not subject to payment of customs duties under the laws of the United States after the British withdrew, and the United States resumed the exercise of its sovereignty which during British occupation had been suspended. (See United States v. Rice, 4 Wheaton, page 246.)
Mr. Fish, Secretary of State, commenting upon the demand by the Mexican authorities for duty on goods imported into Mazatlan while that port was in the occupation of insurgents, stated as to the practice of the United States that “since the close of the Civil War in this [Page 416] country suits have been brought against importers for duties on merchandise paid to insurgent authorities. Those suits, however, have been discontinued, that proceeding probably having been influenced by the judgment of the Supreme Court adverted to,” that is, the judgment of the Supreme Court in the Castine case noted above. (I Moore’s Digest p. 41 et seq. particularly p. 49.)
This Government confidently expects that the Mexican authorities will recognize this principle. It is no fault of Americans in Mexico that the regular constituted Mexican Government may not have been able at certain times and in given areas to enforce its own power and collect its own taxes, nor to protect Americans from the imposition of taxes and other duties by rebels, and therefore Americans who were in no wise responsible for the conditions in such areas, must not now be punished for the forced payment by them of taxes to rebels because of this inability of the regular Mexican authorities to protect them against such payment. If the Mexican authorities can in individual cases show that Americans have been participants in the rebellion, the matter will assume as to these Americans a different aspect.