Foreign Relations of the United States Diplomatic Papers, 1935, The American Republics, Volume IV

812.52/1921

The Chargé in Mexico (Norweb) to the Secretary of State

No. 2635

Mexico, June 13, 1935.
[Received June 21.]

Sir: I have the honor to submit the following brief review of the present agrarian situation as it affects American citizens as background to this Embassy’s despatches reporting its efforts on behalf of its citizens whose lands are affected by expropriation proceedings under the Agrarian Code:

Prior to the appointment of Ambassador Morrow, it was the practice of this Embassy, when called upon to intervene on behalf of American citizens in agrarian cases, to address itself to the Foreign Office. This practice almost invariably resulted in a reply to the effect that the matter had been referred to the appropriate authorities for investigation and it was rare indeed that any redress was obtained for the American landowner.

Ambassador Morrow … obtained the approval of the Mexican Foreign Office for a member of the Embassy staff to take up agrarian cases informally directly with an official of the National Agrarian Commission, which then formed a part of the Department of Agriculture. This policy has since been followed with varying effectiveness. At first the Mexican Government, occupied with its religious troubles and not pressing its agrarian reform policy, was inclined to be conciliatory and these informal representations to the National Agrarian Commission were sympathetically received and occasionally favorably acted upon, although the files show that whenever favorable action was obtained it constituted but a respite and the land, temporarily saved to its owners, was invariably seized at a later date.

Since the inauguration of the present administration on December 1, 1934, conditions have radically changed. The National Agrarian Commission is now an autonomous department of the Government, no longer a dependency of the Department of Agriculture, and is now known as the Agrarian Department. …

Taking full advantage of the amendment to the constitution of December 30, 1933,¹⁹ eliminating all legal recourse in expropriation proceedings, the administration of President Cárdenas is able to boast that it has given more land to the people during its short tenure of office than any other Mexican Government for a like period and the President loses no opportunity to announce that agrarian reform is the keystone of his policy. On May 1, alone, ejidal grants amounting to 552,936 hectares were distributed to 36,856 heads of families. In keeping with this policy is the announced intention of the Chief of the Agrarian Department to favor agrarians as against the landowners. In an open letter to El National, published February 21, 1935, Señor Gabino Vazquez stated that in those cases where agrarians had seized property illegally, his Department by official intervention had been able, keeping within the law, to make their position legal and to give them definite possession of the land they had illegally occupied and cited the case of the Fernandez ranch, Las Rucias, as an example.

The ineffectiveness of handling agrarian cases through the Foreign Office is well illustrated by this same Las Rucias case in which the Embassy, under instructions from the Department, very actively intervened and, even though the Foreign Office was forced to admit the illegal status of the agrarians and promised the Ambassador that they would be evicted from the property, nevertheless, the Agrarian Department gave these same agrarians provisional possession of the land and the presidential decree confirming this provisional grant is expected to be issued shortly. Likewise in the case of Doctor Bauchert’s property, in which, under instructions from the Department, a report was requested from the Foreign Office on February 18, 1935, and in spite of numerous personal reminders by the Ambassador to the Minister for Foreign Affairs²⁰ himself and several follow-up notes, a report has only just now been received, four months after the original request was made, which confirms the right of the agrarians to occupy over one thousand hectares of Doctor Bauchert’s property.

In its informal representations to the Agrarian Department, the Embassy’s efforts have been equally fruitless and it has so far not even received a reply to its several informal letters and personal interviews. For instance, the case of the Compañia Agricola de Quimichis, on which a memorandum was personally presented by an officer of this Embassy to the Chief of the Agrarian Department on February 28, and in spite of repeated reminders and further representations no answer has as yet been obtained.

Under the Agrarian Code a person, whose lands form the object of petitions by agrarians for ejidos, has recourse only to the Local Mixed Agrarian Commission, which is composed of five persons, two of whom are representatives of the Federal Government, two of the State Government and one of the peasants. The landowner has no recourse to the courts and can only appeal to the Agrarian Department after the Mixed Agrarian Commission has reached a decision and sent the file to Mexico City.

When an American landowner considers that the expropriation proceedings are not being legally conducted, that the agrarian census is padded, or that the names appearing on this census are not those of bona fide residents of the neighborhood, or that his lands are wrongly classified, he appeals to the Embassy for redress, having exhausted his recourse before the local committee. The Embassy’s only choice is to take the matter up with the Foreign Office or directly with the Agrarian Department. If it takes the case up with the Foreign Office, a brief note is received to the effect that the matter has been referred to the Agrarian Department and that the Embassy will be advised in due course, and that is where the matter usually ends. If the Embassy takes the case up informally with the Agrarian Department, it may be that, as a result of insistence and persuasion, an inspector is sent to the affected property to investigate the complaints. The most that may be expected from such an investigation is the retaking of the census or the reclassification of the lands with no material benefit to the landowner.

Since a residence in the petitioning center of population for six months only is required to entitle a person to be inscribed in the census and that a census consisting of but twenty male Mexicans of 16 years of age or over is sufficient to form a new center of population with the right to petition for ejidos, it is a very simple matter to gather a few persons together near the property wanted, take a census, and within a very short period to expropriate the land legally under the Agrarian Code, as was done in the Las Rucias case. Under the circumstances, it is small wonder that the Embassy’s representations on behalf of American citizens whose lands are threatened with expropriation have been without avail.

. . . . . . . . . . . . . .

There remains but the question of indemnification as provided for under the constitution and in the Agrarian Code itself. But under the code the question of indemnification does not arise until after the final expropriation decree has been issued and the person whose lands are affected has applied for payment. For the moment the very contentious question as to whether or not the value of the property as declared by the owner for tax purposes constitutes adequate payment is overshadowed by the question as to what constitutes effective payment. Although Secretary of State Hughes agreed to recognize payments in agrarian bonds for a maximum of 1755 hectares taken from any one person,²¹ the depreciation of these bonds, on which neither interest nor amortization is being paid, vitiates this agreement and we can no longer obligate our nationals to accept them in payment.

In this connection, I refer to the Embassy’s despatch No. 2224 of February 12, 1935,²² reporting a conversation between the Ambassador and the Minister for Foreign Affairs in which the latter stated that congressional authorization was necessary before any more agrarian bonds could be issued and also to recall the statement made by the Minister of Finance in Congress December 19, 1933, to the effect that the agrarian debt then amounted to nearly 800,000,000 pesos, as reported in the Embassy’s despatch No. 2262 of February 19, 1935.²²

In this connection I enclose an excerpt²³ from a most interesting treatise on the agrarian question written by Doctor Eyler N. Simpson,²⁴ who has been conducting his investigations in Mexico since 1927 on a scholarship from the Institute of Current World Affairs. The treatise was shown to me in confidence by Doctor Simpson, who asked that it be not referred to nor quoted from for publication until after its approval by his principals.

Even if Congress should authorize the issuance of more agrarian bonds, these bonds could not be accepted as effective compensation unless their market value were very substantially increased, which the issuance of a large number would not tend to do. The Mexican Government has always insisted that foreigners cannot be afforded preferential treatment over its own citizens, thus precluding the payment in cash to foreigners because of the vast sum involved in payments to both foreigners and nationals.

Believing that the informal discussion of agrarian claims²⁵ filed with the General Claims Commission as provided for under the Protocol of April 24, 1934,²⁶ would provide a suitable opportunity for discussing the whole question of agrarian claims with a view to finding some satisfactory basis for indemnifying not only those American citizens whose lands had been taken prior to September 1927 but also those whose lands had been taken subsequently or which might be taken in the future, the Embassy recommended that the discussion of agrarian claims be all inclusive. The Department, however, replied that it did not consider it desirable to include other than the claims filed with the Commission, because of the necessity of prosecuting as expeditiously as possible the work of the General Claims Commission.

Hoping that these discussions might nevertheless provide some basis for the settlement of current agrarian cases, the Ambassador asked the Minister for Foreign Affairs whether the Mexican Government could not be persuaded to discontinue expropriation proceedings affecting American-owned property pending the outcome of the discussions but the Minister replied that the Mexican Government could not restrict its full liberty of action in the vast agrarian program under the Six Year Plan for the restoration of the land to the people and that the most he could do would be to urge the Agrarian Department to extend the full benefit of the period allowed by law in expropriation cases affecting American citizens.

The Claims Convention between the United States and Mexico provides only for the consideration of those claims which arose prior to September 1927. If no agreement can be reached with regard to present agrarian cases, I fear that another claims commission will have to be set up before the one now functioning has finished its labors.

I was recently approached by the British Minister as to our policy on agrarian matters. It appears that the British Legation finds its efforts on behalf of its subjects whose lands are expropriated as fruitless as our own and can obtain no satisfaction from the Foreign Office. Inquiry from the Spanish Embassy elicited the information that they were careful not to intervene in agrarian cases affecting their nationals.

From the Embassy’s observation there would not appear to be any discrimination against properties held by foreigners nor yet between foreigners. If any favors are shown, it would seem that American citizens appear largely among those favored, considering the vast properties remaining in the hands of American citizens, such as the Hearst million acre ranch in Chihuahua and the Hacienda Paso del Rio in Colima, belonging to the heirs of Doctor Ochsner, and others in the border states.

To sum up the situation, the properties of American citizens in Mexico continue to be expropriated under the agrarian laws and it is the announced policy of the present Mexican Government to intensify its agrarian program of breaking up the large estates and dividing the property among the landless peasants. No indemnification is now offered for lands expropriated, although the Department has always insisted that the property of American citizens should not be expropriated without adequate compensation. Since under the Agrarian Code the question of compensation does not arise until after the final presidential decree expropriating the property has actually been issued and published, the only recourse open to the dispossessed landowner is to petition the Federal Government for compensation, and failure to pay within a reasonable time or in a satisfactory medium necessarily results in a claim against the Mexican Government, since no legal recourse is available. In accordance with standing instructions regarding claims, American citizens who consider that they have claims for indemnification against the Mexican Government for lands expropriated are being referred directly to the Department which will have to pass upon the validity of the claim before issuing instructions to this Embassy to take it up with the Mexican Government.

Curiously enough, at the present time there does not appear to be any formal diplomatic claim for actual indemnification now pending but undoubtedly a number of such claims will arise in the very near future, such as in the case of Las Rucias and of Doctor M. F. Bauchert’s property and others. The Department will then have to decide what comprises effective and adequate payment and how this is to be determined. It is still hoped that the negotiations now being conducted by Messrs. Baker and Flood in connection with agrarian claims filed with the General Claims Commission will somewhat clear the atmosphere and indicate some basis for the settlement of present and future expropriations of lands of American citizens and avoid the accumulation of claims by American citizens against Mexico with the resultant ill feeling and to the detriment of our good relations with our Southern neighbor.

Respectfully yours,

R. Henry Norweb

19. Mexico, Diario Oficial, January 10, 1934, p. 121.
20. José Manuel Puig Casaurane.
21. A letter to this effect was sent to the Mexican Chargé d’Affaires upon ratification of the General Claims Convention, March 1, 1924 (411.12/99b); see telegram No. 119, August 22, 1923, to the Chargé in Mexico, Foreign Relations, 1923, vol. ii, p. 550; and also Proceedings of the United States-Mexican Commission Convened in Mexico City, May 14, 1928, p. 44.
22. Not printed.
22. Not printed.
23. Not reprinted.
24. Simpson’s book, entitled The Ejido; Mexico’s Way Out, was published at Chapel Hill, N. C., 1937.
25. See pp. 753 ff.
26. Foreign Relations, 1934, vol. v, p. 470.