Foreign Relations of the United States Diplomatic Papers, 1938, The American Republics, Volume V

812.52/3031

The Ambassador in Mexico (Daniels) to the Secretary of State

No. 7155

Mexico, August 3, 1938.
[Received August 5.]

Sir: I have the honor to enclose herewith a translation, subject to revision, of the Mexican reply to the American note on agrarian compensation. This note was handed to me this morning at 9 o’clock by General Hay and, due to the shortage of time a copy of the Spanish text is not enclosed herewith but will be forwarded by tomorrow’s air mail. For the same reason, I have not had time to study the note and I am, therefore, making no comment.

Respectfully yours,

Josephus Daniels

[Enclosure—Translation]

The Mexican Minister for Foreign Affairs (Hay) to the American Ambassador (Daniels)

57900

Mexico, August 3, 1938.

Mr. Ambassador: I have the honor to refer to your Government’s note delivered on July 21 last, to the Mexican Ambassador to the United States, Dr. Francisco Castillo Nájera.

In the note referred to, your Government admits Mexico’s right to expropriation as well as the social justice which inspires her agrarian reform, the cause of expropriations from American landholders; but insists upon immediate payment to United States citizens for their lands which have been taken from them, regardless of what our country may do with respect to its own nationals. Furthermore, your Government deplores the fact that until now the American landholders whose claims were included in the jurisdiction of the General Claims Commission created in the year 1923, have not obtained adequate compensation and adds that the zeal with which the Mexican Government endeavors to carry out its program of social betterment has nothing to do with the question under discussion and is irrelevant thereto. Your Government requires from that of Mexico the immediate payment of adequate compensation for the American landholders affected by the agrarian reform since August 30, 1927, alleging that otherwise my country will violate a universally recognized rule of international law based on reason, equity and justice.

My Government maintains, on the contrary, that there is in international law no rule universally accepted in theory nor carried out in practice, which makes obligatory the payment of immediate compensation nor even of deferred compensation, for expropriations of a general and impersonal character like those which Mexico has carried out for the purpose of redistribution of the land.

The expropriations made, in the course of our agrarian reform, do, in fact, have this double character which ought to be taken very much into account in order to understand the position of Mexico and rightly appraise her apparent failure to meet her obligations.

Without attempting to refute the point of view of the American Government, I wish to draw your attention very specially to the fact that the agrarian reform is not only one of the aspects of a program of social betterment attempted by a government or a political group for the purpose of trying out new doctrines, but also constitutes the fulfilling of the most important of the demands of the Mexican people who, in the revolutionary struggle, for the purpose of obtaining it, sacrificed the very lives of their sons. The political, social and economic stability, and the peace of Mexico, depend on the land being placed anew in the hands of the country people who work it; a transformation of the country, that is to say, the future of the nation, could not be halted by the impossibility of paying immediately the value of the properties belonging to a small number of foreigners who seek only a lucrative end.

On the one hand, there are weighed the claims of justice and the improvement of a whole people, and on the other hand, the purely pecuniary interests of some individuals. The position of Mexico in this unequal dilemma could not be other than the one she has assumed, and this is not stated as an excuse for her actions but as a true justification thereof.

The enumeration made by your Government, in the note referred to, of social reforms recently carried out in the United States of North America demonstrates to what point the present hour demands a fundamental readjustment in the methods of government, for a few years ago the said reforms would not have been applauded and perhaps not even tolerated. If your Government has been in a position to make the payment of compensations at once, this circumstance only indicates that its economic circumstances permitted of doing so, but certainly it could not have postponed or abandoned those reforms, even in case such conditions had not been favorable.

As has been stated above, there does not exist, in international law, any principle universally accepted by countries, nor by the writers of treaties on this subject, that would render obligatory the giving of adequate compensation for expropriations of a general and impersonal character. Nevertheless Mexico admits, in obedience to her own laws, that she is indeed under obligation to idemnify in an adequate manner; but the doctrine which it maintains on the subject, which is based on the most authoritative opinions of writers of treatises on international law, is that the time and manner of such payment must be determined by her own laws.

Pursuant to the provisions of Article 27 of its Constitution³⁵ in force, the Mexican Government issued a law authorizing the issuance of agrarian bonds³⁶ for the purpose of compensating the landholders affected. But, from the beginning, the difficulty of establishing up to what point the various claims of an agrarian character, of United States citizens, merited or not, in every case, individually, the payment of a compensation, was, both for the United States Government and for that of Mexico, an obstacle in determining the right of the claimant and the amount which had to be paid to him, for my Government could not undertake to pay claims which had not been duly appraised.

There is, in fact, a group of claims which are based on great concessions granted, in other epochs and by other governments, which have been cancelled in view of the lack of accomplishment, by the concessionaries, of the obligations which they undertook; another group has as its basis the existence of great latifundia which were acquired practically without payment; there is another group of claims in which the owners obtained their titles from promotion companies without having carried out the obligations undertaken. The restitution of lands to pueblos, which had been despoiled of them by illegal means, constitutes another group in which the possessor had a title vitiated from the beginning. Other affectations originated in ejidal dotations in accordance with the Mexican agrarian laws, and in these cases Mexico has recognized its obligation to indemnify. And, lastly, there exists a certain number of claims of small and medium owners which, although subject to agrarian provisions, because their properties do not meet the requirements which the latter provisions indicate for small property not subject to expropriation, nevertheless, they having been obtained by subdivisions made by companies, which now are property of the Mexican state, my Government, because of reasons of a moral and equitable order, agreed to grant to the persons affected an immediate compensation by an exceptional procedure.

So then there exist claims in which the right adduced by the claimants is doubtful and debatable; on the other hand, in other claims, there does not, properly speaking, exist any juridical debate, since, as they originated in acts of a clearly expropriatory character of the Mexican Government, the latter raises opposition only to the amount thereof. In these last claims the problem consists substantially in reducing them to their just limits, since the majority contain exaggerated demands, for the value attributed to the properties is very different from that which the claimants themselves declared for the purpose of payment of their fiscal obligations. A settlement which would not take into account that situation would approve, against Mexico, the fraud on the Treasury committed by the parties interested.

My Government desires to make it plain that when it decided to suspend the payment of its agrarian debt in the year 1930, the measure affected equally Mexicans and foreigners. If Mexico had paid only the former, without doubt it would have violated a rule of equity; if it had paid only the latter, to the exclusion of nationals, it would have committed a similar irregularity.

The Republics of our Continent have let their voice be heard since the first Pan American Conference, vigorously maintaining the principle of equality between nationals and foreigners, considering that the foreigner who voluntarily moves to a country which is not his own, in search of a personal benefit, accepts in advance, together with the advantages which he is going to enjoy, the risks to which he may find himself exposed. It would be unjust that he should aspire to a privileged position safe from any risk, but availing himself, on the other hand, of the effort of the nationals which must be to the benefit of the collectivity.

Crowning with success the effort maintained by the States of this Continent against the idea of a special status for foreigners, there was approved, at the Second Pan American Conference, held at Mexico City in 1902, a formula which was broadened and reinforced by Article 9 of the Convention signed at the Seventh Pan American Conference,³⁷ which reads: “The jurisdiction of the States within the limits of the national territory, is applicable to all the inhabitants. Nationals and foreigners who are under the same protection of the national legislation and authorities the foreigners can not claim rights different from or more extensive than nationals.” [sic]

The demand for unequal treatment is implicitly included in your Government’s note for while it is true that it does not so state clearly, it does require the payment to its nationals, independently of what Mexico may decide to do with regard to her citizens, and as your Government is not unaware that our Government finds itself unable immediately to pay the indemnity to all affected by the agrarian reform, by insisting on payment to American landholders, it demands, in reality, a special priviliged treatment which no one is receiving in Mexico.

In the note under reply, it is stated that the claims of an agrarian character previous to 1927, were submitted to the jurisdiction of the General Claims Commission, established by a Convention between the two Governments, and that, to date, whatever the reason may have been, not even a single claim has been adjusted and not one has been paid.

The Government of the United States of North America can not be unaware, as it appears to admit in the note to which I have been referring, of the reasons why the General Claims Commission has not, until now, been able to resolve those of an agrarian character; reasons due to technical difficulties which were not foreseen at the establishment of the provisions regulating the arbitration and which can not be attributed to voluntary acts of either of the two countries. Furthermore, it is known to Your Excellency’s Government that Mexico is disposed to initiate the necessary negotiations for the purposes of arriving at a global arrangement which would overcome those technical obstacles and settle those claims definitively.

It is opportune to recall that my country’s Government has been punctually paying, since the year 1935, the annuities which it undertook to pay by such an arrangement, which put an end to the Special Claims Commission notwithstanding that, for the latter, there did not exist against it, a responsibility which could be imputed to it, according to the most indisputable precepts of international law, it being, on the contrary, a case of acceptance ex gratia of the said responsibility.

In the final part of the note to which I am replying Your Excellency’s Government proposes that there be submitted to the decision of arbitrators, within the terms of the General Arbitration Treaty signed at Washington, January 5, 1929, the following points:

1. The question whether there has been compliance on the part of Mexico with the rule relative to indemnification as prescribed by international law, in the case of United States citizens whose agrarian properties situated in Mexico have been expropriated by the Mexican Government since August 30, 1927;

2. If not, the amount of the indemnification which the Government of Mexico ought to pay;

3. That the conditions be established under which the said payment shall be made, and

4. That the arbitration referred to be carried out in accordance with the provisions of the General Treaty of Inter-American Arbitration, signed at Washington, January 5, 1929.

Mexico has never refused to submit its international differences to the jurisdiction of a court to judge according to law either acts or attitudes toward foreigners, nor has it raised objections to the decisions which have been unfavorable to it. Nevertheless, she considers that arbitration should be reserved, as the same Treaty of Washington establishes, for cases of irreducible differences in which the juridical principle under discussion or the act giving origin to the arbitration are of such a character that the two peoples at variance do not find any more obvious way of coming to an agreement. Such is not the present case, for while it is true that Mexico does not consider that payment of an indemnification for properties which the State expropriates on grounds of public utility, is an invariable and universal rule of international law, it is also true that Article 27 of her Constitution ordains payment in such cases and, therefore, the Mexican Government has never denied such obligation. There is no subject matter, therefore, for the arbitration proposed.

With respect to the conditions under which the said payment should be made, arbitration is likewise unnecessary. It would, furthermore, be improper, under the terms of the Treaty of Washington, since the procedures of execution for the carrying out of obligations already recognized by Mexico can not be a subject for arbitration and would have to be established in accordance with her economic conditions, which can not but be taken into account by a friendly people, nor can that be the subject for decision of an international court, which, by attempting to impose a certain economic organization upon Mexico, would give a death blow to her right to organize herself autonomously, the very basis of her sovereignty. I, therefore, take the liberty of inviting Your Excellency’s Government to appoint a representative, so that, together with the representative whom my Government would designate, they may fix within a brief period of time the value of the properties affected and the manner of payment, which my Government considers as execution, in part, of a general plan for the carrying out of her obligations in this respect, both in favor of nationals and foreigners. The Government of Mexico is ready to discuss at once the terms of this arrangement.

I believe that in this way, as a demonstration of the spirit of friendship and cooperation, animating the Government and the people of Mexico toward the Government and the people of the United States, the request for the indemnification of American citizens for the lands which, in compliance with the agrarian legislation, have been taken from them subsequently to August 30, 1927, will be satisfied.

I avail myself [etc.]

Eduardo Hay

35. Constitution of the United Mexican States, 1917, Foreign Relations, 1917, pp. 951, 955.
36. The issuance of agrarian bonds was provided for by a series of decrees and regulations dating from January 10, 1920. For list of legislation, see Eyler N. Simpson, The Ejido, Mexico’s Way Out, pp. 729–733.
37. Convention on Rights and Duties of States, signed at Montevideo, December 26, 1933, Foreign Relations, 1933, vol. iv, p. 214.