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

812.52/3203: Telegram

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

Mexico, September 1, 1938—10 p.m.
[Received September 2—7:35 a.m.]

360. I have just received the following note from the Foreign Office dated September 1, 1938:

[Translation] “Mr. Ambassador: I have the honor to reply to your Government’s note delivered August 22 of the current year to the Ambassador of Mexico in the United States of North America in which there are set forth various opinions regarding international law and views are expressed regarding the laws of Mexico and acts of my Government. As a detailed analysis of those views might become a discussion of an academic character which, instead of aiding a better understanding between our respective countries and clarifying the existing problems might, perhaps, alienate us from the spirit which friendship and mutual respect impose on us, I refrain from entering into a detailed study of the note referred to, limiting myself to upholding the bases of the international position which Mexico has assumed and to fixing the specific points which may serve as a basis for the prompt and definitive solution of the subject. I cannot, however, fail to express to Your Excellency the regret with which the people and the Government of Mexico have seen that your Government, disregarding the motives, the causes, and the historical antecedents, political and social, of our agrarian revolution, expresses the opinion that the juridical position maintained by Mexico is contrary to the fundamental principles of international law, to ethics and to democratic practices. Mexico believes, on the contrary, that it has adjusted its acts to the standards of international law in accordance with the evolution which the traditional concepts of that law have necessarily undergone. Far from judging that its attitude departs from the standard accepted by the civilized world in general and by the republics of this continent in particular, my country considers that its interpretation represents the unanimous conviction of the Ibero-American Republics and reflects juridical thought at the present moment. Mexico believes likewise that unless the true meaning of the word ‘democratic’ is changed, it cannot be said that a social reform involving the life of the immense majority of the population of the country can be qualified as anti-democratic. Confronted with the inescapable obligation of carrying out the agrarian reform—undoubtedly the most important point of the revolutionary program—my Government must expropriate (afectar) all the lands that may be necessary until their complete distribution, as is ordered by the constitution and the agrarian code of Mexico, laws which established the duty of indemnifying the owner of the lands taken, although the delivery of the indemnification might have to be postponed.

The rights of society are in this case beyond doubt, and the social necessity is so urgent that its satisfaction cannot be subordinated to the possibilities of an immediate payment. In view of the fact that the aspirations of the collectivity must prevail over individual interests, Mexico cannot refrain from carrying out the redistribution of the land although in so doing she might likewise affect foreigners.

This attitude of Mexico is not, as Your Excellency’s Government affirms, either unusual or subversive. Numerous nations, in reorganizing their economy, have been under the necessity of modifying their legislation in such manner that the expropriation of individual interests nevertheless do not call for immediate compensation and, in many cases, not even subsequent compensation; because such acts were inspired by legitimate causes and the aspirations of social justice, they have not been considered unusual nor contrary to international law. As my Government stated to that of Your Excellency in my note of August 3, it is indispensable, in speaking of expropriations, to distinguish between those which are the result of a modification of the juridical organization and which affect equally all the inhabitants of the country, and those others decreed in specific cases and which affect interests known in advance and individually determined.

There are numerous examples of nations whose cultural progress is beyond discussion, which have seen themselves obliged, without repudiating the right of property in the abstract, to issue laws which have signified expropriation without immediate payment and sometimes without later compensation. Countries might be mentioned which, under pressure of reasons considered to be of public necessity, have forced private individuals to exchange their gold and their gold certificates for money which has already been depreciated, or which was depreciated immediately afterwards. Those countries have also been under necessity to require private persons, without distinguishing between nationals and foreigners, to receive in payment of obligations, which had been contracted in gold, the already depreciated currency of the country. Because expropriation was indirect in these cases it was none the less effective, since the owners of gold and gold certificates in the first example, or of credits payable in gold, in the second one, have seen their property diminish without receiving adequate compensation in return. Notwithstanding that each time that measures of this character have been decreed, there have not been lacking those who described it as ‘confiscation pure and simple’ and notwithstanding the fact that they must have caused loss of confidence in investors, and serious disturbances in commerce, the courts of the various countries justified them, in view precisely of the reasons of a superior order and of the public interest which inspired the said measures and the necessity of maintaining the equilibrium of the national economy. It is true that when these emergency measures were adopted the countries which were economically weak, which desired to pay off their obligations, contracted in gold, with depreciated currency, the creditor nations, representing their nationals, denounced debtor countries before the Permanent Court of International Justice, accusing them of being transgressors against right, but later, the same powerful countries which did so could not avoid having recourse to the measures which they had criticized so severely, for the purpose of solving their own problems. Following the juridical transformations of the law of property, although without destroying it, some states have incorporated in their public law the fundamental principle that interests of individuals are subordinated to those of the community as was stated by the Spanish constitution of 1931 in whose Article VV (sic),⁴⁵ after establishing that ‘all the wealth of the country, whoever may be its owner, is subordinated to the necessities of the national economy’, provides that ‘properties may be subject to forced expropriation on account of social utility by payment of adequate indemnization unless it is otherwise provided by a law approved by the votes of an absolute majority of the Cortes’.

In the Republic of Czechoslovakia, according to its constitution, the law ‘can limit the exercise of private property’ and ‘expropriation cannot be effected without previous authorization of the law and indemnization unless a law should provide, either at present or in the future, that indemnization is not granted’. (Article 109)⁴⁶

The German constitution declares that ‘It cannot make any expropriation except for public utility and in accordance with the law. It would be effected by adequate indemnification, unless a law of the Reich otherwise provides. Respecting the sum of the indemnity recourse can be had in case of disagreement to the ordinary courts, except for the laws of the Reich which stipulate the contrary.’⁴⁷

In addition to the states whose constitutions I have just quoted, it is very interesting to observe that Yugoslavia, Bulgaria, Greece, Estonia, Finland, Latvia, Lithuania, Poland, Rumania and several others have already adopted in their organic regions agrarian reforms with procedures similar to those established in the fundamental law of Mexico.

In examining the agrarian law of Rumania the Dean of the Law Faculty of Paris, Mr. H. Berthelmew, maintains, together with a select group of jurists of world reputation, that the application of that law in the important case of the Hungarian optants of Transylvania is not contrary to the standards of international law, and recalls that agrarian laws have been passed which have caused expropriations with inadequate indemnification, in Prussia (1811), in Austria (1848), in Russia (1861), and even in the United Kingdom of Great Britain, when it included Ireland. (Agrarian Reform in Rumania, 1927, pages 50 and 59). The foregoing examples have been cited, not in support of the possibility of failing to pay for the expropriations on account of public utility, since on this particular point my Government has repeated, in conformity with its laws, that it considers itself obligated to indemnify, if only to justify the opinion maintained by Mexico that neither juridical nor moral principles are derogated, when it is maintained that the collective interests must prevail over the interests of persons who are nationals or foreigners. Mexico has maintained that the so-called rights of man, among others, the right to property, with its modalities, are not principles of international law, but that their validity is derived from municipal law. The fact is not disregarded that the contrary opinion upheld by your Government has defenders, but it must be admitted that the point of view of Mexico, far from constituting an unusual theory, lacking substance and without a juridical basis, has in its turn the most solid support, namely, the renowned expositor of the Anglo-Saxon interpretations of international law, Oppenheim affirms the following in the last edition of his famous treatise published by Lauterpacht, in speaking of the rights of the individual, on pages 508 and 509 of the first volume: ‘It is said that such rights include the right to existence, the right to protection of honor, of the family, of health, of liberty and of property, the right to exercise the religion of one’s choice, the right of immigration and other similar rights, but those rights (they can only be municipal and not international rights) at present do not enjoy any guarantee at all in international law.’ Mexico has seen with satisfaction that your Government approves its proposal not to demand special privileged treatment for its nationals, but a just and reasonable treatment in harmony with the generally recognized principles of international law. However, my Government does not differ from the opinion of that of Your Excellency, with respect to the fact that equality of treatment has been established to protect the rights of foreigners against the state, since, on the contrary, that principle was formulated precisely in defense of the weak states against the unjustified pretension of foreigners who, alleging supposed international laws, demanded a privileged position, has been in Latin America where there has been crystallized as an aspiration of the republics of this continent, the principle which has just been discussed. And it is the states which are economically weak that have found themselves obliged to take all possible precautions against foreign investors who, in exchange for producing some revenues to the treasury while they obtain profits which are at times fabulous, have become an obstacle to the very action of the government. It is true, as your Government affirms in the note to which I am replying, that the respect for property rights is recorded in the constitutions of all states of this continent, but it is also recorded that such right must undergo modifications or suspensions which the general interest, the basis of right itself, may demand. In such cases foreigners cannot consider themselves as immune from the modifications to which local legislation is subject. The opinion of Latin America in this respect, has already been brilliantly expressed by the illustrious Argentine authority on international law, Calvo, who, using his indisputable authority, maintained in the classic treatise ‘294.—The very serious subject of the constant claims of the great European powers on the Governments of the American states is related to this question. All have been based on personal offenses, sometimes real and sometimes padded by their agents, always painted by them in vivid colors. And the rule that in more than one case the former have tried to impose on the latter, is that foreigners deserve greater consideration and greater respect and privileges than the natives themselves of the country in which they reside. This principle, the application of which is notoriously unjust and infringes the law of equality of states, and the consequences of which are essentially disturbing, do not constitute a juridical rule applicable in the international relations of those of Europe, and whenever it has been demanded by one the reply of the other has been absolutely in the negative. It had necessarily to be so, because in the contrary case, relatively weak peoples would be at the mercy of the powerful ones and the citizens of one country would have fewer rights and guarantees than the foreigners residing there.’⁴⁸

After the foregoing approval of the opinion of Mexico with regard to the case under discussion, I shall proceed to set forth the point of view of my Government, in regard to the manner in which this matter may be settled, taking as a basis a practical arrangement.

In the letter of Under Secretary Mr. Sumner Welles, of June 29 last, mentioned in the note to which I am now replying, Your Excellency’s Government proposed establishment of a previous deposit as the guarantee of payment for the expropriated lands. My Government considers this proposal unacceptable because it considers it incompatible with the good faith and mutual confidence which should govern the stipulations of an arrangement of this character. Moreover, Mexico, as it has always done, has duly paid in strict compliance with the conditions agreed upon (April 1934) in which our two Governments succeeded in fixing, by means of the ‘Special Claims Commission’ the terms of the pecuniary obligation to correspond to the damages caused by the revolution, whereby it is amply demonstrated how unjust is the proposal contained in the said letter of June 29.

With regard to future agrarian expropriations, I have to advise Your Excellency that my Government finds itself legally incapacitated to prevent the application of the agrarian law, for which reason it will limit itself in each case, to submitting to the consideration of the commissioners mentioned below the amount and the terms of the special indemnifications.

My Government has noted that Your Excellency’s Government accepts, in order to solve the situation created, the proposal that the value of the expropriated lands as well as the terms of payment therefor, be submitted to a commission constituted by one representative of each party. In its turn my Government accepts that, in case the said representatives should not arrive at an agreement, a third representative chosen by the permanent commission then be designated, as established by the Gondra Pact, whose seat is Washington, and is composed of the three diplomatic agents who have been accredited there the longest. To terminate this note, I consider it pertinent to transcribe a few sentences uttered by the President of the Republic in his message to the Congress of the Union and which literally read as follows: ‘Mexico, maintaining its points of view and respecting the aspects of divergence maintained by the Government of the United States, agrees to facilitate this arrangement, which practical sense has imposed, with a most sincere and friendly proposal to consider this discussion terminated, which fortunately has not disturbed the good relations between our Governments and our peoples. The continuation of this discussion would benefit only the interested and traditional enemies of any good understanding between our two Governments, as is demonstrated by the costly, violent and insidious campaign which is being carried on against Mexico in the United States and in which it is attempted to ignore that each country has different problems and different means of solving them and that only a lofty historical and social human comprehension could interpret the true sense of reciprocity which should govern a fruitful and sincere friendship between the nations, which is necessary to fulfill the superior obligation to be faithful to the pact of Inter-American Solidarity, Cooperation and Harmony, concluded among all the republics of this continent and always renewed with greater faith and decision not only for their own benefit, but that of the international community.’

I take pleasure in renewing to Your Excellency the assurance of my highest consideration, Eduardo Hay.[”]

Daniels

45. Reference is apparently to article 44; see Spain, Constitución de la República Española, Gaceta de Madrid, December 9, 1931.
46. Czechoslovakia, The Constitution of the Czechoslovak Republic (Prague, 1920), p. 42.
47. William B. Munro and Arthur N. Holcombe, trans., The Constitution of the German Commonwealth, World Peace Foundation Pamphlets, League of Nations, vol. ii, No. 6 (December, 1919), p. 393.
48. Carlos Calvo, Derecho International Teórico y Práctico de Europa y América (Paris, 1868), vol. i, section 294.