File No. 812.63/13.
Consul Letcher to the Secretary of State.
Chihuahua, August 4, 1914.
Sir: I have the honor to forward herewith a copy of a decree which was issued by the Governor of this State on July 27, 1914, requiring [Page 721] the renewal within one month of all industrial and mining operations in the State of Chihuahua which have been suspended because of revolutionary conditions that have prevailed for the past few years. Especial attention is called to this decree because of its far-reaching effect upon the interests of foreigners, principally Americans, in this State, many of whose enterprises have remained closed continuously since the first warning to Americans to leave Mexico was issued by Mr. Taft in March, 1912.
While a number of American mining companies have recently resumed operations, practically none has done so in the feeling that the expectation of permanent peace really justified them in doing so at the present time. Many see in this decree the beginning of a policy on the part of the Constitutionalists, and particularly the radical wing of this party represented by Villa, to drive Americans and other foreigners out of Mexico through discriminatory legislative acts and executive decrees. This discrimination is already being felt in various minor ways.
Attention may be called in this connection to the order issued by the executive of the State on the first instant to the effect that all mining and industrial companies must henceforth buy Constitutionalist fiat money needed by such enterprises in their operations at the fixed rate of thirty-five cents, American gold, for one Constitutionalist peso. The current market rate of the peso at the present time is about twenty-seven cents. Villa has now contracted for the issuance of ten million pesos for his exclusive use independently of the Carranza wing of the Constitutionalist party, the issuance of which will undoubtedly reduce the price of the peso very considerably. The order referred to is to be binding for six months from August 1.
Particularly noteworthy in connection with the decree relative to the renewal of mining and industrial operations is the reference made in the preamble of the decree, and repeated in the decree itself, to the obligation of mine owners arising out of concessions granted to them by the government. It is necessary to call attention to the utter falsity of this claim, since no extraordinary concessions exist in these cases. It may be remarked that the reference mentioned is typical of the mass of misinformation and exaggeration that has recently been made current regarding the valuable character of concessions held by foreigners.
While on the subject of concessions in Mexico, it may be well to note that the word concession itself as applying to industrial or mining permits or charters in Mexico is entirely misleading. In the first place, the organization and conduct of all classes of business in Mexico is more subject to government control and regulation than with us, and every kind of enterprise must be covered by a permit or license which sets forth the powers and duties of the individual or company in the case. These permits may be either state or national, in which latter case the supervision and regulation of the enterprise corresponding thereto is under the Department of Fomento. In order to attract foreign capital many of these charters granted freedom of taxation for some short period after establishment of the enterprise covered thereby, at the expiration of which [Page 722] period the enterprise falls under the general law in all respects. These special exemptions have been uncommon in the mining industry, having only been granted in cases where mills or smelters requiring exceptional investments have been erected. I venture the assertion that in very few instances in Mexico have the privileges, exemptions, or special rights granted to foreign investors equalled those commonly offered by communities in the United States to attract industrial enterprises into their midst.
I have [etc.]