File No. 812.63/99.
Vice Consul Coen to
the Secretary of State.
[Extract.]
No. 27.]
American Consulate,
Durango,
May 15, 1915.
Sir: I have the honor to report upon the
recent decrees affecting mines and mining property promulgated within
the past two months by the Chihuahua seat of government, copies of which
are enclosed with this despatch. * * *
No information to date has been received at this office of any
modification of the decree of March 19, 1915, as a result of the
protests of
[Page 912]
the American
Government and the English Government against the confiscatory nature of
the decree, except the explanation credited to Manuel Bonilla and made
by authority of the Secretary of Fomento, Licenciado Francisco Escudero,
which appeared in the El Paso Morning Times of April 15, 1915, copy of
which is hereto attached. * * *
The payment of taxes in Mexican gold and the payment of wages of
employees in Mexican silver or gold (enclosures No. 2 and No. 3) are
manifestly impossible, for such money is not of circulation and cannot
be bought in sufficient quantities in the country. * * *
One possible motive for the decrees may have been that it was hoped that
foreign interests could be forced to bring in outside capital and spend
it within the country in order to save their property from confiscation,
thus materially aiding the de facto government, which is moving heaven
and earth to obtain gold with which to buy war supplies from the United
States. This theory was tenable until the promulgation of the last
decree requiring all mines to pay wages in silver or gold, or its
equivalent in paper money of forced circulation. When this last decree
of May 4, 1915, (enclosure No. 4) was issued, the motive for the entire
series at once became evident, and the conviction clearly confirmed,
that the intention and motive was confiscation by seeming legal
requirements but which in reality are absolutely physically impossible
to comply with.
The great amount of American capital honestly and in good faith invested
in the mining industry in this consular district makes this subject of
immense importance to American citizens.
I have [etc.]
[Inclosure 1.]
Manuel Bonilla’s explanation of Villa’s New Mining
Law.
[From El
Paso Morning Times, April 15,
1915.]
I have been authorized by the Minister of Fomento to make a statement
to the press for the purpose of dispelling the incorrect impressions
which seem to exist in the minds of the people of the United States,
as well as those of other foreign countries, in regard to the
reforms decreed by General Villa’s Secretary of Fomento, Licenciado
Escudero. My ideas are in conformity with those of Mr. Escudero and
I make this statement in pursuance of a conversation had with the
Secretary regarding these laws.
The principal objection which most of the American periodicals and
the people interested in properties in Mexico seem to have, and
which upon its face appears to have some foundation, is the fact
that on account of changed circumstances, such as the state of war
and military operations existing in Mexico, it will be impossible or
impracticable for some miners to work their properties for some
time. There is, however, no foundation for any fear in this respect,
because there is a clause or article in the new law which provides
that any owner who for some just or plausible reason is not able to
work the property owned by him in accordance with the requirements
of said decree, may apply to the Government with a fair exposition
of his case, and his reasons for not working his claim or mine, and
in the event the reasons stated are reasonable from a business,
economic or other standpoint, he will be afforded an extension or
some concession, so that his rights shall be protected and in no way
injured. It has been the policy of the Government and the Department
of Fomento, and it will in future be their policy, to grant such
privileges and extensions, and no bona tide application based upon
fact will be refused, and no interest which in justice should be
protected will in any way be injured.
[Page 913]
The miner with means to work his property or a desire to work the
same in a bona fide manner need have no fear that he will be
unjustly deprived of his rights. However, the person who dreams
about holding a property to the exclusion of others until someone
with money comes along and pays him a royalty for that which he has
not earned or developed, and the person who holds large tracts of
pertenencias as a land owner, holds big tracts of farming land
unused without developing the natural resources of the country,
certainly would receive no encouragement of their dreams, Let the
mines be exploited by actual work, and if you claim that some harm
is done you because the law sets at naught the realization of dreams
of becoming, rich by exploitation of others and without work, think
of the claim of these people whom you are depriving of their right
to work and who are debarred from the inalienable right to live by
the avaricious monopolies of land and wealth. * * *
The ancient mining law of Mexico provided that in order for one to
keep his rights to a certain mine, the owner should not only file
his claim as discoverer of a new ledge, or as willing to work some
abandoned property, but he was also required to start and maintain
actual work in the mine. The Government has eminent domain on each
and every portion of its territory, and is sovereign to fix such
conditions precedent or subsequent for granting the right to work or
own a ledge as it may deem meet and proper.
Later on, under General Diaz’s Government, his Minister of Finance,
Mr. Limantour, changed the system, and the new mining law came into
existence, providing that in order to maintain the right of property
in any extension of mineral ground it was not necessary to work the
fundo minero, and the only condition was the payment of six pesos a
year for each hectare constituting the ground.
Since the Diaz Government seemed to have had the undisputed right to
change and amend the mining laws, why should the right be disputed
of the present Mexican Government to change or amend its laws by
what amounts to a repeal of the Limantour amendment, and thus place
the law in the status which from the standpoint of political economy
was to the best interests of the people? The Limantour amendment or
change in no way benefits either the Government or the country, and
any speculator could, under that law, hold a promising ledge in his
grasp indefinitely, provided he has the money to pay six pesos for
each two and a half acres contained in his grant.
The man next to him who starts work and carries the same on in a bona
fide way, pays salaries to the employees and increases the wealth of
the country and the circulation of money is handicapped by the
provision of the Limantour amendment, and he bears a larger burden
economically than the man who merely pays the annual tax. The man
who works his property provides for the payment of duties on
exportation and other taxes derived from the production of ore and
bullion.
[Inclosure 2–—Translation.]
Circular Order requiring all mining taxes to be
paid in Mexican or American gold.
Department of Hacienda and
Fomento,
Chihuahua,
April 8, 1915.
To the Mining Tax Collector at_ _ _ _ _.
In view of the frequency with which consultations are had with this
Department concerning the form in which it is necessary to make the
payments of the annual tax upon mining claims, I state to you, in
order that through you the knowledge may come to those interested in
making the payments corresponding to the four-month periods in
accordance with the law, that these payments ought to be made
commencing the 15th day of this month, in Mexican gold or in its
equivalent in American gold, at 2 for 1, that is to say, the rate of
exchange that existed before the Constitutionalist Revolution.
You will please bring this knowledge to your subordinates and the
agencies under your jurisdiction.
Please acknowledge the receipt of the present circular.
[Page 914]
[Inclosure 3—Translation.]78
Statement regarding General Urbina’s order of
April 14, 1915, relating to payment of mine employes in
coin.
[From El
Paso Morning Times, May 5, 1915.]
A drastic mining decree affecting the properties in the State of
Durango, it is reported, has been issued by General Tomas Urbina R.,
which if enforced, mine owners declare, will force them to suspend
operations. The decree is said to require the payment of all
employees of Durango mining properties in Mexican silver or its
equivalent in American gold, instead of the Villa currency which is
now the medium of exchange in northern Mexico. The penalty for
failure to comply with the provisions of the alleged decree is
confiscation of the mining property by the State Government of
Durango, and mining men declare that some mine owners have been
notified by Urbina’s officers that if they do not comply, execution
will be the penalty.
In addition to requiring payment of employees in silver, Urbina’s
decree is said to make it obligatory for mine owners to give a
thirty-day notice to any employee whom they wish to discharge; the
provision applies to day laborers as well as other employees.
The decree, according to Americans arriving from Durango yesterday,
was issued on April 14, at Auza, State of San Luis Potosi, where
General Urbina was then operating with his troops. Copies of it were
received here yesterday from mining men residing in Durango. Urbina,
by virtue of his being military commander of the State of Durango,
has power to issue the order.
American and foreign mine owners of Durango who are now in El Paso
said yesterday that it is impossible to carry out the provisions of
Urbina’s decree. Silver is no longer in circulation in northern
Mexico and to pay employees on a gold basis, they say, is beyond
reason.
[Inclosure 4—Translation.]
Villa decree of May 4, 1915, requiring payment of
mine employees in coin.
Francisco Villa, General in Chief of Operations of the Conventionist
Army, unto the inhabitants of the Republic, makes known:
That by virtue of the extraordinary powers contained in the Decree of
February 2, 1915, issued in the City of Aguascalientes, with which I
am invested; and
Considering: That the fluctuations of value to which the paper money
of forced circulation is subject are not natural since the time when
the changes in value became so rapid and extensive and lead to the
supposition that they are chiefly due to speculation;
That such speculation injures all classes of society but very
specially injures the laboring classes, who see the articles of
prime necessity daily increasing and their ability to buy with the
product of their labor daily decreasing;
That it is the absolute duty of the undersigned to look after the
interests of the community, attacking the disease by which it is
assailed in its most notorious symptoms;
That, finally, since the class of laborers employed in the mines is
the one most exposed to the harmful effects of such speculation, and
the paper of forced circulation with which the payment of this class
of labor is made is the subject of such great fluctuations, in
justice to the miners I am compelled to free the said wages from the
effects of the rise and fall of the value of paper money;
I have seen fit to decree the following:
- Article 1. The wages or salaries which the mining
companies or individuals working mines have agreed to pay
their workmen in that part of the Republic controlled by the
Army under my command shall be considered to be upon a basis
of silver or gold of the national coinage, or its equivalent
in American money of silver or gold at the rate of two for
one, the minimum daily wage to be one peso of Mexican silver
or gold or its equivalent as stated above.
- Article 2. The payment of the salaries or wages shall be
made in coin or in paper money of forced circulation at the
rate agreed upon between the parties, and in case of
disagreement the rate of exchange on that day shall be
used.
- Article 3. Commissary stores, workmen’s stores, or any
other plan which may have for its purpose the obligation of
the workmen to buy at a certain place articles of prime
necessity and articles for his use, are strictly prohibited.
Establishments, private or public, clearly philanthropic,
and entrance to which shall be absolutely free and
voluntary, are the only exceptions to this
prohibition.
- Article 4. This decree shall commence to take effect on
the 5th day of the coming June.
Done in the City of Aguascalientes on the 4th day of May, 1915.
