File No. 812.512/2090
[Enclosure]
The Mexican Secretary of State for Foreign
Affairs (
Aguilar) to the British Secretary of State for Foreign Affairs
(
Balfour)2
Mr. Minister: I have the honor to reply
to note No. 34 of April 30 this year, which the Chargé des
Archives of the British Legation in Mexico delivered to this
Department, in which His Majesty’s Government protests
energetically against the enforcement of the decree issued by
the Mexican Government on February 19 this year, in so far as
British subjects and interests are concerned, and states that it
will hold the said Government responsible for all the loss and
damage which may accrue to British subjects and interests in
consequence of the decree mentioned.
This decree establishes a tax on petroleum lands and petroleum
leases, meriting the qualification of arbitrary and confiscatory
because it imposes a tax which, in its opinion, is a crushing
burden on the oil industry, and constitutes a higher rate of
taxation on the oil industry than that which exists in any other
country in the world.
Without expressing an opinion as to the accuracy or inaccuracy of
the judgment emitted with regard to the taxation established,
the Mexican Government cannot do otherwise than express the
surprise which the note and protest of His Majesty’s Government
has occasioned it, for the reason that in issuing the said
decree it did so in the legitimate exercise of its sovereignty
as the Government of an independent nation, and the only remedy
is the recourse provided by Mexican laws in cases where taxes
decreed by the public power are considered to be burdensome or
confiscatory.
The surprise of the Mexican Government is legitimate, as would be
that of the Government of any other independent nation—including
that of His Britannic Majesty—should it find that its acts with
respect to its interior affairs, such as the right to impose
taxation, were the subject of diplomatic protests by powers
whose subjects were affected by such taxation. So much so is
this the case that it is certain His Britannic Majesty’s
Government would not permit to be made any diplomatic
reclamations against the necessarily high taxation which the war
has forced it to decree throughout its dominions and which weigh
equally not only upon English citizens and the subjects of the
countries conquered or under its domination in any form, but
upon all foreigners as well.
[Page 757]
By virtue of the liberty of fiscal legislation which Mexico
enjoys, it is opportune to declare that the Mexican Government
does not recognize the right of any foreign country to protest
against acts of that nature which are the result of the exercise
of its interior sovereignty, and, consequently, cannot accept
the responsibilities which it is the intention to place upon it
because of supposed injury resulting from its legislation. This
decision is founded upon the equality which the Mexican
Government desires should exist as between foreigners and
Mexicans in respect of taxation decreed within its own
territory, as it considers that in granting the preferences to
which diplomatic intervention tends it would fail in the
performance of its strictest duties. The recourse to which not
only nationals but foreigners should turn, to protect themselves
against a tax which they may consider confiscatory, is to submit
the case to the Mexican courts, which are ready at all times to
administer justice by applying the laws in force, which justly
consecrate as an individual guaranty the prohibition to
confiscate property. Furthermore, it is generally admitted that
diplomatic representations should be made only after ordinary
measures have been found inadequate and as a last resort.
If the provisions of the decree, in the opinion of His Britannic
Majesty’s Government, are in open conflict with the laws and
contracts under which investments of British capital have been
made in oil lands in Mexico, this can not reasonably constitute
an obstacle for the free development of the public wealth of
Mexico; and such development may exact, as in this case, certain
changes in land legislation beneficial to the country,
especially since the modern conception of private property
considers it rather as a social function closely united with the
prosperity of the State.
The firm purpose of the Mexican Government is to respect foreign
interests, giving them guaranties and facilitating their
development; it believes that it can carry out this program
simply by the operation of the laws and institutions of the
Republic through their integral and equal application; and
considering that this is the best guaranty it can give, it
cannot accept the protest of His Britannic Majesty’s Government,
the effect of which would be to place British subjects in a more
favorable situation than Mexicans.
In the hope that the cultured intelligence of His Britannic
Majesty’s Government will enable it to reach a proper
understanding of the decree which gave rise to the note under
reply, I have the honor, Mr. Minister, to renew to your
excellency the assurance of my highest and most distinguished
consideration.
