Papers Relating to the Foreign Relations of the United States, 1922, Volume II

711.1211/39

The Chargé in Mexico (Summerlin) to the Secretary of State

Mexico, May 25, 1922.
[Received June 5.]

No. 5560

Sir: I have the honor to acknowledge the receipt of the Department’s telegram (No. 70, May 15, 5 p.m.), in which I was instructed to request Mr. Pani to elucidate a certain paragraph in his informal note of May 4, 1922.¹⁵ I was also instructed to request specific information as to the Mexican political and administrative program referred to in Mr. Pani’s note, the extent to which the program has been carried out and how soon it will be completed. I lost no time in bringing the matter informally to Mr. Pani’s attention, and I am now in receipt of Mr. Pani’s informal note, dated May 24, 1922, in reply, a copy and translation of which are herewith enclosed. It will be noted that Mr. Pani takes exception to the Embassy’s translation of the paragraph referred to in the Department’s telegram of May 15th. In this connection reference is respectfully made to the Spanish text of the paragraph mentioned. However, I am of the opinion that this revision is made in good faith. The other changes mentioned by Mr. Pani are of small importance. I am forwarding, however, the only copy in English he furnished the Embassy.

Mr. Pani stated, when he handed me this informal note, that it was a sincere and honest exposition, and that it evidenced their desire frankly to elucidate the matters under negotiation.

With reference to his reported desire to go to Washington for conference with the Secretary, Mr. Pani said he thought it best to await the receipt of this note by the Department; after which, should further elucidation be desired, he should be glad to go to Washington for that purpose, and even to sign the Claims Conventions proposed by him. In this connection, I have reason to believe that Mr. Pani would be pleased to receive an intimation, if not an invitation, to come to Washington for informal and unofficial Conference with the Department in connection with these negotiations, now that he has elucidated certain portions of his note of May 4th last, desired by the Department, as stated in its telegram No. 72, of May 17, 4 p.m.¹⁶

I have [etc.]

George T. Summerlin

[Enclosure—Translation¹⁷]

The Mexican Secretary of State for Foreign Affairs (Pani) to the American Chargé (Summerlin)

Mexico, May 24, 1922.

My Dear Mr. Summerlin: I am pleased to answer your courteous informal note no. 231, of the 16th instant, as follows:

1. The paragraph which you transcribe from the English translation made by your Embassy of my note of May 4¹⁸ completely changes the sense of the original Spanish. In order that so deplorable an inversion shall not continue, it is necessary to substitute for that paragraph the following:¹⁹

“The Government of Mexico sincerely believes that such a Convention might advantageously substitute, with the object of resuming diplomatic relations between the two countries, any Treaty of Amity and Commerce, thought out and written in the tenor proposed by the Department of State of Washington, not only from the Mexican viewpoint, but also—and chiefly—from the American.”

Furthermore, I find some other discrepancies between the complete copy of the English translation (which you sent me under separate cover) and the original Spanish, although these discrepancies are not of equal importance; and I take the liberty, while returning the aforesaid copy to you, to enclose with it a copy of the corrected text,²⁰ on which changes or additions have been made in red ink in those parts of the American Embassy translation which are incorrect or omitted.

2. By simply substituting the English paragraph, quoted above, for the corresponding paragraph of the American Embassy’s version, the doubt of the Department of State would be dispelled. In fact, the convention to which this paragraph relates, and which my note of May 4th considers the best substitute for the proposed Treaty of Amity and Commerce, or similar instrument, for the purpose of resuming diplomatic relations between the two countries, is not a third convention. The Government of Mexico has never thought to propose a third convention for that object, but rather, the first of the two conventions already submitted for the consideration of the American Chancellery, that is to say, the one which has for its object the creation of a Mixed Commission which shall study and decide claims for damages arising from the late Mexican revolution.

3. The last question in your note in reply refers to matters concerning the political and administrative program of the present Government of Mexico which relate to the foreign interests located in or to be located in national territory; to the part of that program which may now be considered as carried out and to the probable duration of its complete realization.

In order to define, on this occasion, the treatment offered to foreign interests by the political and administrative plan which the Government, presided over by General Alvaro Obregón, has been developing, it were sufficient to recall the pertinent parts of Obregón’s numerous public and private declarations, since the manifesto with which he initiated his electoral campaign as candidate for the Presidency of the Republic; in all of these, in said manifesto, and in his addresses as candidate, as well as in his frequent declarations as First Magistrate of the Nation—among which, for instance, might be mentioned those of April 2, 1921, transmitted to the principal periodicals of the world;²¹ those of May 20th, telegraphed to the Consolidated Press Association;²² those of June 27th sent to the New York World;²³ those contained in the Presidential message of September 1st to the Honorable Congress of the Union;²² those of December 31st, communicated to foreign Chancelleries through our Legations;²⁴ the private letters to the Honorable President Harding of June 11th and August 18th,²⁵ etc.; all these declarations, I have said, contain such expressions of the purposes of the present President of Mexico regarding the interests under discussion that they constitute a voluntary and solemn promise or obligation undertaken by that high public official—not only before his own country, but also before the entire world—to offer a gratuitous hospitality to the capital and persons of foreigners who may have come or who may desire to come to cooperate honorably and reasonably with the Mexican people in the exploitation of the national riches.

This offer of hospitality implies, as has been clearly stated in some of the declarations mentioned, equitable reparations for damages suffered, by reason of the revolution, by persons and interests now located in Mexico, and the possibility of future favorable development of those interests and of those which hereafter may come here, not by means of unjust privileges, but by the strict application of the laws, and by granting to those interests all the guarantees which these same laws bestow and all the facilities consistent therewith.

I believe that the complete realization of this plan would go further in satisfying all the demands which the most exacting Government in the world might make in favor of the interests and the persons of its nationals located in another country.

I cannot, for reasons which are obvious, meet the request which you make in the final part of your last note, that is, to fix a period within which reparations will take place for all damages done to the interests or persons of foreigners in Mexico, and within which all the guarantees and facilities which such interests and persons may derive from the full carrying out of the political and administrative program of this Government will be granted. In fact, such reparations, guarantees, and facilities are not simply the result of the perfect normalization of the Nation’s internal life. The nature and complexity of this problem would be sufficient to make each delay excusable and any prediction uncertain. They are also influenced by the normalization of international relations, directly as well as indirectly, because these relations inevitably react upon the internal state of the country. Unfortunately, the state of international relations does not depend upon the will of the Government of Mexico.

I may, nevertheless, recall, by way of example, from the many acts already performed for the purpose of rehabilitating the country abroad, some which, by their character and importance, may be sufficiently demonstrative of the firmness of purpose which animates this Government in such respect, and of its capacity to accomplish that purpose.

The New Legislation and Property

In the first place, I must refer to the character of our recent legislation which has provoked so much alarm among national conservative elements and, above all, among foreigners, not so much because of the changes introduced in the former land system, but principally because it was believed—and certain acts of the preceding Government, perhaps, warranted such belief—that the new land system was to be introduced in a confiscatory and retroactive way.

Each of the Presidential declarations mentioned above contains unequivocal expressions of the intentions of the Government in this respect. Those of June 27, 1921, to the New York World, for example, say:

“… To-day we profess the principle that the natural resources of the Nation belong to the Nation. Never will the Mexican people tolerate a Government which shall not be founded upon this principle.

“This does not imply, by any means, a policy of isolation. Mexico is not so unwise as to think: that she can live or work alone; nor has she such a desire; but in the future we shall demand an equitable share in her development. We have now broken forever with the policy of grants, bribery, and submission. We shall invite foreign capital, and it will be treated justly, but we will not grant it excessive privileges at the expense of the rights of the people.

“Having established this point, I take the liberty to declare that in such a policy there is not the least indication or intent to confiscate. This falsehood has been invented by those who feel that our policy of nationalization will be in opposition to future campaigns of monopolistic exploitation. All rights of private property acquired prior to May 1, 1917—the date on which the present Constitution was promulgated—will be respected and protected. The famous article 27, one of whose clauses declares the petroleum deposits of the subsoil to be the property of the Nation, will not have retroactive effect. …”

The frequency with which these expressions have been invariably repeated, and the numerous administrative acts of this Government (so respectful of the rights of property acquired before the Constitution of 1917 came into force, which has not disturbed the interests enjoying such rights, for which end it has been necessary even to withhold decrees interpreting Constitutional article 27 retroactively issued by a former legal Government duly recognized by the Government of the United States); both of these facts, I say, repeated official declarations, and administrative acts in keeping therewith, have tended to mitigate the radical evils of the revolution and to create a national political atmosphere (considering the effective independence which obtains among the three Powers of the Federation) capable of guaranteeing the nonretroactive interpretation and regulation of the said constitutional article. In this sense, the late decisions of the Supreme Court of Justice of the Nation are significant, granting amparo against acts of the President of the Republic and of the Secretary of Industry, Commerce, and Labor—amparos pending determination in that high tribunal from the time of the Government of Señor Carranza—to several petroleum companies, in a sufficient number of cases to constitute a juridical precedent as regards the violation of the guarantee of nonretroactivity.

Therefore, in order that a question of such great importance shall be definitely resolved, it is only necessary that the Honorable Congress of the Union shall enact the Organic Law which regulates the application of article 27 of our Constitution, in accordance with the principle established of nonretroactivity. It is to be expected that this will occur during the next period of sessions of the Congress, which will be inaugurated the 1st day of September of this year, and it may be assured that the much desired regulation will come sooner and in a more satisfactory form, the greater the conviction of the members of said Congress is that there is being exerted upon them neither the direct pressure of this Executive nor the indirect pressure of a foreign power.

The Agrarian Question

It is necessary, in order to judge this question without prejudice, to know basically the history of Mexico, since the origin of the question dates back to the conquest of America by Spain: As a result of that event, the lands were possessed by the Spanish conquistadores and encomenderos, and the Indians were reduced to slavery—not in law, but certainly in fact—and the protective “Leyes de Indias”, the good intentions of some rulers, and the apostolic efforts of the missionaries had indeed but little influence in favor of the despoiled. The cédula of Phillip V, of October 15, 1713, reading as follows, is a proof of this assertion:

“The King. Whereas, it is ordered by the ordinances and the Leyes de Indias, and especially by the Eighth thereof, Book Third, of the transcript thereof, that the new settlements and pueblos which are formed of Indians be given sites having the necessary streams, woods, lands, entrances, and outlets, for the cultivation thereof, and an ejido of one league for the pasturing of stock, which lands shall not overlap those of the Spaniards; and whereas, I have been informed that this law is entirely disregarded in all the Missions of New Spain, since gobernadores and encomenderos not only do not give lands to the Indians in order that they may form their pueblos, but that, if the Indians have lands, these lands are violently taken from them, their sons are sold as slaves, and their women taken to houses of the gobernadores and encomenderos to serve them in the work of spinning, weaving, and washing, without being paid for their work, with the result that the pueblos, which have been founded at the cost of the great labors of the missionaries, are destroyed, since the doctrine cannot be taught or administered to them; nor can towns be formed of the many Indians who have been recently converted, unless the gobernadores and encomenderos look to the enforcement of the law, and not to their own interests; Therefore, I hereby order the Viceroy of New Spain, audiencias and gobernadores thereof, considering the displeasure which this information has caused me, to look, in the future, to the remedying of this so pernicious abuse and to the punishment of the transgressors of the laws above mentioned, and that, in conformity with and observance of said laws, you devote your greatest vigilance and efficiency to the end that the recently converted Indians referred to be given the lands, ejidos, and waters which are granted to them, and that you do not, on any account, make use thereof, nor of their sons or women, for personal service, unless such service be voluntary on their part, and also paying them the current day wage, to the good of God’s service and mine; with the understanding that if the contrary take place, I will adopt severe measures. And of the receipt of this despatch, of its due wide dissemination, in order that it may be complied with in the parts deemed best, and of the results of the measures which may be adopted, I shall inform myself on the first occasion which presents itself for such purpose. Dated, at Madrid, October 15, 1713. I the King. By order of the King, our Sovereign—(Signed) D. Diego de Morales Velasco. Stamped with the appropriate seal and bearing three rubrics.”

The state of the poor Indians, far from improving with independence, became worse, because this independence—as a distinguished historian says—emancipated Mexico from the Crown of Spain, but not from the Spaniards, who were established firmly on these lands, after having exercised absolute authority over them for three centuries. During the period of independent existence, in fact, all the evils arising from foreign wars and the interminable internecine struggles of classes were added to this sad situation; but, as if this had not been enough, the Federal Constitution of 1857, in prohibiting the acquisition or administration of real property by civil or ecclesiastical corporations, furthered the parceling of the ejidos and communal properties, to the evident prejudice of the settlements of the Indians, and, to worthily crown that age-old mountain of griefs and miseries, the protection afforded by the dictatorship of General Díaz—which systematically favored the interests of the insignificant dominating minority to the detriment of the interests of the great dominated majority—resulted in the total absorption of the small property by the great landed estates.

Consequently, the agrarian question has for four centuries, engendered many animosities and many hatreds, and by reason thereof, has made deeper still the abyss that separates the privileged from the popular classes. It is not to be wondered at, therefore, that, of all the tendencies which manifested themselves on the breaking out of the last revolutionary movement, the recovery of lands—as set out in the decree of January 6, 1915, which provides the necessary measures for the restoration of ejidos and communal properties—should have been the most persistent and vigorous, maintaining always alight the torch of the rebellion and carrying its radical and revolutionary impulse beyond the period of armed struggle, to the time that the present Government was enabled to moderate that impulse and, by means of the recent reorganization of the Agrarian Commissions and an adequate regulation, to give it a bent toward legality.

If it is true, then, that the proceedings by which grants and restorations of ejidos have been made have partaken, in general, of the asperities inherent in the revolutionary impulse that engendered them, and, on some occasions—it must be confessed—even in form somewhat illegal, making more deplorable the damages suffered by the great properties affected, it also is true that all this, satisfying in an expeditious way a popular craving always denied, contributed to the re-establishment of peace, and that, the complete solution of the agrarian problem, by means of proceedings strictly legal and softened by a broad spirit of conciliation, will play a most important role in the definite consolidation of peace.

This Government purposes, moreover, so soon as its financial condition shall permit it, to redeem the bonds created by the law to indemnify the expropriations of private property which has been transformed into ejidos, receiving such bonds in payment of taxes capable of amortizing the agrarian debt in a very short period, or exchanging such bonds for cash.

It is necessary to point out, finally, that the grants and restorations of ejidos should be considered the tardy obedience to a just command issued by King Phillip V in the dawn of the eighteenth century, rather than a manifestation of active and advanced Bolshevism.

Return of Properties “Incautadas”

An administration preceding the present one and one which was recognized by the Government of the United States, seized (incautó) the banks of issue of the Republic, took their cash reserves and expended them on affairs of the Government. One of the first things done by the present administration was to restore the seized banks to their boards of directors, recognizing the respective indebtedness—which amounts to approximately sixty million pesos—and to arrange a form of payment satisfactory to those interested, with which it has complied religiously to date.

The railroads also were seized by the same administration. The Ferrocarril Mexicano has already been returned. It is an English property. The other railroads have not yet been returned because the deterioration of the buildings and of the rolling stock and the lack of discipline of the personnel, occasioned by the revolution, would have made quite difficult the return of those enterprises and their subsequent management by the respective companies. But the present Government has endeavored to improve the condition of said properties and to this end it has expended large sums of money from its own funds. Apart from this, the indebtedness resulting from the seizure of the railroads is awaiting the settlement which is being negotiated for the resumption of service of the public debt.

Resumption of Service of the Debt

The payment of interest and amortization of the foreign debt, having been suspended since the year 1914, the present Government, almost immediately after its inauguration and through the medium of this Chancellery, invited the house of Speyer of New York, and the International Committee of Bankers, headed by Mr. Lamont, to come to Mexico for the purpose of determining, by mutual agreement, the best method of resuming the service of that debt. As the representatives of the holders of Mexican bonds delayed for more than six months their decision to accept the invitation, these representatives are more to blame than this Government that an agreement has not yet been reached.

Mixed Claims Commissions

Although according to the principles of international law, governments are not responsible for the damages resulting from civil wars, and notwithstanding that there was then functioning a National Commission on Claims for said damages, on July 21st of last year, an invitation was extended by cable and through the medium of our diplomatic representatives abroad to all governments whose nationals had suffered damages, in their persons or to their interests, because of the revolution, to the end that, in accord with the Government of Mexico, conventions might be negotiated for the creation of Mixed Commissions, which should be charged with the adjudication of the claims of their nationals. Moreover, as regards the Government of the United States, there was tendered to it, about the end of last year, the drafts of two conventions: one to create the Mixed Commission which should decide the claims for damages originating from the revolution, and the other to create the Commission to decide the other claims pending between the two countries that might be outside of the jurisdiction of the preceding Mixed Commission. Whatever may have been the reasons that moved the Government of the United States to postpone special consideration of said conventions, the Government of Mexico is not responsible for such postponement, nor can it designate the date on which the Mixed Commissions may commence their labors.

I believe that the preceding concrete cases suffice, on the one hand, to illustrate the policy of this Government in respect of present and future investments of foreign capital in Mexico, as that policy was defined at the beginning of this exposition, that is, of absolute respect for rights legitimately acquired; and, on the other hand, to emphasize the constancy and the energy with which the present Chief Magistrate of the Nation is endeavoring to develop that policy, the results whereof, though modest, may, perhaps, attain the limits of what humanly might be required of it, considering the number and the magnitude of the difficulties engendered by a revolution which has continued for more than 10 years and which has shaken the remotest corner of the Republic, and the anomalous international situation which augments and intensifies these difficulties.

With very great pleasure [etc.]

A. J. Pani

15. Ante, p. 653.
16. Not printed.
17. File translation revised.
18. Ante, p. 653.
19. The paragraph appeared in English in Mr. Pani’s note.
20. Not found in Department’s files.
21. Declarations made by Gen. Obregon to the Foreign Office, Foreign Relations, 1921, vol. ii, p. 395.
22. Not printed.
23. Quoted infra.
22. Not printed.
24. Not printed; on June 23, the Department was informed that these statements were made early in Jan. 1922 and to the press, not to the foreign chancelleries (file no. 711.1211/47).
25. Foreign Relations, 1921, vol. ii, pp. 416 and 424, respectively.