Mr. Plumb to Mr. Seward.
Sir: In dispatch No. 115, of the 21st of April last, I referred to an important vote of the Mexican congress, involving the assertion of the principle that the acts of the executive, in the exercise of the extraordinary powers conferred to meet the intervention, were subject to revision by congress.
The position so taken, which arose with reference to the Yera Cruz railroad concession, made by the executive on the 27th of November last, has since then been the subject of a severe struggle between the [Page 614] opposition and the ministerial party in congress, and in the public press, varied in a measure, however, by the special questions involved in that concession.
On the opening of the present session, this was one of the questions of chief importance awaiting a solution.
If the position taken by congress at the previous session should be fully sustained, and the decree in question should be revised independent of the action of the executive, it was felt that all of the acts of the government, during the exercise of its late extraordinary powers, might at any time hereafter, by a congress embracing a larger element of opposition, be summarily taken up and declared subject to revision, and thus a degree of uncertainty would be thrown over the entire legislative action of the executive that would be most unfortunate for the country.
On the other hand, if the question should now be favorably determined, in a case affording in itself to the opposition so many points of attack, it was believed that this issue, involving a permanent vote of confidence in the executive, would be effectually terminated.
Certain features of the concession made by the government to the railroad company have, however, been considered as so objectionable, both by the members of congress in general and by the public at large, that some modifications were admitted by both parties to be necessary.
As a final result; the issue has been met by the voluntary proposal by the government, with the consent of the company interested, of certain modifications in the concession as made last November, which congress has accepted, and with which it has declared the decree of the 27th of November, made by the executive, to be in force, thus waiving the principle of the right of revision, while gaining some of the modifications desired in the special decree under consideration.
The result is considered generally, I believe, as a triumph on the part of the government in the question of the right of revision, as asserted by the vote of congress at the previous session, and has possibly set that question permanently at rest, in a sense the reverse of the position then assumed. The action I have indicated reached a conclusion by the final vote of congress on the 10th instant, and the new decree was published in the Diario Oficial of the 12th instant.
By the terms of this concession as originally made, and as now confirmed by the foregoing action of congress, a subvention is given to the company of $560,000 per annum for twenty-five years.
It is also provided, article 21, that the government shall emit a special paper under the name of “Bonds of the Vera Cruz and Mexico railroad” to the amount of the above $560,000 for each of the four years during which the construction of the road is to continue, which paper is to be admitted in payment of twelve per cent., or to the extent of the sum mentioned, of the duties of importation accruing at the ports of Vera Cruz, Tampico, Matamoras, Manzanillo, and Mazatlan.
If the twelve per cent, of the duties of importation at the five ports mentioned is not sufficient to cover the $560,000 per annum, then the government is to pay the deficiency in money at the city of Mexico.
By article 22, it is provided that from the date of the present law it shall be obligatory upon all importers to pay twelve per cent, of the duty accruing upon effects imported, in this paper, and not in money, under the penalty of having to make a second payment of double the amount. In article 23, it is provided that the minister of fomento shall annually deliver to the railroad company, during the four years of the construction of the road, $560,000 in the paper before mentioned, and [Page 615] that the company has the obligation to maintain in the city of Mexico, and in each of the five ports mentioned, a deposit of the bonds, in order that the importers can purchase the same in due time for their requirement, in the payment of the stipulated twelve per cent. of duties on all importations.
It is also provided that the company shall not sell this paper at a higher price than the value it represents.
After the conclusion of the road, the government is to make the payment of the $560,000 per annum in money, at the city of Mexico, in quarterly payments, and engages to continue these payments without default, and without suspension, variation, or conversion in any form whatever.
Under article 40 of the original decree, it was also provided, as I have before had occasion to advise the department in dispatch No. 44, of the 12th of December last, that until the 31st of December, 1871, or earlier if before that date the road shall be finished, the import duty called sinking fund of the public debt of twenty-five per cent., formerly required to be paid in bonds of the public debt, should be reduced to fifteen per cent., and should be paid at all of the maritime custom-houses of the republic, in shares of stock of the Vera Cruz railroad, which importers must buy for this purpose. The bonds of the public debt, interior, could be purchased at from seven to ten cents on the dollar, but shares of stock in the railroad company will have to be purchased at full rates, thus largely increasing this duty.
By the present law, this arrangement is confirmed and continued, and is extended for another year, viz: to the 31st of December, 1872, unless the road shall be entirely finished, including tunnels and bridges, before that time.
According to the custom-house returns officially published by this government, transmitted to the department with my dispatch No. 213, of the 6th instant, it appears that the amount of the above duty of fifteen per cent, at the maritime custom-houses, for the first six months of the present year, was $455,000, thus making the amount to be given to the railroad company under this head, upwards of $900,000 per annum.
The shares so received are to be held by the government without power to dispose of them until the road is finished.
Of the total distance between this city and Vera Cruz, of 261 miles, 133 miles have been for some time in operation, leaving 128 miles of railroad yet to be completed. On this 128 miles, before the granting of the recent concession, according to official reports of the company, upwards of fifty per cent, of the grading and masonry had been finished. The assistance, therefore, now given to the English company may be characterized as liberal, especially when it is considered that it takes from the revenue of the country, upwards of $1,500,000 per annum at a time when, according to the report made to Congress by the minister of the treasury, on the 28th of September last, it appears that the revenue is insufficient to enable the government to pay the interest on the foreign debt.
This consideration, and the continuance in the concession of the system of additional duties, which there is a growing desire on the part of members of congress to put an end to, explains in part the motives, aside from the question of the right of revision, which have led to the opposition that has been so strongly manifested against this particular measure.
I beg to inclose to the department herewith, copies of the decrees referred to, and have alluded to the subject, both because of the interest [Page 616] of the question involved in the point first mentioned, and because the concession as made is one of some public import, from the fact of its absorbing at the present time upwards of one-twelfth of the public revenues of Mexico, and its direct bearing upon foreign commerce in the stipulations as to the manner of the payment of a portion of the duties on imports, and the forced continuance of the objectionable system of additional duties.
I have the honor to be, very respectfully, your obedient servant,
Hon. William H. Seward. Secretary of State, Washington, D. C.