No. 457.
Mr. Bayard
to Mr. Manning.
Washington, April 25, 1887.
Sir: Referring to my instruction No. 47, of the 10th of February last, in relation to the operation of the recent contract between the Mexican Government and the Spanish Transatlantic Steamship Company, I have to inform you that Mr. John Alexandre, of the firm of Messrs. Alexandre & Sons, has, in verbal conference with the officers of this Department, made additional statements explanatory of the manner in which the contract is executed, which, if corroborated, exhibit the transaction in an unfavorable light, so far as its discriminations against the mercantile marine of the United States are concerned.
Mr. Alexandre represents that merchandise imported into Mexico by the Spanish line referred to practically pays but 98 per cent. of the customs duties exacted from merchandise imported in other bottoms. That under Article III of the contract, 2 per cent. of the regular duties on such merchandise is paid for the importers by the Spanish line, which, under Article IX of the contract, is repaid to the line by the custom-house, provided that the total duties on each entire cargo so imported amount to 50,000 Mexican dollars. Should the duties on any cargo not aggregate that amount the 2 per cent. aforesaid is not refunded, and the line receives only the regular subsidy of $5,000 for the trip. In fact, however, the duties are largely in excess of $50,000 on each cargo, and consequently extra trips in addition to the regular trips are obliged to be made by the line in order to transport the freight tendered. And by another provision of the contract the refund of 2 per cent. of duties on the merchandise imported in any one of the extra trips is made in all cases when the total duties on such cargo amount to 25,000 Mexican dollars.
This arrangement by which shippers of merchandise by the Spanish line pay 2 per cent. less customs duties in Mexico than shippers by any other vessels, is manifestly an unequal and unjust discrimination against all competitors of the Spanish line in carrying freight from the United States to Mexico.
The regular subsidy agreed upon in the contract to be paid by the Mexican “Government to the Spanish line is not complained of by the Messrs. Alexandre. But the discrimination above described, by which a reduction of 2 per cent. of the Mexican customs duties is secured to shippers by the Spanish line, is in many cases largely in excess of the freight charged, and renders competition in freighting impossible.
[Page 717]If it be deemed politic by the Government of Mexico to induce larger importations into that country by granting a rebate on duties on all cargoes wherever the duties levied aggregate more than, 50,000 Mexican dollars, the proposition should be made without discrimination, so that all vessels could avail themselves of it and announce the privilege to their proposed shippers in the United States. Under the present arrangement, however, as described by Mr. Alexandre, the discrimination against the carrying flag of the United States is obvious.
In this connection, it may be important to remember that the treaty of commerce and navigation of 1831, between the United States and Mexico having been terminated through notice given by the Mexican Government on November 30, 1880, this Government is left free to apply whatever measures are or may be provided by legislation to countervail the discrimination complained of. Such a discrimination, if persisted in, would necessarily be regarded as at variance with the intimate and mutually beneficial intercourse which the United States desire to maintian with neighboring communities, and as a disappointing response to the policy manifested by recent acts of Congress.