File No. 812.512/761.
Special Agent Silliman to the Secretary of State.
Sir: Referring to the Department’s unnumbered despatch of May 18, 1915, transmitting the protest of the Sierra Consolidated Mines Company, of Duluth, Minnesota, against the Carranza decree of March 1, 1915, increasing taxes on mining property in Mexico.
I have the honor to respectfully refer the Department to my recent cablegrams on this subject, in response to recent cablegraphic instruction from the Department. From this correspondence it will be seen that the Carranza Government claims that the increase is not improper, because it is equitable. Their position is that a product which is sold for gold, properly may pay its taxes in gold. This principle has for some time been assumed and enforced in the case of export taxes.
There was great opposition to the ruling at first, as the Department may remember, in the matter of taxes on oil exported from Tampico. This was, I believe, the first case in which the Mexican gold peso was used as a unit for calculating export taxes.
It is a fact, however, that an increase from six pesos Mexican currency to six pesos Mexican gold appears exorbitant. At the present rate of exchange, it amounts to the difference between 30 cents American and 3 dollars American per hectare. If 3 dollars appears exorbitant, it is also apparent that 30 cents looks and sounds insignificant. This is a matter which the mining interests might properly take up, jointly or individually, through the Secretary of Hacienda and see if, through the reasons they may present, some more equitable rate cannot be secured, taking into consideration the interests of all concerned.
The Government, in response to a representation made on instruction from the Department at the instance of Consul General Hanna, has agreed to suspend the enforcement of the decree for another three months. This will give time for those interested to make any representation they may deem proper.
In regard to the second, third and fourth points made by the Sierra Consolidated Mines Company, however they may theorize, it has not been the practice of the Constitutionalists to hold that their decrees are effective in territory not controlled by them. They have lately given public notice that they will not undertake to recollect taxes paid to other authorities. On presentation of receipts paid to other authorities, they agree to revalidate them; thus conceding the principle contended for by our own Government that [Page 930] taxes paid to de facto authorities must be recognized by other authorities.
I have [etc.]