Popular Science Monthly/Volume 29/July 1886/An Economic Study of Mexico IV




JULY, 1886.




TAXATION.—Of all the economic features of Mexico there is no one more novel, interesting, and instructive, and withal more antagonistic in its influence to the development of the country, than the system by which the Government—Federal, State, and municipal—raises the revenue essential to defray its necessary expenditures.

The general characteristics of the Mexican tariff, or system of taxing imports, have been already noticed. But one altogether anomalous and absurd feature of it remains to be pointed out. In all truly civilized countries, when foreign articles or merchandise have once satisfied all customs requirements at a port, or place of entry, and have been permitted to pass the frontier, they are exempted from any further taxation as imports, or so long as they retain such a distinctive character.[1] But, in Mexico, each State of the republic has practically its own custom-house system; and levies taxes on all goods—domestic and foreign—passing its borders; and then, in turn, the several towns of the States again assess all goods entering their respective precincts. The rate of State taxation, being determined by the several State Legislatures, varies, and varies continually with each State. In the Federal District—i. e., the city of Mexico—the rate was recently two per cent of the national tariff; but, in the adjoining State of Hidalgo, it was twelve and a half per cent, and in others it is as high as twenty-five per cent. The rate levied by the towns is said to be about nine per cent of what the State has exacted; but in this there is no common rule. Thus, under date of April 9, 1886, an official of the Mexican National Railroad writes: "Goods destined for San Luis (i. e., via railway) pay a local tax in Laredo, Mexico, but on arrival at San Luis pay a municipal tax. These taxes are eternally changing, and are sometimes prohibitory. Take lumber, for example. Three months ago there was a municipal tax of thirty dollars per one thousand feet. This has now been reduced to one dollar per one thousand feet; but there is no certainty that the old tax will not be restored." Nor is this all. For the transit of every territorial boundary necessitates inspection, assessment, the preparation of bills of charges, and permits for entry; and all these transactions and papers involve the payment of fees, or the purchase and affixing of stamps. Thus, by section 377 of the tariff law of December, 1884, it is ordained "that the custom-house shall give to every individual who makes any importation, upon the payment of duties, a certificate of the sum paid, which certificate, on being presented to the administrator of the stamp-office in the place of importation, shall be changed for an equal amount in custom-house stamps. For this operation the interested party shall pay, to the administrator of whom he receives the stamps, two per cent in money (coin) of the total value of the stamps." All imports into Mexico at the present time are liable, therefore, to these multiple assessments; and the extent to which they act as a prohibition on trade may be best illustrated by a few practical examples.

In 1885, an American gentleman, residing in the city of Mexico as the representative of certain New England business interests, with a view of increasing his personal comfort, induced the landlady of the hotel where he resided (who, although by birth a Mexican, was of Scotch parentage) to order from St. Louis an American cooking-stove, with its customary adjuncts of pipes, kettles, pans, etc. In due time the stove arrived; and the following is an exact transcript of the bills contingent, which were rendered and paid upon its delivery:

Original Invoice:
1 stove weight 282 pounds.
1 box pipe " 69 "
1 box stove-furniture " 86 "
Total 437 pounds, or 199·3 kilos.
Cost in St. Louis, United States currency $26 60
Exchange at 20 per cent 5 30
Total $31 80
Freight from St. Louis to city of Mexico (rail), at $3.16 per 100 pounds $15 75
Mexican consular fee at El Paso 4 85
Stamps at El Paso 45
Cartage and labor on boxes examined by custom-house at El Paso 50
Forwarding commission, El Paso 2 00
Exchange 16| per cent on $7.64 freight advanced by Mexican Central Railroad 1 25
———— $56 60

Import Duties:
1 box, 128 kilos (stove), iron, without brass or copper ornaments, at 19 cents per kilo $24 42
1 box, 31·3 kilos, iron pipe, at 24 cents per kilo 7 51
1 box iron pots, with brass handles, at 24 cents per kilo 9 48
$41 41
Add 4 per cent as per tariff 1 65
$43 06
Package duty, 50 cents per 100 kilos 1 00
$44 06
Add 5 per cent as per tariff 2 20
$46 26
Add 2 per cent municipal duty 93
$47 19
Add 5 per cent consumption duty 2 36
$49 55
Dispatch of goods at Buena Vista station, city of Mexico 38
Stamps for permit 50
$50 43
$107 03
Cartage in city of Mexico 75
Total $107 78

Original cost of stove, with exchange $31 80
Freight, consular fees, and forwarding 24 80
Import duties 50 43
Cartage 75
Total $107 78

[Note.—This stove was shipped from El Paso in a lot of goods for Messrs.——& Co., the largest importing house in Mexico, thereby saving an expense of two thirds the consular fee—$14.56—which, if paid on the invoice alone, would have added $9.71 to charges, and raised the total to $117.49.]

In 1878 Hon. John W. Foster, then United States minister to Mexico, in a communication to the Manufacturers' Association of the Northwest (Chicago), thus analyzed the items of the cost, in the city of Mexico, of a tierce, weighing gross 328 pounds, containing 300 pounds (net) of sugar-cured hams:

New York cost, 300 pounds at 11 cents $33 00
New York expenses, such as cartage, consular invoice ($4 gold), manifest, etc., average 5 per cent on large shipments 1 65
Freight from New York to Vera Cruz at 1 cent per pound, payable in New York 3 25
Exchange on New York, $37.90 at 18 per cent 6 82
Import duties in Vera Cruz, 138 kilos at 24 cents per kilo 33 12
Municipal duties in Vera Cruz, $1.03 for every 400 pounds 84
Lighterage and handling from steamer to warehouse ($1 to $1.50 per every 200 pounds) 1 63
Maritime brokerage, 2 per cent on freight ($3.25) 07
Opening and closing barrel 50
Additional charges in Vera Cruz for stamps and cartage to railroad-station, etc. 1 50
Commission in Vera Cruz, 2 per cent on $70.66 1 41
Exchange on Vera Cruz, 1 per cent on $39.06 39
Railroad freight from Vera Cruz to Mexico, 140 kilos, at $54.32 a ton 7 60
Local duties in city of Mexico, 2 per cent on Federal duty, $33.12 66
Local expenses in city of Mexico, cartage from depot, expenses in custom-house, etc. 75
Total $93 19

The net cost of one pound of imported American ham in the city of Mexico in 1878 was therefore 31 cents, or $1 in hams in New York was equal to $2.82 in Mexico!

A similar analysis showed an invoice of ten kegs of cut nails, costing two and a half cents per pound in New York, or $22.50, to have cost 14 16/100 cents per pound, or $141.64, when imported, in the city of Mexico; or $1 value in nails in New York was equal to $0.29 in Mexico. In the case of salt, costing $2 per barrel in New York, the cost of importation was 820.40; or $1 of salt in New York was equal to $10.20 in Mexico! And in the case of (Milwaukee) beer, a barrel costing, on board steamer in New Orleans, $13, cost $35.61 in the city of Mexico. It is clear, therefore, as Mr. Foster points out in connection with the above exhibits, "that articles of the most common use in the United States must be luxuries in Mexico, on account of their high price"; and that while "this would be the case, with such charges, in almost any country, however rich it might be, it is especially so in Mexico, where there is so much poverty."

Again, the Mexican tariff provides that the effects of immigrants shall be admitted free. "But this," writes an officer of the Mexican National Railroad Company, "is practically a dead letter, from the fact that interior duties are levied on everything the immigrant has, before he gets settled: and these are so great that no one goes. I've never known but one case go through Laredo. ... A carpenter, or other mechanic, who desires to get employment in Mexico, has such heavy duties levied on his tools on passing the national or State frontiers, that few are willing or able to pay them. Hence few American mechanics find their way into the country, unless in accordance with special contract."

This practice of locally taxing interstate commerce is in direct contravention of an article in the Mexican Constitution of 1857, and it is said also of express decisions of the national Supreme Court. Several of the leading States of Mexico have at different times tried the experiment of prohibiting it by legislative enactments; but the States and municipalities of the country are always hard pressed to raise money for their current expenditures, and find the taxing of merchandise in transit so easy a method of partially solving their difficulties, that the Federal authorities have not yet been able, or, speaking more correctly, willing to prevent it.[2] It is important, however, to note here that, in the draft of the proposed reciprocity treaty between the United States and Mexico, it is provided that imports from the United States into Mexico, admitted free under the treaty, shall not be liable to any Mexican State duties.

The Mexican tariff system also provides for the taxation of exports, notably on the following products: gold bullion, one fourth of one per cent; silver bullion, one half of one per cent; coined gold and silver, having already paid at the mint, exempt; orchil, $10 per ton; wood for cabinet-work and construction, $2.50 per 31·3 American cubic feet. Small export duties are also imposed on coffee and heniquen. A revision of the Mexican tariff, with a view of modifying certain of its exorbitant duties, more especially those levied on the importation of wines and liquors and certain articles of food, has been recently recommended (1885) to the Government by a committee of delegates of prominent men of business from different parts of the republic.

The existence in a state of the New World of a system of taxation so antagonistic to all modern ideas, and so destructive of all commercial freedom, is certainly very curious, and prompts to the following reflections: First, how great was the wisdom and foresight of the framers of the Constitution of the United States in providing, at the very commencement of the Federal Union, that no power to tax in this manner, and for their own use or benefit, should ever be permitted to the States that might compose it (Article I, section 10). Second, how did such a system come to be ingrafted on Mexico, for it is not a modern contrivance? All are agreed that it is an old-time practice and a legacy of Spanish domination. But, further than this, may it not be another one of these numerous relics of European mediævalism which, having utterly disappeared in the countries of their origin, seem to have become embalmed, as it were, in what were the old Spanish provinces of America—a system filtered down through Spanish traditions from the times when the imposition of taxes and the regulation of local trade was regarded by cities and communities in the light of an affirmation of their right to self-government, and as a barrier against feudal interference and tyranny; and when the idea of protecting industry through like devices was also not limited as now to international commerce, but was made applicable to the commercial intercourse of cities and communities of the same country, and even to separate trades or "guilds" of the same city? Whether such speculations have any warrant in fact or not, it is at least certain that we have in the Mexico of to-day a perfect example of what was common in Europe in the middle ages; namely, of protection to separate interests (through taxation) carried out to its fullest and logical extent, and also of its commercial and industrial consequences.

So much for the tariff system of Mexico. The "excise" or "internal revenue" system of the country is no less extraordinary. It is essentially a tax on sales, collected in great part through the agency of stamps—a repetition of the old "alcavala" tax of Spain,[3] which Adam Smith, in his "Wealth of Nations," describes as one of the worst forms of taxation that could be inflicted upon a country, and as largely responsible for the decay of Spanish manufactures and agriculture. Thus the Mexican law, re-enacted January, 1885, imposes a tax of "one half of one per cent upon the value in excess of $20 of transactions of buying or selling of every kind of merchandise, whether at wholesale or retail, in whatever place throughout the whole republic." Also, one half of one per cent "on all sales and resales of country or city property; upon all exchanges of movable or immovable property; on mortgages, transfers, or gifts, collateral or bequeathed inheritances; on bonds, rents of farms, when the rent exceeds $2,000 annually; and on all contracts with the Federal, State, or municipal governments." Every inhabitant of the republic who sells goods to the value of over $20 must give to the buyer "an invoice, note, or other document accrediting the purchase," and affix to the same, and cancel, a stamp corresponding to the value of the sale. Sales at retail are exempt from this tax; and retail sales are defined to be "sales made with a single buyer, whose value does not exceed $20. The reunion, in a single invoice, of various parcels, every one of which does not amount to $20, but which in the aggregate exceed that quantity," remains subject to the tax. Retail sales in the public markets, or by ambulatory sellers, or licensed establishments, whose capital does not exceed $300, are also exempt. Tickets of all descriptions—railroad, theatre, etc.—must have a stamp, as must each page of the reports of meetings; each leaf of a merchant's ledger, day or cash book, and every cigar sold singly, which must be delivered to the buyer in a stamped wrapper. Sales of spirits at wholesale pay three per cent; gross receipts of city railroads, four per cent; public amusements, two per cent upon the amount paid for entrance; playing-cards, fifty per cent—paid in stamps—on the retail price; and manufactured tobacco a variety of taxes, proportioned to quality and value. Mercantile drafts are taxed at $10 per $1,000, which means a dollar on every hundred.

Farms, haciendas, and town estates are required to be taxed at the rate of $3 per each $1,000 of the valuation, but such is the influence of the land-owners that the valuation is almost nominal. Land and buildings not actually producing income are exempt from taxation, notwithstanding they may be continually enhancing in value.[4]

In the towns, this system of infinitesimal taxation is indefinitely repeated; the towns acting as collectors of revenue for the Federal and State governments, as well as for their own municipal requirements. All industries pay a monthly fee: as' tanneries, 50 cents; soap-factories, $1. So also all shops for the sale of goods pay according to their class, from a few dollars down to a few cents per month. Each beef animal, on leaving a town, pays 50 cents; each fat pig, 25 cents; each sheep, 12 cents; each load of corn, fruit, or vegetables, 6 cents, and so on; and, on entering another town, all these exactions are repeated. A miller, in Mexico, it is said, is obliged to pay thirty-two separate taxes on his wheat, before he can get it from the field and offer it, in the form of flour, on the market, for consumption. As a matter of necessity, furthermore, every center of population—small and big, city, town, or hamlet—swarms with petty officials, who are paid to see that not an item of agricultural produce, of manufactured goods, or an operation of trade or commerce or even a social event, like a fandango, a christening, a marriage, or a funeral, escapes the payment of tribute.

In fact, trade is so hampered by this system of taxation, that one can readily understand and accept the assertion that has been made, that people with capital in Mexico really dread to enter into business, and prefer to hoard their wealth, or restrict their investments to land (which, as before pointed out, is practically exempt from taxation), rather than subject themselves to the never-ending inquisitions and annoyances which are attendant upon almost every active employment of persons and capital, even were all other conditions favorable. Mexico, from the influence of this system of taxation alone, must, therefore, remain poor and undeveloped; and no evidence or argument to the contrary can in any degree weaken this assertion. Doubtless there are many intelligent people in Mexico who recognize the gravity of the situation, and are most anxious that something should be done in the way of reform. But what can be done? If autocratic powers were to be given to a trained financier, thoroughly versed in all the principles of taxation and of economic sciences, and conversant with the results of actual experiences, the problem of making things speedily and radically better in this department of the Mexican state is so difficult that he might well shrink from grappling with it.

In the first place, the great mass of the Mexican people have little or no visible, tangible property which is capable of direct assessment.

Again, in any permanent system of taxation, taxes in every country or community, in common with all the elements of the cost of production and subsistence—wages, profits, interest, depreciation, and materials—must be substantially drawn from each year's product. Now, the annual product of Mexico is comparatively very small. Thus, for example, Mr. Sutton, United States consul-general at Matamoros, as before noticed, has shown that the annual product of the single State of South Carolina is absolutely two and a half times—or, proportionally to area, twenty-five times—as valuable as the annual product of the entire northern half of Mexico; and the Argentine Republic of South America, with only one third of the population of Mexico, has a revenue twenty per cent greater, and double the amount of foreign commerce. Product being small, consumption must of necessity be also small. Ex-Consul Strother (report to State Department, United States, 1885) says: "The average cost of living (food and drink) to a laboring-man in the city of Mexico is about twenty-five cents per day; in the country from twelve and a half to eighteen cents. The average annual cost of a man's dress is probably not over five dollars; that of a woman double that sum, with an undetermined margin for gewgaws and cheap jewelry." Mr. Lambert, United States consul at San Blas, reports under date of May, 1884: "The average laborer and mechanic of this country may be fortunate enough, if luck be not too uncharitable toward him, to get a suit of tanned goat-skin, costing about six dollars, which will last him as many years."

The food of the masses consists mainly of agricultural products—corn (tortillas), beans (frijoles), and fruits, which are for the most part the direct results of the labor of the consumer, and not obtained through any mechanism of purchase or exchange.

Persons conversant with the foreign commerce of Mexico are also of the opinion that not more than five per cent of its population buy at the present time any imported article whatever; or that, for all purposes of trade in American or European manufactures, the population is much in excess of half a million. Revenue in Mexico from any tariff on imports must, therefore, be also limited; and this limitation is rendered much greater than it need be by absurdly high duties; which (as notably is the case of cheap cotton fabrics) enrich the smuggler and a few mill-proprietors, to the great detriment of the national exchequer.

It is clear, therefore, that the basis available to the Government for obtaining revenue through the taxation of articles of domestic consumption, either in the processes of production, or through the machinery of distribution, is of necessity very narrow; and that if the state is to get anything, either directly or indirectly, from this source, there would really seem to be hardly any method open to it, other than that of an infinitesimal, inquisitorial system of assessment and obstruction, akin to what is already in existence.[5]

Note. This curious tax experience of Mexico, although especially striking and interesting, is not exceptional, but finds a parallel, in a greater or less degree, in all countries of low civilization, small accumulation of wealth, and sluggish society movement. Thus, in the British island and colony of Jamaica, populated mainly by emancipated blacks and their descendants (554,132 out of a total of 580,804 in 1881), who own little or no land, and through favorable climatic conditions require the minimum of clothing and shelter, and little of food other than what is produced spontaneously, or by very little labor, the problem of how to raise revenue by any form of taxation, for defraying the necessary expenses of government, has been not a little embarrassing. For the year 1884, the revenue raised from taxation on this island represented an average assessment of about $3.40 per head of the entire population; but of this amount an average of about fifty cents only per head could be obtained from any excise or internal taxation; and this mainly through the indirect agency of licenses and stamps, and not by any direct assessment. The balance of receipts was derived from import and export duties, and from special duties on rum, which last furnished nearly one fourth of the entire revenue. During the same year the average taxation of the people of the United States Federal, State, and municipal was in excess of fourteen dollars per capita. A condition of things in British India, analogous to that existing in Jamaica, has for many years necessitated the imposition of very high taxes upon salt, as almost the only method by which the mass of the native population could be compelled to contribute anything whatever toward the support of their government; the consumption of salt being necessary to all, and its production and distribution being capable of control, and so of comparatively easy assessment. In short, if a man can avoid paying rent, make no accumulations, and will live exclusively on what he can himself gather from the bounty of Nature, he can not be taxed, except by a capitation or poll-tax; and it would be difficult to see how in such a case even such a tax could be collected. But, the moment he enters into society and recognizes the advantages of the division of labor and exchange, he begins to pay taxes, and the higher the civilization he enjoys the greater will be the taxes.

But the greatest obstacle in the way of tax reform in Mexico is to be found in the fact that a comparatively few people not ten thousand out of a possible ten million—own all the land, and constitute, in the main, the governing class of the country; and the influence of this class has thus far been sufficiently potent to practically exempt land from taxation. So long as this condition of things prevails, it is difficult to see how there is ever going to be a middle class (as there is none now worthy of mention), occupying a position intermediate between the rich and a vast ignorant lower class, that take no interest in public affairs, and are only kept from turbulence through military restraint. Such a class, in every truly civilized and progressive country, is numerically the greatest, and comprises the great producers; and because the great producers, the great consumers and tax-payers—for all taxes ultimately fall upon consumption—and so are the ones most interested in the promotion and maintenance of good government. A tax policy, however, which would compel the land-owners to cut up and sell their immense holdings, especially if they are unwilling to develop them, would be the first step toward the creation of such a middle class. But it is not unlikely that Mexico would have to go through one more revolution, and that the worst one she has yet experienced, before any such result could be accomplished. At present, furthermore, there is no evidence that the mass of the Mexican people, who would be most benefited by any wise scheme for the partition of the great estates and for tax reform, feel any interest whatever in the matter, or would vigorously support any leader of the upper class that might desire to take the initiative in promoting such changes. And herein is the greatest discouragement to every one who wishes well for the country.

The Federal budget, in respect to expenditures for the fiscal year 1886-'87, as reported by President Diaz to the Mexican Chamber of Deputies, was as follows:

Congress $1,052,144
Executive Department 49,251
Judiciary 434,892
Ministry of Foreign Affairs 419,828
Ministry of Interior 3,539,364
Ministry of Justice 1,333,696
Ministry of Public Works 4,711,771
Ministry of Finance 12,004,270
Ministry of War and Navy 12,464,500
Total $36,009,716

The estimates of receipts were uncertain. It was hoped, if business recovered, that they would reach 833,000,000; and the Government promised to try and restrict the national expenditures to this amount.

As for the sources of national revenue, the customs are understood to yield about one half; taxes on sales and stamps, some 85,000,000; post-offices and telegraph lines, 8650,000; lotteries, 8800,000; while the receipts from taxes levied by the States (mainly on sales also) amount to from 88,000,000 to 810,000,000, or about one half the receipts from customs.

In respect to the foreign commerce of Mexico, a report on the "Commercial Relations of the United States," issued by the United States Department of State in 1883, says: "Owing to the system, or, rather, to the lack of system, in regard to the collection and publication of customs returns by the national Government, it is impossible for our consuls in Mexico to supply any trustworthy statistics concerning the foreign commerce of the republic." An approximative estimate of the results for 1680 was as follows:

Exports $32,663,554
Imports 24,003,372
Total $56,666,926

The precious metals—coin, bullion, and ores—always constitute the great bulk of what Mexico exports; and the proportion of agricultural products or other merchandise exported is surprisingly small. Thus, out of the total value of exports for 1884, estimated by Consul-General Sutton at $39,716,000, nearly three fourths, or $28,452,000, were credited to the precious metals, and only $11,264,000 to all other commodities; and, of these last, the largest proportion always consists of articles produced near the seaboard, or near the line of the City of Mexico and Vera Cruz Railroad. During recent years, and since the construction of the so-called American railroads, the increase in the exports from Mexico, of products other than the precious metals, has, however, been very notable, and is apparently progressive. But the fact that the exports of Mexico always largely exceed her imports, that the great bulk of the exports are always the precious metals, and that the excess of imports does not represent payment for interest to any extent on any national foreign indebtedness, naturally creates a suspicion that the whole (export) transaction is something abnormal; which may find an explanation in the existence of a class of wealthy absentee landlords, or proprietors, who, living permanently in Paris or Spain, draw rents, tolls, and profits from their Mexican properties, and invest or expend the same in other, or foreign countries. The bulk of the coinage of Mexico—both of silver and of gold—is exported almost as soon as it leaves the mints. Thus, although the average annual coinage of the Mexican mints from 1876 to 1880 was $22,524,694, and since then has been larger ($25,610,000 in 1881-82), the amount of coin in actual circulation in the country is believed to have never been in excess of $15,000,000 or $20,000,000. Much of the Mexican coined silver has, as is well known, been heretofore in large demand to meet the world's requirements for trade with China; but what has come back to Mexico for it in exchange is somewhat of a commercial puzzle.

In a report to the State Department (May, 1884), ex-Consul-General Strother thus briefly sums up the obstacles (heretofore noticed more in detail in this series of papers) which stand in the way of the future development of the commerce of Mexico. He says: "Topographically considered, Mexico labors under many serious disadvantages to commerce, whether external or internal. Her coasts on both oceans are broad belts of intolerable heat, disease, and aridity, and, except a few small seaport towns, are nearly uninhabited. On the whole extent of her coast-line there are but two natural harbors available for first-class modern merchant-vessels—those of Anton Lizado on the Gulf, and Acapulco on the Pacific. All the other so-called seaports now used by commerce are open roadsteads, dangerous in rough weather, and only approachable in lighters, or are located on rivers, the entrances to which are closed to ocean traders by shallows or sand-bars. The natural obstructions and difficulties in the way of inland traffic are scarcely less observable. Mexico is entirely wanting in navigable rivers and lakes. Her fertile districts, capital cities, and centers of population are separated from each other by long distances, arid districts, immense chains of mountains, and vast barrancas washed out by her rapidly descending water-courses. These difficulties were partially overcome by the Spaniards, who constructed a noble system of highways and bridges extending between the principal cities of the viceroyalty, but from the nature of the soil they were immensely expensive to construct and difficult to maintain. During the long and ruinous wars for independence, and the civil wars which followed, these highways went rapidly to destruction; and, notwithstanding recent repairs and reconstructions, the general condition of Mexican highways is not encouraging to either commerce or travel. But all these natural and accidental disadvantages combined may be regarded as nothing in comparison with the crushing and suffocating influences brought to bear on Mexican commerce, foreign and domestic, by the exclusive policy imposed by the mother-country during the three centuries of Mexico's colonial vassalage; and, secondly, by the system of internal and interstate duties and custom-houses, inherited from Old Spain, which still practically vexes the internal commerce of the republic."

Relation of the Sanitary Condition of Mexico to its Commercial Development.—The sanitary condition of every country constitutes an important element in determining its commercial development, and Mexico especially illustrates the truth of this proposition. The coast-lands of the republic are hot and unhealthy. The more elevated portions, where nine tenths of the people live, are claimed to be unsurpassed in salubrity. Strangers from northern latitudes, and accustomed to the ordinary levels of human residence, are liable, on coming to the Mexican plateau, to a process of acclimation, which, although often very trying, is rarely attended with any very serious consequences. Horse-dealers from Texas state that they lose from twelve to twenty per cent of the horses brought to the city of Mexico for sale, solely from the climatic influences contingent on its great altitude; and the common house-cat, it is said, does not thrive, and is scarce on the highlands of Mexico for like reasons. The sanitary conditions of the two chief commercial centers of the republic, namely, the city of Mexico and of Vera Cruz, are, however, so extraordinary and so obstructive to national progress that any review of the country would be imperfect that neglected to notice them. The evil in the case of the former is local and not climatic, and is due to the circumstance that the site of the city is "a bowl in the mountains," so that drainage from it is now, and always has been, very difficult. And, as years have passed, and the population living within the bowl has multiplied, the evil has continually increased, until Lake Tezcoco, which borders the city, and on which Cortes built and floated war galleys, has been nearly filled up with drainage deposits which have been carried into it through an elaborate system of city sewers. If these sewers ever had fall enough to drain them, they have, as the result of the filling up of this lake, little or none now, and the result is that they have become in effect an immense system of cess-pools; while the soil, on which from 250,000 to 300,000 people live, has become permeated throughout with stagnant water and filth inexpressible. And were it not for the extreme dryness and rarefaction of the air, which, as before pointed out, prevent the putrefaction of animal substances, and seem to hinder the propagation of the germs of disease, the city must long ago have been visited with plague, and perhaps have been rendered absolutely uninhabitable. And, even under existing circumstances, the average duration of life in the city of Mexico is estimated to be but 26·4 years. Typhoid fever prevails all the year round, and is especially virulent at the end of the dry season, when the heat is the greatest. And, surprising as it may seem, with a climate of perpetual spring and an elevation of 7,500 above the sea-level, lung and malarial diseases hold a prominent place among the causes of death. According to the reports of the Board of Health of the Mexican capital for April and May of the present year (1886), thirty-three per cent of the weekly mortality at that season was to be referred to typhoid and other forms of gastric fever, and twenty per cent to consumption and pneumonia. In the year 1877, when a typhus epidemic prevailed, the city's mortality was reported to have been as high as 53·2 per thousand as compared with an average death-rate of 24*6 in Paris for the same year. "A distinguished member of the medical faculty of Mexico has lately published a report, in which he demonstrates, by comparative statistical tables, that the annual mortality of the city is increasing to such an extent as already to counterbalance the natural movement of the population, and, if not checked in time, as threatening the race."[6]—"United States Consular Reports," No. 3, 1881, p. 18.

This condition of affairs is not due, as some might infer, to any improvidence or want of enterprise on the part of the Mexicans, for the evil has long been recognized, and at present especially interests the Government. But the difficulties in the way of applying an efficacious remedy are very great, and engineers are not fully agreed as to the best method for attaining the desired result. "For such is the nature of the plain upon which Mexico is built, such the conformation of the land and the contour of the mountains about it, that a vast system of tunneling and canalization would be necessary to create a fall sufficient to drain the valley; and, before the city can be drained, the valley must be." It is said that one celebrated American engineer, whose advice was recently asked by the Government, reported that, if a thorough drainage could be effected, the city, through a consequent shrinkage of soil, would probably tumble down. And, finally, the existing condition of the national and municipal finances is such, that it is not easy for the authorities to determine how the money necessary to meet the contingent great expenditures—estimated at about $9,000,000, or a sum equivalent to more than one third of the entire annual revenue of the General Government—is to be provided.

It ought not to be inferred that there is special danger to travelers, or tourists, visiting the Mexican capital, and residing there during the winter months or early spring; for experience shows that, with ordinary precautions in respect to location, diet, exercise, and exposure, health can be maintained there as easily as in most of the cities of Italy at the same seasons.

At Vera Cruz, the local name of which is "El Vomito" (a term doubtless originating from the continued prevalence in the town of yellow fever), the sanitary conditions are much worse than in the city of Mexico; and the causes of the evil, being mainly climatic, are probably not removable. The statistics of mortality at this place, gathered and published by the United States Department of State, are simply appalling. Thus, the population of Vera Cruz in 1869 was returned at 13,492. The number of deaths occurring during the ten years ending September, 1880, was 12,219. The average duration of life in Vera Cruz for this period was, therefore, about eleven years! Other calculations indicate the average annual death-rate of this place to be about ninety per thousand, as compared with the annual average for all the leading cities of the United States for the year 1880, of 22·28 per thousand.

The writer feels that he would be guilty of a grave omission, in this connection, if he failed to quote and also to indorse the words with which the United States consul, who gathered and communicated these facts, thus concludes his official report, October, 1880: "With these awful facts before me, I leave it to the common judgment and high ideas that our law-makers have of justice to say whether or not the salary of the consul who, for eleven years, has lived in such an atmosphere, ought or ought not to be placed at least back to where it was when he was sent here."

[Note.—No more striking illustration of the popular "craze" for public office can be found than in the circumstance that, although an appointment to the United States consulate at Vera Cruz (salary in 1884, $3,000) is equivalent to investing in a lottery of death, in which the chances to an unacclimated person for drawing a capital prize are probably as great as one to seven or eight, no lack of applicants for the place is ever experienced. Thus, the consul whose appeal for an increase of salary is above noticed, was appointed from Illinois, and resigned in 1881. His successor, appointed from Nebraska, died of yellow fever a fortnight after arrival at his post; and since then there have been two appointments, one from Nebraska and one from New Jersey.]

This, then, is what the writer has to report respecting the economic condition and prospects of Mexico. His conclusions have not come to him, as perhaps may be inferred or charged, mainly from a somewhat extended but brief tour of observation; for no one can be more conscious than he of how little one can know of a country who, ignorant of the language, the customs, the political and social condition and pursuits of its people, sees it simply and hurriedly as a traveler. But the journey in question was, nevertheless, sufficiently extensive and instructive to thoroughly satisfy at least as to two points: First, that here was a country, bordering on the United States for a distance of more than two thousand miles, which was almost as foreign to the latter, in respect to race, climate, government, manners, and laws, as though it belonged to another planet; and, secondly, that the people of the United States generally knew about as much of the domestic concerns of this one of their nearest neighbors as they did about those of the empire of China. The temptation to enter upon a field of economic investigation so fresh and so little worked was too attractive to be resisted; and, accordingly, with the sole purpose of desiring to know the truth about Mexico, and to form an opinion as to what should be the future political and commercial relations between that country and the United States, the writer has made a careful study of a large amount of information that he has found accessible, both from public and private sources. And it is on the basis of this study, and with the kindliest feeling for and the deepest interest in Mexico, that he has written. In so doing, however, he claims nothing of infallibility. He frankly confesses that in respect to some things he may be mistaken; and that others might draw entirely different conclusions from the same data.[7] But for the entire accuracy of most statements and deductions, he believes he finds ample warrant in the published diplomatic and consular correspondence of the United States during the last decade, and in an extensive personal correspondence with railroad and commercial men, who, from continuous residence, have become well acquainted with Mexico.[8] Making every allowance, however, for differences of opinion respecting minor details, the main facts and deductions that have been presented (which can not well be questioned or disputed) are all that are essential for an intelligent discussion of the possible or desirable relations of the United States to Mexico in the future; and it is to a consideration of this matter that the attention of the reader is next invited.

  1. The right to import is held to carry with it a right to sell on the part of the importer, without further restrictions, i. e., in the original packages. Thus, the United States Supreme Court has decided that a license-tax imposed by a State of the Federal Union, as a prerequisite to the right to sell an imported article, is equivalent to a duty on imports, and in violation of the provision of the Federal Constitution, which prohibits the States from imposing import duties; and the decision has been carefully recognized by the authorities of the several States in dealing with imported liquors under local license or other restrictive laws.
  2. In October, 1883, in response to a call of the President of the Republic, the Governors of the several States of Mexico appointed each two delegates, who assembled in convention at the capital, and after some deliberation published a report which exhibited the incompatibilities, disadvantages, and abuses of the system in the most convincing manner; but acknowledging, at the same time, that as all the State governments were more or less dependent upon it for their revenues, they could not recommend its present abolition. The report also concluded with a recommendation "that Congress should at once legalize a practice which a constitutional prohibition had failed to prevent, and which, under existing circumstances, it would be impolitic to suppress entirely." And, in deference to the suggestions of this conference, the Mexican Congress subsequently passed a law, with a view of modifying and limiting the authority of the State and municipal custom-house officers, so as to lessen in a degree the interruptions and vexations incident to the system. But as the Federal Government and some of the States have since then authorized public improvements to an extent that the state of their finances did not justify, and have in consequence increased taxes in all possible forms throughout the republic, the prospect for the complete suppression, or even of any essential modification, of this oppressive system of taxation is not flattering.
  3. The very name is yet essentially kept up in Mexico, where the tax is sometimes designated as the "alcabala."
  4. This practice of exempting unoccupied realty from taxation also prevails in Portugal. The theory there in justification of the practice is, that the use of a thing defines its measure of value, and that to tax unused property is a process of confiscation.
  5. The experience of Mexico in respect to taxation ought to be especially instructive to all that large class of statesmen and law-makers in the United States who believe that the only equitable system of taxation is to provide for an obligatory return and assessment of all property, and that to exempt anything is both unjust and impolitic.
  6. Under the title of the "Great Necropolis," one of the prominent Mexican newspapers, the "Correo del Lúnes," recently said: "Undisguised terror is caused by these processions of the dead which daily defile through the streets of Mexico. To be alive here is getting to be a startling phenomenon. It may be a very short time, unless energetic remedial measures are adopted, before the capital will have to be moved to another location."
  7. One curious illustration of this point is to be found in the following extract from a letter recently addressed to the Mexican "Financier" by a Mexican gentleman, in contravention of the writer's opinions respecting the present industrial condition and prospective development of Mexico. He says: "If you pass through the Academy of San Carlos, you will see pictures executed by native Mexican artists in the highest style of art, comparing most favorably with any production of the academies of design of Paris, Rome, Munich, or elsewhere. Go with me, if you please, to a narrow lane in the small but picturesque city of Cuarnevaca, and there in a small room, working with implements of his own make, you will observe a native, whom you would perhaps class among the peons, carving a crucifix in wood, so highly artistic, with the expression of suffering on our Saviour's face so realistic, that any foreign sculptor of the highest renown would be proud to call it a creation of his own. Again, visit with me the village of Amatlan de los Reyes, near Córdoba, and observe the exquisitely embroidered huipilla of some native woman, surpassing in many respects the designs of the art-needlework societies of New York or Boston; not to mention the fine filigree-work, figures in clay and wax as executed by the natives in or near the city of Mexico, the art pottery of Guadalajara, the gourds, calabashes, and wooden trays highly embellished by native artists, whose sense or acceptation of art is not acquired by tedious study at some academy of design, but is inborn and spontaneously expressed in such creations. Only yesterday in my walks about town I entered the National Monte de Piedad, where I heard the sweetest and most melodious strains from a grand piano of American make, and beheld, to my astonishment, that the artist was a native, a cargador, or public porter, clad in cheap sombrero, blouse, white cotton trousers, and sandals, with his brass plate and rope across his shoulders, ready to carry this very instrument on his back to the residence of some better-favored brother from a foreign land. If this is not innate genius, I know not what else to call it." To this it may be replied that the facts as above stated are probably not in the least exaggerated. There is undoubtedly in the Mexican people, inherited from their Spanish ancestry, much of aesthetic taste and an "innate genius" for music, painting, sculpture, embroidery, dress, decoration, and the fine arts generally. But this very fact, in view of the hard, rough work that Mexico has got to do to overcome the natural obstacles in the way of her material development, is not a matter of encouragement. For it is not genius to carve crucifixes, embroider huipillas, or compose and execute music that her people need; but rather the ability to make and maintain good roads, invent and use machinery, and reform a system of laws that would neutralize all her natural advantages, even though they were many times greater than the most patriotic citizen of the country could claim for it.
  8. From one of these latter the following warning against publishing anything in the way of observations or conclusions was received by the writer:

    "City of Mexico, April 13, 1886.

    "The papers are filled with the letters of travelers about Mexico. If you do not conform to what many people here want you to say, you are put down as having taken a hasty or dyspeptic observation of the country, and had no opportunity to know anything. If you pass one week in an hotel, and should write conformably to what various interests would have you, you are at once quoted as a 'most intelligent and experienced traveler.' A thorough investigation scrapes off all the varnish, and will often expose the motives of not a few people in Mexico, who would have American capital plant itself there under conditions which afford no protection by their Government or ours."