Mexico and its reconstruction/Chapter 19

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CHAPTER XIX

THE FOREIGNER IN MEXICO: HIS LEGAL POSITION

It has been said already that it does not seem profitable to discuss the general organization of the government of Mexico under the constitution of 1917 as compared to that under the constitution of 1857. Constitutions have never been a set rule of action in Mexico and a consideration of the actual conditions within the republic gives little hope that it will be possible to make the political provisions of the Constitution of 1917 function as was intended, until fundamental changes have been accomplished in the social, educational, and economic equipment of the people. The reconstruction of Mexico involves problems deeper than those that can be settled by constitution makers.

It is important, however, to consider the terms of the new Constitution applying to foreigners and their rights, because the manner of the enforcement of these has an immediate bearing on Mexico's relations to other powers and the interpretation, which the governments of the reconstruction period may adopt upon these matters, will determine Mexico's international credit and possibly the continuance of her peaceful relations with other nations. In short, the conditions under which Mexico may work out its own reconstruction and whether it will be allowed to work out its own reconstruction may depend upon its willingness to assume the responsibilities of dealing justly with those of other nationalities, who have acquired rights within its borders.

This is not wholly or chiefly a question of constitutions; it is more a question of the attitude of the government in the interpretation of doubtful clauses of the constitutions. The fundamental law of 1857 had in it objectionable clauses but the government of General Diaz, as time went on, showed itself indisposed to interpret them in a way that would discriminate against foreigners. The Constitution of 1917 has additional indefinite provisions and the governments in power since its adoption have acted in a way to arouse apprehension on the part of foreigners owning property in the country.

The preamble of the new Constitution, like that of the old, contains a clause, which, broadly interpreted, would protect all vested rights. It declares: "No law shall be given retroactive effect to the prejudice of any person whatsoever.^[1] The other clauses that are of special interest to foreign holders of property, though some of them do carry discriminations, are not ones to which international objection may be raised if this general guarantee is in law and practice one which limits all other clauses. If it does not do so, if the rule that a more specific provision of law controls a more general one applies, then certain of the clauses of the new Constitution give good reason for alarm. Only the more important of the doubtful clauses can be discussed here. As to landholding, the Constitution declares that:

Only Mexicans by birth or naturalization and Mexican companies have the right to acquire ownership in lands, waters, and their appurtenances or to obtain concessions to develop mines, waters, or mineral fuels in the Republic of Mexico. The nation may grant the same right to foreigners, provided they agree before the Department of Foreign Affairs to be considered Mexicans in respect to such property, and accordingly not to invoke the protection of their Governments in respect to the same, under penalty, in case of breach, of forfeiture to the nation of property so acquired.^[2]

Mexico doubtless has the right to apply the rule stated in the first sentence to all future grants, if she wishes. It may be that the rule would be considered unfriendly by other nations and it appears beyond doubt that such a rule would check the development of the republic. Nevertheless, there is no obligation on nations to be either friendly or progressive. The second sentence is more objectionable. It would be more straightforward to rely on the unmodified enforcement of the standard expressed in the first sentence. The modification demands that an individual surrender a part of the rights he enjoys under international law as the condition of becoming a Mexican landholder. He is to surrender part of the rights regularly attaching to his status as a foreigner though he does not consent to become a Mexican. There is good reason to believe that many governments would consider the enforcement of such a constitutional provision unquestionably objectionable. Some might well refuse to be bound by such surrender of rights by their citizens.^[3]

Legislation restricting the ownership by foreigners or certain classes of foreigners, of land within border and coast zones, has long standing in Mexico as is shown elsewhere. Such restrictions are still thought advisable. They are found in the Mining Law, which went into effect on January 1, 1910,^[4] and in the Constitution of 1917. Generally such rules have been ones to which the executive might make exceptions. In the new Constitution the prohibition is absolute. "Within a zone of 100 kilometers from the frontiers, and of 50 kilometers from the sea coast, no foreigner shall under any conditions acquire direct ownership of lands and waters."^[5] There seems no doubt that Mexico may, if it wishes, adopt such a rule for her future guidance.

There are a number of other clauses that may affect the property rights of foreigners, the interpretation of which is doubtful, such as those providing for the taking of certain properties for the benefit of "rural communities," the power of the executive to declare null certain contracts and concessions granted by former governments, the provisions concerning church property,^[6]and those concerning exemptions from taxation.^[7]

The equivocal provisions most discussed up to the present time have been those referring to the oil resources of the republic. This has been true for a number of reasons. Oil production has rapidly increased and, on that account, has attracted attention. The Mexican oil supply was important in the World War and for that reason was watched with peculiar interest by partisans of both the allies and the central powers. Further, the leaders of the government in Mexico felt they had an opportunity to secure for the nation a great source of income from petroleum. They wanted to assure that the oil resources as yet undeveloped should be national property, they wanted to tax heavily the yield of the producing areas, and they showed a desire to manipulate the legislation affecting these areas in such a way that the government would have freedom from foreign interference in any measures it might adopt concerning the properties.

The provisions of the Constitution, under which the controversy has arisen, are those affecting general landholding and a special paragraph which reads:

In the nation is vested direct ownership of all minerals or substances which in veins, layers, masses, or beds constitute deposits whose nature is different from the components of the land, such as minerals from which metals and metaloids used

for industrial purposes are extracted; beds of precious stones, rock salt, and salt lakes formed directly by marine waters, products derived from the decomposition of rocks, when their exploitation requires underground work; phosphates, which may be used for fertilizers; solid mineral fuels; petroleum and all hydrocarbons—solid, liquid, or gaseous.

It is later provided that as to such property "the ownership of the Nation is inalienable" and that concessions to develop these resources can be granted "under the laws of Mexico only on condition that said resources be regularly developed, and on the further condition that the legal provisions be observed."^[8] There are a number of reasons why this new constitutional provision is disturbing to owners of the lands affected and particularly to foreign owners. The nation is declared the owner of the property described and this ownership is declared inalienable. Does this overthrow any previous ownership? It is insisted by the owners of oil properties that the rule applying to petroleum has not been the same as that applying, for example, to gold and silver. The laws of 1884, 1892, and 1909 recognized that petroleum in the subsoil was the property of the owner of the soil. Relying on these assurances the investments in oil properties have been made. To enforce a claim of national ownership of petroleum fields now would be to confiscate the property purchased or at least its most valuable part. Such an act, of course, would be contrary to the letter and spirit of Article 14 on retroactive legislation already quoted.

Because of anxiety as to the meaning of this provision Ambassador Fletcher, when presenting his credentials to the Mexican government, made inquiry on the point. He was assured that no confiscation was contemplated. The Mexican Review, a semi-official paper published in Washington in the interest of the Carranza government, declared that the constitutional provision in regard to retroactive legislation protected all private holdings of lands.

About a year later—the first appearing, February 19, 1919—a series of decrees were issued, which seemed again to show a conflict between profession and intent. Certain new taxes were placed on the petroleum industry but in the form of rentals and royalties. Titles to lands were to be registered and if not registered under the new law, the lands were to be declared open to entry. Ownership could be perfected only under the conditions outlined in the Constitution.

But, if ownership was already complete, why should any payments be made to the government as rental or royalty? Such an act would admit that the real ownership was in some one else—in this case the Mexican government. If registry under the new law was more than a formality for the completion of the public records, it also might cloud the title to lands in full possession. The new registry, it was maintained, would in itself pass the actual title to the government or at least put the companies within the terms of the clause of the Constitution that made their properties Mexican in the sense that they could not appeal to their home governments for protection. If the owners refused to comply with the law, their properties were forfeited. If they did comply with the law, the result was the same.

Against these actions by the Mexican government, the United States, Great Britain, Holland, and France protested. The American note, dated April 2, 1918, declared that the Government of the United States would not object to fair taxation nor to taking of the property of its citizens for true public use if proper compensation were made, but it could not "acquiesce in any procedure ostensibly or nominally in the form of taxation or the exercise of eminent domain, but really resulting in the confiscation of private property and arbitrary deprivation of vested rights." The proposed taxes, in themselves, were so heavy as to indicate a trend in the direction of confiscation, but the more serious question was the apparent attempt of the decree to separate ownership of the surface from ownership of the petroleum resources under the surface of the land. It was pointed out that the taking of the rights in question would be accomplished by executive action, without judicial process and apparently without any proof that the "separation of mineral rights from surface rights is a matter of public utility upon which the right of expropriation depends." The note concluded:

In the absence of the establishment of any procedure looking to the prevention of spoliation of American citizens and in the absence of any assurance, were such procedure established, that it would not uphold in defiance of international law and justice

the arbitrary confiscations of Mexican authorities, it becomes the function of the Government of the United States most earnestly and respectfully to call the attention of the Mexican Government to the necessity which may arise to impel it to protect the property of its citizens in Mexico divested or injuriously affected by the decree above cited.

To this protest no answer was sent. On May 18, however, it was announced that the decree of February 19 would not take effect until July 31, 1918. On July 8 another decree postponed action until August 15. The United States again protested, and on August 14 Carranza issued another decree eliminating the necessity of title regulation. The "rentals and royalties" provision, however, was not recalled in principle, and right to possession was conditional on recognition of government ownership.

What the position of the property owners was still remained uncertain when the attack was renewed from another direction. A drilling license for working oil properties has frequently been required as a police measure. This requirement was now combined with other Mexican legislation for use for a broader purpose. The Constitution declared that concessions for oil development could be made "only on condition that said resources be regularly developed, and on the further condition that the legal provisions be observed." The situation threatened was: Develop your lands or forfeit them. You cannot develop your lands without a drilling license. The license will be granted you only on condition that you recognize the standard the government imposes as a condition for holding and operating your lands. Obviously this might be used as a means to dispossess the present owners.

Carranza, meanwhile, had given a reply to the protests of foreign powers against his decrees, denying the right of complaint and declaring that if foreigners had grievances, the Mexican courts were open to them. The oil interests joined in taking action for legal protection under Mexican law. The Mexican Congress was called to consider what should be done. Though the attitude of the government was officially unchanged, assurances were received in May, 1919, that no law enacted by the Congress in the proposed petroleum code would have retroactive effect. The American Department of State was advised that the new oil law would not nationalize oil properties acquired before May 1, 1917. ^[9]

This assurance seemed to indicate that the road was now open toward an amicable adjustment of the petroleum difficulties, but subsequent developments did not show that to be the case. The various notes exchanged indicated that the Mexican government still sought recognition of national ownership of the petroleum resources. Direct steps to this end having been declared unacceptable by the United States, the same result was sought through further provisions concerning denouncements of property, taking out of drilling permits, and decrees concerning the so-called Federal Zone.^[10] Later, under the Obregón government, moves against the petroleum interests were made through the taxing power, under a decree to become effective July 1, 1921. The alleged purposes of the new regulation were to stabilize the world's oil market, to conserve the national resources, and to furnish funds with which the government could again begin payment of interest on the national debt. The rates of taxation were so high that they were alleged to be confiscatory.

As the negotiations for recognition of the Obregón government proceeded this question became bound up with the older controversy. The oil producing interests protested to the United States government that recognition should not be granted unless the alleged confiscatory program of the Mexican government, under whatever guise presented, should be abandoned.

On June 7, 1921, Secretary of State Hughes issued a statement outlining the fundamental position of the United States. It pointed out that the matter at issue was much more important than the question of the recognition of any particular government in Mexico and declared: ^[11]

The fundamental question which confronts the Government of the United States in considering its relations with Mexico is the safeguarding of property rights against confiscation. Mexico is free to adopt any policy which she pleases with respect to her public lands, but she is not free to destroy without compensation valid titles which have been obtained by American citizens under Mexican laws. A confiscatory policy strikes not only at the interests of particular individuals, but at the

foundations of international intercourse, for it is only on the basis of the security of property, validly possessed under the laws existing at the time of its acquisition, that commercial transactions between the peoples of two countries and the conduct of activities in helpful cooperation are possible. . . .

 

This question is vital because of the provisions inserted in the Mexican Constitution promulgated in 1917. If these provisions are to be put into effect retroactively, the properties of American citizens will be confiscated on a great scale. This would constitute an international wrong of the gravest character and this Government could not submit to its accomplishment. If it be said that this wrong is not intended, and that the Constitution of Mexico of 1917 will not be construed to permit, or enforced so as to effect, confiscation, then it is important that this should be made clear by guarantees in proper form. The provisions of the Constitution and the Executive decrees which have been formulated with confiscatory purposes make it obviously necessary that the purposes of Mexico should be definitely set forth.

The oil dispute is not only important in itself, but because it reveals the general attitude the governments that have followed the revolution have shown toward foreigners and foreign capital. The provisions concerning general land ownership might be given retroactive effect, it appears, if the government were allowed to establish that standard as to any other sort of property. The holding of land might be made conditional on the payment of taxes in the forms of "rents" and "royalties." A new registry law might be framed in a way to cut off the right of the foreign owner to appeal to his home government or the same end might be reached by the requirement of a license to operate the land. Manufacturing enterprises and public utilities might be included within the scope of similar regulations, all forming a part of a comprehensive "nationalization program."

In fact, if the Mexican government were allowed to enforce retroactive laws affecting certain property rights of foreigners, there seems to be no reason why the application could not be logically extended to the entire field of their privileges. If foreigners could be required, as an arbitrary condition of continuing to operate their properties, to divorce themselves from the privilege of appealing to their own governments for the protection of their property rights, they might be required to surrender all right of appeal on any ground in return for a grant of the same privilege.

The Constitution contains still another clause that seems to carry the possibility of abuse in relation to the personal and property rights of foreigners, though it has not appeared prominently in the discussions thus far raised. The right to live in Mexico is subordinated to the powers of the executive "in so far as relates to the limitations imposed by law in regard to emigration, immigration, and the public health of the country, or in regard to undesirable foreigners resident in the country,"^[12] and "the Executive shall have the exclusive right to expel from the Republic forthwith, and without judicial process, any foreigner whose presence he may deem inexpedient."^[13]

Similar clauses are not unknown in the legislation of other countries and the exercise, within reasonable limits, of such a right is not properly questioned. If, however, the executive should undertake in pursuance of an anti-foreign program, to make continued residence conditional on the surrender of the rights, which the foreigner enjoys under international law, such action could not fail to arouse protest on the part of the states whose nationals were involved. The exercise of the "exclusive" right of the executive to expel "without judicial process" any resident foreigner whose presence in the country "he may deem inexpedient" or "undesirable" is one, the exercise of which can not be arbitrary. If it were so, the property and personal rights of those whom Mexico has "virtually invited to spend their wealth and energy within its borders"^[14] would practically be beyond the effective protection of the law. No self-respecting country could permit itself to accept such a standard.

The home governments of all foreigners living in Mexico can not escape the responsibility of doing all that is allowed under international law to assure that their rights in the republic shall be recognized and preserved. The law under which they live must be one that establishes equitable standards, not one which, while having regularity of form, denies them the substance of their rights. Broadly considered the firm insistence on such a standard is not a policy lacking in friendliness for Mexico. To fail to insist on such treatment for foreigners would be to encourage the creation of conditions in Mexico that would bring with them a serious menace to its independence. At bottom, of course, the protection of the lives of its citizens is one of the first duties of every state, a duty that does not cease at the boundary. Abroad protection should be given not only in normal times, when, in fact, it will seldom be necessary to call for it, but, so far as circumstances permit, during periods when the countries to which the citizens have gone to live are suffering invasion or are torn by civil war. The outrages practiced on the local population may arouse active sympathy abroad, resulting in extreme cases in intervention by the foreign government in defense of the interests of general humanity, but long before that point is reached a country must feel the call to protect its own citizens resident in foreign lands, when their rights are violated.

It can not be claimed, of course, that as soon as public order is disturbed in a country foreign governments have a right at once to resort to armed intervention to protect their citizens, but in every case it is a national duty to make all governments and all parties to conflicts within them understand that prompt and full reparation for wrongful damages will be expected. Up to what point protest and redress can properly be relied upon, and when more forceful measures must be resorted to can be determined by no definite rule. The character of the disturbed populations, the nature of the violations, their long continuance, the prospect of early adjustment of public order, and an indefinite number of political considerations all influence the decisions that will be taken. No country is under the obligation to allow the abuses to continue indefinitely. At some point the duty to respect technical foreign sovereignty becomes less insistent than the duty to defend the rights of the home government and its citizens.

In the opinion of large numbers of people who have watched developments in Mexico during the revolution the time has long passed when foreign countries should content themselves with protests. The stronger foreign governments, during much of the period of the revolution, have had their attentions and energies occupied elsewhere. On other occasions they have frequently shown themselves unwilling to act when the steps they might take against a weak state could be attributed to selfish interests. It can not fail to be clear, however, that with the cessation of the larger hostilities in Europe and the continuance of chaotic conditions in Mexico the demand for the respect of human rights in Mexico will become more insistent.

What the actual situation of the foreigner is in Mexico, it is hard to state in a comprehensive way. Reports are contradictory and incomplete. The majority of those foreigners who lived in the republic ten years ago have probably left the country. There is no doubt, however, that the experiences they have endured during the past decade have been harrowing in many cases, and ones which in other times and circumstances would have brought foreign intervention.

The sufferings of American residents have been greater than those of other foreign colonies because Americans have been present in larger numbers; they have been residents, to a large degree, of the more disturbed regions and, at least in some instances, they have been the subject of a particular dislike. Nevertheless, what has happened in their cases may be cited as an illustration of the sorts of wrongs that many; foreigners have had to endure.

The list is too long to be recounted at length. Its details are often of too refined a brutality to allow public discussion. They are eloquent testimony that a government that was unable to stop the mounting total of crimes within its territory for practically a decade, let a large part of its people get out of hand and was apparently unable to reduce them to control. The details of what happened in the country are portrayed in letters, telegrams, memorials, and records of personal experience, speeches presented in Congress and testimony before Congressional committees. The record is revolting. As reported to the Congress of the United States, it includes robbery, extortion, holding for ransom, plunder, burning of property without cause, murder by various means, including throat-cutting, disemboweling, beheading, and mutilation. It includes forcing severely wounded women to cook for soldiers, and outrage of wives and children in the presence of wounded or bound husbands and parents.^[15]

Nor is it to be supposed that the wrongs against foreigners have been confined to the earlier period of the revolution and were a result only of the first flush of passion which the conflict aroused. On the contrary, the list of American citizens killed in Mexico between 1911 and the middle of 1919, published by the Department of State in response to an inquiry by the United States Senate, shows a series of rising totals.^[16] Henry Fletcher, American Ambassador to Mexico, testified in August, 1919, that during 1918 and 1919, 51 Americans had been killed in Mexico. During that time he had not been informed of one prosecution by the Mexican government for these crimes.^[17]

No fair-minded person believes that such acts are attributable to the better class of Mexican citizens or that they condone such abuses. They deplore them as much as do any civilized people. But no government can escape the responsibility for allowing conditions to continue indefinitely under which such crimes can occur, and upon the best citizens of Mexico falls the duty to join hands to bring their fatherland again into the control of those who can maintain public order within its territory. Upon their rising to that high opportunity may depend the future of independent Mexico.

1. Article 14. The citations of the Mexican Constitutions in this chapter are based on H. N. Branch, The Mexican Constitution of 1917 Compared with the Constitution of 1857, Philadelphia, 1917.
2. Article 27.
3. It may again be pointed out that the importance of this and similar provisions depends on the action that the government takes under it. Article 33 of the Constitution of 1857 declared that foreigners must subject "themselves to the decisions and sentences of the tribunals, and shall not be entitled to seek other redress than that which the laws concede to Mexicans." On its face this seems to prohibit appeal to the home country but, if it was meant to do so, the government did not enforce the provision.
4. See comment in Branch, op cit., p. 114.
5. Article 27.
6. Article 27, II.
7. Article 28.
8. Article 27. See also Frederic R. Kellogg, "The Mexican Oil Problem," Nation, October 5, 1918, and the following collections of documents and translations: "The Mexican Oil Question," n.p.n.d. (1919); "The Mexican Oil Controversy," n. p., October, 1920.
9. The decrees referred to above were discussed in various issues of the Commercial and Financial Chronicle, New York, during 1917-19.
10. See detail of this correspondence in "The Mexican Oil Controversy," n. p., October, 1920.
11. New York Times, June 8, 1921.
12. Article 11.
13. Article 33.
14. The words quoted are in the American note of April 2, 1918.
15. See, for speeches detailing wrongs of the sorts cited. Congressional Record, vol. 51, part 4, p. 3743, February 21, 1914, and part 5, p. 4512, March 9, 1914. Detailed testimony concerning conditions in Mexico as they affect the rights of foreigners is published in Investigation of Mexican Affairs, Hearing before a Sub-committee of the Committee on Foreign Relations, United States Senate, 66th Congress, 1st Session, pursuant to S. Res. 106, parts 1-3, pp. 1-677. The violation of personal rights is discussed, especially at pages 370-402.
16. "Claims Against Mexico," Senate Document 67, 66th Congress, 1st Session, July 31,1919.
17. The Independent, August 9, 1919, p. 172.