INDUSTRIAL MEXICO
'
AN INDIAN WITH HIS LOAD, MEXICO CITY
INDUSTRIAL MEXICO
1919 Facts and Figures
BY
P. HARVEY MIDDLETON
(ILLUSTRATED)
Mexico is the treasure house from which
will come the gold, silver, copper and prec-
ious stones that will build the empire of
tomorrow, and make the future cities of
the world veritable Jerusalem*.
CECIL RHODES
NEW YORK
DODD, MEAD AND COMPANY
1919
COPYRIGHT, 1919
BY DODD, MEAD AND COMPANY, INC.
He
I *
FOREWORD
During his travels in Mexico gathering the
facts and figures contained in this book, the au-
thor was fortunate enough to secure the active
co-operation of the American Commercial At-
tache, Edward F. Feely, and was also greatly
assisted by Colonel Paulino Fontes, Director
General of the Mexican railways under govern-
ment control, Rafael Zerecero, his assistant, and
M. Munoz, the General Superintendent of the
same railways. He especially wishes to extend
his thanks to Robert H. Murray, correspondent
in Mexico City for the New York World and Di-
rector of the Creel Committee on Public Infor-
mation in Mexico during the war, to George F.
Weeks, correspondent of the United Press and
editor of the Mexican Review, and to C. A. Mc-
Queen, Chief of the Latin American Division of
the U. S. Bureau of Foreign and Domestic Com-
merce. For photographs the author is indebted
to C. B. Waite of Mexico City, and to the Mexi-
can Petroleum Co., of New York.
P. H. M.
New York City,
August 25, 1919.
INTRODUCTION
I'.usiness revival. Trade ambassadors visit Mexican capital.
(Jrowth of foreign trade. Native capital insufficient. Unwise
legislation may be amended.
"MEXICO is the richest undeveloped accessible
country in the world. "
One evening in May, 1919, I was dining in
Mexico City with the correspondent of a great
American daily newspaper, a man who has spent
twelve eventful years in Mexico, who has gone
through all the revolutions, and who is today
an unquenchable optimist on Mexico. The
words at the head of this page are his.
"In the opinion of those who have carefully
lied the situation/* he continued, "Mexico
is on the eve of the greatest era of development
and prosperity that the country has ever seen.
Worldwide demand exists for substantially
everything that Mexico can produce. Many of
-o demands can be satisfied from no other
source than Mexico. This fact, coupled with
the impressive truth that, in the present stage
of the world's progress and necessities, no rich
vi INTRODUCTION
undeveloped country like Mexico particularly
when it adjoins the youngest, wealthiest, most
progressive nation under the sun can be per-
mitted to lie fallow, seems to place in the cate-
gory of the incontrovertible the declaration
that Mexico's economic star is in the ascend-
ant. It may not soar or take unto itself full
lustre for, possibly, months, or one or two years.
But that it will do so, and soon, is as certain as
that the night follows the day."
The Mexican Government rests under the
heavy responsibility of continuing to create
conditions which will enable the Republic to
come into its own. It may be conservatively
assumed that this will be done. Mexico has
bled through nearly nine years of revolution.
There will not be nine more years of revolu-
tion and lawlessness there. Even though the
Mexicans themselves may be inclined to permit
it, which is unthinkable, the world outside of
Mexico will not.
The overthrowing of the old regime has, it
is true, resulted in much unwise legislation, in
some cases jeopardizing the industries created
by American and European capital and energy
industries upon which Mexico is absolutely
dependent. But the old order of things in Mex-
ico, with single families owning millions of
INTRODUCTION vii
acres and a dozen families owning entire states,
has gone never to return. You can no more re-
store th<> Mexico of Porfirio Diaz than you can
bring back the Russia of the Czars or the France
of the days of Mme. de Pompadour. The pres-
ent situation arising from the attempted "na-
tionalization" of properties obtained by foreign
investors either by concessions legally granted
by former Mexican governments or by outright
purchase, is equally impossible. The foreign
holders of such properties, provided they com-
ply with the laws under which their lands were
originally acquired, have as clear a title to them
as you have to your hat.
It is a fact that Mexico 's total foreign debt
is only about $500,000,000. Such a sum is abso-
lutely trivial when one considers that Mexico
possesses millions of acres of virgin soil, oil
fields which produced over 63 million barrels in
1918, thousands of mines of gold, silver, lead
and copper, mountains of iron, unexploited fish-
eries, vast forests of timber which contain many
varieties of precious hardwoods and dyewoods,
and such a range of climates and soils that it
is possible to produce all the cereal crops and
90 per cent, of all the known fruits of the
world.
Humboldt called Mexico "a beggar sitting on
viii INTRODUCTION
a bag of gold," and the present situation of
" the greatest treasure house in the world "
could not perhaps be better described. For,
while Mexico has defaulted for several years in
the payment of her foreign obligations and is
now seeking financial assistance from other na-
tions, she has unexploited natural resources, the
mere scratching of which would provide the
means to clear off all her national debt and place
her on a sound financial basis.
Although there are still bandits and rebels
in Mexico, and probably will be for a long time
to come, I found in my recent trip from the
Texas border to Vera Cruz a great many indi-
cations that Mexico provided there is no really
serious political disturbance is " coming back."
Mexico City during the time of my visit there
in April and May was the meeting place for
trade ambassadors from all parts of the world.
These included manufacturers, bankers and en-
gineers from the United States and Canada,
from Great Britain, France, Spain, Italy, Hol-
land, Denmark, Norway, Argentina, from Cen-
tral and South America, and from Japan.
These men were seeking orders and opportuni-
ties for investments, and were finding both.
There were delegations from New York, Phil-
adelphia, Chicago, San Antonio and Dallas.
INTRODUCTION ix
There was a party from Oklahoma arranging
to invest $25,000,000 in the oil fields, another
from Christiania, Norway, with a $15,000,000
oil proposition ; there was a group from Tokyo,
Japan, investigating the newly discovered oil
deposits in the Gulf of California, and there
were a number of mining engineers from San
Francisco. As a result of the tour in April,
1919, of Mississippi Valley business men
throughout Mexico, American manufacturers
secured large orders and made valuable con-
nections. The rehabilitation of the Mexican
railways will call for American railway sup-
plies to the extent of about $50,000,000. The
Chicago Association of Commerce has opened
a branch office in Mexico City, and the American
Chamber of Commerce of Mexico has formed a
v York auxiliary.
Mexico, with an area of 767,290 square miles,
is seventeen and a half times the size of Cuba,
and infinitely greater in resources. Cuba's
products are limited to the tropical, chiefly
sugar and tobacco. Mexico has these and also
metals, oil, timber, corn, wheat, and livestock
as possible products. It is three times as large
as all of Central America and the West Indies
( -'unbilled, yet it has a population of only 15,-
063,207, or 19.6 per square mile.
x INTRODUCTION
Because of geographical situation and the
needs of each for the natural as well as the
manufactured products of the other, fully 80
per cent, of the foreign trade of Mexico will
always be with the United States. Mexico pro-
duces raw materials in the shape of minerals,
hard woods, fibre, rubber, hides, oil and a great
variety of other products for which there is a
heavy and constant demand in this country.
On the other hand many of the natural products
of Mexico find their way back to Mexico after
having entered into various forms of manu-
factures. It has been estimated that a revival
of business in Mexico will mean an increase in
the export trade of 1,000 per cent. Mexican
oil production has increased fifty-four times
since 1907. The total export business of Mex-
ico for the year 1918 amounted to $183,652,125,
American money, of which the United States
took $175,037,150.
No one knows the extent of Mexico's natural
resources, for they have never been adequately
surveyed or estimated. Mexico is in the posi-
tion of a mismanaged, fundamentally sound
business. An impressive indication of the eco-
nomic vitality and resiliency of Mexico is af-
forded by the fact that last year, in face of ruin
and prostration wrought by the revolution, her
INTRODUCTION xi
revenues were greater than in any other similar
period in her history.
Native Capital Insufficient
Edward F. Feely, American Commercial At-
tache in Mexico, said to me, during my recent
visit to Mexico City: "Mexico cannot finance
her reconstruction with native capital. She
does not possess it. If she did it is question-
able if it would be available. Mexicans are
proverbially loath to enlist what sparse capital
they have in development enterprises in their
own country, no matter how attractive and con-
servative. They are not an investing, develop-
ing people. Foreign capital is needed for the
rehabilitation of her lines of communication
principally for rolling stock and motive power.
Reconstruction is being hampered by inade-
quate transportation facilities.
"Foreign capital is required to prosecute the
development of her petroleum fields, her mines,
her farms, her sugar and coffee plantations, her
fisheries, her timberlands. Millions of dollars
of American capital is now waiting to go into
Mexico eager to enter the country. Some of
it is already being slowly released for use there.
But the bulk of it is waiting until more definite
xii INTRODUCTION
assurances are obtained that sane, rational and
just legislation will be enacted which will sup-
ply foreign investors with the proper and ade-
quate protection which they have a right to ex-
pect and demand. It is safe to assume that the
necessary safeguards will be forthcoming. Al-
ready the Mexican government is evincing con-
servative tendencies of a nature which are in-
dispensable to the establishment and practice
of a friendly and mutually advantageous co-
operation between states, and to the encourage-
ment of international, commercial and invest-
ment relations/'
Legislation to Be Amended?
In view of the widespread interest in Article
27 of the new Constitution of Mexico (see Chap-
ter XI), which if literally interpreted would
seriously injure all American interests in Mex-
ico, it may be stated that during my visit to
Mexico in April and May, 1919, business men of
good standing with whom I talked were of the
opinion that an amendment would be made
which would protect foreign interests.
Announcement was made by one high official
that the Mexican Government will pass a new
law recognizing the right of ownership in the
sub-soil in all properties purchased before the
INTRODUCTION xiii
promulgation of the new constitution, the date
of which was February 5, 1917. Properties
purchased after that date, he said, would be
subject to the law which gives the subsoil to
the nation.
The possibility that American financial inter-
ests, acting of course with proper regard to
the assurances which are given as to the safety
of previous investments, may assist the Mexican
Government in floating a loan in the United
States, has recently been much discussed by
merchants and manufacturers who look upon
Mt-xico as logically one of the best markets for
American goods. It is said that the present
government in Mexico is considering the recog-
nition and refunding of the debts contracted
under the Huerta regime. If such a step by
the Mexican Government is in contemplation,
then, if stable conditions are assured and pro-
tection is given to capital already invested, the
prospects for a rapidly developing trade with
Mexico would be better than they have been in
a long period of years.
CONTENTS
PAGE
INTRODUCTION v
Business revival. Trade ambassadors visit Mex-
ican capital. Growth of foreign trade. Native
capital insufficient. Unwise legislation may be
amended.
CHAPTER I
GOVERNMENT RAILWAYS . 1
Laredo, Texas, to Mexico City. Conditions in the
capital. Shortage of equipment. Growth of
railways. Trip through the danger zone. South-
ern lines. Equipment in service*
CHAPTER II
PRIVATE RAILWAYS AND STEAMSHIPS .... 22
Southern Pacific of Mexico. Proposed new lines.
Difficult construction. Kansas City, Mexico and
Orient. Private freight trains. Small Ameri-
can lines. Building a tropical railroad. Curi-
osities of Mexican railroading. Statistics. Mex-
ico to Japan. New Orleans to Vera Cruz. New
York to Tampico. Coastline and ports.
CHAPTER III
On, INDUSTRY 39
Who's who. New developments. Submarine de-
posits. Rentals. Evolution of industry. Location
CONTENTS
PAGE
of fields. Varieties of fuel oil. Output of each
company. Exporting companies.
CHAPTER IV
MINES 61
Operations resumed. New enterprises. Jap-
anese invasion. The richest deposits. Coal
lands. Statistics.
CHAPTER V
AGRICULTURE 85
Orange crop. Banana flour. Opportunities.
Vegetable oils. Cereals. Cotton. Guayule rub-
ber. Rubber factories. Cattle industry. Sisal.
Vine culture. New developments. Irrigation.
CHAPTER VI
TIMBER 106
Vast tracts of pine. Mahogany. Valuable hard
woods unknown to American markets. Woods for
shipbuilding. Decay resisting species. Dye-
woods. National Forestry School.
CHAPTER VII
TRADE OPPORTUNITIES 116
Agricultural implements and machinery. Henry
Ford in Mexico. American trade associations
open branches in Mexico. List of articles ur-
gently needed. Salesman's itinerary. New enter-
prises. Newspapers and magazines. Manufac-
turing in Mexico shoe factories, breweries, tex-
CONTENTS
PAGE
tile mills, tobacco factories. Japanese competi-
tion. German competition. American automo-
biles in Mexico. Laundry and cleaning machin-
ery needed. Opportunity for American dyes.
Sport in Mexico. Grand opera in the bull ring.
Trade bodies in Mexico. Present an opportune
time to develop trade. Patents and Trade-marks.
CHAPTER VIII
SUGAR AND COFFEE PLANTATIONS 157
Sugar mills resuming operations. Equipment
needed. Opportunities for American capital.
Large scale operation. Coffee production.
CHAPTER IX
CREDIT AND BANKING 168
Local banks. American trade largely on, cash
basis. Bank credits. Sales terms of American
manufacturers trading with Mexico. Mexican
bajik finances shipments. New Banking Law.
CHAPTER X
NATIONAL DEBT 207
Paper money. Items in national debt. Unpaid
interest. Railway debt. International Bankers
Committee.
( IIAPTER XI
MF.XK AN ('MN-TITUTION OF 1917 220
<t upon foreign investments. Taxes. De-
cree of February 19, 1918. American Govern-
ment protests. President Wilson's address
CONTENTS
PAGE
Mexican editors. Protests from British and
French Governments and replies of Mexican Gov-
ernment.
CHAPTER XII
GOVERNMENT DEPARTMENTS AND INSTITUTIONS . 253
National Congress. Departments. Education.
Museums. Telegraphs, Post Office and Harbours.
Libraries. Religion.
ILLUSTRATIONS
An Indian with his load Frontispiece
OPPOSITE PAGB
Blockhouse 011 Mexican Ry 16
Explorers' Train, Mexican By 20
Drawbridge at Salina Cruz 36
Electric cranes at Salina Cruz 36
Oil derrick, Tampico 40
Striking oil 40
Mexican dwellftigs, Tampico 48
American dwellings, Tampico 48
Schoolhouse established by oil company ... 56
Railway station, San Luis Potosi 56
Falls of Juanacatlan 70
Primitive method of farming 102
Ox cart brings freight to railroad .... 102
Mahogany logs for export 112
Chocolate pods ready for shelling . . . .112
Busy street in Mexico City 122
Modern residence in Mexico City 128
".Jitneys" in Mexico City 134
Modern residence in Mexico City 144
Coffee drying 164
Grading coffee 164
Post Office in Mexico City 262
INDUSTRIAL MEXICO
INDUSTRIAL MEXICO
CHAPTER I
GOVERNMENT RAILWAYS
Laredo, Texas, to Mexico City. Conditions in the
capital. Shortage of equipment. Growth of rail-
ways. Trip through the danger zone. Southern
lines. Equipment in service.
IT is an unfortunate fact that the principal
items of news from Mexico are reports of the
activities of Villistafs, Zapatistas, and Felicistas
and of other rebels and bandits who infest cer-
tain portions of Mexico, and that the average
American is convinced that Mexico is an indus-
trial, physical, political and financial ruin.
That this is far from the truth was strikingly
emphasized to me on my trip through Mexico
in April and May, 1919.
When I was invited to make a trip over the
railway lines of Mexico under government con-
trol, I gladly availed myself of the opportunity
to obtain at first hand facts and figures regard-
ing transportation conditions. Leaving New
York on April 8, we reached Laredo, Texas, on
i
2 INDUSTRIAL MEXICO
the morning of April 11. Here we laid over
for a day. The Pullman Company will not at
present allow any of its cars to go into Mexico.
So on the morning of- April 12, we crossed the
river in an automobile to Nuevo Laredo and
boarded the train of the National Railways of
Mexico.
Our Pullman was a duplicate of the one we
had travelled in from San Antonio to Laredo,
and we began our journey to the Mexican capital
at 11 A. M. through a country which differed but
little from that on the American side, for this
stretch of territory is one of the few in the
Mexican republic that does not show mountains
against the skyline. The line traversed the
deserts of the great plateau and passed through
hundreds of miles of dry and treeless plains.
En route we passed many freight cars in bad
order, with holes roughly patched with pieces
of wood or tin, and at Monterey, which we
reached in the late afternoon, we saw thirty loco-
motive frames standing within the steel skeleton
of what was apparently once a repair shop.
Our military guard of forty soldiers, which we
had taken on at Nuevo Laredo, was changed here
for a fresh set. These travelled with us as far
as San Luis Potosi, and here the guard was
again changed for the run to the capital.
GOVERNMENT RAILWAYS 3
The journey by rail from Laredo to Mexico
City was made with no other delay than that oc-
casioned by locomotive troubles on steep grades,
requiring in consequence a few more hours than
in the old days of almost clock-like precision of
operation, when the roads were in perfect condi-
tion and rolling stock was abundant. The
arable land in the northern portion of the re-
public, confined to narrow limits at best, is
either under cultivation or being put into con-
dition for production, and as the central por-
tion of the plateau was reached, and the fertile
valleys of San Luis Potosi, Queretaro, Guana-
juato, and other states were traversed, a scene
of agricultural activity was observed. Piles of
ore at various stations indicated that mining
is active.
The railway from Laredo to Mexico City was
originally a narrow gauge line, built under
American auspices. It was opened for traffic in
November, 1888, and the widening to standard
gauge was completed in 1903. The length of
the main line to the capital is 803 miles, and it
is the shortest route between the frontier and
the capital. On the journey the train crosses
the states of Tamaulipas, Nuevo Leon, Coahuila,
San Luis Potosi, Guanajuato, Queretaro, Hi-
dalgo, and penetrates the state of Mexico.
4 INDUSTRIAL MEXICO
Many stations and a great deal of rolling stock
were destroyed on this line during the revolu-
tion, but the government has rebuilt tracks,
bridges and stations,, has repaired and pur-
chased rolling stock, and is still repairing and
purchasing more as the income warrants. The
heavy expenses have been met with no other
source of revenue than the ordinary business
of the line, with the necessity of carrying mili-
tary guards on all trains at heavy cost.
Mexico City in April and May, 1919
We arrived at Mexico City at two o'clock in
the morning of April 14, 1919, at the Colonia
Station, and found the station plaza crowded
with automobiles and two-horse carriages wait-
ing to carry passengers, to their homes or hotels.
A "cargador" seized our baggage, we engaged
a machine, and in a few minutes from the time
we stepped off the train we were spinning along
the broad, well-lighted and scrupulously clean
Paseo de la Eeforma a magnificent boulevard
which runs from the entrance to Chapultepec
Park to Avenida Juarez.
Ten minutes later we were registered at the
Hotel Regis and taken up in the elevator to our
floor by a smiling Indian. The next morning
GOVERNMENT RAILWAYS 5
we hired a seven-passenger car at a cost of five
pesos ($2.50) an hour to see the city. In place
of the dead, dirty and unsafe city about which
we were solemnly warned before leaving New
York, wo found a metropolis of 900,000 people,
with well-paved, clean streets, beautiful public
and private buildings, w r ith a system of trolley
cars equal to those found in any American city
a city splendidly lighted at night, with traffic
regulations which were enforced, with a good
police system and a first-class fire department.
Regarding the latter, one of the largest fire
stations was opposite our hotel, and on May 3
there was a review of the fire department, and
all their equipment was on parade. They have
what is apparently the latest design of motor-
ized engines, motor trucks for ladders, nets, and
blankets, and they also have one feature which
I have never seen in an American fire depart-
ment men mounted on bicycles carrying " first-
aid " packages on their backs and with the Red
Cross on their sleeves. These men attend fires
and have sufficient knowledge to take care of
minor cases of burns or injury.
In the crowded avenues in the business sec-
tions the "move on" of the policeman is a fa-
miliar sound. At crossroads traffic policemen
have iron posts identical with those at Fifth
6 INDUSTRIAL MEXICO
Avenue and Forty-second Street, New York,
with the same handle to turn the sign to "Ade-
lante" or "Alto" "Go ahead " or "Stop."
Along one side of the beautiful little park
called the Alameda, Indians in tents or with
portable tables sell candied fruits, pottery, bas-
kets, blankets, toys, tortillas, drawn lace, dec-
orated leather, and a thousand other things.
The custom of selling in the streets in this man-
ner is typical of all Mexico and has changed
little since the days of Cortes.
In addition to trolley cars reaching every
section of the city and suburbs, there are thou-
sands of Fords and two-horse carriages, as well
as innumerable motor jitneys, known as "cami-
ones," which carry passengers for ten centavos
(five cents) for short trips. Eiding in one of
the trolley cars in the business district near the
Cathedral, where strap-hanging is by no means
unusual, I was somewhat surprised to read the
following notice pasted on one of the windows :
"Gentlemen : When^ you see a lady stand-
ing on her feet, you will not find it possible
to remain sitting with tranquillity. Your
education will forbid you to do so.
' ' GENERAL MANAGER OF THE RAILWAYS. ' '
Eestaurants, hotels, theatres and moving-
GOVERNMENT RAILWAYS 7
picture houses are all open and doing a thriv-
ing business, and there is every evidence of
activity in all the stores. Department stores
such as the Palacio de Hierro and the Centro
M<Tcnntil were well filled. The American and
British clubs entertained goodly numbers at
luncheon and dinner. Smokers are held fre-
(juriitly at both clubs. The Thieves' Market is
still selling " antiques " and " Aztec relics " to
unsuspecting visitors, and the vendors of
scrapes still haunt the hotels.
The only evidence of rebel activities during
our stay in the capital occurred on Labour Day,
the fifth of May. A celebration had been
planned at Chapultepec Castle, with a fine elec-
trical display. About 8 p. M. all the electric
lights in the city went out, and it was stated
that the Zapatistas had shot down the power
transmission wires which carry the current from
a central plant situated many miles out, and
which supplies light and power to the capital
and other smaller cities near by. We had to
use candles for three hours, by which time the
auxiliary plant in the city was put in opera-
tion, and everything was.again normal.
8 INDUSTKIAL MEXICO
Meodco's Shortage of Railway Equipment
The day following my arrival in Mexico City
I began an investigation at the offices of the
Mexican Government Eailway Administration
with the object of ascertaining the extent of the
deterioration of the physical -equipment of the
railways under government control. At the
end of three weeks I was able to construct a
table showing the shrinkage in the railway
equipment of Mexico since 1913, as the result
of revolutions and the lack of material with
which to repair rolling stock. This table is
given below :
SHRINKAGE IN MEXICAN RAILWAY EQUIPMENT
Standard gauge box cars
Narrow gauge box cars
Number
Metric
destroyed
or condemned
tons
since 1913
13.6
41
8
18.2
OO 7
67
ftn
.1
27.2
Da
1,673
* 36.3
1,630
r 20.0
254
25.0
204
27.2
10.0
16
21
20.0
270
12.0
86
20.0
27
GOVERNMENT RAILWAYS
Number
destroyed
Metric or condemned
tons since 1913
18.2 11
Standard gauge cattle cars
27.2 399
36.3 309
20.0 45
Narrow gauge cattle cars -j 10 '
12.0 13
22.7 23
Standard gauge gondolas ^ 27.2 407
36.3 592
20.0 22
Narrow gauge gondolas 1 10.0 3
[ 25.0 44
( 36 3 20
Standard gauge hopper cars ) '
45.4 lol
13.6 12
Standard gauge flat cars ^ |2.7 ^ ^25
36.3 502
25.0 124
Narrow gauge flat cars J 22.0 65
( 12.0 24
/ nn i Q
Standard gauge coke cars ) *
27.2 25
36.3 106
Standard gauge tank cars | 45,4 95
20.0 2
25.0 9
Narrow gauge tank cars 25.0 16
13.6 82
Standard gauge cabooses -j IH 2 15
22.7 61
10 INDUSTKIAL MEXICO
Number
destroyed
Metric or condemned
tons since 1913
( 11.5 11
Narrow gauge cabooses .............. < 10.0 28
[ 12.0 5
13.6 35
Standard gauge ballast cars .......... J*-;
lo
45.4 8
Standard gauge passenger cars, combina-
tion first and second class .............. 22
Narrow gauge passenger cars, combina-
tion first and second class ............... 12
Standard gauge passenger cars, second
class ................................. 55
Narrow gauge passenger cars, second
class ................................. 44
Standard gauge combination, baggage,
mail and express ...................... 38
Narrow gauge combination, baggage,
mail and express ....................... 19
Merely to bring the Mexican railways back to
the state of efficiency existing under the Amer-
ican operating officials prior to the revolution,
it will be necessary to replace all the rolling
stock mentioned above. In addition, it is esti-
mated that there will be needed 87,500 tons of
rails, accessories and supplies. Since 1910 rev-
olutions have resulted in the destruction of over
10,000 freight cars. At the present moment on
the lines north of Mexico City there are 5,000
freight cars laid up awaiting material with
GOVERNMENT RAILWAYS 11
which to repair them, as well as 400 locomo-
tives and 225 tank cars.
In view of this situation, large purchases of
supplies must be made within the next twelve
months to keep the railways running. Pur-
chases are being made constantly by the New
York office of the Mexican Government Railway
Administration, which has a bank credit of
about $250,000 a month for this purpose.
Growth of Railways
It may be well here to give a brief review of
the development of Mexican railways prior to
the Carranza regime. Railway construction in
Mexico started in 1854, when a line of ten miles
was placed in operation between Vera Cruz and
Tejeria. This line was gradually extended to
the capital, which was reached in 1873. From
1877 to 1882 Mexico built more lines of railroad
than any other Latin-American country, the
average yearly construction during that period
being 428 miles. In 1905 the railway mileage
of Mexico amounted to 10,557, and in 1910 it was
15,260. There has been very little new mileage
built since that date. Most of these railways
have received subsidies from the Mexican Gov-
ernment ranging from $6,000 to $10,000 per
12 INDUSTRIAL MEXICO
kilometre, according to the difficulty of the
work.
In 1903 the Mexican minister of finance, Li-
mantour, purchased $5,000,000 of 4y 2 per cent,
second debenture stock of the Interoceanic Kail-
way. This purchase led soon afterwards to a
further investment by the Mexican Government
in railway stock, this time with the express ob-
ject of exerting its interests both on the policy
and routine of the National Railroad Company,
the stock of which was acquired by the govern-
ment. Limantour visited New York and Eu-
rope in 1903, and while in the former city con-
cluded with Speyer & Co. an arrangement
whereby the Mexican Government became the
owner of a block of shares of the National Rail-
way which gave it a preponderating influence.
In 1908 the National Railways of Mexico was
incorporated in the United States to take over
and unite the properties of the National Rail-
road of Mexico and the Mexican Central.
The laiter system, which thus became part of
the National system, was incorporated in Massa-
chusetts in 1880. The Mexican Government of-
fered a subsidy of $15,200 a mile, and the right
was granted to import all materials for construc-
tion, repair and operation free of duty for fif-
teen years, with the further right of exemption
GOVERNMENT RAILWAYS 13
from taxation for fifty years, dating from the
completion of the line.
The main line was built from Mexico City to
Ciudad Juarez, 1,224 kilometres, branches and
subsidiary lines bringing the total mileage up
to 3,426 kilometres. The Central claimed that
there were but four cities in the whole republic
possessing anything over 5,000 inhabitants
which were not served by one or other of its
systems, main line branches, divisions or exten-
sions. The largest and most important places
outside of Mexico City itself which this railway
serves are: Guadalajara, 125,000 inhabitants;
Leon, with 70,000; Aguascalientes and Zacate-
cas, each with 40,000; Guanajuato and Quere-
taro, each with 45,000, and numerous other
towns with populations ranging from 35,000
down to 1,000.
This railway serves the most fertile and pro-
ductive portion of Mexico, carrying a great min-
eral traffic, and passing through the enormously
valuable silver belt, which formerly yielded one-
third of the entire silver production of the
world. It reaches manufacturing districts
such as Jimenez, the cotton producing district
of Lerdo, Torreon, where there are cotton mills ;
Aguascalientes, with woollen mills, silver and
copper smeltecs, and also the location of the
U INDUSTKIAL MEXICO
largest railway machine shops, and San Luis
Potosi, with its population of about 60,000.
The International Railroad, now also a part
of the National system, was started in 1882 by
that great American railroad pioneer, Collis P.
Huntington at Ciudad Porfirio Diaz, and in six
years it had reached Torreon. The next exten-
sion was to Durango, centre of a rich mineral
district, which was reached in 1902. Hunting-
ton surveyed the line from Durango to the Pa-
cific port of Mazatlan, but it was never finished.
The Mexican Government has at present under
consideration the completion of this line.
Eighty miles have already been built west of
Durango, but the remainder is in the mountain-
ous region, where some twenty tunnels of vari-
ous lengths and thirty large bridges will be
required. It is estimated that the cost of the
extension will be about $15,000,000, but the ex-
penditure will be warranted by the opening of
a rich agricultural, mining, and timber region.
The International at present serves the rich coal
fields of Coahuila, and furnishes the outlet for
the coal and coke of the famous San Esperanza
mines. Two-thirds of the revenue of the mines
is derived from its mineral traffic.
On these northern lines, all standard gauge,
trains are being run without interruption except
GOVERNMENT RAILWAYS 15
in a few districts, notably the line from Chihua-
hua to Ciudad Juarez, where the Villistas are
operating. At the time I was in Mexico (April
and May) trains between Monterey and Mata-
moras, Monterey and Tampico, and Monterey
and Torreon, were being operated without in-
terruption, although a train was blown up by
bandits between Monterey and Tampico, and
traffic suspended for one day on April 11.
Freight and passenger traffic has been aug-
mented to a large extent. From Saltillo to Pie-
dras Negras the coal traffic has increased
greatly, while passenger traffic is large and reg-
ular. The line from Tampico to San Luis Po-
tosi, which had been temporarily interrupted,
had been restored to operation. From this city
to Laredo traffic is normal and has been for an
extended period.
The lines south of Mexico City under govern-
ment control are: The Mexican Railway from
the capital to Vera Cruz; the Vera Cruz and
Isthmus; the Tehuantepec National, the Alva-
rado Railway, the Pan American, the Inter-
oceanic, the Mexican Southern, and several
smaller lines. The most important of these is
the Mexican Railway, the first line to put Mexico
in touch with the outside world, length 264
iiiili-s.
16 INDUSTRIAL MEXICO
The Mexican Railway is operated today un-
der conditions absolutely unique in railroading.
Running through the rebel-infested state of
Vera Cruz, it is protected throughout its length
by a system of forts, or blockhouses. There
are 70 of these blockhouses, each connected by
telephone, one about every four miles, built
close to the track, on raised ground, with watch
towers, manned with Carranza soldiers.
Ditches are excavated around each fort, and
these ditches are protected by barbed wire en-
tanglements strung at a reasonable distance
from the trenches and around them.
A Trip Through the Danger Zone
Owing to rebel activities no trains are oper-
ated on this line at night. I boarded the train at
the Buenavista station, Mexico City, on the
night of May 7, and we pulled out at 5 A. M.
with a military guard and made an uneventful
run across the central plateau to Esperanza.
On leaving this station we soon struck the most
perilous part of the run through the mountains,
a mile and a half above sea level, from Esper-
anza to Maltrata. The line is almost unsur-
passed from a scenic point of view, ascending
from the valley of Mexico to the summit of the
GOVERNMENT RAILWAYS 17
Sierra Madre, reaching its highest point at Aco-
cotla, near San Marcos, an elevation of 8,310
feet. At one point, at Alta Luz, the train is
2,919 feet higher than the topmost point of
Mount Washington, and we looked down upon
the valley spread out like a chessboard thou-
sands of feet below, as the train plunged around
dizzy barrancas, over spidery bridges spanning
profound caiions, or along the curving roadbed
cut in the solid rock of the mountain side.
All the way down the mountains we could
trace the road, its serpentine trail drawn in and
out of the valley and along the ridges, ever and
anon doubling upon itself, but ever descending.
At the Maltrata Incline the scenery is indescrib-
able, the eye dominating a thousand square miles
of mountain ridge and tropical valley, and from
the car window it looks for all the world like
the view from an aeroplane. One's mind shud-
ders at the possibilities of a stick of dynamite
carefully placed by a bandit at this point. A
few days before at Las Vegas, in these same
mountains, on the narrow gauge Interoceanic
Railway, a train was dynamited by Felicistas
and a number of persons killed.
Reaching Orizaba, we notice for a mile or so
along the line great piles of wrecked railway
equipment, the twisted frames of cars of every
18 INDUSTRIAL MEXICO
description, engine frames, wheels by the hun-
dreds with and without trucks, eloquent testi-
mony to past revolutionary activity. Here we
were joined by what they call the "explorers'
train " to protect us from rebel attacks through
the heavily wooded sections between this point
and Vera Cruz. This train consists of a loco-
motive and four cars filled with soldiers, with
soldiers also riding on the car roofs, fully armed,
and ready for instant action. Our train fol-
lowed behind, with another carload of soldiers
on the rear. We soon reach the most dangerous
pass on the tine, going through a series of tun-
nels and then creeping gingerly across the Met-
lac Bridge, 350 feet long, built upon a curve of
325 feet radius, on a 3 per cent, grade, 92 feet
above the river. Eight cast and wrought iron
pillars on masonry bases uphold it, and when
a long train is winding across it the horseshoe
effect is very striking. Shortly after this we
reached Cordoba, and from here to the coast the
run was through level country, Vera Cruz be-
ing reached at 6 :15 P. M., the journey from the
capital having taken a little over thirteen hours.
Other Southern Lines
The Mexican Southern Railway, also operated
by the government, runs from the city of Puebla
GOVERNMENT RAILWAYS 19
to the city of Oaxaca, and was built with British
capital. Two years were spent in completing
the line, which passes through an exceedingly
difficult country. The track parallels the In-
teroceanic line as far as Amozoc. The Inter-
oceanic Railway was incorporated in 1888 by a
special charter, the idea being to construct a
line from Vera Cruz on the Gulf to Acapulco on
the Pacific, but the line, which is narrow gauge,
is still far short of its ultimate destination.
The Tehuantepec National, recently pur-
chased from the Pearsons of London by the
Mexican Government, was completed in 1907.
The total length of the line, which crosses the
Isthmus of Tehuantepec from the Gulf of Mex-
ico to the Pacific, is 190 miles. There is also
a small branch line. Fine harbours have been
constructed at the ports of Salina Cruz on the
Pacific and Puerto Mexico on the Atlantic.
Large warehouses have been erected for the
storage of freight. At both places trains are
run up to the ship's side, where there are elec-
tric cranes for loading and unloading. There
is a line dry dock at Salina Cruz.
A large amount of traffic which formerly went
around Cape Horn or across the Panama Rail-
way now goes via Tehuantepec. This route is
1,200 miles shorter between New York and San
20
INDUSTRIAL MEXICO
Francisco than the Panama Canal. Not only is
it a shorter route to the Pacific ports of the
United States, but to the Orient and Australia.
Sugar cargoes, for instance, can be carried from
Hawaii to New York via Tehuantepec, a dis-
tance of 5,305 miles, instead of carrying them
around Cape Horn, over 12,000 miles. In the
rebuilding of the Tehuantepec Railway and the
improvement of the two ports $65,000,000 has
already been speirt.
Equipment in Service
The following equipment is at present in use
on the lines under government control :
Railways
["Locomotives . .
National Railways . . . < Passenger cars
[Freight cars . .
(Locomotives . .
National Tehuantepec. -j Passenger cars
[Freight cars . .
("Locomotives . .
Vera Cruz & Isthmus. 4 Passenger cars
[Freight cars . .
f Locomotives . .
Pan American < Passenger car
[Freight cars . .
("Locomotives . .
Vera Cruz to AlvaradoJ Passenger car
[Freight cars . .
Standard Narrow
gauge gauge
767
497
11,062
47
12
1,008
16
10
193
7
1
40
295
258
2,778
7
1
40
GOVERNMENT RAILWAYS 21
Standard Narrow
Railways gauge gauge
r Locomotives 54 11
Mexican Railway J Passenger cars .. 58 13
[Freight cars 569 105
Owned by shippers or ( Locomotives .... 158 ....
rented to shippers. .) Freight cars 3,263 ....
The Central Railway was among the first in
Mexico to adopt oil burning engines, and today
practically all the Mexican railways use them.
There are a large number of storage tanks, and
special oil tank cars are used for carrying pe-
troleum from the wells to these tanks.
The number of employes on the railways un-
der government control in Mexico is 31,588, of
which only sixty-nine are foreigners. Gross re-
ceipts for the year ended June 30, 1918, of the
government lines (8,119 miles), amounted to
$29,240,485 United States currency, and the
operating expenses were $19,151,808, net oper-
ating income therefore being $10,088,677.
CHAPTER II
PRIVATE RAILWAYS AND STEAMSHIPS
Southern Pacific of Mexico. Proposed new lines.
Difficult construction. Kansas City, Mexico and
Orient. Private freight trains. Small American
lines. Building a tropical railroad. Curiosities of
Mexican railroading. Statistics. Mexico to Japan.
New Orleans to Vera Cruz. New York to Tampico.
Coastline and ports.
THE tenacity, enterprise and foresight of Harri-
man resulted in the construction a few years
ago of the Southern Pacific of Mexico, which
owns approximately 1,000 miles of line in some
of the most beautiful country on this continent.
This line is the result of the consolidation into
a single system in Mexico of the lines controlled
by the Southern Pacific system of the United
States. The Mexican concession dates from
1905, and carried a subvention of $10,058 United
States currency per mile. This company has
virtually absorbed what was hitherto called the
Cananea, Yaqui River & Pacific, which had con-
structed lines from Nogales and Naco on the
Pacific-Arizona border to Cananea, a copper-
22
PRIVATE RAILWAYS 23
producing centre in the state of Sonora, and
down the west coast of Mexico on the Gulf of
California from the port of Guaymas to Mazat-
lan. continuing to Tepic, from which point it is
eventually to go to Guadalajara and Mexico
City.
The company suffered considerably between
1910 and 1913, the traffic loss for this period be-
ing estimated at $3,000,000, and the cost of main-
taining the property during the same period was
$510,000 in excess of the revenue collected. The
road in its progress southward crosses the
wealthy regions of the Mayo and Yaqui rivers,
which produce the best garbanza (chick peas)
in the world. It passes Navajoa, the centre for
this product, and then touches San Bias, in the
state of Sinaloa, where it connects with the
Kansas City, Mexico and Orient. At Manza-
nillo it connects with the National Railways of
Mexico.
The Southern Pacific of Mexico runs tri-
weekly trains from Nogales to Naco via Ca-
nanea, 120 miles, but the property of the rail-
road in this section has greatly deteriorated,
owing to the fact that it has been compelled on
several occasions to withdraw all trains and
practically abandon the roadbed. All the
bridges have been destroyed, and all rolling
24 INDUSTRIAL MEXICO
stock, roadbed, terminals and buildings will have
to be renewed at an early date. At one point
on this line, between San Bias and Culiacan,
H. J. Temple, the general superintendent, re-
built a bridge nine times. Every time the
bandits destroyed it, Temple rebuilt it. A pile
driver outfit was maintained at the bridge all
the time, and in one month the bridge was re-
built five times. The Southern Pacific of Mex-
ico is compelled to operate armoured cars on all
trains.
A glance at a railway map will show the
small portion of the route between Tepic and
Guadalajara which is still to be completed. The
intervening distance is only a few miles, but it
is in the difficult Sierra Madre country, requir-
ing a number of tunnels one of them nearly
three miles in length and much heavy grad-
ing. Representatives of the Southern Pacific
are now in the field arranging for the early com-
pletion of the line. When this is done the
Southern Pacific will have a direct connection
between its great system in the United States
and the entire west coast of Mexico a region
immensely wealthy in agricultural and mineral
products.
PRIVATE RAILWAYS 25
Difficulties of Construction
The difficulties which will have to be over-
come by the American engineers in completing
this short stretch between Tepic and Guadala-
jara are graphically illustrated by the descrip-
tion of the survey made under exactly similar
circumstances of the Canon de Tamasopo on
the Mexican Central by Max E. Schmidt, an
American engineer. "This canon is eighteen
miles long, with perpendicular cliffs many hun-
dred feet high on both sides.
"When the first surveys were made, the canon
was devoid of roads or trails. The sun hardly
ever penetrated the rockbed where the engineers
camped, and where a sudden rain in a few hours
might create a torrent that would fill the bottom
of the canon from side to side many feet deep,
and carry away every vestige of the camp out-
lit and survey. At night, the noise of the rocks
becoming detached from the cliffs above and
falling into the canon made sleep a succession
of nightmares. When the actual location was
made it was found that, in order to obtain
proper grades, the road would have to inter-
sect the cliffs at about half their heights. Diffi-
culties then began in earnest. On many days
not over 100 feet could be staked. All camp
26 INDUSTRIAL MEXICO
comforts had to be abandoned and night would
find the engineers camping on the cliffs, near
the last stake, swinging their hammocks over
rocks and precipices and securing what little
rest they could. The roadbed as now finished
is nearly all carved out of the solid rock. The
total track curvature is 12,248 degrees, and in
the aggregate only about one-fifth of the dis-
tance is on tangents. "
Another American Line
A gigantic monument to the pluck and re-
sourcefulness of American engineers is the
Kansas City, Mexico & Orient, running from
Kansas City to the Bay of Topolobampo on the
Pacific Coast of Mexico, a total of 1,451 miles.
It was promoted by Arthur E. Stilwell, who
carried large parties of prospective stockhold-
ers from the western states, and in this way sold
enough stock to carry on the construction work.
The company was incorporated in 1900 under
the laws of Kansas. Two sections are still un-
der construction one between Alpine, Texas,
and the Rio Grande, eighty-one miles, and the
other between Sanchez, in the state of Chihua-
hua, and Los Hornillos, in Sinaloa, 198 miles.
This line also taps large agricultural and min-
PRIVATE RAILWAYS 27
ing districts, it being estimated that there are
about 500 mines and prospects on the line, as
well as important haciendas producing sugar,
cattle, grain, timber and fruit. Owing to bandit
activities, service is at present irregular on the
stretch of line from the Rio Grande to Sanchez,
287 miles.
The construction of this line is all first class,
rails of seventy-five pounds weight, ties of Cali-
fornia redwood, tarred, bridges well piled and
provided with safe approaches and abutments.
On the first hundred kilometres of the line, start-
ing from the Pacific terminus at Topolobampo,
there is but one bridge of any importance,
namely, that crossing the Fuerte River, compris-
ing three truss spans, each measuring 300 feet
in length. Several smaller bridges are from
15 to 50 feet in length. On the second division,
from Chihuahua east, however, when the Sierra
is reached, the country becomes difficult to ne-
gotiate. In this long section tunnelling has
been both expensive and difficult, the longest
of the excavations being 1,520 feet, while there
are two others which measure 810 feet. East
of Chihuahua there is a bridge across the Chu-
ar River near Aldama, consisting of ten
spans of fifty feet deck girders on concrete piers
and abutments. Further on, crossing the Con-
28 INDUSTRIAL MEXICO
chos River, there is a steel girder bridge which
is comprised of seventeen spans of fifty feet
deck girders.
The length of the main line in Mexico, from
the Rio Grande to Topolobampo, is 633 miles,
which distance includes a portion of the Chihua-
hua & Pacific Railway, from Tabalaopa to Mi-
naca, 120 miles, operated under lease. The
terminus of the line at the bay of Topolobampo
is a magnificent port, completely mountain-
locked, measuring about seven square miles in
area, with a depth over the bar at the entrance
at low tide of about twenty-two feet.
Privately Operated Trains
A large part of the freight in Northern Mex-
ico is today handled in privately operated trains,
of which there are about thirty in service.
American mining companies have agreed to re-
build a part of the destroyed cars on condition
that such cars are to be used exclusively by
them for a period of two years, after which
they revert to the regular equipment of the serv-
ice. From the American border to San Luis
Potosi, 475 miles, on the government railways,
shippers are dependent on private trains for
quick service, freight being delivered in about
PKIVATE RAILWAYS 29
ten days, at rates 50 per cent, higher than the
regular government rate. As freight is not re-
ceived on private trains in less than carload
lots, shippers of smaller quantities who require
regular quick service must ship by express or
pay insurance. There are special express
trains leaving Nuevo Laredo on the Eio Grande
for Mexican points twice a week.
An effort is being made at the present time
to bring about an agreement with the United
States Railroad Administration for the through
billing of freight from points in the United
States and Mexico, and for the regular inter-
change of cars. Through billing has been dis-
continued since 1915. American owned freight
cars are, however, going across the border into
Mt xico under bond furnished by the shipper,
and bond is released as soon as the car is
returned to the United States. There are at
present about 500 American owned freight cars
in shops and in service in Mexico.
Extension of Lines
When I left Mexico City on May 7 the extra
session of the Mexican Congress had completed
its organization, and was starting to work on
the big questions which it is now compelled to
30 INDUSTRIAL MEXICO
deal with. One of the most important of these
is the extension of the railroads of the country,
as recommended by President Carranza, and
the purchase by the government of all or a ma-
jority of the stock of the United Railways of
Yucatan. This company was incorporated un-
der the laws of Mexico in 1902, and is a system
formed through the consolidation of lines for-
merly independent and then owned by henequen
(hemp) planters of the peninsula of Yucatan.
There are four divisions : the Northern, between
Merida, the capital of Yucatan, and Progreso,
its seaport, and between Merida and Izamal, all
standard gauge; the Eastern, between Merida
and Valladolid, with two branches, all narrow
gauge; the Western, connecting Merida with
Campeche, capital of the state of the same name,
and two branches, all narrow gauge; and the
Southern, between Merida and Peto, with one
branch, narrow gauge.
Since 1914 the Yucatan railways have been
operated by the local government of the State
of Yucatan. The share capital is 23,000,000
pesos ($16,500,000), in addition to which there
is an issue of $4,125,000 first mortgage 5 per
cent, redeemable gold bonds issued in London.
At the time of my visit to Yucatan on May 12
there were 500 miles of railway operating on
PRIVATE RAILWAYS 31
schedule time. Track was in good condition,
but rolling stock was badly in need of repair.
Three new lines are proposed for Yucatan.
The first would link the Yucatan system with
the territory of Quintana Roo, running through
Peto, Yucatan, Bacalar and Santa Cruz. Sur-
veys for this line were made under the rule of
Porfirio Diaz. The second extension, also pro-
posed by Diaz, would connect Santa Lucrecia,
in Vera Cruz, to Campeche, connecting with the
National Railway of Tehuantepec across the
isthmus. The third proposed line will run from
some point on the Southern Pacific, between
Magdalena and Hermosillo, to Ensenada, the
capital of Lower California. The completion
of these lines will enable troops to be trans-
ported by rail from any part of the country to
Lower California without entering the United
States.
The American Smelting and Refining Com-
pany is also planning the construction of a new
line to be operated in connection with its ex-
tensive mines and smelters in the states of Chi-
huahua and Durango, and will expend some
$5,000,000.
32 INDUSTRIAL MEXICO
Smaller American Lines
Another American owned line is the Mexican
Northern, with offices at 82 Beaver Street, New
York, which has a total track of seventy-eight
miles and runs from Escalon, in Chihuahua, to
Sierra Mojada, connecting that region with the
Mexican Central. This line is now under the
control of the Mexican Government. The Mex-
ico Northwestern Railway, incorporated in 1909
under the laws of Canada, with offices at 115
Broadway, New York, was formed for the pur-
pose of providing northern Mexico with rail-
road facilities. It has 476 miles, and is still
privately operated. It owns the following
lines: The Chihuahua & Pacific (incorporated
in 1897 in New Jersey), the Sierra Madre & Pa-
cific, a lumber line, and the Rio Grande Sierra
Madre & Pacific, which owned several lines in
Sonora and Chihuahua all rich in agricultural,
mineral, and forestry resources.
The Parral & Durango Railway was incor-
porated in Colorado in 1898, and runs from
Minas Nuevas, Chihuahua, to Paraje Seco, Du-
rango, fifty-nine miles, with a short branch line
to Parral. The head offices of this line are at
Pittsburgh. The Potosi & Rio Verde, narrow
gauge, is another American enterprise, with of-
1'KIVATE RAILWAYS 33
fices at 82 Beaver Street, New York. This runs
from San Luis Potosi to Ahuacatal, thirty-eight
miles, and is at present under the control of the
Mexican Government.
Building a Tropical Railroad
It was a Kansas City man, Dennis W. Hed-
rick, who built the bridges on a line which
crosses more rivers and streams than any other
railway on the North American continent. This
was the Vera Cruz & Pacific Line, completed in
Il)u3, and now part of the Mexican Government
railways, extending from Vera Cruz to Santa
Lucrecia, a station on the National Tehuantepec,
midway between the Gulf of Mexico and the
Pacific. The distance was only 242 miles, but
the road crosses six large rivers and numerous
streams, which necessitated the building of 300
steel bridges. The largest of these crosses the
Papaloapan River at El Hule, the superstruc-
ture consisting of five spans, each 170 feet in
length, a draw span of 225 feet and two steel
approaches of 245 feet each, making a total
length of nearly one-third of a mile, and con-
suming 1,250 tons of steel.
34: INDUSTRIAL MEXICO
Curiosities of Mexican Railroading
There are a number of reasons, other than
those relating to natural obstacles, which make
railroad building in Mexico expensive. The
peculiarities of the Mexican peon is one of these.
During the construction of a line in the South
thousands of wheelbarrows which were imported
for grading purposes had to be thrown away be-
cause the peons would not use them unless per-
mitted to take the wheels off and carry the bod-
ies on their backs.
Government requirements for the construc-
tion of new railways have also in the past caused
large unnecessary expenditures. When I was
travelling on the Mexican Railway from Mexico
City to Vera Cruz on May 8 I was informed
that the cost of the road had averaged $136,000
per mile probably the most expensive railroad
in the world and that while only 264 miles
long it had taken twenty years to build the road.
A little inquiry soon cleared up the mystery.
The government in granting the concession had
insisted that the railroad be constructed from
both terminals simultaneously. Notwithstand-
ing the vehement protests of the English con-
tractors, they were compelled to transport rails,
parts of locomotives and other machinery on
PEIVATE RAILWAYS 35
mule-back or carts over 250 miles inland, over
rugged mountains, some of them over 8,000 feet
high, and then the track had to be laid back-
wards to meet the section which was working
up from the coast.
Some Statistics
That the freight and passenger traffic of Mex-
ico is growing, despite bandit and rebel activi-
ties, is evidenced by the statistics of transpor-
tation of commodities on the railways under
government control representing only 8,119
miles for the year ended June 30, 1918. Here
are the figures, in metric tons: Forestry pro-
ducts, 393,968 tons; agricultural products,
1,236,719 tons; animals and animal products,
216,443 tons; inorganic products, such as lime,
cement, asphalt, coal and coke, oil, minerals,
etc., 1,935,105 tons; general merchandise, 372,-
473 tons. For a country containing a popula-
tion of only 15,000,000, of which a very large
jHTcontage are Indians and half-breeds living
under the most extreme primitive conditions, a
country which, moreover, has been tom up by
ii i no years of revolutions, these figures are re-
markable.
36 INDUSTRIAL MEXICO
Shipping Facilities
Prior to the European war, the Japanese ves-
sels that plied between Japan and the United
States and Mexico touched only at Pacific coast
ports. A new service has now been inaugur-
ated, the vessels going directly from Japan to
San Francisco, thence to Mexican ports and
then to Panama. Passing through the canal,
they will then call at Vera Cruz and Tampico
and afterwards proceed to New York, making
the return trip in the order named.
Arrangements have been made for the estab-
lishment of steamship traffic between Victoria,
B. C., and ports on the west coast of Mexico.
At present it is necessary to transship all
freight for Mexican ports at San Francisco, but
assurance has been given by the company that
if sufficient business develops to warrant it, a
direct steamer will be put on the route, which
will eliminate the delay at the place named.
The cargoes from Vancouver are expected to
consist of paper pulp, canned salmon, lumber,
coal, etc. On the other hand there is a demand
in British Columbia for numerous Mexican
products, such as coffee, tobacco, rubber, vege-
table oils, fibres, hard woods, fresh and dried
bananas, and other tropical products.
DRAWBRIDGE AT SALINA CRUZ
ELECTRIC CRANES AT SALINA CRUZ
PRIVATE RAILWAYS 37
Within a short time the steamship service
which formerly existed between Guaymas and
Salina Cruz will be renewed. Four vessels are
now being overhauled for the restoration of this
service, which will be most important to the
Pacific littoral and which will emphasize the
value of the Tehuantepec Railway as an inter-
oceanic system. The steamship company has
sent a financial representative to the Central
American countries to solicit business for the
new line.
The National Navigation Company of the
Pacific has resumed the operation of its ves-
sels between various points on the West Coast.
Guaymas and Manzanillo are the terminal
points and calls will be made at Santa Rosalia,
Las Penas, La Paz, Mazatlan, San Bias, etc.
The Mexican Fruit Steamship Co. has re-
sumed the operation of its vessels between
American ports and those on the eastern coast
of Mexico, including Matamoros, Tampico, Vera
Cruz, Puerto Mexico, Frontera and Progreso.
The operation of this line had been suspended
because of the war, and as a consequence, the
banana growers of certain portions of Mexico
had been prevented from market ing their crops.
There is now a regular steamship service be-
tween New Orleans and Vera Cruz, and between
38 INDUSTRIAL MEXICO
New York and Vera Cruz and Tampico, stop-
ping en route at Havana and Progreso, Yuca-
tan.
Coast and Ports of Mexico
Mexico has a coast line of 1,400 miles along
the Mexican Gulf, 327 miles on the Caribbean
Sea and no less than 4,574 miles on the Pacific
Ocean, including the Gulf of California between
the peninsula of Lower California and the Mex-
ican mainland, measuring indentations.
On the Gulf of Mexico the chief ports are:
Matamoros, Tampico, Tuxpam, Vera Cruz,
Puerto Mexico (Coatzacoalcos), Frontera, Cam-
peche, and Progreso.
On the Caribbean Sea there are two ports of
entry: Ascension and Espiritu Santo, also
Payo Obispo for government transports.
On the Pacific side there are the ports of
Guaymas, Topolobampo, Altata, Mazatlan, San
Bias, Manzanillo, Acapulco, Puerto Angeles, Sa-
lina Cruz, Tonala, and San Benito, on the main-
land, and Ensenada and La Paz on the peninsula
of Lower California.
CHAPTER III
OIL INDUSTRY
Who's who. New developments. Submarine de-
posits. Rentals. Evolution of industry. Location
of fields. Varieties of fuel oil. Output of each
company. Exporting companies.
" MINES of liquid gold" some one has truly de-
scribed the oil fields of Mexico, which in the
year JL918 produced 63,828,326 barrels of pitn>-
teum, each barrel contamhyj^fojjff-two gallons.
Although oil was first exploited in Mexico as
far back as 1857, the industry as we know it
today really began in 1900, when E. L. Doheny
and C. A. Canfield, both Americans, began work
in the State of San Luis Potosi near the Vera
Cruz boundary, at Ebano. In that year they
purchased a large tract of land, and in the
spring of 1901 built the first modern oil well
drilling plant in Mexico. Drilling operations
started on May 1 and on the 14th the Mexican
Petroleum Company, the concern organized by
Doheny and his associates, completed their first
successful oil well. Other wells were drilled in
rapid succession, a contract to sell oil to the
39
40 INDUSTRIAL MEXICO
Mexican Central Railway was arranged, and in
1905 deliveries were being made to that railway
at the rate of 6,000 barrels a day. Then Doheny
and Canfield opened up the Casiano district, on
which property they drilled the world's great-
est producer, known as Casiano No. 7, the total
production of which to September 11, 1917,
amounted to 61,580,000 barrels, to which it has
since added 600,000 barrels monthly.
"Who's Who" in Mexican Oil
The Mexican Petroleum Co., Ltd., and its sub-
sidiaries (the Doheny interests) are at present
the largest producers, and best equipped as re-
gards camps and facilities for transportation
and storage. Their product is sold mostly in
bulk to American companies along the Gulf
States, although a good trade is also done with
Brazil. In recent years this company has un-
dertaken to market its products in the United
States, and has established distributing depots
in New York and on the Mississippi River near
New Orleans. The output of the Doheny organ-
izations for last year was as follows : Huasteca
Petroleum Co. (Mexican Petroleum Co., Ltd., of
Delaware) produced 20,186,459 barrels in 1918,
compared with 17,325,171 barrels. Its allied
OIL DERRICK IN TAMPICO OILFIELD, HAUSTECA PETROLEUM
COMPANY
'STRIKING OIL." CERRO AZUL WELL OF THE HUASTECA
PETROLEUM COMPANY
OIL INDUSTRY 41
company, the Mexican Petroleum Co. of Cali-
fornia, produced 1,445,977 barrels, against
3,125,702 barrels.
NYxt in importance to the Doheny organiza-
tion is the Mexican Eagle Oil Co., Ltd. (El
Aguila), of which Lord Cowdray is the princi-
pal owner. This is the concern in which the
Royal Dutch Shell has purchased a large inter-
est. El Aguila produced 16,910,646 barrels in
1918, compared with 16,922,323 barrels in 1917.
Several new companies have recently entered
the field, including the Cia Mexicana de Petro-
leo, La Libertad (Island Oil & Transport Cor-
poration), and the Cortez Oil Corporation (Port
Lobos Petroleum Corporation). The compan-
ies with an output in excess of 500,000 barrels
were as follows: Penn Mexican Fuel Oil Co.,
6,854,081 barrels in 1918, against 4,129,297 in
1917; Freeport & Mexican Fuel Oil Corpora-
tion (Sinclair Gulf Corporation), 4,119,654 bar-
rels, against 4,076,982; East Coast Oil Co.,
3,457,236 barrels, against 3,143,221; Cortez Oil
Corporation, 2,161,757 barrels; Mexican Gulf
Oil Co., 1,728,190 barrels; La Libertad, 1,550,-
869 barrels; Mexican Petroleum Co. of Cali-
fornia, 1,445,977 barrels; Texas Co., 1,279,747
barrels, against 2,315,433 ; Cia Petroleo Tal Vez
(Southern Oil & Transport Corporation), 1,152,-
42 INDUSTRIAL MEXICO
064 barrels, against 989,561 ; International Pe-
troleum Co., 609,734 barrels, against 619,828;
Tampascas Oil Co., 578,479 barrels, against
174,925; Panuco Boston Oil Co. (Atlantic Re-
fining Co.), 531,511 barrels, against 828,067.
At the present time there are 155 petroleum
companies in operation in Mexico, though the
actual production is confined to a few large
companies. The potential daily production of
Mexican oil fields on February 28, 1919, was
1,592,740 barrels, but owing to lack of transpor-
tation facilities the actual production was only
174,872 barrels daily, or 10.98 per cent, of the
potential production. There is no difficulty in
getting the oil from the wells to the coast, as
they are located near shipping points, and all
the big producers are provided with pipe lines,
there being over five hundred miles of such lines
in the comparatively limited area in which are
included the greater number of the producing
wells. Ocean transportation is the difficulty,
and this is being met by the construction of oil
carrying steamers as rapidly as possible. The
number of wells drilling on February 28, 1919,
was 114, and on the same date there were 299
productive wells. These figures compare with
141 wells drilling and 339 productive wells on
December 31, 1917.
OIL INDUSTRY 43
During the month of June, 1919, over 150 ^
tank boats left the ports of Tampico, Tuxpam
and Lobos carrying in the neighbourhood of
eight million barrels of oil. The July, 1919,
shipments were about ten millions of barrels.
New Developments
The Huasteca Company now has 361 kilome-
tres of pipe line, the Aguila has 343 kilometres,
the Mexican Gulf 100 kilometres, and the Oil
Fields of Mexico 89 kilometres. New shipping
stations have been completed during the past
ye;ir, vessels lying off shore and receiving their
cargoes of oil by means of submarine pipes.
The Corona Company, a subsidiary of the
Royal Dutch Shell, is constructing at Tampico
what will be the largest and most modern re-
fining plant in Mexico. The capacity of the re-
finery will be from 5,000 to 6,000 barrels daily.
Another company, a new one, is also planning
an extensive refinery. During the past three
months seventy new wells were commenced in
the Tampico region, four of which opened up
with large productions. The importation of oil
shows a constant and steady increase, the only
acle to definite expansion being the lack of TC^^^V
sufficient ships, though this is now being rein-
44 INDUSTRIAL MEXICO
edied by the release of vessels that had been
engaged in war activities. During the year
1918 there was received at New Orleans alone
petroleum from Mexico of a value of some
$40,000,000.
The Mexican Government recently dispatched
an engineer to make a study of the petroleum
indications in the State of Colima. He has now
reported that he has discovered petroleum in-
dications of great richness in the vicinity of
the Hacienda de Santa Rosalia, surface indi-
cations of seepages, etc., covering many square
miles of territory, while the geological forma-
tions were similar to those of the developed pe-
troleum regions elsewhere.
Another Mexican government engineer re-
ports the discovery of important deposits of pe-
troleum near the port of Altata on the Gulf of
California in the State of Sinaloa. Applications
for concessions to exploit these discoveries are
now being made. These new discoveries are
on the same parallel of latitude with the de-
posits on the coast of the Gulf of Mexico, and
indicate the presence of oil right across the re-
public. On one of the islands of the coast near
Altata a natural geyser of petroleum has been
discovered.
Other deposits have been discovered in the
OIL INDUSTRY 45
State of Chiapas, and the Mexican Government
has appointed a commission of experts to make
a geological survey.
The first discovery of a deposit of paraffine
on the American continent has been made re-
cently in the State of Chihuahua, not far from
the border. The bed has been traced for ten
kilometres in extent, and analyses of samples
show 93 per cent, of the pure mineral. Petro-
leum with a paraffine base has also been dis-
covered in the same region. The greater por-
tion of the oil produced in California, the south-
western portions of the United States, and also
in Mexico, has an asphalt base. It is that with
a paraffine base that produces a good grade of
illuminating fluid. Oil has also been discovered
in the elevated region of the State of Durango,
on the eastern slope of the Sierra Madre.
The Lorena Petroleum Company has recently
brought in a new well which produces upwards
of 12,000 cubic metres of oil daily. A new well
was also brought in at Panuco, Vera Cruz, hav-
ing a capacity of 16,000 cubic metres daily, or
about 100,000 barrels. The well spouted over
100 feet in the air and the surrounding land
was flooded with petroleum before it could be
controlled by the valves and pipe line provided
for just such an emergency. A new well with
46 INDUSTRIAL MEXICO
a capacity of 30,000 barrels daily was reported
to have been brought in recently at Tantoyucan,
Vera Cruz.
Submarine Oil Deposits
Announcement has been made that the Mexi-
can Government will issue a concession for the
exploitation of the petroleum deposits that are
known to exist beneath the waters of the Gulf
of Mexico. Geological study and exploration
have demonstrated the indication of large quan-
tities of oil off the eastern coast, which will
prove a great economical addition to the oil re-
gions. It is claimed that the exploitation of
submarine oil is cheaper than the sinking of
wells on land.
A contract has been made for the sale of 50,-
000,000 barrels of petroleum to an American
company for use on railways in the United
States. This is said to be an initial order.
Papers filed in Mexico City reveal the organiza-
tion of the Mexican-Belgian Petroleum Com-
pany with a capital of $4,000,000 American
money. The company is negotiating for a large
area of petroleum lands in the northern portion
of the State of Vera Cruz. One can readily un-
derstand the eagerness of foreign investors to
OIL INDUSTRY 47
engage in the petroleum industry in Mexico
when the Aguila Company is paying 25 per cent.
dividends and the Royal Dutch Shell is distrib-_
uting dividends ranging from 37 to 48 per cent.
Rentals Paid for OH Lands in Mexico
Official figures regarding the amounts paid
to owners of oil lands as rentals have been com-
piled by the Secretary of Industry and Com-
merce of Mexico, and show the following:
Twenty-four companies pay no rent, owning
their land in fee simple.
Fifty-four companies pay an annual rental of
less than five pesos ($2.50) per hectare
acres). These companies occupy nearly seven-
eighths of the oil lands under operation. The
total area rented by them is 3,325,490 acres, out
of a total of 4,064,870 acres. On this they pay
annual rentals amounting to $589,324 American
money, or a little over 10*4 cents per acre.
Twenty-two companies pay annual rentals of
less than $10 per hectare upon 138,340 acres,
amounting to $166,254 American money.
One hundred and twenty -two companies pay
more than $10 per hectare. They occupy 175,-
087 acres and pay a total annual rental of
143,457 American money.
48 INDUSTRIAL MEXICO
The total area occupied by all the companies
is 4,064,870 acres and the total annual rent is
$3,449,033 American money.
Several companies pay very high rentals,
which serve to increase the average. One pays
$4,166 American money per hectare, another
$1,837, another $2,016, while several pay from
$500 to $1,000.
Exports of crude petroleum and refinery prod-
ucts from Mexico in 1918 amounted to 7,677,278
metric tons, valued at $70,278,776 American
money, compared with 6,426,036 tons valued at
$26,838,063 American money, in 1917. The in-
crease in value reflects the higher prices that
were paid for Mexican oil. The United States
share of the Mexican oil exports in 1918 was 73
per cent.
Evolution of the Oil Industry
In 1857 a group of individuals, mostly mer-
chants, in the village of Macuspana, Tabasco,
entered into an agreement that each should
furnish "a hundred loads of cacao " with which
to procure "sheets of forged iron" to be used
in the making of receptacles for the storage of
"illuminating oil" that flowed with the water
from a spring near the village and which the
natives used for illuminating purposes.
T
MEXICAN DWELLINGS IN TAMPICO
AMERICAN DWELLINGS IN TAMPICO
OIL INDUSTRY 49
These merchants obtained within a short time
great profits from the enterprise, and as they
could not dispose of all the oil at the locality
of its source, they visited for this purpose the
neighbouring cities. Thus it can be seen that
ii if only as a beginning on a very small scale,
oil was already being exploited in Mexico as far
back as 1857.
After a lapse of eight years, in 1865 a per-
mit was granted by the Federal Spanish Gov-
ernment to a Spaniard, Ildefonso Lopez, to ex-
ploit the deposits of bituminous and oleous sub-
stances at San Jose de las Rusias, State of
Tamaulipas, a place not far from Soto de la
Marina, in the eastern portion of the State
named.
The Spaniard, Lopez, dedicated himself al-
most wholly to the exploitation of the " pitch "
or asphaltum which abounds in those regions,
and also, like his predecessors, the mineral oil
that flowed spontaneously.
In view of the good results obtained by him,
a group of Mexican planters organized a com-
pany which bore the name of "The Development
Company of the Gulf of Mexico. " Even if the
constitution of this company indicated that the
ostensible object of its activities was, among
others, the extraction of coral from the shoals
50 INDUSTRIAL MEXICO
near the coast of Sotavento, it really dedicated
itself exclusively to the exploitation of the pe-
troleum fields located near Furbero, Papantla,
State of Vera Cruz. However, the financial ob-
ject of this enterprise was never attained, in
spite of the most rational and scientific methods
employed in the operations, because once the
capital invested had been exhausted, no new
oil indications appeared, and the organizers
abandoned the project, notwithstanding the fact
that in the localities concerned there were
places where oil covered the surface of streams.
As a result of this, in 1878, after several years
of neglect, Dr. Autrey, who was exploring those
regions, came upon the abandoned works and
staked his claim upon the springs. Immedi-
ately after he had secured the permit, he en-
deavoured to organize a company for the pur-
pose of exploiting them. Notwithstanding
great efforts, he failed in his object, and there-
upon made a special trip to the United States
in order to offer for sale, to one of the petro-
leum companies that were then operating in
California, what he pompously called his
"mines of liquid gold in Mexico." Neverthe-
less, he did not succeed in attaining his object.
From this time down to 1883, we have nothing
OIL INDUSTRY 51
sure that could serve to indicate the progress
he activities undertaken towards the exploi-
tation of petroleum. In that year there was or-
ganized at San Juan ^Bautlsta (now Villaher-
mosa), capital of the State of Tabasco, a com-
pany with a capital of one million pesos v of
which Senor Simeon Sarlat, Governor of Ta-
basco, was president. This company had for
its object the exploration of the petroleum
springs near Macuspana, the existence of which
was presumed on account of the exterior indi-
cations to which we have already referred. The
location for the wells was chosen in an ill-
advised manner, and by preference near the
pitch or asphaltum mines, which abounded in
this region, and the drilling operations were be-
gun at the place supposed to be best suited for
it, located at a small farm which was then the
property of Senor Sarlat, and very near the
place where Pearson now has established the
most important camp in the State. However,
all was in vain; and the funds of the company
were exhausted without obtaining positive re-
sults. This discouraged and misled the opera-
tors to such an extent that
I H-ddl workjjven that whicKwa8_nece88ary
for the removal and collectToiTbf the machinery,
52 INDUSTRIAL MEXICO
which, exposed to the rigours of that climate,
was soon converted into heaps of rusty and use-
less iron.
Almost simultaneous with this undertaking,
the famous English empire builder, Cecil
Rhodes, was asking for a corresponding permit
for the exploitation of the carbides of hydrogen
in the subsoil of a great extension of land lo-
cated in the district of Papantla, State of Vera
Cruz, for which purpose he had gathered to-
gether, in New York, a group of foreign capital-
ists, who, in view of the fabulous accounts that
were circulated regarding the importance of the
oil indications in Mexico, undertook an enter-
prise that was to be dedicated to the explora-
tion and exploitation of Mexican oil, conferring
the local management upon Rhodes. This or-
ganization was called ' * The Mexican Petroleum
and Liquid Fuel Company," and like its prede-
cessors in the same line, J^JPaLlejl after using
up a considerable capital; and like the one or-
ganized at Tabasco, it abandoned its machinery.
After this succession of failures there came
naturally a period of pessimism regarding the
oil industry in Mexico. This lasted until 1900,
when the American capitalists, E. L. Doheny
and C. A. Canfield, began work in the State of
San Luis Potosi.
OIL INDUSTRY 53
Location of the Fields
The chief Mexican oil fields can be grouped
in five districts :
vt. The Ebano district, about forty miles west
of Tampico, largely the property of the Mexican
Petroleum Company. The oil has a heavy per-
centage of asphaltum, and averages about twelve
degrees Baume (0.986 specific gravity).
II. The Panuco district, including the Topila
Region, also producing a heavy oil averaging
about twelve degrees Baume. According to V.
R. Garfias, oil of such density cannot be econom-
ically transported by pipe lines.
III. The Huasteca district south of Tampico,
in which the famous "Casiano," "Cerro Azul,"
and "Potrero del Llano " wells occur. This oil
is lighter than the Ebano and Panuco grades,
averaging from nineteen degrees to twenty-one
degrees Baume (from 0.9395 to 0.9271 specific
gravity), and thus admits of being transported
in pipe lines. "Dos Bocas No. 3" and "Po-
trero del Llano " belong to the type of well-
known "gushers'* and have each produced at
the rate of as much as 100,000 barrels a day.
Even higher figures have been given for short
periods.
IV. The Tuxpam district, including the Fur-
54 INDUSTRIAL MEXICO
bero region, southwest of Tuxpam. The oil
from this district is, as a rule, much lighter than
those of the more northern fields.
V. The Tehuantepec-Tabasco district, still
further to the south and east in the neighbour-
hood of Minatitlan, where the Pearson interests
have a refinery.
The petroleum zones of Lower California and
those in the north of Mexico are still unexplored.
The Panuco region is characterized by three
essential points the minor depth at which the
oil deposits are reached (600 to 800 metres),
the relatively few failures in the drilling of
wells in that region, and the short duration of
the production of the wells. The Tuxpam re-
gion, on the other hand, has shown signs that
the deposit from which the oil is extracted,
which is of dolomite lime, is more extensive, as
shown by the long periods of productivity of
its wells. The Tabasco-Chiapas region, al-
though it has not produced considerable quan-
tities so far, has a splendid future on account
of the magnificent quality of its products, which
have bases of paraffin, very light, and contain-
ing enormous proportions of illuminating oil.
The deposits discovered on the Isthmus of Te~
huantepec up to date have been reached at com-
paratively minor depths.
OIL INDUSTRY 55
Great Variety of Types of Fuel Oil
Much misunderstanding with regard to the
statistics concerning the export of petroleum
from Mexico is due to lack of information with
regard to the various grades of so-called "fuel
oil" likely to be included in the shipment.
Specifications for heavy oil to be used as fuel
are given in a pamphlet issued by the Bureau
of Mines, entitled "Heavy Oil as- Oil for In-
ternal Combustion Engines," by Irving C. Al-
len, Washington, 1913. The following easily
attained requirements, drawn from this author-
ity, are significant as admitting a great variety
of grades, while more recent specifications are
even broader:
1. Oil is available for engines if mobile at
degrees F.
2. Sluggish oils are available if heated before
being introduced into the engine.
3. Four per cent, of material insoluble in
xylcne, and 3 per cent, of coke residue may occur
without disqualifying the oil.
4. The flash-point may vary from sixty de-
grees to 100 degrees C.
5. The Maximum specific gravity is .92, which
admits at once many grades of oil.
56 INDUSTRIAL MEXICO
6. The heavier oils can be mixed with a small
amount of lighter oil (2 per cent, of "gas oil"
is usually enough), and thus be made available.
7. Sulphur may occur up to 0.75 per cent.
(Recent United States specifications admit l l / 2
per cent.)
8. Paraffin may occur up to 15 per cent.
9. Asphaltum may occur up to 15 per cent,
and even more.
These specifications make available a great
many types of Mexican fuel oil, inasmuch as vir-
tually all mobile crude oil can be burnt in the
modern heavy-oil engine. Asphaltum oils con-
taining as much as 20 per cent, of asphaltum
have been burnt in certain types of the Diesel
high-compression engine. It is usual, however,
to distil the heavier grades until the tar residues
and cokes are segregated, and to use a special
ignition oil of a low flash-point for starting the
engines. When the sulphur content is too large,
according to the specifications, the per cent, can
be properly lowered by the admixture of oil
with a smaller sulphur content. As a matter of
fact, lighter oil is nearly always mixed with the
heavier Mexican oils before they are used as
fuel.
One ton (2,000 pounds) of ordinary bitumi-
SCHOOLHOUSE ESTABLISHED BY HUASTECA PETROLEUM
COMPANY AT TAMPICO
RAILWAY STATION AT SAN LUIS POTOSI
OIL INDUSTRY 57
nous coal has been estimated as equivalent to
3.6 barrels of oil for railroad purposes, and,
according to one steamboat test, to 3.5 barrels.
Steaming coal contains 7,500 calories per gram,
while the average Mexican fuel oil, when prop-
erly mixed for use, would contain about 10,500
calories per gram. Moreover, one ton of ordi-
nary steaming coal occupies forty cubic feet,
while one ton of fuel oil occupies thirty-five
cubic feet. If the high efficiency of Diesel en-
gines is introduced as a factor, the ratio in the
value of fuel oil to coal is five to two ; whereas,
for naval purposes, which include the consider-
ation of bunker space, the ratio has been esti-
mated to be as high as four to one.
It is useful in this connection to know the
principle of operation in a Diesel engine. The
fuel oil is sprayed into the cylinder, where, in-
stead of exploding as in gasoline engines, it
simply ignites, as a result of the heat of air
compressed at the rate of from 500 to 800
pounds to the square inch. One pound of oil
I in the Diesel engine equals two and one-
half pounds used for a turbine, and four pounds
of ordinary coal used for steam production.
The Diesel engine is constantly being developed
and improved, and will undoubtedly increase
from year to year the use of heavy Mexican oil.
|*J || |J fi isaj 1 1 Jjftj s**! Is h*| E
58
i
: : 1 f :M : : :3 : 3 :
'
60 INDUSTRIAL MEXICO
Out of the total of 7,677,277 tons of oil ex-
ported in 1918, 6,405,731 tons, or about 84 per
cent., were shipped to the United States. The
National Railways of Mexico in 1918 consumed
2,637,543 barrels of oil as fuel. This does not
include shipments from the refineries to other
government railways in Mexico, or to privately
operated railways.
The exports of oil from Mexico in February,
1919, of thirteen companies totalled 4,403,609
barrels, and the same number of companies in
March exported 4,307,469 barrels. The total
oil exports from Mexico in April, 1919, aggre-
gated 6,254,572 barrels, and in May, 6,897,962
barrels. In June, 1919, Mexican oil exports
amounted to about 8,000,000 barrels, and in
July they were about 10,000,000 barrels.
CHAPTER IV
MINES
Operations resumed. New enterprises. Japanese
invasion. The richest deposits. Coal lands. Statis-
tics.
WHILE there are still many mines shut down in
Mexico on account of bandit activities, and a
number of those operating are compelled to em-
ploy armed guards to protect their property,
still the situation is considerably improved, the
total exports of minerals for the year 1918 be-
ing $34,716,000 American money, exclusive of
oil products. Treasures of incalculable richness
lie beneath the surface in every State in Mexico,
and although innumerable mining enterprises
have exploited the metal-bearing regions for
nearly four hundred years, and have extracted
fabulous quantities of precious metals, by far
the greater part is yet to be laid bare.
During my trip through Mexico, from the
Texas border to Vera Cruz, in April and May,
many of the mines which had been shut down
for long periods were preparing to resume, and
a number of new projects were under way. The
61
62 INDUSTRIAL MEXICO
large smelter of the American Smelting and Re-
fining Company at Chihuahua, which reopened
in April, 1918, after having been closed for two
years, continued operations throughout the past
twelve months, smelting about 240,000 tons of
ore. Most of the mines in Chihuahua are de-
pendent upon this smelting plant, and are not
able to run when it is closed. The cyanide plant
of the Alvarado Mining and Milling Company
at Parral, in Chihuahua, was. also in operation
during 1918.
Extensions and improvements to the smelter
of the American Smelting and Refining Com-
pany situated five miles from Chihuahua, made
good progress during the past year, including
the completion of all the concrete work neces-
sary for the mechanical handling of great quan-
tities of ore. When finally completed this will
be the largest smelter in the world, costing
$3,000,000. The San Francisco Mines of Mex-
ico (British) at Parral, Chihuahua, installed
and began operating a flotation process mill
in 1918. The Cusi Mining Company, an Amer-
ican concern at Cusihuirachic, have started con-
struction on a similar mill for the flotation of
its lower grade silver ores.
The principal silver mines of the State of
Hidalgo are now in full operation, and the
MINES 63
smaller ones are preparing to resume. The
mines of Pachuca, capital of the State, produce
more silver than any other single district in
Mexico, and have kept up their production
throughout the revolutionary troubles with only
temporary suspensions for brief periods. It is
a remarkable fact that from 1877 to 1912 the
silver output of Mexico showed a steady in-
crease from year to year, and that in the seven-
teen years ending 1913 Mexico produced consid-
erably more than a billion ounces of silver.
In many parts of Mexico mining companies
which have been operating on a reduced scale
are returning to normal. At the great copper
camp of Cananea in Sonora the Greene-Cananea
resumed operations in December, 1917. The
Moctezuma Copper Company, controlled by the
Phelps-Dodge interests, began operating with
a full force of miners in August, 1918, at Naco-
zari, and is steadily increasing its operations at
its Promontorio mines, near Lampazos, in the
Moctezuma district. The El Tigre silver-gold
mine, also in the Moctezuma district, had a large
production in 1918. The Las Chispas mine,
near Arizpe, resumed work in 1918.
Among those seeking investments at the pres-
ent time in Mexico are many mining groups,
capitalists and engineers, from the United
64 INDUSTRIAL MEXICO
States and elsewhere. During my stay in Mex-
ico City a party of twenty-five arrived from
New York, and after a few days in the capital
went on to the mining regions of Jalisco and
Guanajuato.
The Japanese Invasion
One of the most significant events from a min-
ing point of view, and one of the greatest pos-
sible interest to manufacturers of mining, agri-
cultural, and other machinery, was the Arrival
in Mexico City in April and May, 1919, of sev-
eral delegations representing the largest iron
and steel plants in Japan, whose intention was
announced to be the purchase of the leading iron
ore deposits in Mexico. The deposits in which
they were particularly interested were those in
the famous Iron Mountain near the city of Du-
rango, in the State of the same name. This
mountain is 5,000* feet long, 300 to 400 feet in
height, the average width being about 1,100 feet,
and it is said to range from 60 to 70 per cent,
pure ore. The estimated weight of the mass is
600,000,000 tons.
Excavations made at distances of as much as
twenty-five to thirty kilometres in any direction
disclose the presence of the same iron ore at
MINES 65
varying depths. A branch of the National Rail-
ways runs directly to the foot of the mountain,
and the ore can be quarried out and loaded by
gravity directly into the cars. The nearest coal
deposits are in the State of Coahuila, some 600
miles by rail on the same line. Petroleum has
recently been discovered within a short distance
of the iron mountain, and this may solve the fuel
problem.
The next iron ore deposit to which the Jap-
anese will turn their attention is on the coast of
the State of Colima, but there is no coal on the
west coast, although oil has been found in sev-
eral locations. Having secured the raw mate-
rial, the Japanese propose to convert it into pig
iron and steel, and this in turn they propose to
turn into manufactures of all kinds, especially
industrial and agricultural machinery. It is
said that they will import Japanese labourers
into Mexico, and they claim certainly not with-
out reason that they will be able to undersell
their American and other foreign competitors.
Los Angeles capitalists have also organized a
company to develop iron ore deposits in Du-
rango.
66 INDUSTRIAL MEXICO
The Richest Deposits
Before the revolution Mexico's output of sil-
ver alone amounted to 70,000,000 ounces an-
nually. Much of the silver ore found in Mex-
ico is mixed in considerable quantities with gold,
copper, or lead. The principal silver camps
of Mexico are in the States of Hidalgo, Guana-
juato, Zacatecas, Chihuahua, Sinaloa, Guerrero,
and San Luis Potosi. Silver mines are also
worked in Mexico, Puebla, Morelos, Queretaro,
Oaxaca, Jalisco, Durango, and Sonora, as well
as in Lower California. Silver exports from
Sonora alone for the year 1918 reached $5,237,-
000. Silver ore and silver bullion were of about
equal importance, with silver concentrates rank-
ing next. Silver exports from the State of Chi-
huahua for the year 1915 (mines being closed
during 1916 and 1917) amounted to 6,445,680
troy ounces, and for nine months of 1918 they
were 4,341,376 troy ounces. There are 5,804
silver mines.
Mexico has 988 copper mines. The copper
zone of Sonora is the southward continuation of
that of Arizona, and extends throughout nearly
the whole State. The whole region about Ca-
nanea is a copper deposit, most of the large
veins carrying copper, lead, gold and silver.
MINES 67
Copper deposits are being opened up in Sinaloa,
Coahuila also has large copper resources. Cop-
per exports from Sonora for the year 1918
reached a total of $15,741,000. Copper exports
from Chihuahua for the year 1915 amounted to
38,843 pounds, and for nine months of 1918 they
were 15,225 pounds.
There are 1,800 gold mines in Mexico, though
the present production is small. Gold-bearing
veins are found in Sonora, Sinaloa, Chihuahua,
Oaxaca, and Lower California. Gold placers
occur in Lower California, Sonora, Sinaloa, Du-
rango and Guerrero. Gold-silver veins are
found in Lower California, Sonora, Sinaloa,
Durango, Chihuahua, Michoacan, Guerrero,
Mexico, Oaxaca, Guanajuato, Zacatecas, Quere-
taro, and Lower California. There are reefs
and veins of quartz, in some of which the gold
is 60 per cent, of the value of the ore. In 1910
Mexico produced 5 per cent, of the gold produc-
tion of the world and 33 per cent, of the silver.
Gold exports from Sonora for the year 1918
totalled $1,355,155. From Chihuahua there
were exported for the year 1915 31,691 troy
ounces of gold, and for nine months of 1918
9,604 troy ounces.
There are 118 lead mines in Mexico, the chief
producing camps being in Durango, Chihuahua
68 INDUSTRIAL MEXICO
and Coahuila. Silver lead ores with copper are
found in Sonora. Numerous lead mines are
also worked in Zacatecas, and in one at least
when the ore is smelted it averages 35 per cent,
lead. The main output of lead comes from the
central plateau, where the great camps of Sierra
Mojada, Almaloya, Niaca and Santa Eulalia are
located. The lead production from the numer-
ous mines in the northeastern States is large,
the ore going principally to the smelters of the
American Smelting & Refining Co. in Monte-
rey, the lead, as bullion, being shipped to the
United States for refining. For the year 1915
exports of lead from Chihuahua amounted to
20,620,885 pounds, and for nine months of 1918
they were 35,715,232 pounds.
Chihuahua is considered the richest State in
Mexico in mineral resources, and the leading
industry of that State is the mining and smelt-
ing of silver, gold, lead, copper, zinc and man-
ganese. It was possible in 1918 to work only
those mines located at or near mining camps.
Several mines which had been closed for some
time reopened during the year, and their out-
put, added to the increased production later in
the year of the other mines which were operat-
ing, made the total for the last six months about
twice that of the first half of the year.
MINES 69
There are seventy-three zinc mines in Mex-
ico, mostly in Chihuahua and Sinaloa. Exports
of zinc from Chihuahua for the year 1915
amounted to 5,649,017 pounds. Figures for
1918 are not yet available. Quicksilver is found
in four States in Mexico, the exports of quick-
silver from San Luis Potosi in 1918 ambunting
to $192,719. Antimony is found in seven States,
exports of antimony from San Luis Potosi in
1918 amounting to $96,843. Vanadium is
found in five States, bismuth in eight States,
selenium in four States, and manganese in
seven States, one deposit in the State of Mexico
carrying about 44 per cent, manganese. A
large deposit of graphite is being worked in
Sonora, graphite ore being exported from that
State in 1918 to the value of $224,000, all of it
mined at Guaymas.
The district of Piedras Negras is the source
of bituminous coal for the whole of Mexico. In
the last years of the revolution the coal mines
were greatly handicapped on account of confis-
cation, labour trouble, and the closing of the
many smelters throughout the country which
consumed their outputs, but 1918 saw the open-
ing of many of the mines that had closed down,
and a boom in the opening of those that had
been running at half capacity.
70 INDUSTRIAL MEXICO
The output of the coal mines in the Piedras
Negras district has now reached 75,000 tons of
coal a month, and will soon be 100,000 tons a
month. The making of coke on a larger scale
is contemplated. At present there are two
mines, the Mexican Coal and Coke Co., and the
Cia. Combustibles de Agujita, that are equipped
with coking ovens and are making a limited sup-
ply of coke.
New York Operators Acquire Coal Lands
Arrangements were recently made by a New
York company to lease for ninety-nine years,
with option of purchasing at the end of five
years for $5,000,000, the Carlos F. Johnson
semi-anthracite coal lands three miles northeast
of Ortiz, Sonora. It is proposed to build a
thirty-mile extension of the Southern Pacific
Railway of Mexico to tap the field, so that ton-
nage can be sent to the United States through
Nogales, as well as through Guaymas up to the
Pacific Coast, and down to the Panama Canal.
The Carlos F. Johnson coal land is well known
among coal operators in the United States, but
for several reasons it was thought impossible
to open it. The veins cover an area of thirty-
MINES 71
two square miles. There are a number of pros-
pect holes on the property which show coal, but
only three distinct shafts to depth. The most
important of these is the shaft at El Salto,
which is down 400 feet. There is also included
in the records secured from Hermosillo officials
the log of a bored hole sent down 460 feet at
El Salto. At eighty feet this bore cut a vein
feet thick, at 271 feet it cut a second vein
seven feet thick, and at 393 feet it cut a vein
twenty-two feet wide, giving a total indication
of thirty-five feet of coal.
The test of the coal shows 81.56 free carbon,
85 fixed carbons, 10 volatile matter in some
places and from 5 to 7 per cent, elsewhere. The
whole field will be subjected to exploration with
diamond drills for at least one year. It is
hoped that the drills will show up deposits of
bituminous and coking coal, which will add con-
siderably to the assets of the property.
Mining Statistics for 1918
Figures compiled by the Mexican Depart-
ment of Mines for nine months of 1918 show a
monthly production of $20,000,000, Mexican
money. Table below gives the quantities in
72
INDUSTRIAL MEXICO
kilos (equivalent to two and one-fifth pounds
avoirdupois), values being in pesos, equal to
one-half the amount in American currency :
Metal
Silver
Kilos
1,601,331
6,185,207
79,335,629
55,080,286
16,136,131
2,808,121
901,512
13,537
120,000
109,419
4,178,686
1,889,082
23,761
n (r>esos) .
Value per
Kilo
$ 41.00
1,333.33
0.30
1.20
0.5G
0.88
1.82
0.59
5.00-8.00
0.16
0.23-0.26
Total value
$ 65,654,571.30
3,244,881.18
23,800,688.75
66,096,343.89
9,036,223.51
2,471,147.48
24,637.66
785,296.99
787,273.77
668,589.76
458,321.32
36,038.27
Gold
Lead
Copper
Zinc ....
Antimony
Arsenic
Tin
Mercury
Tungsten
Graphite
Manganese
Molybdenite ....
Total valuatio
..$180,064,982.88
The total number of mining concessions in
each State, the additional number granted in
1918, and their area in hectares (two and one-
half acres to the hectare) is as follows:
Number of
States Mines in
Existence
Aguascalientes 2,671
Lower California 827
Coahuila 814
Chihuahua 4,858
Durango 3,835
Guanajuato 1,233
Additions in one Year
Number
Granted
Area
in 1918
Hects.
11
80
28
226
74
537
260
3,549
220
1,290
155
1,685
MINES
73
Nui
ites Mi
Ex
tnberof
nes in
istence
,024
,301
1,802
853
632
,092
,610
259
165
707
,600
>.090
m
eon
o
j Potosi
1
Guerrero
Hidalgo
Jalisco
Mexico
Michoacfin
Nuevo
Oaxaca
Puebla
Queretaro
San Lui
Sinaloa
Sonora
Tamaulipas 147
Nayarit 453
Vera Cruz 67
Zacatecas 2,146
Totals 33,186
Additions in one Year
Number
Granted
Area
in 1918
Hects.
34
205
180
2,581
80
785
4
39
37
713
131
983
62
317
31
294
34
123
79
707
135
842
489
4,803
11
75
18
112
7
48
219
1,349
2,289
21,343
The total number of hectares covered by min-
ing claims prior to 1918 was 452,032, or 1,130,-
075 acres. Adding the 21,343 hectares (53,357
acres) granted in 1918, and a grand total of
1,183,437 acres results.
New Mining Law
A new mining decree effective July 1, 1919,
entitled "The Law of Imposts on Mining, " was
issued on June 27, 1919, by President Carranza,
the complete text of which is given below:
74 INDUSTRIAL MEXICO
I, Venustiano Carranza, Constitutional President of
the United Mexican States, do hereby decree that by
virtue of the extraordinary power conferred on me in
the Department of Exchequer by the law of May 8,
1917, passed by the Congress of the Union, do hereby
decree the following:
Law of Imposts on Mining
Chapter One. The Impost in General.
Article 1. The imposts to be levied on mining are
as follows :
A. Property Tax
B. Impost on Production of metals
C. Taxes on smelting, coinage and assaying.
Chapter Two. Impost on mining property.
Article 2. Titles to mining property will pay, on
their issuance, an impost of ten pesos Mexican cur-
rency, for each claim set forth in the title, irrespective
of the class of minerals to be exploited. This impost
will be collected in the form of stamps which will be
placed on the titles in question.
Article 3. All mining properties will pay an an-
nual tax in accordance with the following principles :
(a) From one to five claims at the rate of six pesos
annually for each claim, or two pesos for each third.
(b) From six to fifty claims at the rate of nine pesos
annually for each holding, or three pesos for each
third.
(c) For each fifty-one to a hundred claims at the
MINES 75
rate of eighteen pesos annually per holding, or six
pesos for each third.
(d) From 101 claims and beyond, at the rate of
eighteen pesos annually per holding, and six pesos for
each third.
Article 4. The progression of the quotas above in-
dicated will be applicable as long as the holdings shall
belong to one owner and the descriptions thereof are
set forth by the same mining agency.
Article 5. The payment of the impost on the min-
ing claims will be made in advance by thirds. The
failure of payment of one-third will give rise to a dec-
laration of forfeiture of the mining claims which will
be made in accordance with the respective regulations.
Article 6. The impost on mining will be made only
on the basis of the legality of the title itself, independ-
ent of the exploitation of the property or the effective-
I of the proprietor's possession of same.
Chapter Three. The impost on the Production of
Metals.
Article 7. Gold, silver and metals for industrial
purposes whether they be produced in the Republic or
whether they come from foreign countries, will pay an
impost according to the following quotas :
A. On the value of the gold and silver which may be
presented for coinage in the National Mint, 7 per cent.
B. On the value of gold and silver for exportation
when presented in form of mineral-stone, dirt, concen-
trates cyanide, sulphates, smelter-residues, or in any
r form whatsoever wherein the metals are com-
76 INDUSTRIAL MEXICO
bined or mixed with substances which are not metals,
properly speaking, 8 per cent.
C. On the value of gold or silver for exportation,
which is presented in refined state in the country and
not united or mixed with other metals more exten-
sively than is considered necessary for an alloy, 7 per
cent.
D. On the value of lead, tungsten, molibdeno, man-
ganese, graphite and mercury, 2 per cent.
E. On the value of zinc, antimony and other metals
or minerals which may not be set forth in this article,
1 per cent.
F. On the value of copper for exportation when it
is presented in bars, unfused ore or concentrates, when
these products exist in a combination exceeding 50 per
cent, of copper or exceeding 300 grams of silver, or
5 grams of gold to the ton, in accordance with the fol-
lowing tariff :
When the value of electrolited copper on the New
York market is 25 cents American currency, or more,
the impost will be sixty per thousand.
From twenty to twenty-five cents United States
currency the impost will be 50 per thousand.
From nineteen to twenty cents United States cur-
rency the impost will be 40 per thousand.
15 to 19 cts. U. S. Cy., the impost will be 35 per thousand.
17 to 18 cts. U. S. Cy., the impost will be 30 per thousand.
16 to 17 cts. U. S. Cy., the impost will be 25 per thousand.
15 to 16 eta. U. S. Cy., the impost will be 20 per thousand.
13 to 15 cts. U. S. Cy., the impost will be 10 per thousand.
10 to 13 cts. U. S. Cy., the impost will be 6 per thousand.
to 10 cts. U. S. Cy., the impost will be 1 per thousand.
MINES 77
G. On the value of copper for exportation, pre-
sented in bars, unfused ore or concentrates, and con-
taining 60 per cent, copper, less than 300 grams silver
or five grams gold per ton in accordance with the fol-
lowing tariff:
When the value of the pound of electrolited copper
on the New York market is 25 cents United States
currency or more, the impost will be 60 on the thou-
sand.
20 to 25 cts. U. S. Cy., the impost will be 30 per thousand.
19 to 20 cts. U. S. Cy., the impost will be 25 per thousand.
18 to 19 cts. U. S. Cy., the impost will be 20 per thousand.
17 to 18 cts. U. S. Cy., the impost will be 18 per thousand.
1C to 17 cts. U. S. Cy., the impost will be 15 per thousand.
15 to 16 cts. U. S. Cy., the impost will be 13 per thousand.
13 to 15 cts. U. S. Cy., the impost will be 10 per thousand.
10 to 13 cts. U. S. Cy., the impost will be 5 per thousand.
to 10 cts. U. S. Cy., the impost will be 1 per thousand.
H. On the value of copper for exportation when it
is presented in the form of unrefined minerals or con-
centrates whose contents do not exceed 50 per cent,
copper, in accordance with the following tariff:
When the value of the electrolited copper on the
New York market is 25 cents or more the impost will
be 70 on the thousand.
20 to 25 cts. U. S. Cy., the impost will be 70 per thousand.
ID to 20 cts. U. S. Cy., the impost will be 60 per thousand.
18 to 19 cts. U. S. Cy., the impost will be 50 per thousand.
17 to 18 cts. U. 8. Cy., the impost will be 40 per thousand.
16 to 17 eta. U. 8. Cy., the impost will be 30 per thousand.
i:> to 16 cts. U. S. Cy., the impost will be 25 per thousand.
13 to 15 cts. U. 8. Cy., the impost will be 15 per thousand.
10 to 13 cts. U. 8. Cy., the impost will be 05 per thousand.
to 10 eta. U. 8. Cy., the impost will be 01 per thousand.
78 INDUSTRIAL MEXICO
Article 8. The National Mint will receive without
limitation, gold which private persons may present for
coinage, at the rate of $1,333.33 pesos the kilogram of
pure gold, which price will also obtain for the collec-
tion of the impost of production, and for the coinage
fees.
Article 9. The power of coining silver money be-
longs only to the Government of the Union, and will
not be exercised by private persons.
Article 10. For the collection of the impost of pro-
duction on silver and industrial metals the Secretary
of Hacienda will issue monthly a tariff which will ob-
tain for the succeeding month, taking as a basis the
average of current prices of the preceding two months
on the New York market.
Article 11. In all the preceding cases the current
prices obtaining on the day of the presentation of the
metals in the National Mint, at the Federal Offices of
Assay or at the Custom Houses, will be paid for the
metals in question.
Article 12. The impost of production will not be
levied in the following cases :
A. Old Mexican and foreign gold coin which are
presented at the National Mint for recoinage will pay
only the corresponding duties of coinage, assaying and
smelting.
B. Gold, silver, copper, lead and zinc which may be
exported in the form of mineral stone, ore or concen-
trates whether these be in their natural state, whether
concentrated mechanically or whether as sulphates,
MINES 79
cyanides, smelter-residues, always on condition that
said metals do not exceed the following proportions :
Gold, 2 grams per ton.
Silver, 200 grams per ton.
Copper, 3 per cent.
Lead, 8 per cent.
Zinc, 5 per cent.
C. Gold, silver, copper, lead and zinc imported into
the Republic in the form of mineral stone, ore or con-
centrates, or partially refined, may be exported in
metallic state, after having been treated in the metal-
lurgical establishments in the Republic ; but always on
condition that the substances imported may have a
percentage superior to those specified in the preced-
ing paragraph. Owners of metals will pay in each
case the customary fees for assaying and inspection.
D. Metals employed in National industries. In or-
der that gold and silver may be included in this ex-
emption, owners must bring satisfactory evidence be-
fore the National Mint or the Federal Officers of As-
saying, of the industrial use to which these metals will
be put.
E. Mineral samples in natural state, which are ex-
ported weighing as much as ten kilograms and with
an intrinsic value not exceeding ten pesos.
F. Iron.
Article 13. Fees for smelting, coinage and assay-
ing will be paid in accordance with a tariff issued by
the Secretariat of Hacienda on a basis of cost of actual
operation.
80 INDUSTRIAL MEXICO
Article 14. Assay fees are payable when this oper-
ation is carried on in accordance with the law, govern-
mental order or petition or at the request of the inter-
ested parties; fees for smelting are payable when the
lack of homogeneity of the bars or pieces of metal
render it necessary to smelt them for assay or coinage ;
and the fees for coinage are payable when metals are
coined.
Article 15. Assay fees are not payable when the
operation, carried out in accordance with the law or
in compliance with a governmental order, shows the
presence only of slight traces of the minerals which
are sought.
Chapter Four. General Dispositions.
Article 16. The States may not impose upon min-
ing property, or upon exploitation or production of
mines, more than a single impost, which is not to ex-
ceed 2 per cent, of the value of the metal in the case of
gold or silver, nor of 50 per cent, of the impost on the
production of other metals or minerals. States are
absolutely prohibited from imposing any other tax
whatever whether upon extraction, production, refine-
ment, or utilization of the establishments of whatever
class, including coke plants, or the capital invested in
them, shares and mining titles, transference of owner-
ship of mining titles or of the metallurgical establish-
ments, denunciations, possessions, the organization of
mining and metallurgical companies, expedition of
titles, actions relative to same, or other requirements
prescribed for the establishment, acquisition, or ex-
ploitation of mining or metallurgical properties.
MINES 81
Article 17. Refining or metallurgical establish-
ments of all classes whatsoever including coke plants,
will pay to the State in which they are situated, or to
the territorial government or to the Federal district
wherein they may be located, a single impost of five
on the thousand yearly computed on the value of the
estate and its machinery.
Article 18. The Federal stamp contribution will
not be levied upon the entries which the interested
parties may make in accordance with the laws and
regulations which the State government may prescribe
under the conditions which are laid down for them in
the preceding articles.
Article 19. The municipalities are rigidly forbid-
den to impose any restrictions whatever on mining
organizations, under any circumstances or pretexts.
Article 20. The exportation of coinable gold is ab-
solutely forbidden under penalty of seizure; this ap-
plies to all classes of gold or silver coins of current
Mexican coinage, as well as all foreign gold coins. In
regard to the exportation of what are known as "Pesos
fuertos" the Secretariat of Hacienda may permit same,
provided that, within a period of five days there be
brought into the country for coinage in the National
Mint a quantity of gold metal equal to the value of
the pesos.
Article 21. Importations of Mexican and foreign
gold euin> \\ill be excepted from the payment of con-
sular duties and from the formality of consular in-
voices.
Article 22. No import duties will be levied on zinc
82 INDUSTRIAL MEXICO
and aluminum ingots, filings, grains, filifonns, sul-
phurs, alcaline, cyanides, hipo-sulphates of soda, salt-
petre, nitrate of potash or of soda, lead acetate and
zinc in small perforated plates, provided the foregoing
metals are brought into the country to be utilized in
the treatment of minerals.
Transitory
Article 1. The present law will be effective on
July 1, 1919.
Article 2. The decree of the 26th of April, 1918,
is hereby repealed as well as all the laws and anterior
provisions made up to the present relative to imposts
and mining privileges.
Article 3. All penalties due from the taxpayers on
the annual impost on mining property, including those
accumulated to the date of the promulgation of the
present decree, are hereby cancelled.
Article 4. All taxpayers owing the impost on min-
ing claims are given the months of July and August
without penalty in which to settle the first and second
instalments (tercios) of the current year.
Article 5. Proprietors of mines with payments due
previous to 1919, and who have covered the two thirds
of this year in accordance with the preceding article,
may settle their over-due obligations in as many pay-
ments as they owe instalments, by paying each over-
due third at the same time that they pay their ordi-
nary imposts.
MINES 83
Article 6. If the interested parties do not take ad-
vantage of this concession or if, having the right to
same, by virtue of having complied with the law, they
do not make the payments on the dates when they are
due, the forfeiture of the titles will be declared as
prescribed by law, without further recourse.
Article 7. The parties who take advantage of the
concession set forth in Article 5, transitory, are obliged
to present to the Secretariat of Hacienda a declaration
setting forth the following data: Office where pay-
ment is made, number and date of the title, registra-
tion number, name of the estate or estates, name of
the present proprietor, amount of the debt and
voucher covering the two thirds of this year. The
period during which the concession set forth in Article
5, transitory, may be utilized, will expire the 30th of
September of the current year.
Article 8. The imposts of mining property or on
the production of metals, which may be owing when
this law goes into effect, will be liquidated and paid
in accordance with the quotas of the decree of April
26, 1918, which is nullified by the present decree.
Article 9. While the present international re-
strictions exist, which affect the free commerce of gold,
the exporters of mixed bars of whatever composition,
of gold, minerals and all classes of concentrates, when
these have a percentage of gold exceeding two grams
per ton, must re-import into the country in bars of
coinable gold or in Mexican or foreign gold coin a
quantity equivalent to the gold contained in the bars,
minerals or concentrates which are exported.
84 INDUSTRIAL MEXICO
Article 10. The Secretary of Hacienda will deter-
mine the procedure which must be followed to guaran-
tee the re-importation of the gold referred to in the
foregoing article.
Article 11. The production impost will not be lev-
ied on gold which is re-imported in accordance with
the foregoing articles, since it will have already paid
this impost on exportation.
Ordered to be printed, published, circulated and
complied with :
Given at the President's Palace, in Mexico City,
on June 27, 1919.
New Mining Company
It was announced on August 23, 1919, that a
new mining company, the Mexican Corporation,
had been formed, with a capital of $5,000,000,
under the auspices of the Camp Bird and Santa
Gertrudis companies. Several South African
financial houses are participating in the new
venture, including the Consolidated Gold Fields
(represented by Lord Brabourne), Consolidated
Minos Selection Co., the Exploration Co., and
the Imperial and Foreign Corporation.
CHAPTER V
AGRICULTURE
Orange crop. Banana flour. Opportunities. Veg-
etable oils. Cereals. Cotton. Guayule rubber. Rub-
ber factories. Cattle industry. Sisal. Vine culture.
New developments. Irrigation.
MEXICO is more richly endowed with agricul-
tural resources than any other country in the
world, and in spite of the unsettled conditions
still prevailing in certain parts of the country,
the exports for the year 1918 of agricultural
products and livestock amounted to $74,253,500.
With tropical, semi-tropical and temperate
zones, with millions of acres of rich virgin soil,
and with other fertile millions of acres that have
been merely skimmed, Mexico offers oppor-
tunities for agricultural developments such as
can be found in few parts of the world.
Ninety per cent, of all the fruits existing in
the world are grown in Mexico. The orange
crop of the State of Sonora for the season just
closed was a large one, and 100 carloads were
exported. A large fruit house in St. Louis is
arranging for the regular shipment from Mex-
85
86 INDUSTRIAL MEXICO
ico of large quantities of Sonora oranges, which
are equal in every way to the choicest fruit
grown in Louisiana or Florida. The principal
producing States of oranges and citrus fruits
are Sonora, Jalisco, San Luis Potosi, Vera Cruz
and Morelos. The principal orange State is,
however, Sonora, where the orange matures two
months earlier than in California. With proper
development under American management the
Mexican orange industry would soon assume
great proportions.
These oranges, which are seedless, formerly
had a large sale in California, until the disease
known as Tripetta Luddens devastated the
greater part of the groves, and the oranges were
barred from the United States. Having con-
quered this disease, exportation is about to be
renewed. In the years 1900 to 1904 the Ha-
ciendas of Santa Ana, the districts of Ocotlan,
Atotonilco, Yurecuaro and La Barca, in the
State of Jalisco, exported 800 box cars an-
nually of oranges to El Paso, San Antonio,
Kansas City, St. Louis, Chicago and New York.
In the States of Vera Cruz and Tamaulipas, in
groves near the coast, fruit is obtained two
years after planting.
AGRICULTURE 87
Banana Flour Factories
The exportation of bananas, which are exten-
sively cultivated in the southern Mexican States,
has grown in recent years from three to five
million dollars. Preparations are at present
being made to engage in the manufacture of
flour from bananas upon a large scale in the
States of Vera Cruz, Tabasco, Chiapas, and part
of Oaxaca. It is proposed to utilize the surplus
crops which cannot be shipped owing to their
too rapid ripening, and which in the past have
been a total loss to the growers. Four factories
have already been established in Villahermosa,
capital of the State of Tabasco, for the manu-
facture of this banana flour, and for the extrac-
tion and utilization of the rubber contained in
the skins of the fruit. It is expected that this
product will to a large extent take the place of
wheat flour among the poorer classes, while it
will be obtainable at much lower prices.
Methods of evaporating bananas for export
are also being considered. At present few
planters have the ovens necessary for preparing
evaporated bananas, but a great industry in this
lino is awaiting development by enterprising
American capitalists. The fruit when ripe
could be pulped by adequate machinery capable
88 INDUSTRIAL MEXICO
of large production, and after rolling or cutting
the pulp in rectangles of the desired size and
thickness, the evaporation could be completed in
special ovens. Thus might be obtained many
tons of evaporated banana, perfectly preserved
in tin cans, both light and impermeable for
transportation to any part of the world.
The cleaning and cutting of the banana, re-
ducing it to pulp and then cutting, evaporating
and packing it, might be done in lighters of va-
rious draughts which would navigate the exten-
sive rivers of Tabasco and connect with the
planters at the moment when the fruit becomes
ripe. By such methods might be avoided a
waste of the ripe fruit, which is so difficult and
costly to transport. Tabasco has unlimited po-
tential production of this nutritious food prod-
uct.
Strawberries of the finest flavour are grown
all the year round in the neighbourhood of Ira-
puato, State of Guanajuato, and at points in the
Valley of Mexico. The raspberry is cultivated
at San Angel, near the capital. Pineapples are
cultivated to a great extent in all the southern
Mexican States, but very few are exported.
AGRICULTURE 89
Opportunities for Americans
There are opportunities of incalculable value
to enterprising American fruit growers who will
go down to Mexico and cultivate in marketable
quantities the guava, mamey, the luscious cus-
tard apple, and the alligator pear. And the
same thing applies to vegetables, for Mexico
can produce green peas, asparagus and celery
equal to the finest products of the United States.
At present Mexico imports considerable quan-
tities of canned fruits and vegetables.
The territory around Tampico is peculiarly
adapted to the cultivation of the green lime.
Locally there is little cultivation of the groves,
but the trees grow in great profusion through-
out the sections adjacent to Tampico. Several
years ago limes were exported, but never in any
great quantity, and it has been some time since
any such shipment was made. The apparent
drawback to the business is the lack of sufficient
means to gather the fruit, but with an organiza-
tion properly supervised there is no present
reason why this obstacle could not be overcome.
The harvesting and packing season is Novem-
ber and December. As a likely development
arising from the marketing of the limes is the
extraction of the oil from the fruit. This need
90 INDUSTKIAL MEXICO
not be confined to the lime itself, but would in-
clude oranges and lemons, which are overabun-
dant in the Tampico district. Manufacturers
of machinery for the extraction of such oils, and
importers interested in the green lime, should
communicate with the American Chamber of
Commerce, Apartado No. 777, Tampico, Mexico.
Vegetable Oils
Mexico produces several plants yielding oils,
both industrial and succulent, but no great in-
dustry has as yet developed from them. The
pinon (jatropha curcas) yielding 16 per cent, of
a strong cathartic oil; the riccinus communis
(castor oil bean) yielding 40 per cent, of that
oil; ajonjoli (sesame indicum), yielding 33 per
cent, of a soft sweet oil, the peanut, and several
others may be mentioned.
A new fruit containing a large percentage of
oil has been discovered in the region of Torreon,
and is known by the name of "chichopoxtle."
Experiments show that 25 per cent, of its con-
tents consists of oil of great value in industrial
pursuits requiring a lubricant of high quality.
It is proposed to introduce the cultivation of
this fruit upon a large scale. In Yucatan a
plant has been found which is claimed to be a
AGRICULTURE 91
specific in cases of erysipelas. The growth in
question is a climbing vine, yielding milk when
tapped. This is applied either in the form of
ointment or with other substances, and is said
to give relief in twenty-four hours, followed by
a complete recovery in three days.
Cereals
Several millions of the inhabitants of Mexico
live on corn, the annual production of which in
normal times is about 110,000,000 bushels, which
is less than the quantity needed for domestic
consumption, so that there is often a large im-
portation. In some sections two crops a year
are planted. The scarcity of corn in Mexico is
one of the chief causes of all the revolutions,
and explains the constant efforts of the Mex-
ican Government to increase the production by
the introduction of modern methods and Amer-
ican machinery. In May, 1919, General Pablo
Gonzales, the military commander of the State
of Morelos, called upon the government to
provide twenty tractors and five hundred
ploughs for the use of the farmers in that re-
gion. The machinery was distributed through-
out the State. General Gonzales stated that
this was all that was needed to restore that sec-
92 INDUSTRIAL MEXICO
tion (recently freed from banditry by the kill-
ing of Zapata) to a normal condition of pro-
ductiveness.
Normally the summer crop of corn in the
States of Vera Cruz, Tamaulipas and Chiapas
is estimated at about 300,000,000 pounds. In
1918 military agricultural colonies were estab-
lished in the States of Chihuahua, Mexico and
elsewhere in sections where active operations
of the troops were no longer required, but where
it was deemed necessary to maintain an armed
force in readiness for service.
There was plenty of rainfall throughout the
State of Coahuila in 1918, and the ground was
in fine condition for the planting of the corn
crops. Every foot of available land, even reach-
ing up into the mountains, was put under cul-
tivation, and an immense harvest of wheat and
corn was expected. During 1918 there was an
increased demand for machinery and agricul-
tural implements throughout northern Mexico.
Eight hundred and thirty-five thousand bushels
of corn alone were raised in Chihuahua in 1918.
In the central plateau in the north of Mexico
agriculture is found in its most complete de-
velopment, helped by extensive irrigation proj-
ects. The principal products of this region are
AGRICULTURE 93
corn, wheat, beans, peppers, peanuts and to-
bacco.
The Mexican plan of cultivation makes it pos-
sible to take off the land three crops a year, one
crop of wheat and two of corn. The average
yield of wheat per acre is about 20 bushels, and
of corn about 50 bushels on irrigated soil and
about 30 bushels on dry land. The area best
adapted to wheat cultivation is on the greai
plateau at an elevation of 6,000 to 9,000 feet, and
comprises some 52,000 square miles, over one-
third of which could be planted to wheat without
serious detriment to the other agricultural in-
terests, yielding over 110,000,000 bushels.
Barley is grown to greatest advantage in Hi-
dalgo, Tlaxcala, Puebla and Mexico, the yield
being about 7,000,000 bushels. Rice is grown
in Colima and Guerrero, production about
1,250,000 bushels. The frijol or Mexican bean
is grown in every State in Mexico, the leading
producing States being Jalisco and Vera Cruz,
the crop having an annual value of about $7,500,-
000, practically all consumed in Mexico.
The west coast States of Sonora and Sinaloa
are the great producers of garbanzo (chick
peas), which appear regularly at all Spanish
meals, and are grown in nearly all the States.
94 INDUSTRIAL MEXICO
The exports by rail of the Mexican garbanzo
crop raised in 1918 from the State of Sonora
amounted to 174,865 sacks, and from Sinaloa
134,799 sacks, making a grand total of 309,644
sacks. This was the largest crop raised since
1912. There were also large shipments by wa-
ter. The total crop was over 25,000 tons, and
produced an income of more than $4,500,000,
the crop being disposed of through a single
house in New York at $180 per ton. This is one
of the most profitable branches of agriculture in
Mexico.
Cotton
The great cotton belt of Mexico is the Laguna
district, which includes portions of the States
of Chihuahua, Coahuila, Nuevo Leon, Tamauli-
pas, Durango, Zacatecas and San Luis Potosi.
This district produces 90 per cent, of the cotton
grown in the republic. The cotton is put up in
square bales of about 500 pounds, buckles being
used in baling. The cotton crop for 1918 was
one of the largest in the history of Mexico,
reaching 78,392,700 kilos. It is said that 50,000
bales will be exported to the United States,
Japan, and South America. The Association of
Cotton Producers of Torreon, Mexico, recently
sold 10,000 to 15,000 bales of cotton to Yus Hu
AGRICULTURE 95
Kita, of Tokyo, and 15,000 bales to firms in
England. The area planted for the 1919 sea-
son will be much reduced, however, owing to the
ravages of the boll weevil.
Guayule Rubber
The extraction of rubber from the shrub
known as guayule is one of the modern and most
successful industries of Mexico. The exports
from the Piedras Negras district alone for the
year 1918 amounted to 2,656,769 pounds, of a
value of $1,004,561. The guayule shrub grows
in the mountains of Zacatecas, Nuevo Leon, San
Luis Potosi, Coahuila, Durango, Chihuahua and
Sonora, at an altitude of 3,000 to 6,000 feet, blos-
soms in September or October, propagates itself
slowly, and dies after fifteen years of growth.
The yield of marketable rubber from the wild
plants runs from 6 to 15 per cent. It differs
from the best quality Para in some respects,
but for many purposes for which rubber plays
an important part in modern industry it has
received worldwide recognition. There are
four distinct advantages in guayule. It grows
in otherwise sterile soil, if this contains a due
amount of lime; it requires only a subtropical
climate, healthy at all times, it can be gathered
96 INDUSTRIAL MEXICO
all the year round, and commercially it is profit-
able, even considering the low per cent, of rub-
ber content.
Beginning in 1902, when American capitalists
financed a series of experiments, the industry
has grown until now there are factories in the
States of Durango, Coahuila and San Luis Po-
tosi. By 1911 the exports of guayule rubber
amounted to 19,749,522 pounds, which fell off
to 2,816,068 pounds in 1916 owing to the revo-
lution. The 1918 production of guayule was the
largest in several years, although the complete
figures are not yet available.
Analysis of a good sample of the ordinary
grade of guayule rubber gave: Rubber, 57.28
per cent. ; resin 19.35 per cent. ; water 20.69 per
cent. ; inorganic impurities 2.68 per cent. Bet-
ter grades give a much higher rubber content.
The crop is usually cut every two or three years.
Under the name of the Fomento de Comercio
Internacional, S.S. (International Commerce
Exchange), a new rubber factory which is still
in process of construction has commenced the
manufacture of automobile tires and inner tubes
in Mexico City. It is a private enterprise rep-
resenting an investment of about $350,000.
The factory, a modern brick and cement struc-
ture, has its own electric lighting plant, and
AGRICULTURE 97
uses oil for fuel. It is equipped with American
machinery, and is under the supervision of ex-
perienced American foremen. About 100 hands
are employed at present, but when running at
full capacity the factory will employ about 350
men. It also has equipment for the manufac-
ture of raincoats, hot-water bags, and rubber
soles and heels, and it is the hope of the owners
to manufacture eventually rubber goods of
every description. There is another small rub-
ber factory in Mexico City which is prepared to
manufacture rubber tires.
Cattle Industry
The raising of cattle has always been one of
the most important industries of Mexico, where
there were formerly vast haciendas containing
350,000 head of cattle, the importation and
crossing of fine stock having produced magnifi-
cent results. The best so-called native cattle
of the country are generally a cross between
the bullfighting breeds imported from Spain
and the Brown Swiss dairy animals, the result
being a first-class beef type. In round numbers
there were in Mexico before the revolution about
5,000,000 cattle, about 800,000 horses, 300,000
mules, 250,000 asses, 5,000,000 sheep, 4,000,000
98 INDUSTRIAL MEXICO
goats and 600,000 hogs. Hog raising is general
throughout the country.
The Sisal Industry
Another of the leading industries of Mexico
is the production of sisal, or henequen fibre,
which enters largely into the manufacture of
cordage and some forms of fabrics. The prin-
cipal demand for the raw material is for use
in the manufacture of twine for harvesting.
Owing to certain peculiarities of the soil and
climate of Yucatan, that State has become the
centre for sisal cultivation, and everything in
Yucatan centres around that industry, the an-
nual production bringing in a constant revenue
of many millions.
The plant from which the fibre is extracted is
one of the Agave family, and closely resembles
the maguey, well known as the source of the fa-
mous alcoholic beverage " pulque, " but which is
also valuable for its fibre as well as for the man-
ufacture of sugar, an enterprise which the gov-
ernment is encouraging, while at the same time
discouraging the production of the deleterious
liquor.
The plant is propagated from the small
"suckers" growing at the roots of the parent
AGRICULTURE 99
stalk, and it requires several years of cultiva-
tion before the leaves are of sufficient size to
utilize in fibre making. These leaves are from
three to five feet in length, and continuous crops
are gathered from the same plant for an ex-
tended term of years. After being cut from the
parent stem with a " machete, " or large knife,
the leaves are taken to the machinery shed,
whore they are put through a special machine
designed for rapid decortication. The result-
ant fibre is carried into the open air and sus-
pended from wires or otherwise disposed until
it is thoroughly dried by the heat of the sun.
It is then packed in bales and shipped to various
portions of the world where there is a demand
for it.
In connection with the separation of the fibre
from the bulk of the stalk, it is a fact that cattle
and other domestic animals eat the refuse pulp
with avidity, and become fat and robust with-
out eating any other food. Indeed, when this
pulp is available, they will touch nothing else,
but remain close to the factories until they are
sated.
The total exportation of henequen from Yu-
catan for the year 1918 is estimated at 600,000
bales and is valued at 48,0<H),00() pesos (1
peso = $0.50 United States currency). For the
100 INDUSTEIAL MEXICO
current year, it is expected that the output will
be even greater, owing to the fact that new mar-
kets have been opened in various parts of the
world, notably the Argentine Republic, where
the fibre is used in the manufacture of grain
bags. The henequen planters recently sent a
trade commissioner to Argentina for the pur-
pose of studying the market there as well as
to investigate generally the possibilities of trade
between the southern Republic and Mexico.
New Developments
Vine culture is now being established on an
extensive scale in the State of Hidalgo, quanti-
ties of cuttings being brought from other sec-
tions. Some of the land best adapted to viticul-
ture is in the vicinity of Parras, State of Coa-
huila, where the industry has been well estab-
lished. Grapes as an article of table food are
grown in practically every Mexican State, the
yearly production being' about 6,600,000 pounds.
Coahuila, Chihuahua and Durango grow the
largest grapes.
The Governor of the State of Puebla has re-
quested the assistance of the Mexican Depart-
ment of Agriculture in the establishment of a
national vineyard in that region. In accord-
AGRICULTURE 101
ance with this request, the government of the
United States has been asked to give permission
for the exportation of one million grapevine cut-
tings from California, the varieties cultivated
in that State being adapted to the soil and cli-
mate of various portions of Mexico. A similar
movement is under way in the State of Quere-
taro.
The agent of agricultural information and
propaganda in Tacambaro, State of Michoacan,
has advised the Mexican director general of
agriculture that there has recently been discov-
ered in that section a plant known as "irguan,"
which produces red ink that is adaptable to
various uses. The plant is said to be found
in great abundance, and the agent mentioned
requested that some one be designated to make a
careful study of it for the purpose of ascertain-
ing whether it might be utilized in any of the
industries, and also to determine whether it
might be transplanted to other climates.
An association of Vera Cruz business men
has been formed for the purpose of establishing
a bank to encourage the formation of agricul-
tural colonies. Under instructions of the De-
partment of Agriculture special agents have
been appointed in various portions of the Re-
public for the purpose of stimulating the culti-
102 INDUSTRIAL MEXICO
vation of idle lands and of introducing modern
methods of agriculture. It is intended to extend
this work to all portions of the country as rap-
idly as possible.
Specimens of bread made from flour produced
from the nopal cactus have been submitted to
the National Board of Health of Mexico for
test in order to determine its suitability as food
for human beings. The novel product is said to
be appetizing in appearance and taste, and as
there is an unlimited supply of the fruit avail-
able the originators of the new article of food
are hopeful of its introduction upon a large
scale.
A systematic effort is being made to introduce
the silk industry into Mexico, a country which
is well adapted for it in every respect. A ship-
ment of silkworm eggs has recently been re-
ceived from France, and the Director General
of Agriculture has issued a call to all persons
interested in this industry to join classes to be
established for the purpose of giving expert in-
struction.
Irrigation Projects
The Mexican Secretary of Commerce and In-
dustry is studying a project for the irrigation
5 PRIMITIVE METHOD OF FARMING IN MEXICO IS SLOWLY
GIVING WAY TO THE INVASION OF AMERICAN PLOWS AND
TRACTORS
A MKMCAN CONTRAST OX CART BRINGS FREIGHT FOR THE
RAILROAD
AGRICULTURE 103
of the fertile lands of the Valley of Mexico
upon a large scale. At present most of these
lands only produce a single crop annually, de-
pending entirely upon the rainfall for moisture.
Where water is available for irrigation, as
among the so-called floating islands at Xochi-
milco, continuous crops are produced, and it
is the design of the department named to con-
struct irrigation works upon a large scale in
order that the best possible use may be made
of the lands not now so provided. It is be-
lieved that in this manner all the food required
by the City of Mexico can be produced at its
very doors, and even a surplus for shipment
elsewhere.
It is known that large tracts of lands in the
States bordering the United States, notwith-
standing the fact that they are on the southern
bank of the Rio Bravo, are completely deserted
for lack of cultivation; but they really offer a
bright prospect to agriculture, with only one
requirement, and that is, a good system of
canals, which they now lack.
Among the great works that could be cited
in this region is the great dam for the storage
of the waters of the Rio Bravo, called " Ele-
phant Butte." It has been some time since
Mexico entered into an agreement with the
104 INDUSTRIAL MEXICO
United States in regard to the exploitation of
the waters of the Rio Bravo, by virtue of which
Mexico has the use of seventy-six million cubic
metres of water.
The northern part of the Territory of Lower
California consists of lands of marvellous fer-
tility, improved by the circumstance of being
near the banks of the Colorado River, which is
the boundary between that Territory and the
State of Sonora, and receives at its mouth the
waters of the tributary called Rio Nuevo (New
River), both of which enclose a zone that could
very well be employed for the purpose of build-
ing canals. Much has been said recently about
the extensive projects in contemplation for the
construction of an extensive irrigating system
by using the Lake of Chapala, as well as the
waters of the Rio de Santiago or Tololotlan,
which has its source in that lake.
With the renewed interest in farming in Mex-
ico, the old-time implements of agriculture are
being discarded for modern machinery. Many
large landowners have recently resided for con-
siderable periods in the United States, for po-
litical reasons, and on their return have intro-
duced the American machinery which they had
observed used to such good advantage here. It
has also been discovered that it is less expensive
AGRICULTURE 105
to maintain a tractor than horses and mules,
which are so apt to be stolen by roving bandits
in search of mounts. Fortunately, it is impos-
sible to use tractors in guerrilla warfare.
A company of American capitalists has asked
for a concession to exploit the island of Guada-
lupe, off the coast of Lower California. The
island is uninhabited, but it has herds of wild
goats and cattle and large deposits of guano.
There is much fertile agricultural land on the
island, and it is proposed to colonize it with
families.
CHAPTER VI
TIMBER
Vast tracts of pine. Mahogany. Valuable hard
woods unknown to American markets. Woods for
shipbuilding. Decay resisting species. Dyewoods.
National Forestry School.
THE great wealth contained in the Mexican for-
ests is not yet appreciated by the lumber world.
The railroads are now, however, beginning to
open up the country in some of the Mexican tim-
ber regions, and already narrow gauge and log-
ging railways are either in process of construc-
tion or being projected. Lumber companies
are erecting new and enlarged mills, and the
lumber industry of the country, as yet in its
infancy, is certain to have a tremendous growth
in the very near future. The monthly output of
the mills in the State of Durango in 1918 was
estimated at 2,250,000 feet of sawn lumber. In
addition, about 600 carloads of ties and bridge
timbers are turned out by these mills monthly.
The daily capacity of the lumber mill at Madera,
Chihuahua, is 500,000 feet, and that of the Pear-
son mill, Chihuahua, 100,000 feet daily. The
106
TIMBER 107
lumber shipments in 1917 from these two mills
amounted to 19,500,000 feet, and the figures for
1918 will be much larger.
There are immense quantities of building
timber and cabinet woods in Mexico, many spe-
cies of which are as yet unknown in foreign
markets, although they are classed among the
most valuable and expensive. The yearly pro-
duction of mahogany amounts on an average to
about $1,200,000 Mexican money ($600,000), the
States of Chiapas, Tabasco, Vera Cruz and Cam-
peche supplying the greater quantity. In nor-
mal times about one-half of the mahogany
consumed in the United States comes from Mex-
ico. Cedar is found in all parts of the country,
but the States of Chihuahua, Tabasco, and Vera
Cruz contain the largest and most desirable for-
ests of this wood, cutting annually cedar logs to
the value of more than $1,0(X),000. Ebony is
produced in Tamaulipas, Guerrero, Hidalgo,
and Yucatan. Puebla produces the largest
quantity of aloe wood, Coahuila the most oak,
NiH'Vo Leon the most walnut, Lower California
leads in iron-wood, while the State of Jalisco is
'! 'bra ted for its orange wood.
108 INDUSTRIAL MEXICO
Vast Tracts Awaiting Exploitation
It is conservatively estimated that the area
of first-class timber in Mexico comprises from
20,000,000 to 25,000,000 acres. In one section of
the State of Durango recent investigation
showed some 5,368,500,000 feot of commercial
pine, and another tract in the northern part of
the same State containing 4,800,000 acres was
estimated to have 10,000,000,000 feet of com-
mercial pine ready for cutting. It is possible
to buy much of the Durango timber land at a
very low price, and returns from the same can
be estimated on the value of the lumber, the
value of the firewood or charcoal, and the value
of the land after the timber is cut, this latter
being a variable quantity.
Charcoal produced from these timber lands
is a feature the American lumberman ordinarily
thinks little about, yet it is a source of revenue,
as the demand throughout Mexico for charcoal
is almost unlimited. Besides the States men-
tioned, pine is also found in Chihuahua, Jalisco,
Michoacan, and Guerrero, the standing forests
in these States comparing favourably with sim-
ilar timber in the United States and Canada as
regards quality, diameter, and extreme length
of clear body.
TIMBER 109
Valuable Hardwoods
There are twenty-five varieties of hard woods
not generally known to the American lumber-
man. Among the chief of these should be men-
tioned the zapote mamey, which resembles the
walnut in appearance, is of a dark brown cinna-
mon colour, has about the same grain as ma-
hogany, and is capable of a very high polish.
The zapote chico, of the same family, is prac-
tically one of the most valuable woods growing
in the tropics. The trees are of great size, the
length of their clear body being often 50 feet,
and in tropical Mexico they are very plentiful.
The sap, which is the chicle of commerce, is
gathered in very much the same manner as the
rubber sap. The wood is of a clear, deep, red-
dish brown colour, very hard, but easily worked
until thoroughly seasoned, when only the finest
edged tools have any effect on its surface. The
wood takes a beautiful finish, and is valuable for
furniture. Used as piling for both railway and
port construction, it has been found that the
chico zapote bears the test of a much longer
period of endurance than oak; sea worms will
not attack it, and for withstanding the effects
of either salt or fresh water, mud, wet or arid
soil, it appears comparatively indestructible.
110 INDUSTRIAL MEXICO
Zapotillo Colorado is another tree of the same
family as the zapotes. It is often three feet in
diameter, and usually yields fifty feet of trunk
without knots. The grain is very close, light
in colour, and takes a fine polish. Zapotillo
bianco is a beautiful white wood with a yellow-
ish tinge of even colour, and is very desirable
for inside house finishing.
The palo maria, with a trunk from 50 to 100
feet long and clear of knots, closely resembles
mahogany in colour, grain and weight. The
Mexican red cedar is of an even grain and col-
our, and is extensively used for lead pencils and
cigar boxes. One of the most promising of
the undeveloped woods is the granadilla, a kind
of rosewood, in appearance equal to mahogany,
of a rich, reddish brown colour and with dark
wave line markings.
Another beautiful and curiously marked wood
is the galeado. The colour is yellow, with dis-
tinct irregular markings of seal brown, close
grain, and very heavy. The maccaya wood,
much like hickory, is used by the Indians for
wagon work. Other less known woods are the
coralillo, the guapage, huisch, jicoco, cork wood
of which there is a large amount in tropical
Mexico, and the lignum vitae.
The extensive forests of the hot country in
TIMBER 111
the States along the coast contain not only ma-
hogany and a great variety of other cabinet
woods, but also woods yielding precious gums,
wood for dyeing purposes, and other industrial
uses. What is urgently needed is a scientific
investigation of the forestry resources of Mex-
ico. The methods of felling and hauling timber
in the forests of the hot country are wasteful
and destructive.
Twelve Important Varieties
Following is a list of twelve woods which are
available in sufficiently large quantities for
commercial purposes, though the question of
getting them to the market is a serious one :
Palo Prieto. Found over all the southwest-
ern part of Mexico, is quite common in Sinaloa,
but does not here reach the enormous size of the
trees in the extreme southern part of the Re-
public. Both sap and heart wood are highly
resistant to rot, and it is considered one of the
best woods of Mexico.
Ebano (ebony). Found all along the coast of
Mexico, grows to a large size in Sinaloa, but
the logs are not very straight. Logs of more
than twelve inches in diameter with perfectly
sound hearts are very rare. The excellent qual-
112 INDUSTRIAL MEXICO
ities of this wood when cut from live, sound
trees are known all over the world.
Amapa Negra, or Amapa Verde. Found all
over Mexico. In the State of Sinaloa the trees
are rather small in size, although plentiful. It
is a very much better wood than the Amapa
Blanca, and is employed rather extensively in
shipbuilding.
Tepemezquite, or Meuto. Found all over the
southwestern part of Mexico and is especially
plentiful in the States of Sinaloa and Nayarit
(Tepic). Used extensively in shipbuilding, es-
pecially where heavy compressive stresses are
encountered. Its worst characteristic is a tend-
ency to check badly when exposed to the sun,
the ends frequently opening up for a distance
of two or three feet and curling back on the
log.
Truchas or Trucha. Found all over the Pa-
cific coast of Mexico. Grows well in Sinaloa,
especially in the southern part. This wood is
used in shipbuilding wherever heavy tensile
stresses are encountered.
Woods Favoured for Shipbuilding
Palo Amargo or Cedro Blanco (Mexican white
cedar). Found all over the northwestern part
MAHOGANY LOGS FOR EXPORT FROM THE STATE OF CAMPECHE
CACAO OR CHOCOLATE PODS READY FOR SHELLING
TIMBER 113
of Mexico. Grows to a fair size only and is not
very straight. The Mexicans consider this
wood to be superior to the best Douglas fir or
yellow pine. It is used very successfully in
naval construction where a light wood of the
approximate strength and resisting qualities of
Douglas fir is required.
Palo Margarita or Barilillo. Very often con-
fused with the Palo Fierro (ironwood). Found
all over the southwestern part of Mexico and
quite common in Sinaloa. Considered one of
the very hardest of the hardwoods and used
very extensively in shipbuilding, especially
where heavy compressive stresses occur.
Haba. Very plentiful in the coast country of
Sinaloa and Nayarit. Grows to a large size,
fairly straight, and is seldom hollow. Consid-
ered by Mexican shipbuilders to be the best na-
tive wood for naval construction. It is rather
difficult to handle when green, as the sap burns
the skin upon contact and is very plentiful just
under the bark of the tree.
Guayacan (lignum-vitae). Very plentiful on
the west coast of Mexico from the State of So-
nora to Oaxaca. Grows to greater size and de-
gree of hardness in southern Sinaloa and Naya-
rit. Regarded as one of the most reliable
woods growing in Mexico and undoubtedly the
114 INDUSTRIAL MEXICO
best for certain parts of ships. When placed in
very dry places, however, it is liable to become
brittle and break under heavy shearing stresses.
Amapa Blanca. Found all over the Republic
of Mexico; in the State of Sinaloa grows to a
fairly large size and is quite straight. While
the Amapa Blanca is not so durable and is more
liable to decay than others of the Mexican hard-
woods, it is considered well adapted to take its
place among the most reliable materials in ship-
building.
Two Decay -Resisting Species
Mora Amarillo (logwood). Found all over
the west coast of Mexico in great quantities, the
most durable kinds being from the States of
Sinaloa and Nayarit. Considered and proved
to be one of the native woods most highly re-
sistant to the effects of salt water, damp at-
mosphere, and rot induced by vegetable fungi.
Its qualities as a dyewood are too well known to
require comment.
Arellano or Palo Colorado (rosewood). One
of the softest of the Mexican hard woods. Un-
doubtedly has the greatest resistance to decom-
position induced by vegetable fungi of any of
the native woods. It is found in Sinaloa, Naya-
TIMBER 115
rit, Colima, Jalisco, and Guerrero, and it is con-
sidered by the natives to be well adapted to
constructions of all kinds where strength, dura-
bility, and reliability are essential.
Mexican Dyewoods
In 1917 there were imported into the United
States from Mexico 22,250 tons of logwood, 2,112
tons of other dyewoods, and 2,683 pounds of
indigo. Dyewoods and plants found in Mexico
include Santa Marta wood or peach wood from
the Sierra Nevada; safflower; fustic and log-
wood, the latter indigenous to Campeche Bay,
Mexico.
Educational Work
A horticultural experimental station has re-
cently been established at Queretaro. A thou-
sand trees of various kinds have been planted,
including those of both the temperate and sub-
tropical regions, and these will be distributed
among growers as soon as they are ready for
transplanting. On March 1, 1919, the National
Forestry School was formally opened at Coyoa-
can, a suburb of Mexico City. The course of
instruction will cover a period of three years.
CHAPTER VII
TRADE OPPORTUNITIES
Agricultural implements and machinery. Henry
Ford in Mexico. American trade associations open
branches in Mexico. List of articles urgently needed.
Salesman's itinerary. New enterprises. Newspapers
and magazines. Manufacturing in Mexico shoe fac-
tories, breweries, textile mills, tobacco factories. Jap-
anese competition. German competition. American
automobiles in Mexico. Laundry and cleaning ma-
chinery needed. Opportunity for American dyes.
Sport in Mexico. Grand opera in the bull ring.
Trade bodies in Mexico. Present an opportune time
to develop trade. Patents and Trade-marks.
THERE is a growing market for American agri-
cultural implements and machinery in Mexico.
There are no Mexican import duties on farm
machinery, and near Mazatlan a Mexican citi-
zen has established an experimental farm where
he hopes to persuade American firms to demon-
strate their goods for the benefit of the farmers
of the surrounding country.
Contracts have been entered into by the Mex-
ican Department of Agriculture for the pur-
chase from American manufacturers of 200
116
TRADE OPPORTUNITIES 117
tractors, one thousand gang-plonghs, and one
thousand threshing machines. A large number
of trucks suitable for agricultural purposes will
also be secured. Demonstrations of the practi-
cal use of this machinery will be made in vari-
ous parts of Mexico, and then the implements
will be sold to farmers desiring them at actual
cost and on instalments. Much farm machinery
has already been brought into Mexico and sold
in this way. The extensive areas of level valley
lands in many of the Mexican States offer splen-
did opportunities for the use of modern ma-
chines.
Henry Ford has submitted a plan to President
Carranza for the establishment in Mexico of
an extensive and complete plant for the manu-
ure of tractors for agricultural purposes.
The plan is to educate Mexican mechanics in the
Ford plants in the United States and then send
them to Mexico to operate the factory there.
These Ford tractors will be sold to farmers
practically at cost and on easy terms.
A corps of expert engineers who have been
on trusted with the preliminary investigation
needed for carrying out Mr. Ford's plans was
in Mexico at the time of my visit there. In-
cluded in the party were several engineers who
had been employed in Mexico and understood
118 INDUSTRIAL MEXICO
local conditions. At the present time it is un-
derstood that Mr. Ford will confine his opera-
tions to the establishment of three plants at
different points. It is believed that the cities
of Monterey and Durango will be the two first
selected, and that the third will be at some point
in either Michoacan or Jalisco. In the first
named city all the essentials are to be found
in the way of railway communication, coal, oil,
labour, etc. After making a thorough study of
the various points suggested, the visiting engi-
neers will return to Detroit and report to Mr.
Ford before any further steps are taken. Dis-
tributors have already been appointed in Mex-
ico for the Ford tractors.
A travelling exhibition of agricultural ma-
chinery will also be established by the Mexican
Government, the necessary rolling stock being
provided by the government railways. The in-
crease in the tomato crop this year has been
sufficient to cause the growers to purchase a
notable amount of American farming machinery
and implements, and the coming year will prob-
ably mean a greater increase. The crop this
year amounted to one thousand carloads, or
more than three times that of any previous
year.
TRADE OPPORTUNITIES 119
American Trade Bodies Open Mexican
Branches
The Chicago Association of Commerce has
opened a branch office in Mexico City in charge
of H. H. Garver. The plan of the Mexican
bureau of the Association is to provide for the
needs of the present situation in Mexico. Of-
fices will be opened in other Mexican cities as
developments warrant. Enquiries for Ameri-
can goods will be telegraphed or cabled by rep-
resentatives in the field. These will be com-
municated to firms listed with the bureau which
sell the articles required. Bids will be for-
warded through the Chicago headquarters, and
when business is closed the field representative
will act as the agent of the concern making the
sale. He will be compensated on a commission
basis, the rate to be agreed upon at the time
the bid is forwarded.
This Mexican trade bureau of the Chicago
Association of Commerce is to be operated as
nearly as possible on a self-supporting basis,
each interested firm paying a registration fee
of $5. Necessary expenses and telegraph and
cable tolls will be prorated among those directly
involved. The benefits of this bureau will be
extended to manufacturers and merchants
120 INDUSTRIAL MEXICO
throughout the Mississippi Valley as well as in
Chicago. The bureau is the direct result of the
recent visit to Mexico of the delegation of the
Mississippi Valley Association.
The American Chamber of Commerce of Mex-
ico has established a branch office in New York
with James Carson of the National Paper &
Type Company as Chairman, the Vice-Chair-
man being J. A. Lewis, Vice-President of the
Irving National Bank, and C. R. Austin of the
General Equipment Company, the Secretary of
the branch being Manuel Gonzalez, Chief of the
Latin- American Trade Division of the National
Association of Manufacturers.
Articles Urgently Needed
Articles in great demand at the present time
in Mexico include the following: Earthen-
ware, cutlery, glass containers with metal tight
caps for preserves, brass beds, brass varnish
with bright and dull finish, bicycles, fancy goods,
glassware, textiles such as denim, gingham,
zephyrs, ticking, cashmere, indigo, Palm Beach,
sweaters, cotton, wool, silk, art silk, cotton
drills, cotton yarn, shirtwaists, hosiery, men's
shirts, neckwear; shoe store supplies; electric
lamps; colouring materials; leather; mining
TRADE OPPORTUNITIES 121
equipment ; paints and colours, chemicals, phar-
maceutical specialties, soap, condensed milk,
lard, patent and proprietary medicines, print-
ing inks, perfumery, printing presses, and pa-
per.
There is a large market in the Salina Cruz
district for a windmill with a low tower, not
more than 14 or 16 feet high, but with twice the
ordinary width at the ground and powerfully
braced. The standard windmill has never been
a success in this region, swept as it is by rag-
ing " northers " which blow on an average of
four days in ten in the dry season.
In Mexico City there is a market for certain
classes of glazed tiling for walls and floors.
The most popular style is an English product
6x6 inches, but this is now unobtainable, leav-
ing the market open for the American make
3x3 inches, in various colours. This must be
a high grade tile, suitable for walls and floors
of bathrooms and kitchens. Another tile that
would find a ready market is a flat preferably
red slightly glazed tile to be used in building
charcoal stoves. The tile should be about 6x6
inches and 1% to 2 inches thick.
Over $300,000 worth of lumber was imported
from the United States into Monterey, Mexico,
during April, 1919. Tampico, Vera Cruz and
122 INDUSTRIAL MEXICO
the Pacific ports also received American lum-
ber in considerable quantities. An unusual ac-
tivity in manufacturing Mexican lumber is re-
ported. Mills in the forest districts of Micliou-
can, Jalisco, Durango and some of the other
States have resumed operations, but it will be
some time before the yards in the principal cities
and distributing centres of Mexico are restocked
with building materials.
Salesman's Itinerary
A salesman should go direct to Mexico City
by rail via Laredo, Texas, for in the Mexican
capital are located the largest wholesale houses,
many of them with branches in the cities of the
interior, and connections can often be made for
handling the line throughout Mexico proper,
with the exception of Yucatan, which should be
considered separately. After working Mexico,
the salesman will be able to get a more accurate
line on those cities in the interior which it may
be safe and advisable to visit.
If it is decided to go by boat, the salesman
should take a steamer from New York to Pro-
greso, via Havana, and visit the city of Merida,
the commercial centre of Yucatan, which is
within easy rail communication with the only
TRADE OPPORTUNITIES 123
other city of any importance on the peninsula,
Campeche. From Progreso there are weekly
sailings of the Ward Line to Vera Cruz, which
should be the next stop. From Vera Cruz
which city it will be found profitable to work
thoroughly as it is the port of entry of a con-
siderable territory north and south as well as
for Mexico City the salesman could proceed to
Tampico, fifteen hours by steamer from Vera
Cruz (weekly sailings )\ which will be found a
fairly good market for manufactured articles at
present. From Tampico he may either return
to Vera Cruz by boat and thence to Mexico City,
or he may leave Tampico by rail for Monterey
or San Luis Potosi, and thence to Mexico City.
The only other cities which it would be ad-
visable to visit are Guadalajara, Puebla, Monte-
rey and San Luis Potosi, all within rail com-
munication with the capital, -the latter being on
the direct route from Mexico City to Laredo.
As to the west coast, a great part of the trade
is done with San Francisco and Los Angeles
jobbers. Previous to the war, German and
Spanish importers had a monopoly of the im-
port and export business in the principal cities,
and were in a position to control prices and con-
ditions generally throughout the whole terri-
tory. Since the war the large Spanish houses
1:24 INDUSTKIAL MEXICO
have been reaping the harvest, but many of the
smaller houses have succeeded in breaking away,
and are now dealing direct with exporters in
the United States. There are also a number
of very large and important Chinese houses in
Mazatlan, Guaymas, Magdalena, and Manza-
nillo who have taken a great part of the tra'de
formerly done by German houses.
All of the large importing houses in Mexico
City have salesmen travelling the territory, and
they rather resent the intrusion of manufac-
turers' representatives in that territory in
search of direct sales from the factory, espe-
cially where they are buying from the same fac-
tory. Salesmen who intend to visit that terri-
tory therefore should look into this phase of
the matter before leaving Mexico City. Infor-
mation can be had in Guadalajara in regard to
all the West Coast cities.
The cities on the National Railway line from
Laredo to Monterey, Saltillo and San Luis Po-
tosi do a large business with jobbers and ex-
porters along the border, and while some mer-
chandise is reshipped north from Mexico City,
as a rule that business should be done direct
from the United States.
Travel between Mexico City and Vera Cruz
is now comparatively safe, and the whole line
TRADE OPPORTUNITIES 125
is protected with blockhouses every few kilo-
metres through the danger zone. Business con-
ditions in Vera Cruz and Tampico are fair, but
handicapped by difficult communications with
the interior points, where there are consider-
able rebel activities, which is handicapping the
production and shipping of coffee, and cutting
off the consuming power of these rich and for-
merly prosperous localities, with its consequent
effect on sales of merchandise by Vera Cruz and
Tampico importers. But few of the large sugar
and coffee plantations in the State of Vera Cruz
are operating.
Travel on the National Tehuantepec Railway
across the Isthmus is possible, but somewhat
uncertain, and connections with Vera Cruz and
the north by rail are subject to rebel attacks.
New Enterprises
A company of Norwegian capitalists has un-
dertaken development enterprises upon a large
scale in the northern portion of the State of
Vera Cruz. Their plans include the develop-
ment of a waterfall for the production of light
and power to be furnished to the people of a
Jarge area. Lumber operations and the raising
of crops on a large scale will also be undertaken.
126 INDUSTKIAL MEXICO
The amount of capital invested in the company
is $20,000,000 American money, and the com-
pany expects to furnish employment to five
thousand men.
Announcement has been made of the organiza-
tion by another group of Norwegians of the
Banking Company of Norway and Mexico, with
headquarters in Mexico City and a branch in
Guadalajara. Besides the regular business of
banking, the institution will devote much atten-
tion to the enlargement of trade relations be-
tween Scandinavia and Mexico, and will seek
to attract capital to invest in the productive in-
dustries of Mexico.
A project is on foot in Mexico City for the
establishment of a series of packing houses at
various points on the coast of the State of Yu-
catan to handle the fish, oysters and other sea
products of that region. The supply is varied
and inexhaustible, and until the present time
little or no effort has been made to take advan-
tage of this source of wealth. It is reported
that the necessary capital has already been sub-
scribed and that operations will be commenced
in a very short time.
The Mexican consul at San Francisco has re-
cently communicated to the Mexican Govern-
ment the information that 80,000 Portuguese la-
TRADE OPPORTUNITIES 127
bourers, skilled in vine culture and wine making,
and who have been thrown out of employment
by the new prohibition laws of the United States,
wish to go to Mexico to establish the wine in-
dustry in that country. The Secretary of Agri-
culture and Fomento is said to have expressed
great interest in the proposition, and instruc-
tions have been sent to the Mexican consul in
San Francisco to inform the prospective immi-
grants that the Mexican Government will ex-
tend any facilities which would be of assistance
to them.
The wine industry in Mexico is to be greatly
increased in the near future, and the Depart-
ment of Commerce of Mexico is preparing a
report on the advantages in the way of soil, cli-
mate, etc., which different sections of this coun-
try would afford to growers and producers of
wines and liquors, as well as statistics on the
consumption of alcoholic beverages in Mexico.
In this connection there would probably be a
sale at present in Mexico for the machinery,
apparatus, stills, etc., taken from dismantled
distilleries for use in alcohol and liquor plants.
The Mexican Government has recently given
instructions for the construction in the aviation
shops in Mexico City of a number of war aero-
planes which will be stationed in different ]
r2S INDUSTKIAL MEXICO
tions of the Eepublic. These machines will in-
clude the latest devices in such matters, and will
be built entirely by native mechanics. The mo-
tors to be used are known as the "Aztatl," and
are the product of native inventive genius.
Manufacturers of paper, printing machinery
and inks will be interested to learn that there are
in Mexico today 439 newspapers, magazines and
periodicals, divided among the various States as
follows: Aguascalientes 9, Campeche 2, Coa-
huila 15, Colima 9, Chihuahua 11, Chiapas 5,
Mexico City 137, Durango 6, Guanajuato 28,
Guerrero 2, Hidalgo 4, Jalisco 26, Mexico
(State) 7, Michoacan 12, Nayarit 5, Nuevo Leon
16, Oaxaca 5, Puebla 18, Queretaro 3, San Luis
Potosi 9, Sinaloa 10, Sonora 10, Tabasco 5, Ta-
maulipas 13, Vera Cruz 27, Yucatan 34, Zaca-
tecas 9, Lower California 2. Of the foregoing
81 are daily papers, 51 are semi-weekly or tri-
weekly, 180 are weeklies and tri-monthlies, 33
are bimonthlies, 85 are monthlies and 9 are of
various terms of publication.
One of the largest rubber manufacturing con-
cerns in the United States is making investiga-
tions for the purpose of determining the most
suitable locations for the establishment of four
factories for the manufacture of tires and other
objects into which rubber enters. The city of
s
1 ;
li
w
TRADE OPPORTUNITIES 129
Mrxico will probably be one location, Monterey
another, Guadalajara the third, and Merida the
fourth.
Several months ago an automobile factory
was established in Monterey, and on June 24,
1919, there arrived in Mexico City the first ma-
chine turned out by this new enterprise. These
Mexican cars will be known as "El Monterey,"
and will be native built throughout. The pres-
ent capacity of the factory is 2,500 cars an-
nually. The Mexican Government will foster
the new industry by granting freedom from
taxes for a period of years, and the govern-
ment railways will transport the products of
the factory at reduced rates.
Manufacturing in Mexico
Mexico possesses the raw materials for prac-
tically all branches of industry, but they are un-
exploited at home and are exported to other
countries. There are some manufacturing es-
tablishments in Mexico, but with a few notable
exceptions they operate on a small scale, owing
to lack of machinery and capital. Among the
articles manufactured at the present time in
Mexico may be mentioned shoes, blankets, cali-
coes, cashmeres, fichus, beers, wines, furniture,
130 INDUSTRIAL MEXICO
pottery, matches, accoutrements, hats. Silk and
wax are manufactured animal as well as vege-
table.
The principal shoe factories are in Mexico
City, Leon, Guanajuato and Guadalajara. The
largest factory is the Excelsior, in the capital.
There are small shoe factories in all the Mexi-
can States, owing to an abundance of the raw
material. The greater number of hides are,
however, exported. There are factories for the
manufacture of textiles in Mexico City, Orizaba,
Puebla, Jalisco, San Luis Potosi and Queretaro,
practically all of them supported by French
and Spanish capital.
The brewing of beer is a flourishing industry
in Mexico, and there are large breweries in
Monterey, Orizaba, Toluca and Mexico City.
The malt and hops are at present imported, al-
though good results have been obtained in hop
growing experiments in certain regions. The
manufacture of tobacco is one of the few manu-
factures which have arrived at a state of per-
fection, cigars and cigarettes of very high grade
being made in Mexico City, Orizaba and Puebla.
There are two tobacco factories in Mexico City,
"El Buen Tono" and "La Tabacalera Mexi-
cana," whose buildings, machinery and general
arrangement are unrivalled in any part of Latin
TRADE OPPORTUNITIES 131
America. The first named is a French enter-
prise, and the second is Spanish.
Owing to the abundant supply of precious
hard woods, there is a growing industry in fur-
niture making. There are enormous supplies
of the raw materials for glass making, but the
existing glass factories are equipped with an-
tiquated machinery, and their products conse-
quently leave much to be desired.
Japanese Competition
Japanese merchants are making a determined
effort to capture a large share of Mexican trade,
and are offering merchandise of all kinds at
much lower prices than their competitors. A
significant event in this connection was the ar-
rival recently of twenty thousand tons of sugar
of superior quality at Salina Cruz, on the Pa-
cific coast side of the Isthmus of Tehuantepec,
directly from Tokyo. Agents of Japanese silk
mills were in Mexico in June, 1919, for the pur-
pose of establishing a central depot and opening
branches in all the large Mexican cities for the
sale of their products as well as of other lines
of dry goods. The Japanese also propose to
import various fibres produced in Mexico and
manufacture textiles therefrom.
132 INDUSTRIAL MEXICO
German Competition
A pamphlet issued in May, 1919, by the Ger-
man electrical trust indicates that Mexico will
be a fruitful field for German enterprise, and
proves that the propaganda of the Teutons did
not diminish to any great extent as the result
of military defeat. It says:
"In Munich there was formed in 1918 a Ger-
man-Mexican society composed of educated peo-
ple. The purpose of this society was to dis-
seminate information about Mexico, lend im-
petus to a study of Spanish, bringing about the
teaching of the German language and German
kultur in Mexican schools, inducing Mexican
salesmen to visit Germany and inducing Mexi-
can youths to attend German universities. A
monthly paper is also issued, entitled Deutsche
Mexicanische Rundschau."
In March, 1919, a similar society was formed
in Bavaria with a charter membership of two
hundred people.
In Eenthingen there was incorporated "Al-
meco," founded by industrial firms. Its pur-
pose was to facilitate the exchange of raw prod-
ucts and other commodities between the two
countries. There is also the information so-
TRADE OPPORTUNITIES 133
ciety of the "Deutsche Mexicanischer Anseid-
ler."
The pamphlet goes on to say that in 1913
many imported from Mexico goods to the
value of 26,000,000 marks, and exported goods
valued at 48,000,000 marks. Then there is made
this interesting statement.
"Seventy-five per cent, of Mexico's exports
found their way to the United States, which re-
iranls Mexico as its warehouse. Of course,
those exports will now go to Germany."
Giving details about hopes for relations with
Mexico, the pamphlet concludes as follows:
"In 1913 there were 3,000 Germans in Mex-
ico who were merchants, doctors, etc. They
moved in the best circles, and are pioneers
around whom our German immigrants will from
now on settle. Our imports will consist of met-
als, petroleum, fibres, fruits, woods, etc.
"Our first duty is to secure from Mexico large
imports of raw materials and not regard it as
a dumping ground for German goods."
American Automobiles in Mexico
During my recent trip to Mexico from the
Texas border to Vera Cruz one of the things
which surprised me most was the quantity and
134 INDUSTRIAL MEXICO
variety of American automobiles to be seen
everywhere. In Mexico City there is a greater
display of machines than one can find in many
an American city. On Sunday morning in
Chapultepec Park there is a parade of au-
tomobiles past the band-stand four lines deep,
two lines going in each direction, the cars be-
ing so numerous that they can only go at a
walking rate. Every make and type of Amer-
ican, French and British car is represented. In
the business districts, in addition to all kinds
of pleasure cars and motor trucks, there are
hundreds of jitneys which carry passengers for
short distances for ten centavos (five cents).
During the year 1918, 365 commercial auto-
mobiles, valued at $525,664, and 2,578 passenger
automobiles, valued at $1,653,545, were exported
from the United States to Mexico by American
manufacturers. In November, 1917, there were
in operation in Mexico City 2,165 automobiles,
1,329 of which were for private use and 836
for hire. Among the latter were 150 jitneys
and 33 taxis. There were also 2,457 coaches
or carriages in Mexico City, of which 900 were
for private use and the remainder were for
hire.
There has been an especially heavy demand
for popular priced touring cars and trucks
"JITNEYS" IN MEXICO CITY
A FULL "JITNEY" LOAD IN MEXICO CITY
TRADE OPPORTUNITIES 135
a demand which is traceable to the practical
disappearance of Mexico's most popular beast-
of -burden, the ox. During the revolution large
numbers of oxen were destroyed by the rebels
for their hides and this, together with the de-
struction of thousands of freight cars and the
general run-down condition of Mexican rail-
roads, has created a large and constantly grow-
ing market for automobiles. One American
salesman sold 800 cars in Mexico in six months
and during his travels through the country was
keenly impressed with the demand for motor
trucks throughout Mexico, both in the mining
districts and for passenger service." A type of
car in great demand is the five-passenger tour-
ing car painted black, with leather upholstery
and nickel trimmings. The type of motor pre-
ferred is six-cylinder with selective clutch, gear
box back of engine, full floating rear axle and
twelve-inch suspension. The straight side tire
equipment with sixty-inch tread is preferred.
In commercial vehicles the three-ton type with
three to four speed and rear wheel worm drive
is given the preference. Big cooling capacity
is essential, owing to the extreme heat in some
parts of the country.
There is a good demand for trailers and tow-
ing hooks.
136 INDUSTRIAL MEXICO
Orders for American cars are usually placed
on the basis of cash f. o. b. factory. Dealers
usually require a commission of 20 per cent, on
pleasure cars and 25 per cent, on commercial
vehicles. Mexican consular invoices are neces-
sary for shipment into the country, the Mexican
consul obtaining 3 per cent, of the invoice price
as his fee. Customs brokers charge $5.00 per
car for making entries and there is also a mu-
nicipal or octroi tax of l 1 /^ per cent. Corre-
spondence should, of course, be in Spanish.
There is no duty on catalogues and printed ad-
vertising matter. There are facilities in Mex-
ico for handling storage batteries, and speed-
ometres should register in kilometres.
Automobile importers in Mexico are doing
business today under very trying conditions,
among which may be mentioned the delay in ob-
taining goods, the heavy freight charges and
the lack of banking facilities for financing their
business. A number of the automobile agents
in Mexico have large showrooms in central lo-
cations, employ salesmen to travel the interior
and maintain large and well-equipped garages
and repair shops.
It is probable that there will be a very ma-
terial increase in the demand for automobiles
in Tampico. Several of ^ the most important
TRADE OPPORTUNITIES 137
American motor truck manufacturers are rep-
resented in that city, and there is a slow but
sure increase in the use of trucks. The light
serviceable type is the most popular, but the
oil companies are interested in trucks suitable
for heavy and hard work. Practically all of
the medium priced cars are to be seen on the
streets of Tampico and on the near-by motor
roads. The dealers handle all makes of tires
and prices range from $24 for cheap tires to
$118 for the best.
In Yucatan there are about 1,000 automobiles,
the greater number of them in the city of Me-
rida, which is often referred to as the spotless
town of Mexico. Nearly all standard cars and
tires are in use. Motor trucks have recently
been put into use by the Mexican military or-
ganization in Chihuahua, where operations
against Villa necessitate, a considerable quan-
tity of motor equipment. There are no exclu-
sive dealers of automobiles or trucks in Chi-
huahua owing to its close proximity to El Paso,
where most of the different manufacturers are
represented and from which point that terri-
tory is usually controlled.
In sending automobiles by rail to Mexico
City they are consigned to a forwarding agent
at the border, usually Laredo, Texas, who at-
138 INDUSTRIAL MEXICO
tends to all details connected with transfer
across the Rio Grande (American railway cars
do not cross the river), customs, etc. Freight
rates from the Mexican side at Nuevo Laredo
to Mexico City for automobiles boxed or crated
are 67.65 pesos in carload lots and 102.48
pesos in less than carload lots per 1,000 kilos
(equal to one ton). Value of the peso is 50
cents.
By water from New York to Vera Cruz the
rate for automobiles boxed is 30 cents per cubic
foot. The railroad rate from Vera Cruz to
Mexico City is 38.40 pesos per 1,000 kilos in
carload lots, including handling charges. In
less than carload lots a minimum is fixed for
each car. If the actual weight of the car is 750
kilos or less and does not exceed 1,750, the
minimum weight charged is 3,000 kilos. Over
1,750 the minimum weight is 4,000 kilos, on the
basis of the carload rate. In carload lots the
minimum weight is 10,000 kilos.
Laundry and Cleaning Machinery
Climatic conditions in Yucatan are such that
light washable clothing is generally worn the
year around by all classes of people. During
the mild months of the winter the well-to-do
TRADE OPPORTUNITIES 139
classes use light woollen garments, such as
serge. During the hot, dry, and very dusty
months of the long summer, garments have to
be laundered with great frequency and in this
connection it may be remarked that the Yuca-
tecans, from the common Indian labourers up,
are among the most cleanly people in the world,
utmost cleanliness of person and clothing being
a matter of racial and regional pride.
The laundry of the common people is done
in the home, while that of the better classes is
done by hired labour and in Spanish and Chi-
nese laundries. No machinery is used in the
cleaning of clothes. There are no steam laun-
dries and no dry cleaners. It would seem that
modern installations would pay a good return
on investment. The matter of opening modern
cleaning establishments does not appear to have
received much attention and its promotion prob-
ably could best be attempted by correspondence
and advertising with young and progressive
Yucatecans who have lived in the United States,
who know the advantage of mechanical cleaning
and who are interested in manufacturing and
importation and installation of machinery.
140 INDUSTRIAL MEXICO
American Dyes in Mexico
The Mexican consumption of dyes amounts to
about $1,500,000 (United States currency) an-
nually, and there is a splendid opportunity for
Americans to capture the trade formerly con-
trolled by German houses. Complaints are
made, however, by representatives in Mexico of
American manufacturers that it is not possible
to secure a complete line from any single dye
concern in the United States. Exporters and
selling agents in America as a general thing
represent a number of manufacturers, with the
result that the shades and concentrations of the
dyes do not run uniform over a number of ship-
ments. The impression obtains in Mexico that
American houses are waiting to renew relations
with the local German firms who, previous to
the war, controlled the dye business in Mexico.
A valuable opportunity is being lost by any
American manufacturer who entertains this in-
tention, for, of course, German dye importers
in Mexico will renew their relations with Ger-
man factories as soon as this is possible. An
active representative with a small stock for im-
mediate delivery, and the ability to guarantee
a continuous supply of the principal shades,
uniform in colour and concentration, would find
TRADE OPPORTUNITIES 141
it easy to introduce and establish a line of
American dyes at present.
Sport in Mexico
Manufacturers of sporting goods and equip-
ment will be interested to learn that many Amer-
ican sports have successfully invaded Mexico,
and one of the first letters which I received
on my arrival in Mexico City in April last was
an invitation to attend a baseball game. There
is a fine baseball park near the Paseo de la Re-
forma, and the Mexicans put up a very good
game. The Spanish residents in the capital
have taken up football and there are a number
of clubs, the principal one being the "Espaiia."
Football is also very popular in the States of
Hidalgo and Puebla. Boliche is of course
played all over Mexico, and there are many good
tennis and golf clubs. Pelota is another fa-
vourite game.
Horse racing has always been a favourite
sport in Mexico, and there are hippodromes in
Mexico City and in Cindad Juarez, Chihuahua.
Physical culture is given by experienced teach-
ers in gymnasiums in Mexico City and else-
where, wrestling, jiu jitsu and boxing also be-
ing taught. The Y. M. C. A. in Mexico City is
142 INDUSTRIAL MEXICO
a centre for the teaching of all sports, includ-
ing swimming.
Bull fighting has been prohibited in Mexico
City, and at the time of my visit the bull ring,
holding forty thousand people, was used on Sun-
days for grand opera. We attended a perform-
ance of "Ai'da," excellently rendered by an
Italian Grand Opera Company from the United
States.
Trade Bodies in Mexico
Following is a list of the local Chambers of
Commerce in Mexico, which are legally recog-
nized and in affiliation with the National Cham-
ber of Commerce, whose headquarters are in
Mexico City:
City of Aguascalientes, State of Aguasealientes.
City of Acapulco, State of Guerrero.
City of Campeche, State of Campeclie.
City of Juarez, State of Chihuahua.
City of Mexico, Federal District.
Industrial Chamber of Agriculture and Mines,
Juarez, Chihuahua.
City of Colima, State of Colhna.
City of Cordoba, State of Veracruz.
City of Caiianea, State of Sonora.
City of Victoria, State of Tamaulipas.
City of Chihuahua, State of Chihuahua.
TRADE OPPORTUNITIES 143
Industrial Chamber of Agriculture and Mines, City
of Chihuahua.
City of Durango, State of Durango.
City of Guadalajara, State of Jalisco.
City of Guanajuato, State of Guanajuato.
City of Guaymas, State of Sonora.
City of Hermosillo, State of Sonora.
City of Irapuato, State of Guanajuato.
City of Jalapa, State of Veracruz.
City of Leon, State of Guanajuato.
City of Laguna del Carmen, State of Campeche.
City of Matehuala, State of San Luis Potosi.
City of Matamoros, State of Tamaulipas.
City of Monterey, State of Nuevo Leon.
City of Morelia, State of Michoacan.
City of Merida, State of Yucatan.
City of Orizaba, State of Veracruz.
City of Puebla, State of Puebla.
Chamber of Agricultural Industry, City of Puebla,
State of Puebla.
Chamber of Commerce and Agriculture, City of
Paso del Macho, State of Veracruz.
City of Queretaro, State of Queretaro.
City of Saltillo, State of Coahuila.
Chamber of Commerce, Industry and Agriculture,
City of Tampico, State of Tamaulipas.
City of Tulancingo, State of Hidalgo.
City of Tehuacan, State of Puebla.
City of Tepic, State of Nayarit.
City of Toluca, State of Mexico.
144 INDUSTEIAL MEXICO
Chamber of Commerce of the Laguna District, City
of Torreon, State of Coahuila.
Chamber of Agriculture of the Laguna District,
City of Torreon, State of Coahuila.
City of Veracruz, State of Veracruz.
City of Zacatecas, State of Zacatecas.
The committee on transportation of the
Mississippi Valley Association trade mission to
Mexico reports that arrangements have been
made to facilitate the handling of parcel post
and express packages over the border and
through customs inspection. It finds that one
of the most serious handicaps to trade expan-
sion to the south lies in the fact that the Amer-
ican railways will not permit their cars to be
through routed to Mexican points, which en-
forces expensive and tedious reloading into cars
of the Mexican National Railways.
A scheme has been worked out whereby a
car may be billed through if the shipper fur-
nishes a bond for $2,500 to insure the return of
the car from Mexico and pays $75 for the return
of the car empty over Mexican lines. This is a
costly and unsatisfactory arrangement. The
committee will appeal directly to the railroad
administration to make arrangements for
through routing and through bills of lading.
Until such a plan is perfected the mission ad-
8
3
s
w
*
H o
!!
1!
O Q
8
u
Z
i
I
TRADE OPPORTUNITIES 145
vises the shipment of all goods, except those
consigned to cities in the north of Mexico, by
boat to Tampico and Vera Cruz.
The Present an Opportune Time
The committee on wholesaling and manufac-
turing sales, of the Mississippi Valley Associa-
tion, of which Walter C. Alward of the Chi-
cago office of Carson, Pirie, Scott & Co. is chair-
man, says:
"It is the opinion of the committee that the
present is an opportune time for American con-
cerns to open the way for a larger and per-
manent trade with Mexico. Conditions in the
country today are no worse, as far as the com-
mittee can determine, than they have been for
the last few years, while in many respects they
have improved. Little could be gained either
by individual business interests or by the coun-
try in staying out of Mexican markets at this
time, and there is much to be said in favour
of immediately entering that trade." This is
the opinion of all those who have investigated
opportunities for selling merchandise of the sort
carried by the average city shop and of those
seeking the products of Mexico.
146 INDUSTRIAL MEXICO
Mexican Exports and Imports
Following is a list of the articles in general
export and import trade :
Exports
Coffee.
Henequen.
Guayule (Mexican Rubber).
Hule (Para Rubber).
Cocoa.
Guano.
Fibres.
Lechuguilla.
Ixtle.
Zapupe.
Palma.
Candelilla (Vegetable Wax).
Zacaton Root.
Hides (Crude and Tanned).
Cotton.
Cotton Seed.
Pochote (Vegetable Silk).
Plaster.
Asbestos.
Graphite.
Carey.
Pearl Shells.
Chicle (Raw Chewing Gum).
Bones.
TRADE OPPORTUNITIES 147
Wool.
Petroleum.
Oil Seeds.
Castor Oil.
Ajonjoli.
Almond.
Cayaco or Coyol.
Peanut.
Woods (Construction, Tanning and Colouring).
Cigarettes.
Cigars.
Tobacco.
Fruits.
Algas (Marine).
Vanilla.
Tecalli (Mexican Marble).
Marble.
Medicinal Plants.
Magnesite.
Minerals (Gold, Silver, Copper, Lead, etc.).
Salt.
Sarsaparilla.
Sodium Carbonate.
Colouring Earth.
Imports
Artificial Flowers.
Asbestos.
Asphaltum (Manufactures of).
Athletic Goods.
148 INDUSTRIAL MEXICO
Babbitt Metal.
Shoe Paste and Polish.
Brass (Manufactures of).
Oatmeal.
Table Food Preparations.
Brushes.
Buttons.
Automobiles.
Automobile Trucks.
Automobile Accessories.
Cars.
Wagons and Wheelbarrows.
Celluloid Products.
Cement (Hydraulic).
Sulphuric Acid.
Baking Powder.
Calcium Carbide.
Copper, Sulphate of.
Chemicals, Drugs, Dyes, Medicines.
Patent Medicines.
Soda, Salts and Preparation of.
Clocks.
Coal (Bituminous).
Coke.
Confectionery.
Copper (Pigs, Ingots, Bars, Wire, Plates and Sheets)
Cotton Duck (Bleached and Unbleached).
Corsets.
Knit Goods (Wearing Apparel).
Wearing Apparel (other than knit).
TRADE OPPORTUNITIES 149
Fire Brick.
Tiles.
Batteries.
Electrical Goods in General.
Electrical Machinery.
Telegraph and Telephone Instruments.
Dynamite.
Bags.
Cordage.
Twine.
Smoked Pish.
Pickles.
Oysters.
Canned Fish.
Flavouring Extracts.
Fly Paper.
Dried Fruit.
Metal Furniture.
Glass Bottles.
Class Jars.
Glass Demijohns.
Glue.
Jewellery.
Hops.
Kclting.
Boots and Shoes.
I'riuter's Ink.
Scientific and Optical Instruments.
Bolts, Nuts, Rivets and Washers.
Castings.
150 INDUSTRIAL MEXICO
Cutlery.
Enamel ware.
Firearms.
Engines (all kinds).
Engines (parts).
Machinery (all kinds).
Machinery (parts).
Pipes and Fittings.
Radiators.
House Heating Apparatus.
Boilers.
Stoves.
Ranges.
Structural Iron and Steel.
Tin Plates.
Ternepletes.
Tools (all kinds).
Wire (Plain).
Wire (Barbed).
Metal Polish.
Motor Boats.
Piano Players.
Naval Stores.
Mineral Oils (Petroleum Products).
Vegetable Oils.
Paints.
Varnish.
Books, Music, Maps, Engravings, Etchings, Photo-
graphs, and Printed Matter.
Paperboard.
TRADE OPPORTUNITIES 151
Paper Hangings.
Printing Paper.
Wrapping Paper.
Writing Paper.
Paraffin and Paraffin Wax.
Pens and Pencils.
Perfumeries.
Cosmetics.
Plated Ware.
Roofing Felt.
Shoe Findings.
Toilet Soap.
Surgical Appliances.
Tin Products.
Toys.
Umbrellas.
Zinc Products.
A bank in San Francisco in its monthly letter
for July, 1919, makes the following statement:
Our trade with Mexico, while important, is trifling
compared with its possibilities, and needs systematic
and probably organized exploitation. Western Mex-
ico has not been seriously affected by the disturbances
in that country, which, in any case, seem to have de-
generated into ordinary banditry which cannot last
much longer in the face of modern means of suppres-
sion. To the eight or ten ports of call on the west
coast we now ship by regular steamer lines between
60,000 and 70,000 tons of general merchandise and
152 INDUSTRIAL MEXICO
mining supplies, besides lumber and whatever is taken
by small tramp steamers. Normally the ports on the
east side of the Gulf of California should get much
more by rail, but the rail service is through the dis-
turbed district. We import very little except from
Salina Cruz, from which we get coffee and some other
tropical products, the tropical zone beginning a little
north of the southern extremity of the peninsula of
Lower California. All these ports have more or less
extensive hinterlands, that tributary to Acapulco being
especially large and attractive. As a practical propo-
sition as distinguished from talk leading to nothing in
particular, this west coast of Mexico would seem to be
one of the first regions to be studied. This study
would have to be made by agents who speak the local
language, who are sympathetic with the Latin Ameri-
can nature and who have adequate capital at their
demand for both trade and investment.
Trade-Marks and Patent Laws
Registration of trade-marks in Mexico is
valid for a term of twenty years and may be
renewed. The fees payable in connection with
applications are as follows : Government regis-
tration fee 5 pesos ; stamp on power of attorney
10 centavos; stamp on application 50 centavos;
stamps on application for legalization of con-
sular certificate and on the certificate of legaliza-
tion 50 centavos each. Applications must be
TRADE OPPORTUNITIES 153
typewritten on paper 330 by 215 millimetres
with a margin of 54 millimetres on the left. The
application must be accompanied by a descrip-
tion of the mark with claims in triplicate, an
electrotype, twelve copies of the mark and a
power of attorney if application is not made by
the owner. A separate application must be
made for each mark to be registered. Owner-
ship of trade-marks in Mexico is based upon
priority of application but during the first two
years it is possible to secure the cancellation of
marks improperly registered. After two years
registration is conclusive proof of ownership.
The law provides for the protection of commer-
cial and trade names without registration. No-
tice of applications for registration is supposed
to be given by publication but as the applica-
tions are usually published about a year late it
is unsafe to rely upon such notice.
Mexico is a party to the international ar-
rangement for the registration of trade-marks
with headquarters at Bern and by a single reg-
istration in Bern citizens of countries adhering
to the convention obtain registration in Mexico
as well as in the other signatory countries.
This form of registration is not open to citizens
of the United States. Neither is Mexico a party
to the Pan American Trade-mark Convention
154 INDUSTRIAL MEXICO
under which a bureau for international registra-
tion has recently been established at Havana.
Applications must therefore be made directly to
the Mexican Office of Patents and Trade-marks.
Registered trade-marks as well as electrotypes
for use in connection with applications must
show the words "Marca Industrial Registrada"
or "M. Ind. Rgtrda" if for factory marks and
the words " Marca de Comercio Registrada"
or "M. de C. Rgtrda" if for marks used only
by dealers. The registration number and the
date of registration must also be shown and a
place for these data should be left on the electro-
type. Unless the mark consists solely of a de-
sign or figure without words, the name of the
applicant and the location of the establishment
must also be shown and these must likewise ap-
pear on the electrotype.
Patents are registered at the Oficina de Pat-
entes y Marcas, Calle de Filomeno Mata 8, Mex-
ico, D. F. The applications must be typewrit-
ten on paper the same size as that indicated for
trade-mark applications and must bear a stamp
of fifty centavos. The application should show
the name of the inventor, the name given to
the invention, the object of the invention, the
name and residence of the agent and address of
the applicant, and must be accompanied by a
TRADE OPPORTUNITIES 155
triplicate description of the patent ending with
a "reivindicacion," that is, a clear statement
of the elements constituting the invention.
Triplicate drawings must also be furnished as
well as a model if required. If the application
is satisfactory, the applicant is directed to pay
the fees. The fee for a provisional patent valid
for one year is five pesos, while for a regular
patent valid for twenty years the fee is forty
pesos. A provisional patent may be converted
into a regular patent within one year upon pay-
ment of an additional fee of thirty-five pesos.
For examinations to determine the novelty of
an invention, a charge of twenty pesos is made.
No working of the patent is required but after
three years the courts may direct patentees to
license the use of inventions by others if the in-
vention is not available to the public on a suffi-
cient scale. Before such compulsory license
will be granted, however, a hearing is held and
the compulsory license may be revoked at the
end of two years. One-half of the net profits
arising- in such cases are given to the owner of
the patent.
The Mexican trade-mark and patent laws have
remained practically unchanged for a number
of years. Previously there was considerable
complaint about the pirating of American trade-
156 INDUSTRIAL MEXICO
marks in Mexico, but apparently such cases are
less frequent now. The separate States have
no jurisdiction in matters relating to trade-
marks and patents. Applications must be in
the Spanish language and it is preferable that
they be made out by the representative of the
applicant in Mexico. It is also preferable that
the electrotype be made up in Mexico in order
that all of the required data may be included.
Protection for trade names may be secured by
publication in the prescribed form. A stamp
of one peso must be attached to the application
for publication.
CHAPTER VIII
SUGAB AND COFFEE PLANTATIONS
Sugar mills resuming operations. Equipment
needed. Opportunities for American capital. Large
scale operation. Coffee production.
OWING to the destruction of some of the cane
sugar producing factories in the State of More-
los, but recently freed from the grip of the
bandit Zapata, and to rebel activities in the State
of Vera Cruz, the production of sugar in Mex-
ico during the last few years has been consider-
ably reduced so much so that in 1918 it was
necessary to import thousands of tons from
Cuba to make up the amount needed for do-
mestic consumption. In 1911, before the revolu-
tion, the production of Mexican sugar amounted
to 160,000 tons.
The sugar mills are, however, resuming oper-
ations in many parts of Mexico, and present
prospects are for a crop of 115,000 tons for
1919-20. In the west coast States of Sonora
and Sinaloa, where the irrigated sugar planta-
tions of the Almada Company, Redo & Co. and
the United Sugar Companies (American), are
157
158 INDUSTRIAL MEXICO
located, rebel activities have had hardly any
effect upon operations, which were only inter-
fered with once, in 1916, by a Villista raid. The
Cuatotolapam sugar mill on the San Juan River
in the State of Vera Cruz, owned by E. V.
Weems of Winchester, Virginia, is running,
and so are the following sugar mills: Oaxa-
quefia mill at Santa Lucrecia, Vera Cruz, the
Santa Fe mill at Tlacotalpan, the Paraiso Novil-
lero mill and the Motzorongo mill, both in the
State of Vera Cruz.
One of the leading sugar mills in the State of
Oaxaca is that at Niltepec, on the Pan American
Railway. The annual production of this plan-
tation and mill is 1,000 to 1,500 tons of white
sugar and 100,000 to 125,000 litres of alcohol
of ninety-six degrees. The company is at pres-
ent planning to extend its plant in order to in-
crease its output to 3,000 tons of sugar a year.
Another sugar mill and plantation in the same
State are located in Laolloag, producing each
year about 300 metric tons of sugar, although
capable of turning out 1,000 metric tons. A
third company owns a plantation in Mixtequilla,
about four kilometres from Tchuantepec. The
output of this estate ranges between 160 and
165 metric tons a year.
As a result of my recent tour through Mexico
SUGAE PLANTATIONS 159
I met N. A. Helmer, a New York engineer who
specializes in sugar machinery, and who was
down there making an extensive investigation
regarding the conditions surrounding the opera-
tion of the irrigated sugar plantations of the
United Sugar Companies located at Los Mochis,
State of Sinaloa, about 600 miles south of No-
gales, Ariz., and fourteen miles south of the
port of Topolobampo, which is the terminus
of the Kansas City, Mexico and Orient Rail-
road.
There are two distinct plants at Los Mochis,
known as the Aguila and Mochis, the acreage of
the two plantations being about 140,000 acres,
approximately one-tenth of which is under cul-
tivation. The cane grown here is mostly a pur-
ple variety, fairly straight, with a rind exceed-
ingly hard and high fibre content never less
than 12 per cent, and sometimes as high as 16
per cent. Cultivation is largely carried on with
traction engines, although mules and oxen are
also used. The labour is largely Indian and
Mexican, housed in colonies located near the
points where they are employed. To induce la-
bour to remain, supplies are sold to them at
cost or less from the commissaries operated by
the company. There are two i mention plants
affording an ample water supply, the system of
160 INDUSTRIAL MEXICO
canals being complete and highly organized.
The market for the products of these planta-
tions is entirely Mexican. They grow about
twenty-five tons of sugar cane to the acre, yield-
ing about 10 per cent, of white sugar and about
three gallons of alcohol to the ton of cane
the alcohol being about 96 per cent, anhydrous.
Manufacturing costs are about $12 per ton.
The market for sugar is along the west coast
to Mazatlan and large quantities are shipped
north to Nogales, thence in bond to El Paso and
Laredo as distributing points to Central and
Eastern Mexico. The market does not demand
an extremely high grade of sugar. Only one
grade is produced ; namely, a fine grained hard
cube sugar sold in paper-lined sacks.
In talking over the political conditions in the
districts visited by Mr. Helmer he said, "My
observations have led me to believe that the
newspaper reports of outrages are exaggerated
and that the conditions are far better than those
existing twenty-five years ago in Kansas or
other poorly policed agricultural States of the
West. I believe that conditions in Mexico will
improve rapidly as soon as our government as-
sists Mexico by permitting the introduction of
military supplies on the distinct understanding
that effective repressive measures are to be un-
SUGAE PLANTATIONS 161
dertaken against brigandage of any descrip-
tion, so as to permit the demobilization of a por-
tion of the labour now in the military service. M
Equipment Needed by Sugar Plantations
The equipment needed by the sugar industry
includes evaporating machinery, such as vacuum
pans and multiple effect evaporators, boilers,
pumps, piping, valves, fittings, fire brick, struc-
tural steel for buildings, tank material, distilling
machinery, cotton and jute sacks for sugar, cans
(and boxes to contain them) for alcohol, casks,
cooperage machinery, electrical equipment for
lighting and power, hydro electric machinery,
plantation railroad equipment, mechanical
ploughing equipment, agricultural tools, live
stock, chemicals for clarification of sugar juices,
office equipment, and internal combustion mo-
tors.
The sugar industry in Mexico offers one of
the most productive opportunities for the in-
vestment of American capital and the introduc-
tion of modern machinery. Mexico is in many
respects an ideal sugar producing country, and
it might rank with Cuba if as much attention
were given to the crop in the one country as in
the other. Sugar cane grows in practically
162 INDUSTEIAL MEXICO
every State in the Republic, and it is due to the
primitive methods employed that Mexico has
not entered more largely into the sugar export
trade. Plantations of sugar cane covering in
all hundreds of thousands of acres exist in the
States of Puebla, Morelos, Vera Cruz, Oaxaca,
Sonora and Sinaloa.
The industry is at present carried on both by
the wealthy planter, with his hundreds of thou-
sands of dollars invested in lands and refineries,
and by the poor renter, with his few acres of
ground, his wooden rolls and copper kettle.
The rich man produces the refined white sugar,
and the poor man produces the various classes
of brown sugar, known in Mexico as "pilon-
cillo" and "panocha," which when fresh re-
sembles maple sugar, and which are used to
sweeten beverages.
Lands on the elevated levels yield less but
richer cane than that planted on the lowlands,
and attempts in recent years to grow the sugar
cane on the plateau have met with decided suc-
cess. From twenty-five to forty tons of cane
per acre is stated to be the average yield on the
elevated plantations and from forty to sixty
tons in the tropical lands. The cane, especially
on the Gulf slope, grows to an enormous size,
SUGAR PLANTATIONS 163
and does not need a heavy outlay for its irriga-
tion and cultivation.
It is safe to say that not more than 10 per cent,
of the land available in Mexico for the planting
of sugar cane is utilized. There is a large field
in the country for the best class of refining
factories, although before the revolution there
wore over two thousand sugar mills in Mexico,
large and small. There is a tendency to in-
crease the acreage under cultivation and to mod-
ernize the methods in the refining of the raw
material.
It is in large scale operation that real money
is to be made in Mexican sugar. For a planta-
tion having 6,000 acres in cane, with the proper
machinery and buildings, the working capital
should be about $1,250,000, exclusive of the land.
Such a plantation would handle about 1,000 tons
of cane a day of twenty-four hours. They would
probably grind about 120 days in the year, which
would moan that they would have to raise 120,-
000 tons of cane. The average cost of cane in
Mexico should not exceed $2.50 a ton delivered
to the factory.
Mr. Ilrlmer was kind enough to furnish me
with some operating data which showed that a
modern factory operating on average cane from
164 INDUSTRIAL MEXICO
irrigated lands would produce about 10 per
cent, of white cubed sugar, and this cane being
of a very high fibre content would almost sup-
ply all of the fuel required to manufacture the
sugar, the limit to the fuel economy being the
extent to which the exhaust steam was utilized
in multiple effect and for heating the juices.
On new alluvial lands, the quantity would be
generally less on account of the rank growth of
the cane tending to produce gums and invert
sugars rather than sucrose or crystallizable
sugar, although after a term of years the juices
would become richer and the tonnage of cane
decrease.
The average Mexican factory for the produc-
tion of sugar contains a great deal of very high-
class and expensive machinery, but as a gen-
eral thing very little attempt is made to obtain
the engineering refinements, particularly in the
matter of heat economy, that so distinguishes
the modern Cuban or Hawaiian factory, and, to
an even greater degree, the American beet sugar
factory.
It would appear that in the reconstruction of
such plants as may have been damaged during
the revolutionary period, it would be desirable
for the owners to study this feature of plant
COFFEE DRYING NEAR JALAPA, MEXICO
GRADING COFFEE IN MEXICO
SUGAR PLANTATIONS 165
equipment or engage an expert, as the use of
additional fuel requires a great deal of com-
mon labour to obtain it, considerable transpor-
tation equipment to bring it to the plant, addi-
tional labour to use it, and, most serious of all
is the fact that wood fuel is a very scarce
article except on the coastal plain along the
Gulf.
Coffee
Although the competition with Brazil is
keenly felt by coffee planters throughout Mex-
ico and Central America, coffee growing has not
decreased except in certain districts, notably in
Vera Cruz, where rebel activities have inter-
fered with production and shipping. The zone
with the largest comparative production is to
be found contiguous to the Isthmus of Tehuan-
tepec. In general the State of Colima, with
some districts of the States of Puebla, Morelos,
Jalisco, Hidalgo, Michoacan, Mexico, and Tepic,
produce coffee crops, and while Vera Cruz in
normal times leads all other States in the quan-
tity of its output, the State of Colima and the
Uruapam district of the State of Michoacan,
grow the finest quality. It was from a planta-
tion in Colima that a shipment of coffee was
166 INDUSTRIAL MEXICO
annually made to the former German Kaiser.
Coffee in Mexico is generally grown at an
elevation of 2,000 to 5,000 feet. In certain dis-
tricts the plantations are situated below 1,000
feet, but it is a recognized fact that coffee grown
at such low levels is inferior in quality. The
only redeeming feature is that the quantity pro-
duced is so much greater, which compensates
the planter for the lack of flavour and conse-
quent lower price. The production per acre
runs from 250 to 500 pounds. These results are
obtained from ordinary cultivation, but they
can be greatly augmented by improved methods,
as no plant more readily responds to high cul-
tivation than the coffee tree.
The amount of coffee grown in Mexico in
normal times varies from 77,000,000 to 110,-
000,000 pounds, and the amount exported is
about 39,600,000 pounds. The number of coffee
trees to the acre varies from 500 to 1,000. The
usual life of the tree is about forty years, but
it is in its prime from the sixth to the thirteenth
year. After the plantation is well organized
and on a paying basis, it is only necessary for
the owner to be on it during the picking season,
which comes in the delightful months of winter.
In fact it is perfectly feasible for a man to run
a fruit farm in the United States and a coffee
SUGAR PLANTATIONS 167
plantation in Mexico at the same time ; thus the
winter season, which is a dead loss to many
American agriculturists, could be used by them
in coffee production. It cannot be too strongly
emphasized, however, that bandits and rebels
are still active in some of the best coffee grow-
ing districts, and no American should venture
either his money or his person until he is as-
sured of adequate protection to life and prop-
erty.
CHAPTER IX
CREDIT AND BANKING
Local banks. American trade largely on cash basis.
Bank credits. Sales terms of American manufactur-
ers trading with Mexico. Mexican bank finances
shipments. New Banking Law.
THE business being done at present by local
banks in Mexico City consists almost entirely
of foreign exchange transactions, and even in
this line of business they have to meet the com-
petition of street brokers, who are able to
handle such transactions at a smaller margin
of profit for the reason that they are under little
or no expense.
Some of these banks are handling commercial
credits to a limited extent, and make advances
on Bill of Lading with insurance policy attached
covering local shipments, at interest charges of
from 3 to 5 per cent, per month. One local
bank is financing a limited number of import
shipments from the United States through their
New York correspondents, but only for the ac-
commodation of old clients, and usually at terms
not to exceed thirty days.
168
CKEDIT AND BANKING 169
Deposits are accepted by banks up to limited
amounts, and in some cases a charge of 1 per
1 . is made for the privilege, the banks having
neither the means nor the desire to invest money
entrusted to their keeping. The usual loan and
discount features of the banking business are
not being handled by local banks, and the in-
terest on such loans as are made has been as
high as 2 per cent, per month.
In other words, the business now being done
by these institutions is on a day-to-day basis,
with no evidence of that permanency and sta-
bility which is essential to a successful banking
business. The lack of confidence and apparent
feeling of uncertainty which prevails among
bankers in Mexico today may be explained by
the fact that many of them have passed through
the difficult days of the revolutions, and have
suffered losses arising from the chaotic mone-
tary situation which prevailed until the present
gold standard was adopted. As a result the
banking business is being conducted in such a
way that if these institutions were called upon
to liquidate, they would be able to do so at short
notice, and a minimum loss.
This lack of banking facilities in the real sense
of the term has occasioned great difficulty in
local commercial transactions by eliminating the
170 INDUSTRIAL MEXICO
use and advantages of credit almost entirely,
and taken in connection with the lack of circu-
lating medium which prevailed for a time, has
been a distinct handicap commercially.
American trade with Mexico during the last
four and a half years has been on a strictly
cash basis with few exceptions. American com-
mission merchants and manufacturers' agents
and representatives have been obliged to insist
on a partial payment in cash of the invoice value
of import orders, the balance usually covered
by sight draft against documents, payable either
in New York or at a Mexican port of entry.
A considerable share of business being placed
by Mexican importers is being financed by cred-
its opened by them with New York banks against
which shippers may draw at sight for value of
invoice, and some of the larger importers in
Mexico have found it profitable to appoint buy-
ing agents in New York and elsewhere who at-
tend to their purchases, the shipping of their
orders, and in some cases to the payment of in-
voices. For this service a commission on total
annual purchases is paid, the amount of the
commission varying with the nature of the busi-
ness, but usually not over 5 per cent.
This latter arrangement has been satisfactory
to importers in Mexico because it enables them
( IvKDIT AND BANKING 171
to take advantage of the cash discount allowed
by the factory, and by bringing them into closer
relations with the manufacturer, insures them
the best export prices, rapid handling of ship-
ments, and close contact with the developments
of the trade in their line of merchandise.
An intimate knowledge of business methods
in Mexico, of the intricacies of the Mexican
tariff and especially of the quality and price of
the merchandise saleable in Mexico are requi-
sites and essentials of handling such a business
successfully by agents in the United States.
Under present conditions there is a large field
in Mexico for the development of this branch of
export business, and reliable houses in the
I" ni ted States which may be equipped to handle
it could make important connections in Mexico,
especially if they were willing to finance pur-
chases themselves instead of being obliged to
ask the purchaser in Mexico to open a credit
in their favour for the payment of invoices.
It is certain that the bulk of Mexico's import
trade will be done in the future on a credit basis,
and while our proximity will always give us a
certain advantage in competition with Euro-
pean manufacturers, other factors such as price
and quality being equal, they have on the other
hand the distinct advantage of entering the field
172 INDUSTRIAL MEXICO
prepared to extend credit while American man-
ufacturers and exporters with but few excep-
tions are still trying to maintain a cash basis.
It is apparent that our competitors for Mexi-
can trade are closely in touch with the situa-
tion and its possibilities for the future, and have
been quick to see the advantage of the entering
wedge which liberal credit terms will give them
in re-establishing their former trade with Mex-
ico. In a word, they are ready to accept what-
ever of risk there is in the situation, and to be
successful we must do likewise.
There are in Mexico many houses of entire
responsibility in every line of trade, and the
matter of extending credit should be left to the
discretion and good judgment of the representa-
tive or agent of the manufacturer or exporter
who is on the ground, and who by careful selec-
tion and personal contact with the most impor-
tant concerns will be in the best position to de-
termine whether or not credit should be ex-
tended, and on what terms. The personal in-
vestigation on the part of the man in the field
should in all cases be supplemented by a report
from a reliable bank with American connections,
or from a credit agency.
Owing to the number of inquiries received re-
garding present credit conditions in Mexico, the
CREDIT AND BANKING 173
National Association of Credit Men has recently
completed an investigation of the sales terms
employed by representative members of that
Association who are doing business with Mex-
ico. The following are extracts from the replies
received from firms handling various lines in
demand in Mexico:
Manufacturers of Stockings. All of our busi-
ness with Mexico for some time past has been
on a cash in advance basis.
Knitt'unj Company. We have several very
reliable customers in that Republic to whom we
have been shipping merchandise regularly for
years. This merchandise goes forward to them
with draft attached to documents which are de-
livered against the acceptance of draft at sixty
days' sight. We have also a number of custom-
ers who have just started with us from Mexico,
who have been sending us cash or draft with
their orders. We believe that the general busi-
ness condition in Mexico has not improved so
materially, but believe this country will be very
desirable in the next six months.
Cotton Goods. Owing to conditions existing
in Mexico we required, until recently, cash in
Xc\v York, but have within the past few weeks
decided to ship merchandise to the best of the
Mexican houses on a basis of sight draft at des-
174 INDUSTRIAL MEXICO
tination or thirty or sixty days' accepted draft
against documents.
Manufacturers of Oil Cloth. We are making
shipments to Mexico under three sets of terms,
namely, cash in New York before shipment goes
forward, sight draft documents attached, and
open credit (cash upon receipt of documents).
While we have been extremety careful and still
are regarding Mexican credits, we believe con-
ditions are improving and we are gradually
modifying credit restrictions, depending of
course upon the account and our knowledge of
the financial conditions of same.
Manufacturers of Paper Bags. For the past
three or four years all shipments made by us
to Mexico have been on terms of cash with order,
letter of credit subject to draft or draft with
documents attached at the border.
Manufacturers of Signals. Our business is
done almost exclusively with railroads and since
the disturbed conditions in Mexico we have sold
all materials sight draft against bill of lading,
New York.
Manufacturers of Watches. Most of our
transactions down there have been made under
what we call regular account. The party has
had to prove to us most satisfactorily their
credit standing and we have never allowed our
CREDIT AND BANKING 175
accounts to go much over $1,500 or $2,000. In
other shipments that we may have made to
Mexico during the time of the war terms have
been documents against payment through either
L\ N\-\v York representative of the concern, mer-
chandise remaining in the banker's custody
against payment, or to some duly endorsed bank
representative in Mexico.
Manufacturers of Tools. We do not care to
do mucli business with concerns in Mexico ex-
cept on terms of draft with documents attached.
Manufacturers of Roofing Material. Most of
our business in Mexico is conducted on a cash
against documents basis. When accepting an
order from a concern we have had no previous
dealings with, we generally ask them to open
a credit with a New York bank, unless we can
obtain positive assurance that our documents
will be taken up promptly upon presentation,
in which case we draw on the customer at sight.
If we find later that our bills are being met
promptly, we do not hesitate in extending to
such customers our thirty or sixty days' accept-
ance terms. Quotations on our products at the
present time are f. o. b. cars, New York, and
when drawing our drafts we include the amount
of our invoice, plus ocean freight, marine and
war risks.
176 INDUSTRIAL MEXICO
Manufacturers of Pipe. Up to recently a
good many of the Mexican houses in good stand-
ing have had their goods shipped through No-
gales, Ariz., and billed accordingly. Payments
have been made to us through their Nogales
offices, and as these houses were of unquestion-
able standing we did not hesitate to fill any
order that came before us. We have also had a
few transactions with houses located in Mexico
City, but their standing was so high that we at
their request and risk made shipment on open
terms, and have already received our money.
We are now negotiating with a certain party to
represent us in Mexico and have given instruc-
tions that credit against orders taken should
be opened in New York, or if necessary to sell
goods on sight draft against documents, pay-
ment to be made on arrival of the goods in
Mexico on these terms. We feel that con-
ditions in Mexico at the present time are
not sufficiently staple to sell goods on open
terms.
Manufacturers of Eope. Whatever business
we are doing with companies in Mexico is being
handled on a cash basis.
Refining Company. On our shipments to
Mexico, we either receive check in advance or
else have a confirmed credit opened up in this
CREDIT AND BANKING 177
country, against which we draw with bill of
lading attached.
Manufacturers of Ploughs, etc. Our business
with customers in Mexico during the past year
and a half, has been somewhat more active than
for several years prior to that time. Even at
that, though, the volume is not anywhere near
the amount which we enjoyed prior to the revo-
lution, about 1913. The unsettled conditions
have compelled our restricting shipments in
many cases to a cash-in-advance basis, even to
some customers who prior to the revolution
were regularly extended credit on terms of sixty
days net, 2 per cent, for cash in ten days. At
this time, there are probably one half-dozen of
our old well-established customers to whom we
ship goods, invoices amounting from $3,000 to
$3,500 on open account, terms sixty days net,
2 per cent, cash in ten days. The balance of the
business is handled either cash in advance or
cash against documents at the border.
Manufacturers of Medicine. It has been the
policy of this house to request "cash with or-
ders'* for the past two or three years.
Wholesale Dealers in Stationery. What we
have been doing has been strictly on a cash
basis, and only in one or two places around Yu-
catan.
178 INDUSTRIAL MEXICO
Manufacturing Chemists. All of our trans-
actions with parties in that country have been
made on a strictly cash basis.
Bag Manufacturers. On shipments to Mex-
ico we ask for cash in advance. Shipments are
made to the customer direct through forward-
ing agent at border.
Manufacturers of Shoes. We have not been
shipping direct on open account to any but the
largest concerns of unquestionable standing un-
til very recently. We have a few accounts in
Mexico to whom we have been selling through
the disturbing period on open account, but on
other accounts we have either asked them for
payment in advance or have required some sort
of confirmed credit to cover their orders. Just
a short time ago, our salesman went through
this territory, and we are now arranging to
handle orders in this section both on open ac-
count basis and in some cases draft against
documents at Laredo, Texas, or some other bor-
der city. Our credit information in these ac-
counts consists largely of the information gath-
ered direct by our salesman when he took the
order, from bankers, business houses, etc., and
the usual commercial credit reports. You will
see by the above that our method of handling
Mexican business has not been standardized yet,
CREDIT AND BANKING 179
as it has appeared to us that conditions in Mex-
ico are such that it is impossible almost to
standardize any method of handling credits
there just at this time. It is much safer, in our
opinion, to take each particular order separ-
ately, and h't the method of handling same be
governed by the prevailing circumstances.
Manufacturers of Electrical Supplies. We
have no fixed manner in which we are extending
credits to Mexican buyers. In some instances
we are insisting upon full payment with the
order, and we also ask the following terms:
(1) One-half payment with the order and the
balance draft against shipping documents. (2)
Full payment against shipping documents.
(3) Where the companies are owned by Amer-
ican capital we are extending open credit.
Manufacturers of Glass. We have a very
small business in Mexico and on account of the
unsettled conditions there, we have felt it better
to hold these few customers to a cash basis.
There seems to be just a little more activity at
this time than in the past.
Manufacturers of Scales. With two or three
I t ions, all business with Mexico is handled
>n a cash-before-shipment basis. The excep-
tions arc firms to whom \vc have sold on open
account for a number of years and their credit
180 INDUSTRIAL MEXICO
standing and ability to pay their bills is un-
questioned.
Manufacturers of Furniture. Under ordi-
nary conditions we have shipped into Mexico
under our regular terms of 2 per cent, thirty,
net sixty, bills payable in New York exchange,
and we are pleased to admit that we have had
very little trouble with our Mexican accounts.
Manufacturers of Shoe Polish. We have our
representative in Mexico, who also has an office
in Vera Cruz and Monterey and our business
with Mexico is done on the basis of a remittance
from customer prior to shipment, or cash de-
posited in New York against documents less dis-
count for cash, as our representative being on
the ground, is able to notify the customers and
see that drafts are accepted and taken care of.
Manufacturers of Abrasive Materials. We
are making very few shipments to Mexico on a
basis of sight draft attached to bill of lading.
Our terms have been and are now C. 0. D. bor-
der or port of entry with the usual advance pay-
ment of 10 to 25 per cent., guaranteeing freight
in the event of non-delivery. From this, how-
ever, we make some deviations in that where
an account is established with us in the way
of meeting its obligations promptly on C. 0. D.
basis we sometimes waive the requirement of
CREDIT AND BANKING 181
advance payment. We make another deviation
to a certain class of merchants whose responsi-
bility we consider unquestionable and ship them
on a C. O. D. basis, being careful of course al-
ways to watch to what particular part of the
Republic they go and another exception is made
in that we have a few accounts whose terms are
what we might term regular, meaning sixty
days. Those were our regular terms to Mexico
prior to the time that we placed them on a
C. 0. D. basis. Those exceptions, however,
only represent a small percentage of the ac-
counts that we now handle in Mexico. The mat-
tor of credit really is a question of confidence
and mutual understanding between the manu-
facturer and exporter and their clients in Mex-
ico.
Powder Works. The general trade condi-
tions in Mexico show no great improvement
over the past several years due to the general
demoralizing conditions in industry, includ-
ing transportation, although the prospects point
to a steady, if gradual, improvement. To the
large mining companies of known financial abil-
ity and credit standing we arc willing to extend
credit according to our regular terms applying
in this couu :ncl\ , thirty days net or 2 per
cent, for cash in ten days. To all trade other
182 INDUSTRIAL MEXICO
than that above mentioned our plan is to ask
for cash against documents at the border or
for an arrangement under which cash is deliv-
ered to the manager of our Mexico City office
as soon as invoices are delivered to our Mexi-
can office.
Shirt Manufacturers. We still continue sell-
ing in Mexico on a cash basis, either requesting
cash with the order or drawing on the customer
through a bank on the border line with instruc-
tions to deliver shipping papers against pay-
ment.
Manufacturers of Locks. We have been sell-
ing in Mexico for the last few years strictly
on a cash basis with very rare exceptions, or
we have been selling with bill of lading attached
through a bank in the United States on the bor-
der, or on a confirmed bank credit.
Mexican Bank Finances Shipments
I discussed this matter of commercial cred-
its with the head of a banking firm in Mexico
City a man who has had twenty years contin-
uous experience in the country and is intimately
acquainted with the conditions. I asked him to
outline for the benefit of American exporters his
CREDIT AND BANKING 183
method of dealing with the problem. His state-
ment follov
"As regards terms of payment to be offered
the Mexican merchant, it is my opinion that to
request him to pay cash with his order is prac-
tically the same as inviting him to purchase
elsewhere, and when it is realized how difficult
it would be to establish a domestic business un-
der such conditions, it is apparent why trade
with Latin America cannot be built up in that
manner. Goods can be shipped with sight draft
attached to shipping documents, collection to
be effected through a bank, but even under these
terms it is very difficult for the merchant here
to do business, besides, there always exists the
clanger to the seller, that the buyer if unscrupu-
lous, and when giving his order makes no de-
posit to bind the deal, may refuse to take up
the draft when presented to him and the seller
finds himself with the merchandise on his hands
and in a foreign country.
"For an American firm to extend direct credit
to a merchant in Mexico at present, where be-
cause of years of internal strife business can-
not yet be considered normalized, is in my opin-
ion something that should be undertaken only
by firms who are thoroughly familiar with the
184 INDUSTRIAL MEXICO
situation, in a position to judge credit risks,
and preferably on the ground in order to pro-
tect their interests. As few American firms are
in this position, it is our desire to assist them
by eliminating the element of risk in giving
credit, our plan being to finance shipments to
merchants here by means of commercial credits.
"We are in a position to have confirmed bank-
ers* credits opened by our New York and San
Antonio correspondents, for account of firms
in Mexico wishing to purchase goods in the
United States. These credits, of course, are
only opened to merchants who are deserving
of them and who make the necessary arrange-
ments with us. The operation is as follows :
"A merchant in Mexico desires to buy a bill
of goods for $5,000 from Brown, a merchant in
New York City who is not disposed to sell ex-
cepting against payment in the United States.
On the other hand, the merchant in Mexico
wants ninety days from the date on which the
shipment is made in New York in which to pay
for the goods. If the merchant here makes the
necessary arrangements with us, we will open
a confirmed banker's credit for this purpose,
we requesting our New York correspondent to
accept Brown 's draft drawn on them at ninety
days' sight, with documents attached, covering
CREDIT AND BANKING 185
shipment from New York to Vera Cruz, for
account of the Mexican buyer. When our New
York correspondent receives the authorization
from us to open this credit, they will advise
Brown to that effect; that is, that they will ac-
cept Brown's ninety-day draft up to $5,000 if
presented with corresponding documents at-
tached. The buyer will place a time limit within
which Brown can present his draft to our New
York correspondent, this limit being advised
when the credit is opened.
"While it is true that Brown does not re-
ceive cash for this shipment, he receives a docu-
ment that is very easily negotiated, the accept-
ing bank discounting it for him if he so desires.
As Brown must wait the sixty or ninety days
until maturity of the draft before receiving his
money, he can reimburse himself the loss of
interest by adding the amount to his invoice or,
and preferably, simply quote prices that will
cover this extra expense.
"It is a general custom that the merchant at
whose request a credit is opened pay the bank
who authorizes it the corresponding commis-
i, and in the past this has been our practice
here, but we find that the Mexican merchant ob-
jects to this procedure as he considers that the
firm selling goods should extend him direct
186 INDUSTRIAL UKXICO
credit. We believe that this stand is taken
more out of a question of principle than any-
thing else, as it is obvious that regardless of
what arrangements are made for paying for
this service, the buyer of the goods must ulti-
mately pay for it. Nevertheless, we find in
practice that it is preferable that the seller of
the goods take into consideration this point and
quote the Mexican buyer net prices, simply add-
ing to the price of his merchandise what it will
cost him to discount the bank acceptance and
our commission, which we believe in the ma-
jority of cases is more than covered by the usual
cash discount.
" Under this arrangement, the foreign mer-
chant can quote prices allowing sixty or ninety
days, the only condition being that we pass on
the credit, and instead of receiving a note or
an acceptance from the buyer, he receives a
New York bank's acceptance. We here receive
the merchant's note as our security.
"The American firm before soliciting an or-
der to be handled under this arrangement would,
of course, have to consult us in order to ascer-
tain if we can issue the credit. This can be
done by mail or cable, or if the order is solicited
by a salesman in this country, he would first call
on us to find out which firms we can extend
CREDIT AND BANKING 187
credit to, after which he approaches the buy-
ers, with the knowledge that he can offer sixty
or ninety days from date of shipment in which
to pay for their purchases, the only condition
being that the buyer 's note be made out in our
favour.
"Another and simpler form of extending
credit to merchants here, under our guarantee,
is that of drawing thirty to ninety days draft in
our favour but direct on the buyer. The mer-
chandise is consigned to us and turned over
to the Mexican firm against the acceptance of
the seller's draft. Under this arrangement, we
would simply guarantee to the American firm
the payment of their draft at maturity, once
accepted.
"A merchant buying goods under this ar-
rangement would consider that he is being ex-
tended direct credit by the seller, as we do not
appear in the transaction, our commission be-
ing paid by the drawer of the draft, who would
of course consider this expense when quoting
prices for his merchandise. However, in this
case it is also necessary that the American mer-
chant first consult us for each and every opera-
tion to ascertain whether we can give the neces-
sary guarantee. "
188 INDUSTRIAL MEXICO
Proposed New Banking Law
In view of the interest which is being shown
in the new law for the regulation of banks and
institutions of credit in Mexico, submitted to
Congress by President Carranza through the
Department of Finance, it will be of interest
to recall for purposes of comparison some of
the provisions of the banking law of March 19,
1897, and at the same time to note the rapid
growth and development of the Mexican bank-
ing system which followed the enactment of that
law.
The American commercial attache in Mex-
ico, Edward F. Feely, in a comprehensive study
of the Mexican banking situation, points out
that by the provisions of the law of 1897, banks
and institutions of credits were divided into
three principal classes, based on the particular
functions they would be called on to perform:
(1) Banks of emission, which issued bank notes
of given denominations, payable at par, on de-
mand, and to bearer; (2) mortgage banks, which
made loans secured by urban or rural estates,
and issued bonds secured by the same guaranty,
bearing interest and redeemable under stated
circumstances and at given times; (3) banks
of promotion, which were specially designed to
CREDIT AND BANKING 189
encourage mining, agricultural and industrial
enterprises, with the faculty of making pre-
ferred loans, unsecured by mortgage, and issu-
ing short-time bonds or certificates running for
a certain term and payable on a certain date.
The enactment of this law was followed by
a period of economic and commercial develop-
ment, which continued throughout the presi-
dency of Gen. Porfirio Diaz, and in which the
banking system of the country played a leading
part.
Rapid Development of Banking From
1897 to 1913
Before the end of 1897 there had been estab-
lished in Mexico nine banks of emission, with
total assets of $68,565,519, the most important
of which were the Banco Nacional de Mexico
and the Banco de Londres y Mexico, both in
Mexico City, and with branches in the impor-
tant cities and towns of the interior. Under
the liberal provisions of the law there were
established between the years 1897 and 1913 a
total of thirty-two banks of emission throughout
the Republic, and according to statistics pub-
lished by the Department of Finance in 1913
there were in existence in Mexico at that time
190 INDUSTRIAL MEXICO
twenty such banks, with total assets amounting
to about $425,500,000.
Beginning with a single institution in 1897,
with assets of $4,857,000, the importance of
mortgage banks increased rapidly, until in 1913
four such banks had been established, with
assets totaling about $43,762,000.
The banks of promotion found a wide field
for the development of their business in the way
of financing mining and agricultural enter-
prises, and at the end of the fiscal year 1913,
the last year for which such statistics are avail-
able, the total assets of such banks amounted
to over $83,000,000, divided among six institu-
tions.
In addition to the banks enumerated above
there were in active operation at the same time
two general banks of deposit, one loan bank
for the promotion of agricultural and irrigation
enterprises, besides six branches of foreign
banks, a number of private banking institutions,
and the Monte de Piedad or National Pawnshop
tinder federal control. The latter institution
is classed as a bank, inasmuch as it formerly
had the faculty of issuing notes and accepting
deposits. It is the oldest banking institution
in Mexico today.
During the turbulent period which followed
CREDIT AND BANKING 191
the fall of President Diaz, and the consequent
struggle between revolutionary parties to se-
cure control of the government, this great sys-
tem of banks, with total assets amounting to
about $600,000,000, built up and firmly estab-
lished by a prosperous existence of seventeen
years, was forced out of existence, its assets
wiped out, its reserves taken over, and the banks
themselves finally declared insolvent. Since
1914, therefore, Mexico has been without banks
of any sort within the meaning of the law of
1897.
Plans for a Single Bank of Issue
In a message to Congress in September, 1918,
the Executive attributed his failure to use the
authority previously given him by that body
to promulgate a law for the establishment of a
sole bank of emission to the uncertain state of
the money market resulting from the European
war and the difficulty of obtaining a loan for
that purpose at a fair rate of interest. But the
idea prevails among business men and bankers
that efforts will be made by the government to
finance the new bank of emission without look-
ing abroad for the necessary capital.
192 INDUSTRIAL MEXICO
Policy of Nationalization
This nationalization of banks and credit in-
stitutions would be in accordance with the pol-
icy which the present government has mani-
fested in its efforts to secure control of the
key industries of the country; but, on the other
hand, the sources from which the capital needed
for the establishment of the new banks under
the proposed law are to be drawn are not ap-
parent. In this connection it should be noted
that according to the provisions of the new
law governing banks in general, no bank may
invest in the stock of any similar institution,
but only in that of the sole bank of emission.
It is also significant as defining the attitude
of the government toward the general policy
of nationalization, that in submitting the new
law to Congress, the Executive explained that
while its provisions are in general accord with
those of the banking law of 1897, nevertheless
the amendments and additions which now ap-
pear have been inspired by the precepts of the
Federal Constitution and also by the new
orientation which the present government has
decided to give to the development of the coun-
try financially.
Of equal interest in connection with the new
CREDIT AND BANKING 193
la\v are the reasons given by the Executive in
his letter of submittal for the modifications and
amendments in respect of the new classification
of banks, of their various functions, and espe-
cially of the provisions that are to govern
branches of foreign banks which may be estab-
lished in the Republic.
Under the proposed law the following classi-
fication of banks and institutions of credit is
made:
Sole bank of emission, to be established later in con-
formity with the provisions of the Federal Constitu-
tion.
Mortgage banks, defined as those which shall make
loans secured by urban or rural real estate, with the
faculty of issuing bonds secured by the same guaran-
tee, bearing interest and redeemable under stated cir-
cumstances and at given times.
Banks of promotion, created especially to facilitate
or encourage mining, industrial, and commercial oper-
ations, by means of priority loans; granting their
guarantee for certain operations and issuing short-
term cash or treasury bonds, bearing interest and pay-
able on a fixed day.
Agricultural banks, which shall make loans and
advances for the purchase of equipment or expense
of operation, to be secured by the products and crops
of the farm, and with the priority of rights conceded
by law.
194 INDUSTRIAL MEXICO
Petroleum banks, which shall make all kinds of
loans and advances for equipment and operation to
petroleum exploitation enterprises such loans to be
secured by the actual products of such exploitation,
and with the prior rights conceded by this law.
Banks of deposit, including those banks which shall
have the faculty of carrying on any kind of banking
transaction under the conditions determined by this
law, with the exception of the issuance of notes, treas-
ury bonds, or mortgage bonds.
The purpose of this classification is to pro-
mote by the specialization of functions a more
facile and efficient response to the needs of the
different lines of production, and so guarantee
ready capital for the promotion of industry,
commerce, and agriculture. Hence none of the
different kinds of banks is to possess the fac-
ulty of carrying on the particular transactions
of any of the others.
An important modification of the banking law
of March 19, 1897, is that under the new law the
capital stock of the agricultural banks, the
banks of deposit, and of the banks of promotion
shall be at least 500,000 pesos ($250,000), and
that of the mortgage and petroleum banks at
least 1,000,000 pesos ($500,000), these minima
having been prescribed after a consideration of
the comparative importance of the operations
CREDIT AND BANKING 195
to be carried on by each kind of bank, and in
order to facilitate the creation of the greatest
possible number of agricultural banks, each
with a relatively small capital, so as to supply
the needs of the agricultural and stock-raising
industries in all sections of the country.
In view of the present economic condition of
the nation, the exhaustion of resources and the
decrease in reserve capital, it is not to be ex-
pected that financial interests will readily seek
investment, nor that bank deposits will increase
with rapidity. In order, therefore, that the new
banks may begin operations with perfect se-
curity it has been judged necessary that their
entire capital stock be contributed at once, in-
stead of the mere 10 per cent, generally pre-
scribed by the commercial code for the estab-
lishment of corporations.
In order to avoid confusion, and so that the
interests of the public may be fully guaranteed,
the use of the word "bank" or any equivalent
term, for the designation of firms or establish-
ments which are not duly authorized credit in-
stitutions within the terms of this law, is pro-
hibited. A period of six months is given to
those firms or establishments, both national and
foreign, which have been employing the word
* ' bank, ' ' to discontinue its use unless they shall
196 INDUSTRIAL MEXICO
submit within that time to the provisions of
the new law. The laws now in force prohibiting
the issuance of bills, promissory notes, or any
other document payable at sight and to bearer
by individuals or corporations not duly author-
ized so to do are, by the terms of this law,
amplified and extended.
Among the provisions of the new law which
merits special attention is that which prohibits
all banks from charging penal interest, whether
expressly as such, as commission, or in any
other form whatsoever. The special procedure
provided by the former law for the collection by
banks of their outstanding obligations has been
suppressed because, in the opinion of the Exec-
utive, it involved the granting of a privilege
contrary to the spirit -of the Constitution.
To sec.ure a more effective guarantee of de-
posits received by the. mortgage banks, the new
law provides that that portion of such deposits
which is secured by discountable documents
shall not exceed 25 per cent, of the total deposits
of the bank, and that such documents shall be
payable within a period not to exceed three in-
stead of six months, as fixed by the former law.
CREDIT AND BANKING 197
Banks of Promotion
In determining the particular kind of opera-
tions which shall be carried on by banks of pro-
motion, it was thought advisable to limit such
banks to the emission of treasury bonds or cer-
tificates, and to loans in cash, secured by real
estate or by furniture, fixtures and equipment,
at terms not to exceed one year, to commercial,
mining, and industrial establishments for their
promotion and encouragement.
The new law, therefore, eliminates the grant-
ing of promotion loans to agricultural enter-
prises by banks of promotion, such assistance
to be furnished in future by the agricultural
banks. The former field of action of banks of
promotion is, however, extended to include
financial assistance to commercial enterprises.
In this way it is hoped that all industries will
be assured a source of supply of capital for
promotion purposes by applying to the partic-
ular kind of bank designated by law for that
object.
An important modification is embodied in the
provision that promotion loans shall not exceed
three-fourths of the total amount represented
by the sum of the capital stock <>t the bank plus
the value of the treasury bonds or certificates
198 INDUSTRIAL MEXICO
in circulation, instead of two-thirds of such
total amount, as provided by the former
law.
Banks of promotion will also be obliged to
carry on hand in cash at least 50 per cent, of
the amount of their deposits, an additional 25
per cent, to be secured by documents bearing at
least three first-class signatures and payable at
periods not to exceed ninety days, and the bal-
ance, 25 per cent., by similar documents pay-
able at periods not to exceed six months, or by
obligations received as security for promotion
loans.
Under the proposed law the agricultural
banks shall have as their field of operations the
granting of loans in cash, secured by real es-
tate or chattels, at terms not to exceed five years,
to large agricultural and stock-raising enter-
prises for their encouragement and develop-
ment. They may also make advances in cash at
terms not to exceed one year for the equipment
and operation of smaller enterprises, such loans
to be secured by the crops and products of the
farm. Facilities are thus offered to the small
farmer to enable him to carry on cultivation of
his property for a year, repaying the amount
of the loan out of the proceeds of the harvest.
Agricultural banks will also be permitted to
CREDIT AND BANKING 199
accept deposits under the same terms as the
banks of promotion.
A novelty in the new law is the provision
providing for the establishment of the petro-
leum banks and granting to such institutions
facilities for the promotion and encouragement
of the petroleum industry. These are made
necessary, it is explained, by the rapid increase
in importance of this industry in Mexico, and its
peculiar requirements as distinguished from
those of agriculture and commerce.
Banks of Deposit
The so-called banks of deposit are not char-
acterized by any particular kind of operations.
They may carry on any sort of banking busi-
ness with the exception of the issuance of notes,
mortgage bonds, or treasury bonds, or certifi-
cates, but the law provides that the loans for
promotion and operation purposes which they
may make shall not enjoy the prior rights and
protection conceded by law to agricultural banks
and banks of promotion. Deposits received by
hanks of deposit must be secured to the extent of
50 per cent, by gold reserves on hand; 25 per
;. by documents bearing at least three first-
1 prudent signatures, payable at terms
200 INDUSTRIAL MEXICO
not to exceed ninety days; and the balance by
their capital stock.
In stating the reasons which underlie the
embodiment in the new law of special provisions
to govern the establishment and regulation of
foreign banks in Mexico, the principle is laid
down that the banking system of the country
is of public interest, and that foreign banks and
institutions of credit must therefore submit to
the national laws. In accordance with this prin-
ciple it is provided that foreign banks or other
foreign institutions of credit which may wish
to establish branches in the Republic, besides
complying with the requisites of inscription and
registry prescribed by Article 24 of the Com-
mercial Code, must also obtain from the De-
partment of Finance the particular concession
required by law, according to the kind of bank-
ing transactions they intend to carry on; with
the understanding that no such branch of a for-
eign bank may operate except under a single one
of the different classifications enumerated
above, even though by virtue of its concession
or of foreign laws it might have the right to
make transactions which would correspond to
those of other kinds of banks specified under
this law.
It is further provided that the capital of srr 1 "!
CREDIT AND BANKING 201
branches of foreign banks shall be the same as
that prescribed for national banks according
to the classification under which they may fall,
and that this capital may not be withdrawn from
the Republic while the branch exists. In addi-
tion, such institutions shall be considered Mex-
ican for all purposes, and neither they nor their
employes may invoke rights of alienship.
It is explained that these dispositions are
justified by the consideration that foreign in-
stitutions of credit, in so far as their local
branches are concerned, ought not to occupy a
better position nor enjoy greater privileges than
the national banks ; but that, at the same time,
the unity of the banking system demands that
they be placed on an equal footing with the lat-
ter in respect of requirements, advantages, and
measures of security.
It is therefore proposed that foreign banks,
their local branches, and any other credit insti-
tutions at present existent in the Republic, must
submit to the terms of the law within a period
of six months, or cease to operate within the
Republic, even as private banks. It is there-
fore apparent that if the new banking law of
Mexico should be adopted in its present form
it would inevitably close the doors of every
foreign bank in the Republic. Therefore, in
202 INDUSTRIAL MEXICO
view of the pressing need of Mexico for finan-
cial support from other countries it is probable
that important alterations will be made.
Stockholding Restrictions Federal Inspection
Bank of Emission
Of the enactments affecting all banks under
the law now in force, there have been incor-
porated in the proposed law those which seemed
to be in accord with the fundamental ideas of
the new project, and some additions have been
made as well.
All banks are expressly prohibited from ac-
quiring stock in other credit institutions in the
Republic, except the stock of the sole bank of
emission. It is further provided that if stock
should be received as collateral or for any other
purpose, such stock may not be represented by
the bank holding it in general meetings of stock-
holders, the idea being to avoid monopolies and
to prevent one bank from exercising pressure
on another. This danger, it is said, does not
exist in the case of the sole bank of emission,
since the government will always possess the
majority of the shares and exercise control of
it according to the provisions of the Federal
Constitution.
CREDIT AND BANKING 203
As hitherto, the Department of Finance will
have charge of the fiscalization of all banks and
institutions of credit, with unlimited power to
inspect all books, papers, and transactions of
the banks, as well as to ask whatever informa-
tion may be necessary to a full knowledge of
the state of their affairs. This work will
usually be done by inspectors or auditors, act-
ing without fixed assignment in order thus to
avoid all probability of connivance. The func-
tion of these auditors will be merely to inves-
tigate the affairs of the bank, and they will have
no authority to intervene therein, nor to make
any decision on their own initiative, but will
simply report the result of their investigations
to the Department of Finance so that the neces-
sary corrective measures may be taken.
If a bank should fail to comply with any of
the requirements or conditions prescribed in
this law for the protection or benefit of the pub-
lic, and if such failure is not of a nature to
warrant the cancellation of the concession, the
Department of Finance, after hearing the inter-
ested bank, may order it to suspend any or all
of its operations until such time as it may have
complied with tin* iv<|uin'ments or conditions
of the law.
The power of issuing notes of a fixed value,
204 INDUSTRIAL MEXICO
payable at sight to the bearer, shall belong to
a single bank under Federal control, as pro-
vided by Article 28 of the Constitution of Feb-
ruary 5, 1917. The operation of this bank shall
be governed exclusively by a special law to be
promulgated for that purpose.
Other Provisions
Among the other important provisions of the
new law that will be of interest to foreign banks
which may be considering the establishment of
branches in Mexico, as well as to those institu-
tions at present engaged in the banking busi-
ness there, are the following:
Art. 10. The establishment of two distinct insti-
tutions of credit under the same concession shall not
be authorized, nor shall authority be given to a bank
for the omission of various kinds of securities which
by their nature and within the meaning of this law
may correspond to institutions of different classifica-
tions.
Art. 11. Under no circumstances shall concessions
for the establishment of credit institutions be granted
until the applicants therefor have deposited in the
National Treasury or in the sole bank of issue stock
or bonds of the proposed bank, or bonds of public
debt, whose nominal value shall be at least 20 per cent.
CREDIT AND BANKING 205
of the sum which the new bank is required to have
on hand for its establishment. (See Art. 14, Sec.
"d.") This deposit shall be returned as soon as the
bank may have begun operations.
Art. 14. Sec. "b." The capital stock of corpora-
tions organized in the Republic for the exploitation
of credit institutions shall never be less than 500,000
pesos ($250,000 United States currency) for agricul-
tural banks, banks of deposit, and banks of promo-
tion; and never less than 1,000,000 pesos ($500,000
United States currency) for mortgage banks, and pe-
troleum banks.
Sec. "d." No such corporation shall be estab-
lished without having its capital stock entirely sub-
scribed and available in cash.
Sec. "f." The reserve fund so-called shall be made
up of the accumulation of 10 per cent, of the annual
net profits until such time as it equals one-third or
more of the amount of capital invested.
Sec. "g." In general assemblies of stockholders,
the minority shall have the right to name a represen-
tative with the same powers as those prescribed for
similar officers by the commercial code, and such rep-
resentative shall have in addition the power to call a
general meeting and to inform the Department of
Finance of any irregularities or infractions of the law
governing credit institutions, or of the criminal code.
Art. 16. Institutions established in foreign coun-
\\lii.-h [MM M'.-uritifs payable to bearer shall not
maintain in tin- Republic agencies or bram-hos for the
206 INDUSTRIAL MEXICO
issuance or redemption of such securities, nor agencies
for the reception of deposits.
Art. 23. No individual or company not duly au-
thorized so to do by the terms of this law shall have
the power to issue bills, notes, or any other document
bearing the promise to pay in cash to bearer at sight.
Constructive Help Needed ~by New Exporters
In the way of constructive assistance at home
it is interesting to know that British banking
interests are organizing a bank of discount for
foreign trade which will also undertake to guar-
antee or insure foreign credits, keeping closely
in touch with conditions in foreign markets
through resident representatives. It would
seem that the establishment of such an institu-
tion in the United States would not only be a
profitable investment, but would also be of the
greatest assistance to our exporters; especially
to those who are not experienced in foreign
trade, and who hesitate to enter the field di-
rectly for lack of acquaintance with banking
methods and credit conditions abroad. Its serv-
ices could be made especially valuable in respect
to Mexico, owing to the anomalous situation
which prevails there.
CHAPTER X
NATIONAL DEBT
Paper money. Items in national debt. Unpaid in-
terest. Railway debt. International Bankers Com-
mittee.
IT is an indisputable fact that from the found-
ing of the Mexican Republic to the present ad-
ministration there has never been any tendency
on the part of the government to repudiate any
of its financial obligations. The late T. W.
Osterheld, who was an authority on Mexican
finances, points to the history of the first two
loans of the Republic as proof of its integrity.
The Mexican Government, in assuming the re-
sponsibility of the Spanish debt, received $11,-
000,000 for a $30,000,000 loan, paid $29,500,000
for the service of the loan and finally in 1890
nguished this debt by the payment of over
$62,000,000. A more recent example, taken
from the present administration, may be seen
in the conversion of the paper money issued by
the Provisional Government during the first few
months of its existence at Mexico City, and later
at Vera Cruz, in order to maintain the Army
207
208 INDUSTRIAL MEXICO
while the new government was in formation.
This issue amounted to, in all, about 670,000,000
pesos, the larger part of which was redeemed
as taxes, railroad fares, etc., and the balance
amounting to about 50,000,000 pesos being con-
verted into gold certificates, payable in five
years, on the basis of five cents gold for each
peso of Constitutional paper, which was greatly
in excess of its value at that time.
From 1912 to 1916 Mexico had one revolu-
tion after another; commencing with the over-
throw of Diaz by Madero and the final success
of General Carranza. "On only two occasions
during this period did Mexico appeal for for-
eign capital," writes Osterheld. "Once in
1912, when the government under President Ma-
dero floated a $10,000,000 4% per cent, gold
loan, through Messrs. Speyer & Co., in New
York, and Speyer Brothers in London. In 1913,
during the administration of Huerta, there was
authorized an issue of ten-year 6 per cent, gold
bonds in an amount of 16,000,000, which could
be increased with the approval of the bankers
to 20,000,000. This loan was to be secured by
38 per cent, of the import and export duties of
Mexico, and in the agreement with the bank-
ers it was stipulated that no further external
loan should be made for a period of two years.
NATIONAL DEBT 209
The loan had for its object the repayment of
the Madero loan made by Speyer & Co., and
Speyer Brothers (about 41,000,000 pesos), to
guarantee the certificates issued by the National
\ \vays of Mexico for interest not paid on its
bonds, to cover certain guarantees to the banks
of issue, for the guaranteeing of railroad sub-
ventions, and for providing equipment for the
army, purchase of the Mexican National Pack-
ing House, and the deficit existing in the budget.
Under contract with the bankers in Paris,
6,000,000 of these were placed under the date
of June 8, 1913, and further amounts were of-
fered for subscription in Mexico City by the
secretary of the treasury by decree and au-
thorization granted by the Mexican Congress,
under the stipulated conditions as agreed with
the bankers in Paris. The legality of 700,000
of this issue brought out in London by Renter &
Co. has been questioned. "
In 1914 the loss of income caused by the revo-
lution resulted in the non-payment of interest
on all bonds with the exception of a few local
railway bonds, such as those of the United Rail-
ways of Yucatan. The military campaigns of
General Carranza were financed entirely with
paper money. The first issue of this, ordered
by decree dated April 26, 1913, was for 5,000,-
210 INDUSTRIAL MEXICO
000 pesos, known as the Monclova issue. In
December, 1913, this was increased by 20,000,000
pesos, and in February, 1914, it was raised again
by 30,000,000 pesos. The amounts issued
against this last authorization totaled 25,000,000
pesos.
When the Constitutionalist Army arrived in
Mexico City in August, 1914, it was found ex-
pedient to convert the previous issues of paper
money, and at the same time make a larger issue
to meet the increased expenses necessitated by
the occupation of the southern part of the coun-
try. Therefore, on November 19, 1914, an is-
sue of 130,000,000 pesos was sanctioned, in order
to convert the Monclova and Constitutionalist
issues, and at the same time provide money for
the campaign against Villa. About 43,000,000
pesos were printed in Mexico City and were
known under the name of the "Provisional Gov-
ernment of Mexico Issue. " The printing con-
tinued in Vera Cruz, the issue being increased
to 200,000,000 pesos and later to 250,000,000.
It is estimated that the total amount of paper
money issued during the first and second pe-
riods of the revolution was 671,954,221 pesos.
During this period there were several issues
of paper money made by such generals as Fran-
cisco Villa, Alvaro Obregon and Pablo Gon-
NATIONAL DEBT 211
zalez, while the revolution was still in its early
stages, and under authorization granted by
General Carranza. Villa and at least one other
general printed paper money greatly in excess
of that authorized. As already pointed out, re-
demption of the Vera Cruz issue was made in
the form of railway fares, taxes, etc., and the
balance, amounting to 50,000,000 pesos, was
converted into gold certificates, payable in five
years, on the basis of five cents gold for each
peso of Constitutional paper. All other author-
ized issues were duly withdrawn and exchanged
in part, leaving at present only about 2,000,000
pesos outstanding, which are under care of the
Monetary Commission pending conversion.
The final issue of paper money, that which is
now outstanding, was the paper known as In-
falsificables (non-counterfeitable) or Carranza
bills. These were printed in New York by the
American Bank Note Company in the denomi-
nations of five, ten, twenty, fifty and hundred
pesos bills, in an amount of 450,000,000 pesos.
It was found necessary, however, to print in
Mexico City, small bills of two and one peso
notes, as well as five, ten and twenty centavo
denominations, which increased the total issue
to nearly 540,000,000 pesos. Of this amount,
only 400,000,000 were placed in the hands of the
212 I X DUSTEIAL MEXICO
public, half of which were redeemed the first
year through the medium of railroad fares,
freight fares, and import and export duties.
In 1916 Mexico was placed on a gold and sil-
ver basis. Since then, redemption has contin-
ued steadily through the medium of import and
export duties, which also include all oil shipped
from Mexico, so that today it has been con-
servatively estimated that not more than 80,-
000,000 pesos are outstanding. Redemption is
taking place at the rate of approximately 100,-
000 pesos daily, which are burned in the Public
Square in Mexico City. It is expected that the
balance outstanding will be entirely redeemed
during 1919-20. Should this be found imprac-
ticable before the entire amount is redeemed, it
is expected that some such system as was
adopted in the case of the Vera Cruz paper
will be used. The present market value of in-
falsificables is three cents per peso (United
States currency) but in view of the previous acts
of the Mexican Government it is assumed that
the final redemption of the small amount of bills
which will be outstanding will be at ten cents
United States gold, their issuing rate. At that
rate the amount now involved does not exceed
$8,000,000 United States currency.
During the revolution, the government found
NATIONAL DEBT 213
occasion to borrow money from the Banks of
Issue, the total of which is stated to be about
$20,000,000. At the same time, it must be borne
in mind that there is a large amount due to the
government employes for back salaries, and that
a certain amount will have to be paid for prop-
erty destroyed during the revolution, including
the damage done to the various railway lines.
The subjoined table shows in detail the con-
stitution of the national debt ; with interest ap-
proximated to 1919:
CONSOLIDATED 3 PER CENT. INTERIOR DEBT, 1885
Bonds in circulation $ 21,215,462.00
Interest due 3,182,319.00
REDEEMABLE 5 PER CENT. INTERIOR DEBT, 1894
(First and Second Series)
Bonds in circulation 45,395,550.00
Interest due 11,348,887.00
CITY or MEXICO 5 PER CENT. FOREIGN LOAN,
1889
Bonds in circulation 6,762,907.00
Interest due 1,690,726.50
FOREIGN 5 PER CENT. LOAN, (1899)
Bonds in circulation 48,603,414.00
Interest due 12,150,853.50
FORF K CENT. LOAN, (1904)
Bonda in circulation 37,037,500.00
.st due 7,407,500.00
FOREIGN 4 PER CENT. LOAN, (1901)
Bonds in circulation 51,065,246.00
Interest due 10,213,040.00
FOREIGN 6 PER CENT. TREASURY BONDS, 1913
(Series "A" only)
Bonds in circulation 30,000,000.00
214 INDUSTRIAL MEXICO
Interest due $ 9,000,000.00
Due on "Religious Fund of California" five
years unpaid 107,627.47
Miidero loan 50,000,000.00
Interest due (about) 5,000,000.00
Other Bonds Guaranteed by Mexican Govern-
ment:
Caja de Prestamos 35 year 4 J / per cent. Sink-
ing Fund 25,719,790.00
Interest due 5,786,952.75
Mexican National Packing Co. 6 per cent. 1st
and 2nd mortgage Gold Bonds 4,500,000.00
Interest due 1,350,000.00
State of Vera Cruz, 5 per cent., 1901 588,000.00
Interest due 147,000.00
State of Vera Cruz, 5 per cent., 1906 332,000.00
Interest due 83,000.00
State of Tamaulipas, 5 per cent., 1902 449,750.00
Interest due 112,437.50
State of Tamaulipas, 5 per cent., 1906 399,800.00
Interest due 99,950.00
State of Sinaloa, 5 per cent., 1906 233,350.00
Interest due 58,337.50
Total $350,181,047.47
In addition to the above items, the total
funded debt of the National Railways of Mex-
ico and subsidiary lines on June 30, 1918,
amounted to $238,740,393, on which there is ac-
cumulated interest up to January 1, 1919, of
$51,824,139 (dollars).
International Bankers Committee
Leading American, French and British bank-
ers have united, with the knowledge of their re-
NATIONAL DEBT 215
spective governments, to inform themselves "as
fully as possible as to existing conditions in
Mexico with a view to such positive action as
may be taken whenever circumstances permit."
Through the International Bankers Commit-
tee on Mexico, the formation of which was an-
nounced Feb. 24, 1919, they will act jointly
for the protection of the interests of holders
of Mexican Government, railway and industrial
securities. J. P. Morgan is chairman of the
committee.
It is known that the committee was launched
after an extensive series of conferences both
here and abroad, to some of which representa-
tives of the three governments are believed to
have been invited. The bankers represented on
the committee recognize that they virtually con-
trol the financial markets which any Mexican
Government in quest of funds would have to
visit.
Thomas Cochran, of J. P. Morgan & Co., act-
ing for Mr. Morgan, issued a statement regard-
ing the International Bankers Committee, as
follows :
"The following international committee has
been constituted for the purpose of protecting
the holders of securities of the Mexican Repub-
lic and of the various railway systems of Mex-
216 INDUSTRIAL MEXICO
ico. The committee will be prepared to take
such further steps as may seem wise in order
to afford counsel and aid to investors who hold
interests in Mexico :
J. P. Morgan, chairman, of J. P. Morgan &
Co.
John J. Mitchell, president Illinois Trust &
Saving Bank, Chicago.
Walter T. Eosen, of Ladenburg, Thalmann &
Co.
Chas. H. Sabin, president Guaranty Trust
Company, New York.
Mortimer L. Schiff, of Kuhn, Loeb Co.
James A. Stillman, chairman of the board,
National City Bank, New York.
James N. Wallace, president Central Union
Trust Co., New York.
Albert H. Wiggin, chairman of the board,
Chase National Bank, New York.
Eobert Winsor, of Kidder, Peabody & Co.,
Boston.
Laurence Currie, of Glyn Mills, Currie & Co.,
London.
Sir Clarendon Hyde, of S. Pearson & Son,
Limited, London.
E. E. Peacock, chairman of the bondholders'
committee of the Mexican Tramways and the
NATIONAL DEBT 217
Mexican Light and Power group of companies,
London.
Vivian H. Smith, of Morgan, Grenfell & Co.,
London.
Vincent W. Yorke, chairman of the Mexican
Railway Co., Ltd., London.
William d'Eichthal, of Mirabaud & Co., Paris.
Georges Heine, director of the Banque de
I'Tnion Parisienne.
Andre Honnorat, member of the Commission
for the Protection of French Holders of Mexican
Securities.
Jacques Kulp, auditor of the Banque de Paris
et des Pays-Bas, Paris.
Joseph Simon, Inspector of Finance, general
delegate of the Commission for the Protection
of French Holders of Mexican Securities.
"This committee is not yet prepared to an-
nounce a definite program of procedure, but in
general its functions will be to inform itself
as fully as possible as to existing conditions in
Mfxico with a view to such positive action as
may lie taken whenever circumstances permit.
Especial care has been taken as to the composi-
t i mi of the committee upon a broad international
basis, so as thereby to insure so far as may be
joint and united action by security holders in
218 INDUSTEIAL MEXICO
all three countries concerned; namely, the
United States, Great Britain and France.
"The United States State Department at
Washington and the foreign offices respectively
of the British and French governments have
been advised of the formation of this commit-
tee.
"Each American member has named an alter-
nate to serve in case of need, and the following
have been appointed to serve as such alternates :
John H. Fulton for James A. Stillman.
Benjamin S. Guinness for Walter T. Rosen.
Jerome J. Hanauer for Mortimer L. Schiff.
E. D. Hulbert for John J. Mitchell.
Thomas W. Lamont for J. P. Morgan.
Frank W. Remick for Robert Winsor.
Francis H. Sisson for Chas. H. Sabin.
Edward R. Tinker for Albert H. Wiggin.
J. Y. G. Walker for James N. Wallace.
Mr. Lamont is also a member of the National
Association for the Protection of American
Rights in Mexico, and will probably serve as a
link between the two committees. Although
they will remain independent of each other, it
is understood that they will co-operate. The
National Association is composed chiefly of in-
dustrial men and comprises only Americans.
The bankers ' committee will gather authorita-
NATIONAL DEBT 219
tive statistics about foreign investments in Mex-
ico, which are now loosely estimated at between
$1,000,000,000 and $2,000,000,000.
Step Toward Rehabilitation
Eafael Nieto, then acting Minister of Fi-
nance of Mexico, visited New York in February
and March, 1919, on a mission of "inquiry" to
learn the terms on which the present govern-
ment of Mexico can get banking assistance in
the United States for the rehabilitation of the
national and railway debt. Mr. Nieto estimated
the national debt oustanding at $250,000,000,
and added that the railway debt guaranteed by
the government would bring the total up to
$370,000,000.
All estimates of the bonded indebtedness of
Mi-xico disagree and absolutely accurate figures
are unavailable. Statements issued by the Car-
ranza administration, for instance, always ig-
nore the debts incurred by Huerta.
CHAPTER XI
MEXICAN CONSTITUTION OF 1917
Effect upon foreign investments. Taxes. Decree
of February 19, 1918. American Government pro-
tests. President Wilson's address to Mexican editors.
Protests from British and French Governments and
replies of Mexican Government.
IN 1917 a constitutional assembly in Mexico
adopted a constitution altering Article 27 of the
Constitution of 1857 to read as follows :
Art. 27. The ownership of lands and waters within
the limits of the national territory is vested originally
in the nation, which has had and has the right to
transmit title thereof to private persons, thereby con-
stituting private property.
Private property shall not be expropriated except
for cause of public utility and by means of indemnifi-
cation.
Legal capacity to acquire ownership of lands and
waters of the nation shall be governed by the follow-
ing provisions:
1. Only Mexicans by birth or naturalization and
Mexican companies have the right to acquire owner-
ship in lands, waters, and their appurtenances, or to
obtain concessions to develop mines, waters or min-
220
MEXICAN CONSTITUTION OF 1917 221
eral 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 con-
sidered Mexicans in respect to such property, and
accordingly not to invoke the protection of their gov-
ernments in respect to the same, under penalty, in
case of breach, of forfeiture to the nation of property
so acquired. Within a zone of 100 kilometres from
the frontiers, and of fifty kilometres from the sea-
coast, no foreigner shall under any conditions acquire
direct ownership of lands and waters.
Legislation from 1884 to 1917, whose au-
thenticity and binding force have never been
questioned, has consistently upheld the prin-
ciple that the owner of the surface is likewise
the owner of all mineral fuels in the subsoil.
Article 10 of the Mexican Mining Law of No-
vember 22, 1884, states that "the following sub-
stances are the exclusive property of the owner
of the land, who may, therefore, develop and
ni joy them, without the formality of claim (de-
nuncio) or special adjudication . . . petroleum
an<l gaseous springs, etc."
The mining law of June 4, 1892, states that
"tin- owner of land may freely work, without a
special franchise in any case whatsoever, the
following substances: mineral fuels; oils and
mineral water; etc."
.':2 INDUSTRIAL MEXICO
The mining law of November 25, 1909, ef-
fective January 1, 1910, states, in Article 2, that
1 1 the following are the property of the owner of
the soil: I. Ore bodies or deposits of mineral
fuels, of whatever form or variety, etc. "
In reliance upon these laws, American com-
panies have purchased and leased petroleum
tracts in Mexico, and by expenditure of over
$300,000,000 in lands, leases, camps, pipe lines,
pumping stations, wharves, tank steamers, etc.,
have created, from the bare exude indications
which led to their investment, an industry of
great proportions, and of enormous significance
to the United States.
The provision, therefore, in Article 27 of the
1917 constitution vesting the " legal ownership "
of petroleum in the nation, " seems to indicate/'
in the language of the protest addressed by the
United States to Mexico under date of April 2,
1918, "an intention to separate the ownership
of the surface from that of the mineral deposits
of the subsurface." Were this attempt to be
carried into effect, there would necessarily re-
sult the confiscation of legitimately acquired
rights in oil fields and mines.
The constitution of 1917, however, if properly
interpreted, offers a safeguard against such
action. Article 14 thereof provides:
MEXICAN CONSTITUTION OF 1917 223
Art. 14. No law shall be given retroactive
effect to the prejudice of any person whatso-
ever.
Prior to the presentation of his credentials
as ambassador to the de facto Mexican Govern-
ment on February 20, 1917, the Hon. Henry P.
Fletcher was assured by the Mexican Minister
for Foreign Affairs that Article 14 guaranteed
Americans against confiscation of their proper-
ties. However, on February 19, 1918, under a
general authorization by Congress to legislate
on matters of finance, the following executive
decree was issued :
Art. 1. There is hereby established a tax on oil-
bearing lands and on oil contracts executed prior to
May 1, 1917, covering leases of lands for the develop-
ment of hydrocarbons or permits to undertake such
development whenever a consideration has passed.
Art. 2. Annual rentals stipulated in the contracts
to which reference is made in Article 1 hereof are
taxed as folio
A. Rentals of five pesos per annum per hectare, or
less, 10 per cent, of their amount.
B. Rentals of more than five pesos and of less than
t n pesos per annum per hectare, 10 per cent, on the
first five pesos, and 20 per cent, on the balance.
C. Rentals of over ten pesos per annum per hec-
10 IMT cent, on the first five pem, -<> p-r rent.
224 INDUSTEIAL MEXICO
on the next five pesos, and 50 per cent, on any re-
mainder above 10 pesos.
Art. 3. All royalties stipulated in oil contracts are
taxed 50 per cent, of their amount, in cash or in kind,
according to the decision of the Department of Fi-
nance.
Art. 4. Claims (fundos) operated by the owners
of the surface are assessed an annual rental of five
pesos per annum per hectare, and a royalty of 5 per
cent, of the output, in cash or in kind, according to
the decision of the department in each case.
Art. 5. The Department of Finance shall notify
taxpayers during the last two weeks of each two-
monthly period whether they are to pay the royalty in-
curred for the period of two months ending with the
said two weeks in cash or in kind.
Art. 6. Taxes assessed under Article 2 shall be
paid in the local Stamp Tax Bureau having jurisdic-
tion over the lands in question ; and in case the said
lands appertain to several jurisdictions, payment shall
be made in the bureau designated by the Department
of Finance, after consulting the taxpayer. Such pay-
ment shall be made in advance during the first two
weeks of each period of two months.
Art. 7. Royalties assessed in cash shall be paid in
the bureaus fixed by the above article on the dates
therein prescribed, covering two-monthly periods in
advance.
Art. 8. Payment of the amounts mentioned in
Articles 2, 3 and 4 hereof shall be made by means of
MEXICAN CONSTITUTION OF 1917
special stamps bearing the legend: "Rentas Petro-
leras."
Art. 9. Persons liable to the taxes established by
this law shall file during the first two weeks of each
two-monthly period a statement (manifestacion) on
the forms to be issued by the General Stamp Tax
Bureau (Direccion General del Timbre) setting forth
the rentals, output, and other data necessary for the
assessment of the taxes. These statements shall be
delivered at the stamp tax bureaus mentioned in Ar-
ticle 6 hereof.
Art. 10. Transfers of contracts taxed under this
law shall be communicated to the bureaus mentioned
in Article 6 hereof, within thirty days following their
execution. Apart from this obligation on the part
of the contracting parties to give notice, the notaries
public before whom such operations are executed shall
give immediate notice thereof to the General Stamp
Tax Bureau.
Art. 11. Royalties, or portions thereof, when pay-
able in kind, shall be delivered in any of the storage
stations belonging to the operating company or indi-
vidual, at the choice of the Department of Finance,
which shall designate the place of delivery at the same
time as it indicates the form of payment.
Art. 12. Whenever royalties, or portions thereof
are payable in cash, their amount shall lie determined
by taking the fiscal value of the products at the port
of shipment as fixed by the two-monthly schedules of
the Department of Finance, after deducting the cost
226 INDUSTRIAL MEXICO
of transportation by pipe-line, according to the dis-
tance, from the point of production to the port of
shipment and the average schedule for the public au-
thorized by the Department of Industry, Commerce
and Labour for the pipe-lines of that region. The
Tax Bureau of the Department of Finance shall be
required to inform opportunely the local Stamp Tax
Bureaus of the valuations above mentioned, so that
these bureaus may check the statements.
Art. 13. Oil-bearing land paying no rental at pres-
ent shall be assessed five pesos per annum per hectare,
and lands paying no royalties shall be assessed 5 per
cent, of the output. The payments mentioned in this
article shall comply with the same conditions as are
established by this law for other taxpayers.
Art. 14. Owners of lands desiring to develop pe-
troleum in the subsoil on their own account and who
have made no oil contract, and the last assignees of
the right of development under contracts mentioned
in Article 1 of this law, shall file a statement within
three months following the promulgation of this de-
cree, enclosing certified copies of their contracts of
purchase, lease or otherwise, with the Department of
Industry, Commerce and Labour, which department
shall revise the statements, rejecting those contain-
ing data not duly certified. On the expiration of
this time, all petroleum lands not registered in the
form prescribed in this article shall be deemed open
to entry (vacante) ; and claims thereon and the de-
velopment thereof shall be governed by regulations
MEXICAN CONSTITUTION OF 1917 227
to be issued on the subject, which regulations shall
determine what persons are liable to the taxes assessed
hereunder.
Art. 15. Contracts mentioned in this law should be
executed by public deed, and contracts under private
deed shall be valid only when the formality of a pub-
lic deed is not made necessary by the size of the opera-
tion, and when by other unquestionable methods of
proof it is shown that they have been executed in the
form of a private deed, on the dates and under the
t. THIS indicated.
Art. 16. The royalties established by this law, the
portions of royalty fixed by Article 3 hereof, the tax
on rentals fixed in Article 2 and the other rentals
established hereunder shall be delivered in local Stamp
Tax Bureaus by the operators or the last assignees of
the ri^ht of development, who, on making their pay-
ments to intermediate assignees, or to the own
shall deduct the proportional part of the taxes to be
borne by either of these, so that the federal rentals
and royalties shall be distributed in the same propor-
tion as the rentals and royalties at present established
on oil-bearing lands in the several oil contracts now in
force.
Art. 17. Taxes not paid within the period fixed
1>\ the law shall pay a surcharge of 10 per cent, for
each month of deferred payment.
Art. 18. The revenue derived from the taxes lev-
ifd liereunder shall be distributed as follows:
\ty per cent, to the Federal Government.
228 INDUSTRIAL MEXICO
Twenty per cent, to the State Government
within whose jurisdiction is located the land
in question.
Twenty per cent, to the Municipality
within whose jurisdiction is located the land
in question.
When the lands are situated in two or more munici-
palities, or in two or more States, the Department of
Finance shall distribute the tax, taking into considera-
tion the amount of land comprised within each juris-
diction, the situation of the wells, their output and
other pertinent facts.
Art. 19. Infractions of the provisions of this law
shall be punished by fines varying from fifty to
1,000 pesos, according to the gravity of the offence.
This shall not bar the institution of judicial proceed-
ings if a criminal offence shall have been committed.
This law shall take effect from the date of its pro-
mulgation.
(Signed) V. CARRANZA.
February 19, 1918.
Against this decree, the United States, Great
Britain, Holland and France made protest.
The American Government's protest was pub-
lished in the Official Bulletin of June 29, 1918,
as follows :
MEXICAN CONSTITUTION OF 1917 !
Text of Fletcher Note of Protest Against Tax
on Oil Lands, in Mexico Owned by United
States Citizens
The State Department's attention has been
called to press comment published in Mexico to
the effect that Ambassador Fletcher's note of
April 2, 1918, respecting the Mexican decree of
February 19, 1918, establishing a tax on oil
lands, is inconsistent with the President's ad-
dress to the Mexican editors now visiting this
country. The United States Government would
have appreciated being asked for its consent to
the publication of this note inasmuch as this
procedure is usually followed in diplomatic deal-
ings between friendly nations. Such consent
would of course have been readily given if the
Mexican Government had intimated that it be-
lieved the note should be published.
An examination of the note proves that all
that the United States asks for its citizens who
have made investments in Mexico ' relying on
the good faith and justice of the Mexican Gov-
ernment and Mexican laws is justice and fair
dealing. There is no disposition on the part of
the United States Government to interfere in
the internal affairs of Mexico. However, the
seizure of property at the will of the sovereign
230 INDUSTRIAL MEXICO
without due legal process equitably adminis-
tered and without provision for just compen-
sation has always been regarded as a denial of
justice and a cause for diplomatic representa-
tion.
President Wilson's Address
The President in his speech referring to Mex-
ico's future said:
"It must depend upon every nation that has
any relations with her, and the citizens of any
nation that has relations with her, keeping
within the bounds of honour and fair dealing
and justice, because so soon as you can admit
your own capital and the capital of the world
to the free use of the resources of Mexico it
will be one of the most wonderfully rich and
prosperous countries in the world. "
The President further pointed out that the
basis for the future relations of nations was
trust, and said:
"As long as there is suspicion there is going
to be misunderstanding, and as long as there is
misunderstanding there is going to be trouble.
If you can once get a situation of trust then
you have got a situation of permanent peace. "
.MEXICAN CONSTITUTION OF 1917 231
Note of April 2
The United States always desires to accord
to the Mexican Government and people justice
and fair dealing, and it is confident that it will
be accorded the same justice and the same fair
dealing in return.
The note of April 2 is as follows :
MEXICO, April 2, 1918.
Excellency:
The decree of the 19th of February, 1918, which
was published in the Diario Oficial on the 27th of
February last, establishing a tax on oil lands and on
oil contracts executed prior to the 1st of May, 1917,
etc., has been brought to the attention of my govern-
ment, and I am under instruction to state to Your
Excellency that my government has given most care-
ful consideration to the effect which this decree, if
carried into operation, will have upon American in-
terests and property rights in Mexico.
Provisions of the Decree
The said decree provides for the imposition of cer-
tain taxes on the surface of oil lands, as well as on
the rents, royalties, and production derived from the
exploitation thereof. It is noted also that among the
provisions for the collection of such taxes is one re-
232 INDUSTRIAL MEXICO
quiring that payment in kind shall be delivered to
the Mexican Government at the storage stations of
the operators. Articles IV, XIII, and XIV of the
said decree seem to indicate an intention to separate
the ownership of the surface from that of the mineral
deposits of the subsurface, and to allow the owners of
the surface a mere preference in so far as concerns the
right to work the subsoil deposits upon compliance
with certain conditions which are specified. While
the United States Government is not disposed to re-
quest for its citizens exemption from the payment of
their ordinary and just share of the burdens of taxa-
tion so long as the tax is uniform and not discrimina-
tory in its operation, and can fairly be considered a
tax and not a confiscation or unfair imposition, and
while the United States Government is not inclined to
interpose in behalf of its citizens in case of expropria-
tion of private property for sound reasons of public
welfare, and upon just compensation and by legal
proceedings before tribunals, allowing fair and equal
opportunity to be heard and giving due consideration
to American rights, nevertheless the United States
cannot acquiesce in any procedure ostensibly or nom-
inally in the form of taxation or the exercise of em-
inent domain, but really resulting in the confiscation
of private property and arbitrary deprivation of
vested rights.
MEXICAN CONSTITUTION OF 1917 233
Not a New Principle
Your Excellency will understand that this is not
an assertion of any new principle of international law,
but merely a reiteration of those recognized principles
which my government is convinced form the basis of
international respect and good neighbourhood. The
seizure or spoliation of property at the mere will of
the sovereign and without due legal process fairly
and equitably administered, has always been regarded
as a denial of justice and as according internationally
a basis of interposition.
My government is not in a position to state definitely
that the operation of the aforementioned decree will,
in effect, amount to confiscation of American interests.
Nevertheless, it is deemed important that the Govern-
ment of the United States should state at this time
the real apprehension which it entertains as to the
ible effect of this decree upon the vested rights
of American citizens in oil properties in Mexico. The
amount of taxes to be levied by this decree are in
themselves a very great burden on the oil industry,
and if they are not confiscatory in effect and as to
this my government reserves opinion they at least
indicate a trend in that direction. It is represented
to the State Department that the taxation borne by
the oil fields of Mexico very greatly exceeds that im-
posed on the industry anywhere else in the world.
Moreover, it would be possible under the terms of the
decree, in view of the fact that th> M.xican Govern-
234 INDUSTRIAL MEXICO
inent has not storage facilities for the taxes or roy-
alties required to be paid in kind, by storing the same
in the tanks of the operators, to monopolize such stor-
age facilities to the point of practical confiscation
thereof until emptied by order of the Mexican Gov-
ernment or by the forced sale of the stored petroleum,
to the operators at extravagant rates.
Surface and Subsurface Rights
It is, however, to the principle involved in the ap-
parent attempt at separation of surface and subsur-
face rights under this decree that my government
desires to direct special attention. It would appear
that the decree in question is an effort to put into
effect as to petroleum lands Paragraph 4 of Article 27
of the Constitution of May 1, 1917, by severing at
one stroke the ownership of the petroleum deposits
from the ownership of the surface, notwithstanding
that the Constitution provides that " private property
shall not be expropriated except by reason of public
utility and by means of indemnification." So far as
my government is aware no provision has been made
by Your Excellency's Government for just compensa-
tion for such arbitrary divestment of rights nor for
the establishment of any tribunal invested with the
functions of determining justly and fairly what in-
demnification is due to American interests. Moreover,
there appears not the slightest indication that the
separation of mineral rights from surface rights is a
MEXICAN CONSTITUTION OF 1917 235
matter of public utility upon which the right of ex-
propriation depends, according to the terms of the
Constitution itself. In the absence of the establish-
ment 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 au-
thorities, 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 in-
juriously affected by the decree above cited.
The investments of American citizens in the oil
properties in Mexico have been made in reliance upon
the good faith and justice of the Mexican Government
and Mexican laws, and my government cannot believe
that the enlightened government of a neighbouring
Republic at peace and at a stage in its progress when
the development of its resources so greatly depends
on its maintaining good faith with investors and
operators, whom it has virtually invited to spend their
wealth and energy within its borders, will disregard
its clear and just obligations toward them.
Acting under instructions, 1 have the honour to
rc'ju.-st Your K. \rrllency to be good enough to lay
before His Excellency, the President of Mexico, this
formal and solemn protest of the Government of the
Tinted States against tin- violation or infringement
236 INDUSTRIAL MEXICO
of legitimately acquired American private property
rights involved in the enforcement of the said decree.
Accept, Excellency, the renewed assurance of my
highest consideration.
HENRY P. FLETCHER.
The American Government's note was deliv-
ered on April 4. On May 18, 1918, the Carranza
Government issued a decree extending to July
31, 1918, the term set in the law on oil-bearing
lands and oil contracts for the filing of state-
ments. On July 8, 1918, a decree regulating
Article 14 of the decree of February 19, 1918,
was issued, further amendments being made on
August 8, 1918. On July 31, 1918, the decree of
February 19 was re-issued with slight altera-
tions.
On August 12, 1918, a new decree was issued
by President Carranza under extraordinary
powers in the Department of Finance conferred
upon him by Congress, containing the following
provisions :
Art. 1. Petroleum claims which have been sur-
veyed and in which capital has been invested for oil
exploration or development, and statements regarding
which have not been filed up to August 15, 1918, as
prescribed in the decree of July 31, 1918, shall not
be open to entry.
MEXICAN CONSTITUTION OF 1917 237
Art. 2. The right to the petroleum development
of these properties shall be acquired by means of
special contracts to be executed with the Department
of Industry, Commerce and Labour, in conformity
with regulations to be issued on the subject, until such
time as the organic law contemplated in Article 27
of the constitution shall determine the method of
granting of franchises (concesiones) on this subject.
Art. 3. The present holders or operators of such
properties who shall not have filed the statements
required in the decree mentioned above shall continue
to hold and operate the said properties on payment
into the Federal Treasury of an annual rental of five
pesos per hectare and of a royalty of 5 per cent, of
the output, until such time as the basic terms are pub-
lished for the execution of the respective contracts.
But if the interested parties shall prove that they are
in possession of the said properties under contracts
executed prior to May 1, 1917, they shall continue to
hold and operate such properties subject to the obliga-
tion to pay the tax imposed on petroleum contracts by
the Decree of July 31, 1918.
Art. 4. The present operators of such properties
may continue to develop work already begun and au-
thorized, after compliance with the requirements laid
down in the foregoing article; but they shall not be
permitted to undertake new work until after the execu-
tion of contracts granting the right to develop such
claims.
Art. 5. All persons liable to the taxes established
238 INDUSTRIAL MEXICO
under Article 2 hereof shall make their payments in
accordance with Articles 6, 7, 8, 9, 10 and 11 of the
decree aforementioned (July 31).
Art. 6. Payment of taxes levied hereunder shall
give the payers thereof the preferential right to the
execution of the contracts to which Article 2 hereof
refers.
Art. 7. Failure to make payment of the taxes
levied under Article 3 hereof shall result in the for-
feiture of the preferential right acquired through
such payment, and shall cause the claim in question
to be declared open to entry or the preference to be
granted to another.
Art. 8. The executive may make use of the right
of coercion in securing observance of the fiscal obliga-
tions imposed hereunder.
(This law shall become effective from August 16,
1918.) (Signed) V. CARRANZA.
The British Government on April 30, 1918,
directed to the Mexican Government the follow-
ing note :
(Note and reply translated from El Universal, Mexico
City, August 13, 1918.)
BRITISH LEGATION, MEXICO, April 30, 1918, No. 34.
Mr. Minister:
In accordance with instructions I have received from
the Prime Minister for Foreign Affairs of His Majesty,
I have the honour to inform Your Excellency that the
provisions of the Petroleum Decree of the 19th of last
MEXICAN CONSTITUTION OF 1917 239
February, imposing new charges on petroleum-bearing
lands and on contracts covering petroleum, have been
examined with due care by the government of His
Majesty.
His Majesty's Government considers that this de-
cree, especially in reference to the measures mentioned
in Articles 3, 4, 11, 12, 13, 14 and 16, is of an arbi-
trary and confiscatory character, which imposes an
appalling charge on the petroleum industry, the result
of which will be that an exaction of tribute on the
petroleum industry will exist, higher than that in any
other country in the world.
The provisions of the decree are in the opinion of
the government of His Majesty in open conflict with
laws and contracts in force, according to which con-
siderable investments of British capital have been
made in petroleum-bearing lands, and in the petroleum
industry in Mexico.
His Majesty's Government observes that the pay-
ment of taxes in kind, mentioned in the decree, might
produce a monopoly of facilities at present existing
for storage of petroleum, and that it would be con-
trary to the principles of the Mexican Constitution
and those of justice to separate surface rights from
su! (soil rights which now belong to those land owners
who have invested capital in the petroleum-producing
/one.
For the above reason > Hi y's Government
1'onnally and energetically protests against the putting
into effect of the provisions of the decree in question
240 INDUSTRIAL MEXICO
so far as concerns British subjects and British capital,
and holds the Mexican Government responsible for
all loss and damage which might result to English
subjects and capital as a consequence of the decree.
I avail myself of this opportunity to renew to Your
Excellency the assurance of my high esteem.
(Signed) H. A. CUMMINQS.
To His Excellency General Candido Aguilar,
Minister of Foreign Relations,
Mexico.
The reply of the Mexican Government to the
foregoing note follows :
MEXICO CITY, Aug. 12, 1918.
. . . Without judging the exactness or inexactness
of the qualifications of established taxes, the Mexican
Government can only express the surprise caused by
the note and the protest of his Britannic Majesty, for,
in the capacity of an independent nation in the legiti-
mate exercise of her sovereignty, Mexico issued a de-
cree against which the only recourse that Mexican
laws concede is when they judge onerous and confis-
catory taxes decreed by public power.
The surprise of the Mexican Government is legiti-
mate, as would be that of any other government of a
free country, including that of his Britannic Majesty,
if it found that acts of interior legislation such as the
right of imposing contributions were called into ques-
tion by the diplomatic protests of the countries of sub-
jects affected by the imposition. The Mexican Gov-
MEXICAN CONSTITUTION OF 1917 241
eminent is sure that the Government of His Ma.i
would not permit diplomatic protests against the high
contributions that the war has caused him to decree
in all his dominions, and which would weigh equally,
not only upon British subjects and subjects of con-
quered nations, or those subjected in any form to his
dominion, but upon foreigners alike.
In virtue of its freedom of fiscal legislation, it is
opportune to declare that the Mexican Government
doe-i not recognize the right of any foreign country to
protest against acts of this nature coming from the
right to exercise interior sovereignty, and, in conse-
quence, cannot accept tin* responsibility which it is
pretended will be charged to her account as supposed
damages as a consequence of this legislation.
Such a decision is founded upon the equality which
the Mexican Government desires should exist between
Mexicans and foreigners regarding contributions de-
creed in its territory, because it is deemed that, con-
ceding the preferences to which all diplomatic inter-
\viition tends, such a decision is fair to Mexico in its
strictest terms.
The course to be taken by foreigners and nationals
alike to free themselves from impositions which are
deemed confiscatory consists in submitting the case
before tribunals, which are always found ready to ad-
minister justice, applying the law, which justly guar-
ndividuals against eontUration of property.
Furthermore, it is generally admitted that diplomatic
itation should be the last recourse taken and
only when the last resources have been exhausted.
INDUSTRIAL MEXICO
If the provisions of the decree are openly against the
laws and in violation of contracts previously made, ac-
cording to the concept of his Britannic Majesty, such
could not rationally constitute an obstacle to the free
development of Mexican property, and this develop-
ment can demand, as has happened, certain changes of
legislation beneficial to the country. This is evident
when it is considered that the modern concept of prop-
erty is that it is a social function bound closely to the
prosperity of the State.
The Mexican Government has a firm purpose in re-
spect to foreign interests. It gives them guarantees
facilitating their development and believes that its
program can only be realized through the laws and
institutions of the republic by applying disposition
equally.
Esteeming that it is the best guarantee it can im-
part, the Mexican Government cannot see a way to
accept the diplomatic protests from his Britannic Maj-
esty, which would have the effect of giving English
citizens unequal preference over Mexican nationals.
CANDIDO AGUILAB.
The protest of the French Government fol-
lows:
FRENCH LEGATION,
MEXICO CITY, May 13, 1918.
Excellency:
The Decree of February 19 last levying new taxes
on oil-bearing lands and contracts relating to the sale
MEXICAN CONSTITUTION OF 1917 5
of petroleum has aroused considerable concern among
the numerous stockholders of foreign or Mexican oil
companies established in Mexico.
They complain particularly that the provisions of
Arti K 11, 12, 13 and 14 of the new decree
impose upon the industry fiscal charges so burdensome
as not to be comparable with those levied by other
countries. They claim that these regulations, strict
compliance with which might entail confiscation, rest
on principles of law wholly different from those on
which was based the legislation in force when their
investments in petroleum in Mexico were made. At
that time no attempt was made to establish differences
between surface Bights and those flowing from sub-
surface ownership; it is due to this distinction that it
has been possible to assess the new taxes which deprive
companies of almost all the profits they had hoped
to enjoy from the capital invested, thereby gravely
jeopardizing the existence of some of these con-
Actinpr under instructions from my government, I
beg to call to the attention of Your Excellency the seri-
situation that may be faced by the oil companies
as the result of this new measure, and to say that I am
trained to make all reservations as to the conse-
quences that may befall tin- French shareholders of
Ml'-li eompai;:
Accordingly, I appeal to Your Excellency to bring
your influence to bear on behalf of the interests with
whose defence I am charged.
244 INDUSTRIAL MEXICO
Accept, Mr. Secretary, the assurances of my very
high consideration.
(Signed) F. DEJEAN.
The reply of the Mexican Government to the
French note of protest follows :
DEPARTMENT OF FOREIGN AFFAIRS.
No. 2770 MEXICO, Aug. 15, 1918.
Mr. Charge d' Affaires:
I have the honour, under instructions from the
President of the Republic, to make reply to your note
of May 13 last, which Your Excellency addressed to
this Government with regard to the Decree of Febru-
ary 19 fixing a tax on oil-bearing lands and oil con-
tracts. On the assumption that this decree is a new
regulation in oil legislation which might bring about a
serious situation for companies in which French stock-
holders are interested, Y. E., under orders from your
Government, is pleased to call the attention of this de-
partment to such disadvantages, and to add that you
are constrained to make all reservations as to the con-
sequences that might be caused to such stockholders.
At the same time, Y. E. is pleased to appeal to this
department to bring, its influence to bear on behalf of
the interests with whose defence you are charged.
The President has instructed me to give to Y. E.
all assurances as to the fate of the interests you so
worthily represent, since the French- shareholders may,
under the protection of the laws and institutions of
the Republic, appeal to the Mexican courts in the
MEXICAN CONSTITUTION OF 1917 24:>
event of their considering the tax which gave rise to
tin 1 note of Your Excellency either burdensome or
pivjudicial to their interests, with the certainty that
justice will be done them. Further, I am authorized
to state to Your Excellency that the Mexican Govern-
ment in its desire to facilitate the development of the
natural resources of the country, will be quick to
modify the legislation on the subject if their applica-
tion shows that they fail in their purposes and if the
damages which foreign and national interests believe
they suffer as the result of their enforcement are ade-
quately proved before the courts of the nation.
The Mexican Government is keenly interested in
the development and security of foreign investment in
Mexico; it is confident it will achieve this purpose by
its legislation and through its authorities, and the one
no less than the other, Your Excellency may be quite
sure, will justly consider all steps taken by French
stockholders in defence of their interests.
Permit me to express the hope that the French Gov-
ernment will be duly apprised by Your Excellency as
to the true character of the measures of the Mexican
Government on this subject, and to renew to Y. E. the
assurances of my kind consideration.
(Signed) C. AOUILAR.
In December, 1918, President Carranza pre-
sented to ti ican Congress a bill embody-
ing a Petroleum Code, containing 125 articles.
Articles 1 to 16 will give a clear indication of
1M6 INDUSTRIAL MEXICO
the proposed legislation, which failed to pass
the last session of the Mexican Congress, but
which will be considered in all probability in an
amended form at the regular session in Novem-
ber, 1919. An extract from this bill is given
below :
Whereas the increasing importance of the oil indus-
try requires that preference be given to a settlement of
all the problems having a relation to the said industry,
so that its development may be intensified by the in-
vestment of new capital ; and
Whereas such a result can only be attained by the
institution of a legal system which shall consolidate
past investments,
Now, therefore, the Executive by virtue of the
power conferred on him by Sec. I, Art. 71, of the Fed-
eral Constitution, hereby submits to the consideration
of the Congress the following
PROPOSED ORGANIC LAW OF ARTICLE 27 OF THE CON-
STITUTION IN THE MATTER OF PETROLEUM.
Art. 1. The Nation enjoys the legal ownership of
the following substances which are subject to the pro-
vision of this law :
I. Ore bodies, measures and natural de-
posits of petroleum;
II. Gaseous hydrocarbons to be found in
the subsoil or those seeping through the
ground to the surface;
MEXICAN CONSTITUTION OF 1917 247
III. Natural deposits of ozokerite and
asphalt; and
IV. All mixtures of hydrocarbons of the
several kinds having their origin in natural
phenomena.
ART. 2. The legal mvnership of the Nation in the
substances enumerated in the foregoing article is tn-
dlifjuible and imprescriptible; consequently the rights
-.-ranted under this law shall not constitute absolute
and definite ownership.
Art. 3. The rights granted under this law may be
hypothecated, alienated and transferred wherever the
general law authorizes such transactions in the case of
real property; notice shall be given to the Depart-
ment of Industry, Commerce and Labour of all such
transactions. Failure to comply with this provision
will be punished by a fine of from 50 to 500 pesos; and
no operation of any kind whatsoever relating to the
petroleum industry shall be carried out on any petro-
leum claim, so long as the fine remains unpaid.
Art. 4. The petroleum industry is hereby declared
to be of public character; accordingly, condemnation
proceedings shall lie for such portion of the surface as
may be necessary for the development of the claims,
in pursuance of what the law may prescribe on the
subject.
Art. 5. Each petroleum claim shall be the object
of a single franchise (concesion).
Art. 6. A "petroleum claim*' shall be understood
to be a solid of indefinite depth limited laterally by
248 INDUSTRIAL MEXICO
the vertical planes passing through the boundaries of
a continuous area devoted to petroleum development.
Art. 7. The term ''petroleum development" shall
be understood to mean the extraction, reducing to pos-
session or enjoyment of the substances enumerated in
Article 1.
Art. 8. The surface area of a claim shall not be
less than four hectares, and its shape shall be such as
to permit the sinking of a well and the erection of a
standard tank as prescribed by the regulations in force
on the date of the franchise.
Art. 9. Franchises granted under this law by the
Federal Government to individuals or to civil or com-
mercial associations organized under the laws of Mex-
ico shall be limited in purpose to the development of
the substances enumerated in Article 1.
Art. 10. The grantee of a petroleum claim may
extract therefrom and enjoy all substances mentioned
in Article 1, without any other limitation than that of
not trespassing in his development work on adjoining
properties and that of complying with the provisions
of this law and of such regulations as may be enacted
on petroleum development.
Art. 11. Operators of a petroleum claim may ap-
propriate within the limits of their claim, subject to
authorization of the Executive, the surface area neces-
sary for the work of extraction and for the immediate
storage. of the products extracted, paying in such event
due compensation to whomsoever may be hereto enti-
MEXICAN CONSTITUTION OF 1917 249
tied; any judicial action taken hereunder shall not
interfere with the prosecution of the work.
Art. 1.2. Operators of a petroleum claim shall ac-
quire easements of way and of pipe-lines on obtain inur
proper authorization from the Executive to install
such pipe-lines and pumping stations as the develop-
ment of the property demands, on payment of duo
compensation to whomsoever may be thereto entitled ;
any judicial action instituted hereunder shall not inter-
fere with the prosecution of the work.
Art. 13. Operators of a petroleum claim shall have
the right to establish storage stations and refineries,
subject to the approval of the project by the Executive
and to the assent of the owners of the lands it is sought
to occupy. In the event of failure to obtain such
assent, the necessary area may be condemned pursu-
ant to the condemnation laws then in force.
Art. 14. Operators of petroleum claims shall have
the right to build wharves, loading stations and sub-
marine pipe lines subject to the approval of the
Executive in conformity with the provisions in force
in this regard.
Art. 15. Only grantees shall have the right to
build storage tanks or refineries on their respective
jM-trnli'um claims.
Art. 16. The grantee of a petroleum claim may
use the surface waters for the needs of his operations.
in pursuance of the general law on the subject. He
may likewise use the subsoil waters for the sajne pur-
250 INDUSTRIAL MEXICO
pose, subject to the authorization of the Executive and
on payment of the due compensation to whomsoever
may be hereto entitled.
The following values were assigned by the
Mexican authorities as a basis for the 10 per
cent, export tax during July-August and Sep-
tember-October, 1918 :
Pesos
Fuel Oil, of density 0.91, per ton 13.00
Crude Oil, of density 0.91, per ton 15.50
Oil, of density greater than 0.97, per ton. . 6.00
Gas Oil, per ton 13.00
Refined Gasoline, per liter 0.125
Crude Gasoline, per liter 0.1175
Kerosene, crude or refined, per liter 0.04
As before, twenty centavos are to be deducted
from the price fixed for each one one-hundredth
increase in density, and forty centavos to be
added to the price for each one one-hundredth
decrease in density. One peso is at present
something more than fifty cents in United States
currency. At this rate fuel oil of density 0.91
is valued in our currency at $7.15 a ton.
The usual rates of conversion of tons into
barrels are as follows: for Tuxpam " crude oil"
(0.93 specific gravity), 6.7 barrels to the metric
ton; for Tuxpam "fuel oil" (0.949 specific grav-
MEXICAN CONSTITUTION OF 1917 251
ity), 6.5 barrels to the ton; for Panuco " crude"
(0.98 specific gravity), six barrels to the ton.
The conversion rate for density 0.91 would thus
be about seven barrels to the ton, making fuel
oil of this grade come to $1.15 (United States
currency) per barrel, and the tax, ten cents per
barrel. The density of ordinary Mexican fuel
oil, however, is 0.95. Making all the proper
deductions, fuel oil of this grade is valued by
the Mexican authorities at $6.71 per ton or $1.03
(United States currency) per barrel, and the
tax likewise ten cents per barrel. According to
the figures ruling before the change of Sep-
tember 13, the tax on this grade of oil was about
twelve cents. The actual selling price of ordi-
nary fuel oil in Mexico (free on board ship at
Tampico) appears to range from twenty-eight
to seventy-eight cents per barrel, according to
density and per cent, of gasoline content. The
lower prices pertain to heavier oil with a small
per cent, of gasoline. Heavy Panuco, for in-
stance, of about 0.98 density (twelve degrees
Baume), sold at twenty-five cents per barrel
(f. o. b. Tampico) on July 1, 1918. Even Tnx-
pam crude of 0.93 density has been recently
quoted as low as forty-three cents per barrel
at Tampico, although the usual price is higher.
The highest price recently obtained for Tuxpam
252 INDUSTRIAL MEXICO
fuel oil of 0.95 density was seventy-eight and
one-fourth cents, but this appears to have oc-
curred in only one consignment.
On July 14, 1919, the Mexican ambassador to
the United States, Ygnacio Bonillas, made the
following statement regarding the oil situation :
"I know that drilling permits are granted to com-
panies and to individuals who comply with the requi-
sites of law, and that a great many permits are being
asked by companies who have not the means to take
out all the oil the wells are capable of producing. The
companies have never exported from Mexico more
than 10 or 12 per cent, of the capacity of the wells.
The Mexican Government has always been perfectly
willing that they should export all they could to the
full capacity.
"There is absolutely no intention on the part of
the Mexican Government to confiscate properties. All
that Mexico desires is to derive a revenue from this
great natural wealth, which, previous to the establish-
ment of the government emanating from the revolu-
tion, flowed out of the country without any benefit
other than giving work to some of the people in the
oil region. The oil men object to the revolutionary
decrees, and the matter of legislation on oil subjects is
in the hands of our Congress at the present time. It
is my firm belief that when the Mexican Congress
gets through with that legislation it will be equitable
and just legislation which ought to be satisfactory to
all."
CHAPTER XII
GOVERNMENT DEPARTMENTS AND INSTITUTIONS
National Congress. Departments. Education.
Museums. Telegraphs, Post Office and Harbours.
Libraries. Religion.
THE National Congress is composed of a Sen-
ate and a Chamber of Deputies, the former con-
sisting of fifty-six members, two for each State
and the Federal District, elected indirectly for
a term of four years. One-half of the Senate is
renewed every two years. The members of the
Chamber of Deputies are also elected indirectly,
but for a term of two years, in the proportion
of one Deputy for 40,000 inhabitants or frac-
tion exceeding 20,000.
Suffrage is possessed by all male citizens who
have reached the age of eighteen years if mar-
ried, and of twenty-one years if not married.
Congress meets twice a year. The first session
is from September 16 to December 15, and may
be extended for thirty legislative days. The
second session is from April 1 to May 31, which
may be extended for lift con legislative days.
During recess, Congress is represented by a
itt-t INDUSTRIAL MEXICO
Permanent Committee consisting of fourteen
Senators and fifteen Deputies, which has the
power to convene Congress, either upon its own
initiative or at the suggestion of the President,
in extraordinary session. The duties of the
committee are to advise the President relative
to matters affecting legislation; to give its con-
sent to the use of the national guard by the
President upon certain occasions provided for
by the constitution; to prepare a report on all
pending legislative matters in order to expedite
action by the next Congress ; to give or withhold
its approval of presidential appointments in the
diplomatic and consular services, and to admin-
ister the oath of office to the President of the
Republic and to the justices of the supreme
court in certain cases provided for by the con-
stitution.
The President and Vice-President are chosen
by electors for a term of six years ; the Presi-
dent is assisted by a cabinet of eight secretaries.
His salary is 50,000 pesos, equal to $25,000.
The cabinet officials are appointed by the
President and are directly responsible to him
for the proper administration of the respective
departments.
The Department of Foreign Relations (Sec-
retaria de Relaciones Exteriores) is charged
GOVERNMENT DEPARTMENTS 255
with the conduct of all diplomatic and consular
matters at home and abroad, the negotiation of
treaties and conventions, the settlement of
boundary disputes, and such other international
matters as may arise from time to time. The
secretary of this department has custody of
the grand seal of the nation and is keeper of
the national archives.
The Department of the Interior (Secretaria
de Gobernacion) has charge of the administra-
tion of the Federal District and the National
Territories ; the regulation of the federal rural
police, elections, immigration, public charities,
sanitation, the National Printing Office, and the
Official Gazette (Diario Oficial).
The Department of Justice (Secretaria de
Justicia) has jurisdiction of the national ju-
diciary comprising a supreme court, three cir-
cuit courts, and thirty-two district courts, as
well as the various courts of the States, Terri-
tories, and Federal District. The eleven su-
preme court justices and four supernumerary
justices are elected by indirect vote of the peo-
ple for a term of six years.
The Department of Public Instruction and
Fine Arts (Secretaria de Instruccion Publica y
Bellas Artes) has supervision over the educa-
tional institutions of the Federal District and
L>56 INDUSTRIAL MEXICO
the National Territories, and over the higher
grades of instruction in the various States.
Under its scope are such institutions as the
Academy of Fine Arts, the Conservatory of
Music and Declamation, the National Patholog-
ical Institute, and other scientific academies
and societies. Public libraries, registration of
copyrights, national museums, and archaeolog-
ical exhibits also fall within the jurisdiction of
this division.
The Department of Promotion (Secretaria de
Fomento, Colonizacion e Industria), which is
divided into five sections, is devoted to the regu-
lation, progress, and development of the nat-
ural resources of the Eepublic. The forests,
mines, agricultural lands, and water powers are
each assigned to one of these sections for due
attention and exploitation. Under this depart-
ment are established the Bureau of Weights and
Measures, Bureau of Printing and Engraving,
Patent Office and Commercial Trade-marks,
Eegistry of Deeds, Bureau of Statistics and Ar-
chives, and Publications.
The Department of Communications and Pub-
lic Works (Secretaria de Comunicaciones y
Obras Publicas) is charged with the regulation
of all railways, private as well as government
owned, street railways, telegraph and telephone
GOVERNMENT DEPARTMENTS 257
systems, cables, wireless service, and with the
improvement and development of highways,
bridges, harbours, ports, and other means of
communication and transportation. It also has
charge of the various public buildings, and is
empowered to maintain these as well as to erect
new edifices when necessary.
The Department of Finance (Secretaria de
Hacienda, Credito Publico y Comercio) has the
duty of collecting all federal taxes, the admin-
istration of the custom houses, mints, and as-
say offices, the disbursing of public funds, com-
pilation of commercial statistics, and such other
fiscal matters connected with the administration
of the government.
The Department of War and Marine (Secre-
taria de Guerra y Marina) has charge of all
matters pertaining to the national defence, as
well as supervision and maintenance ot various
naval and military schools and colleges.
Mexico is divided politically into 27 States,
3 Territories, and 1 Federal District. Govern-
ors of the States are elected in the same manner
as the President of the Republic, as are also the
legislatures and the judiciary of each State.
The Territories are administered by govern-
ors appointed by the President, while the L>
ernment of the Federal District, which includes
258 INDUSTEIAL MEXICO
the capital, Mexico City, is in the hands of three
officials, likewise appointed by the President.
The States and Territories are subdivided into
municipalities, which elect their own adminis-
trative councils and mayors.
Notable progress has been made in the ex-
tension of the post and telegraph service in the
Republic. There are now about 3,000 post-
offices of all classes, 500 telegraph stations, with
25 telephone and 6 wireless-telegraph stations.
The length of wire totals about 75,000 kilome-
tres (46,602 miles), while the cable system
shows a total length of cable amounting to
775,000 metres (over 480 miles).
Education
Education in Mexico has been for many years
the subject of serious consideration on the part
of the government. As early as 1836 it had
been decreed that the department boards in the
States should establish public schools. In 1843
there were 1,310 primary official schools, but
the organization was neither complete nor sys-
tematic.
In 1910 the number of primary schools alone
was 12,000, and the attendance in them substan-
tially 1,000,000.
GOVERNMENT DEPARTMENTS 259
Elementary tuition is under the care of muni-
cipalities, and they are obliged to establish at
least one school for each 4,000 inhabitants.
Municipal schools of the Federal District and
of the Territories come under Federal jurisdic-
tion. The superior board of primary education
(Direccion Superior de Instruccion Primaria)
has been created for the organization, superin-
tendence and management of said institutions.
On the other hand, the individual States exer-
cise considerable discretion as to the manner in
which such instruction is carried out, and are
practically independent in their development of
the higher grades and courses, each State en-
couraging high schools and special schools ac-
cording to the needs of its own population.
The most advanced branches, those that fit
students for technical or professional careers,
are again subject to direct Federal control.
The Mexican university was founded by royal
decree of January 25, 1553, and was followed
by another at Guadalajara and by one of less
importance at Chiapas. It was closed and dis-
solved during the unquiet times of 1862. The
faculties teaching law, medicine, engineering
and artistic branches continued their work,
however, although organic association between
them was lost.
260 INDUSTRIAL MEXICO
The university has five faculties: law, medi-
cine, engineering, fine arts, and the college of
special (non-professional) studies. The schol-
astic year runs from February 1 to the end of
November. The administration lies in the coun-
cil consisting of two professors and one student
from each faculty, the rector being appointed
by the President of the Republic. The faculty
of engineering receives the largest financial sup-
port, while that of fine arts (architecture hav-
ing full faculty rank) has the most students.
The general program for primary education
embraces morals, civic instruction, the national
language, history, geography, arithmetic, the
principles of physical and national sciences, to-
gether with drawing, singing, and for girls, sew-
ing, etc. For superior primary instruction
there are added French, several sciences in their
principles, and advanced studies in graded work.
Museums. There are throughout the Repub-
lic museums of art, science and archaeology.
As a rule, each State has, in the capital city, a
Museo del Estado (State Museum), devoted to
State products and antiquities. The largest
and best museum of the country is in the City
of Mexico. It is a part of the National Palace,
and is called the National Museum (Museo Na-
cional de Mexico).
GOVERNMENT DEPARTMENTS 261
Libraries. The Biblioteca Nacional (Na-
tional Library), in the City of Mexico, is by far
the largest, having about 200,000 volumes.
Religion. The Constitution expressly pro-
vides for the independence of Church and State.
As might be expected from its history, the pre-
vailing religion in Mexico is the Roman Cath-
olic, the foundation of which may be said to
date from 1517. However, tho Mexican Epis-
copal Church, in reality a part of the general
Protestant Episcopal Church, the Presbyterian
Church, the Methodist Episcopal Church, the
Baptist Church, and several other denomina-
tional as well as unsectarian religious organiza-
tions, have been established in the Republic.
As part of the educational forces of the Re-
public emphasis must be given to the numerous
charitable and correctional institutions, sup-
ported to a large extent by the government, both
of the nation and of the individual States, and
also by private gifts and foundations. The
manifestation of this spirit was one of the early
incidents of the Spanish conquest, and in every
city of colonial times there was an endowed hos-
pital, school, and an asylum. Not a few of these
itutions have disappeared with changing
conditions; but many have preserved their iden-
tity or have been taken over by the government.
262 INDUSTKIAL MEXICO
To these should be added ,the hospitals and peni-
tentiaries started within the past generation.
Telegraphs, Post Office and Harbours
During the year 1918 a total of 291,902 parcel
post packages passed through the Mexican post
office, of which 277,357 were from the United
States and 15,545 were from other foreign
countries. As compared with the last previous
year for which there are any official reports
(1912-13), this shows a decrease in the number
of packages from European countries of 91,253,
while the number of packages from the United
States increased 159,458.
Throughout practically the entire revolution
the Carranza forces were kept busy restoring
the telegraph and postal services as rapidly as
new territory came under control. Repair
gangs went with the armies into the field, and
the telegraph lines, which had for the greater
portion been destroyed by the enemy, not once
but many times, were repaired, restored and put
into operation with as little delay as possible.
So closely was this work pushed that not infre-
quently civilians thus employed were killed or
wounded by the enemy.
At the present time there is complete tele-
a o
03 X.
CO W
B
"8
51
GOVERNMENT DEPARTMENTS 263
graphic communication with all portions of the
ublic, and this has been the case for many
months. The last State to be thus provided
was Morelos, where Zapata held sway so long,
and which has now come under the control of
the Federal Government. When the difficulties
encountered are considered, the total destruc-
tion of equipment, the scarcity of suitable ma-
terial for poles, and the remoteness from
sources of supply, the promptness with which
telegraphic communication has been restored
and maintained is one of the most interesting
achievements of the period.
One of the most important features of the
work of reconstruction has been the establish-
ment of a complete system of wireless telegra-
phy connecting all portions of Mexico, and act-
ing as a safeguard against the cutting of the
land wires by bands of marauders. The over-
whelming importance of such a system was
demonstrated during the revolution, and ex-
ts were accordingly dispatched to the United
States for the purpose of securing the most
modern appliances and inventions in wireless
communication, and these have been utilized in
the various centres of population. The sta-
tions at Saltillo, the capital of Coahuila, and
( linpultopoc, in the suburbs of the capi-
264 INDUSTRIAL MEXICO
tal, are the largest of the system, being of
five kilowatt power. The other stations are
all of two and one-half kilowatt power and are
located at Vera Cruz, Torreon, Chihuahua, Cam-
peche, Xcalak (in the territory of Quintana
Roo), Mazatlan, San Jose del Cabo and Santa
Rosalia in Lower California, and also at Guay-
mas, in Sonora, and under construction at Sa-
lina Cruz, Acapulco and Manzanillo. A wire-
less station has been established at Cananea,
Sonora, by an American copper company.
The land service, which has always been the
property of the Government and has afforded
one of the cheapest methods of electric commu-
nication in any portion of the world, has been
greatly extended since the Carranza government
obtained control, and many places have been
given telegraphic communication which were
neglected before that time. The entire country
is now covered and the service is in a practically
normal condition.
The improvement of the harbours of Mexico is
being undertaken gradually. One of the proj-
ects under way is the deepening of the channel
of the Panuco River and the dredging of a deep
sea channel across the bar at its mouth, afford-
ing easier access to the great oil exporting cen-
tre of Tampico. The jetties have also been re-
GOVERNMENT DEPARTMENTS 265
paired. Similar work has been carried out at
Tuxpam. At Vera Cruz the harbour has been
dredged, new and substantial wharves erected,
and the port put into shape to accommodate its
rapidly growing traffic.
Arrangements are being made to improve the
seaport of Progreso, Yucatan, which is at pres-
ent nu j rely an open roadstead, vessels lying sev-
eral miles off shore. Harbour improvements
are being carried out at Frontera, in the State
of Tabasco, including the dredging of a channel
through the bar, thus opening the Grijalva and
Usumacinta rivers for navigation by ocean-
going vessels into the interior and making of
San Juan Bautista, the capital of the State, a
port of entry. This improvement will afford
shipping facilities for the export of vast quan-
tities of fruit and other products, including the
renowned bananas of that region, which are su-
perior to the product elsewhere and command
much higher prices.
At Coatzaooalcos wharves are being rebuilt
and the channel dredged out. On the west coast
work is being prosecuted at Guaymas and Ma-
zatlan. At the latter place it is proposed to
dredge a channel for deep water vessels into
the estuary and establish there securely pro-
tected wharves for the accommodation of the
266 INDUSTRIAL MEXICO
constantly increasing commerce of that port.
A wharf is projected at Acapulco, where it is
much needed, while the wharf at Manzanillo,
which was destroyed during the revolution, is
being rebuilt. At Salina Cruz also harbour im-
provements are being made.
The lighthouse service of Mexico has been
overhauled. Much of the machinery and equip-
ment of the lighthouses had either been de-
stroyed or removed during the revolution and
the buildings damaged. But this has all been
remedied and mariners approaching the shore
on either coast find the signals all in fairly good
order.
INDEX
Agricultural colonies, 101
Agricultural machinery, 116,
118
Aguascalientes, 13
Aloe wood, 107
Alvaraclo Ry., 15
Ambassadors, trade, viii
Amozoc, 19
Automobile, factory, 129
Automobiles, market for, 133
Aviation, 127, 128
Bananas, 87
Bandits, 27, 61, 125
train dynamited by, 15
Bank credits, 170
Banks of Deposit, 194, 199
Bank of Discount, British,
206
Bank of Emission, 193
Banks of Promotion, 193, 197
Bankers' Committee, Interna-
tional, 214
Banking law, 188
Banks, agricultural, 193, 198
foreign, 200
local, 168
mortgage, 193, 196
nationalization of, 192
petroleum, 194
Baseball. 141
uth, 69
Him k house*, railway, 16
Bonillas, Ygnacio, 252
Breweries, !::<>
Cactus, bread from, 102
Canfield, C. A., 39
267
Capital, native, insufficient, xi
Casiano oil well, 40
Cedar, 107
Cereals, 91
Charcoal, 108
Chihuahua, 15
Ciudad Juarez, 15
Cleaning machinery, 138
Coahuila, coal fields, 14
Coal fields, 69, 70
Coast line, 38
Coffee lands, 165
bandits and rebels, 167
Congress, Mexican, 253
Constitution, 1917, Article 27,
xii, 220
Article 14, 223
Cordoba, 18
Cotton, 94
Cowdray, Lord, 41
Danger zone, trip through, 16
Debt, national, vii, 207
items of, 213, 214
Decree of Aug. 12, 1918, re-
garding petroleum de-
velopment, 236-238
Decree Feb. 19, 1918, estab-
lishing oil taxes, 223-
228
American protest, 229-
M8
British protest, 238-240
Mexican reply, 240-242
Kn-n.-h protest, 242-244
Mexican reply, 244-245
Diesel engine, 67
Doheny, E. L., 39
268
INDEX
Durango, 14
Dyes, l:W
Dye woods, 115
Ebony, 107
Education, 258-260, 261
Esperanza, 16
Exports, by articles, 146, 147
Feely, Edward F., xi
Felicistas, 17
Football, 141
Ford, Henry, 117
Foreign trade, growth of, x
Forestry School, 115
Freight cars, American, in
Mexico, 29
Freight trains, privately oper-
ated, 28
express, 29
Fruits, tropical, 89
Furniture, 131
Garbanza, 23, 93
German competition, 132
Government Departments,
254-257
Guano, 105
Guadalajara, 13, 24
Guanajuato, 13
Harbours, 264
Hardwoods, 109-115
Harriman, 22
Hedrick, Dennis W., 33
Huasteca Petroleum Co., 40
Huerta, debt, xiii
Helmer, N. A., 159
Henequen, 98
Horse racing, 141
Huntington, Collis P., 14
Imports, by articles, 147-151
International Railroad, 14
Interoceanic Railway, 12, 15,
19
Iron Mountain, 64
Iron wood, 107
Irrigation projects, 102
Jalisco, 64
Japanese competition, 64, 131
Jimenez, 13
Kansas City, Mexico & Orient
II y. Sections under
construction, 26
Bandit activities, 27
Bay of Topolobampo, 28
Laundry machinery, 138
Leon, 13
Lerdo, 13
Libraries, 260
Lighthouses, 266
Limantour, buys railway
stock, 12
Limes, 89
Liquors, 127
Lumber, imports, 121
Magazines, 128
Mahogany, 107
Maltrata, 15, 16
Manganese, 69
Manufactures, 129
Matamoras, 15
Mazatlan, 14
Metlac Bridge, 18
Mexican Central Railroad, 12,
13
Mexican Eagle Oil Co., 41
Mexican Northern Ry., 31
Mexican NorthAvestern Ry., 32
Mexican Petroleum Co., 39
Mexican Railway, 15, 16
"Mexican Southern Ry., 15, 18
Mexico, area, ix
Mexico City, 4
street cars, 5
fire department, 5
traffic, 5
market, 5
INDEX
12G9
o City Continued
jitneys, 5
department stores, 7
Minerals, exports, 62
Mines, antimony, 69
copper, 63, 66
gold. i;7
lead, 67
quicksilver, 69
reopening
silver, 02, 63, 66
zinc, 69
Mining lau
Mining statistics, 71, 72, 73
Mississippi Valley, tour of
business men from, ix,
144, n.-
Monterey, 15
r trucks, market for, 134
Museums, 260
National Railroad, 12
Newspapers, 128
Nieto, Rafael, 219
Norwegians, developments by,
125
Oak, 107
Oaxaca, 19
Oil companies, principal, 40,
41, 42
Oil discoveries, Colima, 44
Chiapas, 45
Sinaloa, 44
Durango, 45
dividends, 47
exports, 48, 59
fields, location. .">:{
fuel, types of, 55
industry, evolution, 48
output, principal compa-
nies, 58
rent :i!- |>;tid for lands, 47
submarine deposits, 46
tax .'50
iU, number, 42, 43
Oranges, 85, 86
Orange wood, 107
Ori/aba. 17
Osterheld, T. W., 207, 208
Packing House, National, 209
Packing houses, 126
Pan-American Ry., 15
Paper money, 207
monclova issue, 210
Constitutionalist issue, 210
Infalsificables, 211
Parafline deposit, Chihuahua,
45
Parral and Durango Ry., 32
Patent laws, 154
Petroleum Code, 246-250
Piedras Negras, 15
Pine, 108
Pineapples, 88
Population, ix
Ports, 38
Portuguese, labourers, 127
Posts and telegraphs, 258,
262
Potosi and Rio Verde Ry., 32
Puebla, 18
Puerto Mexico, 19
Queretaro, 13
Railway construction, difficul-
ties, 25
Railway debt, 214
Railways, Government
Laredo, Tex., to Mexico
City, 2
military guards, 2
damaged cars and sta-
tions, 2, 7
shrinkage in equipment,
8
equipment destroyed, 17
equipment in service, 20
employ.-*. 21
receipts, 21
growth of, 1 1
270
INDEX
Railway statistics, 35
Railway supplies, market for,
ix, 10, 11
Raspberries, 88
Rebels, train dynamited by,
Regis, hotel, 4
Religion, 261
Revival, business, v
Rhodes, Cecil, 52
Rubber, guayule, 95
manufacture, 96, 128
Salesman's itinerary, 122
Sales terms, 173-187
Salina Cruz, 19
Saltillo, 15
San Esperanza, mines, 14
San Luis Potosi, 13
Schmidt, Max E., 25
Shoe factories, 130
Silk industry, 102
Sisal, 98
Southern Pacific
lines in Mexico, 22
damage by rebels and band-
its, 23
armoured cars, 24
Speyer, 12, 208, 209
Sport, 141
Steamship lines, 36, 37
Stilwell, Arthur E., 26
Strawberries, 88
Sugar mills, 157
equipment needed, 161
Tampico, 15
Tehuantepec National Ry., 15,
19
Tepic, 24
Textile factories, 130
Torreon, 13
Tractors, 104
Ford, 117
Trade bodies, 142
Trade-marks, 152
Train, military, 18
Vanadium, 69
Vegetable oils, 90
Vegetables, 89
Vera Cruz & Isthmus Ry., 15
Vera Cruz & Pacific Ry., 33
Villa, 137
Vine culture, 100
Walnut, 107
Wines, 127
Wireless, 258, 263, 264
Yucatan, railways, 30, 209
sisal, 98
Zacatecas, 13
Zapatistas, 7, 157
PLEASE DO NOT REMOVE
CARDS OR SLIPS FROM THIS POCKET
UNIVERSITY OF TORONTO LIBRARY
HC Mlddleton, Philip Harvey
135 Industrial texico
