United States. Dept. of Commerce and Labor United States. Bureau of Foreign Commerce.

Consular reports, Issues 268-271 online

. (page 22 of 93)
Online LibraryUnited States. Dept. of Commerce and Labor United States. Bureau of Foreign CommerceConsular reports, Issues 268-271 → online text (page 22 of 93)
Font size
QR-code for this ebook


Digitized by LjOOQ IC



UNITED STATES ENTERPRISES IN MEXICO. I71

purpose of changing its gauge from narrow to standard. This
change means a large expenditure of money, and is now well under
way. It is impossible to ascertain just how much has been expended
up to the present date, and the amount given as the capital actually
invested includes the amount that is to be expended in the imme-
diate future on construction and equipment.

MINING.

Next in importance to the railroads, from the standpoint of
American capital invested, is the mining industry. Since the time
of Cortes, mining has been the principal source of Mexico's wealth.
The amount invested by Americans in mining in Mexico may be
stated, in round figures, at $80,000,000.

This is a comparatively small percentage of the total amount of
capital invested in Mexican mining properties. Yet a large amount
of this $80,000,000 is invested in up-to-date mining machinery, which
is competently handled, and Mexico's mineral wealth has been greatly
increased by this American investment. Mines that were given up
years ago, and mines that could not be worked at all on account of
the low grade of the ores, can now be profitably worked by the newer
methods, for which Mexico is mostly indebted to Americans. The
increased output of Mexican mines, as well as the opening up of new
mining districts, is largely due to Americans, both through the im-
proved mining methods and through the development of the country
by railroads built by our capital. Thus, taken on the whole, Amer-
ican capital is a stronger factor in Mexico's principal industry than
the amount invested indicates on the surface.

Sonora has the largest amount of American capital invested in
any one State of Mexico — $27,800,000. Chihuahua comes next, with
$21,000,000. The State of Durango ranks third in importance with
regard to the amount of American capital invested in its mining
industry, with $6,500,000. Coahuila is next, with an even $6,000,000
of American capital invested.

HACIENDAS, RANCHES, AND FARMS.

Agriculture comes after mining in the amount of American capital
invested, with $28,000,000. Estimates under this heading have been
most difficult to make. It is certain that many of the so-called trop-
ical agricultural companies have greatly exaggerated the amounts of
capital actually invested by them. Many of them have given their
authorized capitalization, running up into millions, as the amount
of capita] actually invested, when really the amount of capital paid
in is a very small percentage of the authorized capitalization and
the amount invested is still less, perhaps a few thousand dollars.



Digitized by VjOOQ IC



iy2 UNITED STATES ENTERPRISES IN MEXICO.

The first cost of virgin land in the tropics of Mexico is very small —
say, 50 cents to $1 per acre as a liberal average. Development work
is expensive, and some of the older companies have no doubt spent
considerable sums in improving their properties; but in a general
way, the ** monthly payment" companies have not invested much in
Mexico, however much the small investors may have paid to the
promoters for the privilege of holding stock in their companies.
Legitimate investments in Mexico may be expected to pay reason-
able returns — perhaps a larger percentage of profit than the same
amount of money could earn in the United States — but promises of
200 to 500 per cent profit in five or ten years can be set down as
** fakes" pure and simple. Many wealthy Americans and other for-
eigners, as well as Mexicans, live in Mexico and have their money
invested here, being generally well satisfied with 10 to 15 per cent
profit. The whole Isthmus of Tehuantepec and possibly the entire
tropical section of Mexico could be bought by capitalists residing in
this city, and if there were any sure 200 per cent investments to be
made in that region they would certainly be taken up by persons
on the ground who are thoroughly familiar with the conditions
there. The speculative bubble will be pricked one of these days,
and the small investors in the United States will have a lot of pret-
tily engraved shares of stock and some more or less valuable expe-
rience to show for the money they have invested. This does Mexico
and Americans no good. I am in receipt of an average of ten or more
letters each week from persons of small means in the United States,
who desire to invest in tropical agricultural companies operating or
claiming to operate in Mexico, asking for information and advice
concerning such companies and investments. One reply covers the
whole ground. That is, first, that rubber culture in Mexico is as yet
purely in the experimental stage, and no reliable statistics or informa-
tion can be given concerning its probability of success. Promises
of dividends by companies who propose to engage in the rubber-
growing business are purely speculative and theoretical. Other
American agricultural companies who propose to raise various trop-
ical products may or may not be successful. Some are successful,
but they are comparatively few. It is safe to advise any person not
to invest in any enterprise in Mexico without first visiting the country
personally and thoroughly investigating the proposition and the local
conditions. Persons who have not sufficient capital to do this had
better not invest here. A small investment made blindly by a school
teacher or minister or laboring man in the United States in a for-
eign enterprise may be well made, but in nine cases out of ten
the money could be invested to better advantage in the United States.
Another erroneous idea, which seems to be quite common among



Digitized by VjOOQ IC



UNITED STATES ENTERPRISES IN MEXICO. 1 73

Americans resident in the United States, is that Mexico is a good
place for persons of small means to come ,to to engage in agricul-
tural or other pursuits. In most cases it is not. As in the case of
investments on a small scale in enterprises in Mexico, no person
should decide to come here to live and engage in business without
first personally visiting the country and thoroughly investigating
the local conditions.

While not much can be said in favor of the tropical agricultural
companies, there are a great many legitimate agricultural enterprises
in Mexico operated by American capital — some very successfully —
and there is doubtless a large field here for conservative investments
of American capital in this line.

Since it is impossible to estimate, with any degree of accuracy,
the amount of American capital invested in agricultural enterprises
in many of the States, no comparisons by States can be made.

MANUFACTORIES AND FOUNDRIES.

Next to railroads, mining, and agriculture, the largest American
interest in Mexico is in manufacturing. This is an industry in which
American capital is only beginning to assume importance, and one
in which it is likely to figure very prominently in the next few years.
As a whole, the Industry is as yet in its infancy here, but with a high
protective tariff it is a thriving infant, well nourished by liberal
encouragement on the part of the Mexican Government. A number
of important manufacturing enterprises in which American capital is
heavily interested are just starting or have plants in course of con-
struction, as the large iron and steel works at Monterey. In the case
of manufacturing enterprises, it has been possible to estimate very
closely the amount of capital actually employed, as there is neces-
sarily tangible property upon which to base an estimate.

Sinaloa, a State without a railroad and one rarely heard of in the
United States, leads the list of Mexican States in regard to the
amount of American capital invested in manufacturing enterprises.
Most of this is engaged in a few large sugar refineries. The Federal
District comes next, with a variety of large and small manufacturing
enterprises. Nuevo Leon, whose capital, Monterey, is one of the
principal manufacturing centers in the Republic, comes next, with
$2,500,000 of American capital invested in her enterprises.

BANKS AND TRUST COMPANIES.

American capital is beginning to assume importance in the bank-
ing of Mexico, and this interest is one that is growing rapidly.
American methods, which were unknown here a few years ago, have
revolutionized banking in this country and placed it on a business



Digitized by VjOOQ IC



174 UNITED STATES ENTERPRISES IN MEXICO.

rather than a social basis. As yet, the total amount of American
capital invested in banking in this country — naturally, mainly in
Mexico City — is relatively small, but it is a powerful leaven in the
loaf, and threatens to become the body of it in the next few years.
American capital has recently acquired considerable interest in three
of the leading banks of Mexico, namely, the London Bank, the Cen-
tral Bank, and the International and Mortgage Bank. Two trust
companies, in which American capital is mainly interested, have
recently started in this city. The two small American banks which
are operating here have been thus far very successful, and others are
now being started in various cities of the Republic where there
are large American interests.

OTHER ENTERPRISES.

Next after banks, in the order of the amount of American capital
invested, come assay offices and chemical laboratories, ore buyers, ore
testers, smelters, and refiners, all closely allied to the mining interest.
All of Mexico's large smelters are operated by American capital.

Americans have of late been building many electric light and
power plants, gas plants, water-works plants, telephone systems,
and similar plants. The Mexican Telephone Company, operating
the telephone system of this city, and the Mexican Telegraph Com-
pany, with a line to Veracruz from this city and a cable from Vera-
cruz to Galveston, are the largest enterprises of this sort. In
addition to building plants for their own operation, Americans are
building most of the telegraph and telephone lines and laying most
of the cables for native and other foreign companies. American
material is being used principally in the construction of electric
street-car lines in this and other cities of the Republic.

American contractors, while they do not show a vast amount of
invested capital — this being limited to the material needed for current
operations — are another strong factor in Mexico's progress. Many
of Mexico's cities have recently undertaken or are now planning
extensive municipal improvements, and in all of these the American
contractor is a conspicuous figure. A large share of the construc-
tion work of all kinds, both public and private, now going on
throughout the length and breadth of this Republic is being done
by Americans and American capital.

American real estate and building and loan companies are just
getting well started here, and they are rapidly changing the old
methods of transacting this sort of business. Mexicans, as well as
Americans resident here, like the system of buying homes on the
installment plan, and these companies are likely to be successful in
their undertakings.



Digitized by VjOOQ IC



NEW RAILROADS IN MEXICO. I 75

RECAPITULATION BY STATES.

The Federal District, which practically means the City of Mexico,
is credited with$32o,8oo,ooo of American capital invested. It should
be understood that all of this capital is not invested in the City of
Mexico. Of this amount, $281,800,000 is credited to the railways
having their main offices in this city. These railroads extend in all
parts of the Republic, but it is impossible to credit to each State
and Territory its proportionate share of the capital so invested.
Another large item is that of mining interests, which have their main
offices in this city, from which are operated their various properties
throughout the Republic. The same is true of other large items.

The State showing the largest amount of American capital in-
vested is Coahuila, with $48,700,000; but of this amount $37,800,000
is credited to the Mexican International Railroad, which is not con-
fined to the limits of that State. The next State in the order of
American capital invested is Sonora; with $37,500,000, of which
$27,800,000 is claimed to be interested in mining enterprises. It is
known that some of the amounts claimed by or for certain mining
companies operating in that State are greatly exaggerated, and
therefore the amount of American capital invested in Sonora is
estimated to be very little in excess of the amount credited to the
State of Chihuahua ($31,900,000). Of the total amount credited to
Chihuahua, $21,300,000 is in mining enterprises.

Oaxaca comes next, with $13,600,000, but this amount includes
some doubtful tropical agricultural companies and would be con-
siderably reduced if an accurate estimate could be made. Nuevo
Leon, with $11,400,000, therefore ranks next to Chihuahua with re-
lation to the amount of American capital actually invested.



NEW RAILROADS IN MEXICO.

The firm of S. Pearson & Son, Limited, the contractors for the
harbor works of the port and drainage works of this city, and for
the reconstruction works on the Tehuantepec Railroad, in company
with Mr. Pedro M. Armendariz, of Mexico City, recently obtained a
concession from the Mexican Government for the construction and
operation of a railroad. This is to start from a station known as
Ojapa, on the Northern Railroad of Tehuantepec, and run to a point
opposite Alvarado, the terminal station of the railroad from Veracruz,
or some other convenient point on the right bank of the Papaloapam
River, touching at the towns of Acayucan, San Andres Tuxtla, and
Alonso Lazaro. The concessionnaries are authorized to construct
and operate a branch line from the main road, starting at Alonso



Digitized by VjOOQ IC



176 FINANCIAL MEASURES IN MEXICO.

Lazaro and connecting with the Veracruz and Alvarado road at Al-
varado. Within the first year, 12 miles must be completed, and
every year thereafter not less than 12 miles additional; the whole
line must be completed and in operation before the expiration of ten
years from date of concession.

Another concession was granted to Mr. Algeron Joy, of Mexico
City, or to a company he may organize, for the construction of a rail-
road between the State of Oaxaca and Veracruz, starting from the
southern side of the Papaloapam River, at a point opposite the town
of Tuxtepec, in the State of Oaxaca, and making connection with
the Veracruz and Pacific Railway. Three miles must be completed
within the first year and the balance within two years from the date
of the concession. The motive power may be any that is approved
by the Government, including animal power. In no case shall for-
eign merchandise enjoy any freight discrimination which is not
granted similar Mexican goods. The concessionary may charge
other railroads which are making use of the roadbed a maximum of
60 per cent of their regular transportation rates on all freights so
hauled. All construction material for road and telegraphic equip-
ment may be imported free of customs duty. The amount of $3,000
in bonds of the consolidated public debt is to be deposited in the
National Treasury as a guaranty for the fulfillment of the contract,
and the principal office of the concessionary is to be in Mexico City.

J. G. Pag6s,

Veracruz, December d, ip02. Vice-Consul,



FINANCIAL MEASURES IN MEXICO.

The Department has received from Minister Clayton, of Mexico,
and from Vice-Consul J. G. Pages, of Veracruz, under date of No-
vember 17 and 14, 1902, translation of a financial measure about to
be adopted by the Mexican Government in. view of the decline of
silver, as follows:

Article i. The Executive of the Republic of Mexico is authorized —
(i) To establish a basis for regulating the import duties in such a manner that,
without changing the present customs tariff, the proceeds of such duties collected
shall vary in accordance with the fluctuations in foreign exchange when exchange
is quoted above 220 per cent, or its equivalent, 22^ pence per peso, Mexican cur-
rency, which was the value adopted in the current budget of expenditure, and
within the limits that, in the opinion of the Executive, are indispensable for covering
the increased expenditures consequent upon the high rate of exchange, and remit-
tance of funds for payments of interest on national Bonds in foreign money.

(2) To abolish the internal-revenue stamp tax of 7 per cent on the import duties
and the 2 per cent on port charges, authorized by the laws of November 12, 1896, and
November 30, 1898.



Digitized by VjOOQ IC



NEW IMPORT DUTIES IN MEXICO. 1 77

(3) To reduce the amount of federal contributions from 30 per cent to 25 per
cent.

(4) To increase the apportionments for the maintenance of the civil and military
services, as provided by the present estimates and laws. It is, however, stipulated
that the increase of expenditures resulting from the new apportionment shall not
amount to more than $500,000 Mexican currency per year. The Executive is em-
powered to make this change by simply issuing a decree to that effect.

(5) To change the present system of imposing the internal-revenue tax of 3 per
cent and the charges on coining of gold, so that the tax imposed on this metal may
be proportionate to its real value, as is the case with silver.

(6) To create an internal-revenue tax on crude petroleum for refining purposes,
or on the refined petroleum; provided, that in reducing the duty on the crude petro-
leum, in order to facilitate its importation in large quantities for purposes of fuel,
the Executive should consider it necessary to adopt this means in order not to cur-
tail the amount of the duties which the treasury receives for petroleum imported
for the purposes of refining.



NEW IMPORT DUTIES IN MEXICO.*

• Under date of December 5, 1902, Minister Clayton sends from
Mexico City a clipping from the Mexican Herald, containing a
translation of a recent decree, as follows:

Article i. On and after the ist day of January, 1903, the laws of November 30,
1888, and May 12, 1896, creating, respectively, the 2 per cent port works tax and
the 7 per cent stamp tax on import duties will be abolished.

Art. 2. On and after the same date 9f January i, 1903, the import duties on
foreign merchandise brought into the Republic will continue to be adjusted in ac-
cordance with the rates set forib in the import schedule, but the sum that would
be payable according to that adjustment will be reduced by 50 per cent, and the
amount thus found will be multiplied by the sum fixed by the Department of Fi-
nance for the settlement of duties during the month in question, which in no case
will be less than 226 per cent. The product will represent the amount of import
duties to be paid by the importer.

Art. 3. In order to determine every month the rate of settlement referred to in
the foregoing article, the Department of Finance will take the average of the rales
at which the banks of the capital have sold sight drafts on New York on each of the
days comprised between the ist and 25th of the month in which the announcement
of the rate has to be made, making a reduction of 30 per cent (or less if the liabili-
ties of the nation payable in foreign coin increase in future) on the points of differ-
ence between the fixed exchange rate of 220 per cent and the average in question.
The said Department, any day between the 25th and 28ih of the month in ques-
tion, will apprise the custom-houses through the general custom-house bureau of
the rate adopted and at which duties are to be settled during the following month,
said rate being published in the Diario Official.

Art. 4. The rate of settlement for import duties adopted for each month will be
applied to merchandise carried in ships anchoring in the port of their destination,
or brought in over our frontiers after 12 o'clock on the night of the last day of the

*A report covering the same information has been received from Vice-Consul Pages, of Veracruz.
See also report just preceding this.



Digitized by VjOOQ IC



178 CUBAN PRESIDENTIAL MESSAGE.

previous month and before the same hour of the last day of the current month,
even though in either case the adjustment of clearance formalities be effected at a
date subsequent to the last day of the month during which the rate of settlement
was in force. Goods imported through the mails will be subject to the rale for
the settlement of duties in force on the day of their arrival in the country.

Art. 5. The stamp tax payable at the time of their importation by alcoholic
beverages and foreign cards, as well as the additional duty for the benefit of the
municipalities of the towns where the custom-houses are situated, will be estimated
on the basis of the import duties, calculated according to the foregoing articles.
The pecuniary penalties provided by the general custom-house ordinances to cor-
rect infringements of those ordinances will be computed in the same manner when
those penalties are based on a percentage of the import duties.

Art. 6. Merchandise imported for consumption in the free zone, with the ex-
ception provided by article 676 of the general custom-house ordinances, will pay
only 10 per cent of the duties calculated according to the terms of article 2 of this
decree; but the tax for the benefi^t of the municipalities, as well as the stamp tax
payable with respect to alcoholic beverages and foreign cards, imported for use in
said zone, will be estimated and paid on the basis of the full duties in question.

Art. 7. Merchandise imported for the free zone and similar merchandise pro-
duced in that region, and which is forwarded farther inland according to the provi-
sions of Section IV, Chapter XXII, of the general custom-house ordinances, will
pay duties at the rate of liquidation in force at the date when permission for for-
warding the goods inland is solicited, and from the total of said duties the 10 per
cent spoken of in the foregoing article will be deducted, even though the merchan-
dise may have been imported at any prior date. The duties on foreign goods
moved from point to point of said zone will be estimated in the same manner,
either with a view to collecting them when there is room for so doing according to
law, or with a view to the imposition of penalties provided for infringements of the
same law.



CUBAN PRESIDENTIAL MESSAGE.

Minister Squiers sends from Habana, November 8, 1902, transla-
tion of President Palma's message to Congress, presenting the proj-
ect of the general budget of expenses and revenues for 1903, showing
an estimated surplus of $2,614,032.

Mr. Squiers gives the following summary of the message:

Mr. Palma calls attention to a decrease of $7,157,855.21 in the
disbursements during the last fiscal year, without making any re-
duction in services of sanitation, which he points out will yearly call
for increased expenditures.

Educational matters are well supported, the number of schools
being 3,474, with an attendance of 163,348.

An agricultural station is to be organized at a cost of $75,000.

The statistics submitted show a decrease in imports during the
first six months of 1902 amounting to $1,700,000, and of exports to
$12,300,000, or 5 per cent in the former and 28 per cent in the latter,
as compared with the year 1901, due, it is claimed, to the low price
of sugar.



Digitized by VjOOQ IC



CUBAN PRESIDENTIAL MESSAGE. I 79

Estimated receipts on account of consular fees amount to $250,-
000, as compared with $850,000 estimated receipts under the first
consular fee. bill which passed Congress, and $550,000 under the
amended bill which passed the Senate and is now pending in the
House.

It is stated that this is the smallest Cuban budget presented since
the middle of the century^ and when certain expenses are transferred
from the General Administration to the provincial or municipal, there
may be a still further reduction of 25 per cent.

The message reads:

Habana, November /, iqo2.
To CongTtm:

I fulfill with true satisfaction the duty imposed upon me under section 5 of ar-
ticle 68 of the constitution, in presenting to Congress the project of the general
budget of the nation for the fiscal year of 1903.

For the first time we, as Cubans, exercise the most important of therights which "
a people can enjoy — that of freely regulating its revenues and expenses — and this
must be for all a cause of true pleasure because it was one of our most ardent as-
pirations, which, after bloody sacrifices, we see to-day happily realized. The Gov-



Online LibraryUnited States. Dept. of Commerce and Labor United States. Bureau of Foreign CommerceConsular reports, Issues 268-271 → online text (page 22 of 93)