# Mexico under Carranza/Chapter 3

Contents
CHAPTER III
Character of Foreign Investments in Mexico, Particularly Those of Americans — Relation of These Investments to the Economic Condition of the Country — Dealings Between Foreign Investors and the Mexican Government
ABOUT the end of Diaz's long administration Marion Letcher, American Consul at Chihuahua, compiled a statement which was filed in the State Department at Washington showing the total wealth of Mexico to be $2,434,241,422; of which Americans owned $1,057,770,000; English, $321,302,800; French, $143,446,000; all other foreigners, $118,535,380; Mexicans, $792,187,242. Senator Fall, of New Mexico, who is well informed on Mexican affairs, asserts that the correct figures for English investments are more than double those given by Consul Letcher; and that the figures for the Americans should also be largely increased. However this may be, the Consul's compilation will at least serve to give an idea of the relative importance of foreign capital in developing the resources of Mexico. The fact is that foreigners have developed Mexico; have built its railroads, opened its mines, ​constructed and operated its factories, opened up its oil wells, introduced modern machinery and implements, and have given employment to practically all the native labour in the country, except that engaged at from 1 5 to 50 cents a day on the plantations, farms, or ranches.
The point of present interest is that these large foreign investments, and their influence in developing natural resources and affording a livelihood to all who were willing to work, are paraded as one of the fundamental grievances of the Carrancistas to redress which they have confiscated all the property that could be converted into cash without too much effort and have greatly damaged or destroyed substantially all the rest. Conscious that such proceedings are not considered exactly good form in the countries whence the investments came, the Carrancistas have expended a good deal of ingenuity in endeavouring to justify, or at least to excuse, their peculiar ideas regarding the rights of property. Or it may be that these endeavours have been prompted less by prickings of conscience than by a fear that if the whole truth were known there might be some inconvenient insistence upon restitution and protection for whatever property is left in accessible shape and for such foreigners as still survive.
The Carrancistas have been particularly zealous in their efforts to win American sympathy. To ​this end they have maintained two centres of propaganda in the United States. One, located in Washington, issues a monthly journal and press sheets at frequent intervals describing in roseate terms alleged conditions in Mexico and descanting upon the beneficent effects of Carranza's sway. This material is circulated among members of Congress, Government officials and others supposed to be more or less influential.
Every number of these publications contains numerous manifestations of one of the most prominent vices of the Latin element of Mexico, and that is mendacity. Probably a sufficient example of this characteristic may be found in a statement in one of these publications to the effect that a recent school census taken in Mexico City showed that a larger percentage of children of school age attended the public schools in that city than were attending the public schools of the city of New York. Of course, this statement to any person acquainted with conditions there was palpably false. Its falseness was quickly demonstrated by news from Mexico City, published in the daily papers of this country a short time after the item referred to appeared, to the effect that many of the schools there had been closed because the government found itself unable to pay the salaries of the teachers.
Another centre of Carranza propaganda was ​established in New York City shortly after the beginning of the Carranza revolution, by what was called the "Latin-American News Association." In some way unknown my name appears to have been entered upon the mailing list of this association, and I have received numerous pamphlets devoted to various phases of Mexican affairs. In one of these appears the following statement:
"Mexico has been the happy hunting ground of the adventurer since the days of the Spanish Conquest. Egypt, Morocco, Tunis, South Africa, do not compare with it as a treasure box. Government has always meant merely an organized system of robbery and exploitation. It gave the people nothing, it took everything the people had. It taxed them in the most ruthless ways; it spent the taxes for private purposes and profit. The courts were merely another instrument for enforcing serfdom along with the army."
As we shall see, this statement is entirely true as applied to the Latin masters of the Mexican people and the sort of government which they were accorded by these masters during the first three hundred years of their control. The pamphlet continues:
"Diaz reduced the process to a scientific system. He termed it 'developing the country. The concession seekers flocked to Mexico with the coming ​of Diaz to power in 1876. He owed them everything, for they made him master of Mexico. They enjoyed thirty-four years of almost uninterrupted freedom until the flight of Diaz to Paris in 1910. . . . He paid his first debts by concessions for the building of two railroad lines from the Texas border to Mexico City. Land was given for the right of way, together with a subsidy of $14,000 per mile on level country and $35,000 per mile in rough country.
"During all these years, the United States was unhappily the bulwark of the exploiting interests. The Mexican people feared American intervention more than anything else and this fear kept them from revolution. And the colossal grants and subsidies for railroads, mines, oil, gold, silver, copper and land, judiciously distributed, identified the United States' State Department, the Senate, tie press, and the people of the United States with Diaz no matter what his outrages might be.
"The Mexicans want to get back their lands which have been taken from them by bribery or machine guns. And they are doing it. They want to get back their oil wells, gold and silver mines, and the tremendously rich copper deposits of the north, and they are doing it."
The name of the author of the pamphlet is not given, and there is no means of ascertaining the race to which he belongs. It is certain, however, that the paragraphs quoted indicate two of the worst characteristics of the element which has given Mexico bad government for four hundred ​years, and these are mendacity and lawless greed. It will be noted that the author of the article does not hesitate to allege that the grants and subsidies given by the Diaz government were successfully used as bribes to influence the State Department, the Senate, the press, and the whole people of the United States. This may be accepted as a fair measure of the truthfulness of the Carranza propaganda with which the country has been flooded. What the writer really meant, although he did not say it, was that the Mexicans had taken, and propose to continue to take by the strong hand, tie property acquired by citizens of the United States and other foreigners in their country.
It is my purpose to show that no citizen of tie United States, during the Diaz regime, ever acquired, by grant or subsidy, a dollar's worth of oil territory, gold, silver, or copper mines, or land; and that the railroad subsidies from which American citizens benefited were probably the most moderate ever given for such value as was received by Mexico in the building of her railroads, and were very much less than subsidies granted by our own country for a like purpose. Also, that in the use of the subsidies by the recipients of them a degree of honesty was exhibited which we cannot claim to have been exercised in handling subsidies granted for railroad construction in the United States. As an illustration of the reckless falsehoods which ​have been uttered about the dealings of our people with Mexico, and which, alas, have found credence to which they were not entitled among men in responsible positions in our Government, may be cited the history of oil development.
PETROLEUM DEVELOPMENT
The existence of petroleum in what is now the state of Vera Cruz, was known before the Spanish conquest. Asphaltum, produced by the drying on the surface of exudes from these oil deposits, was used before the time of Cortez for making the floors of the Aztec temples. The Latin inhabitants of Mexico knew of the existence of these oil exudes from the time that they first occupied the country. Notwithstanding this fact, and the further fact that since the development of oil in the United States it was known that exudes of this character indicated the presence of petroleum beneath the surface, no citizen of Mexico ever showed the possession of energy and initiative enough to attempt the development of these oil measures. It remained for two Americans, Messrs E. L. Doheny and C. A. Canfield, citizens of Los Angeles, to undertake the development which has added enormously to the economic wealth and welfare of Mexico, and which has conferred a great benefit upon the civilized world. These men, who had made fortunes in petroleum ​development in the United States, learned of the existence of the exudes in what is now known as the oil territory of Mexico. They visited this section, which at the time was largely a jungle, and convinced themselves of the existence of subterranean oil measures. These measures were upon lands which were held in private ownership, under titles dating largely from the time of the Spanish conquest, four hundred years before. In their oil developments they of course, were forced to deal with these private owners, inasmuch as Article 10 of the Mining Law of Mexico at that time provided:
Art. 10. The following substances are the exclusive property of the owner of the land, who may therefore develop and enjoy them, without the formality of claim or special adjudication:
I — Ore bodies of the several varieties of coal.
IV — Salts found on the surface, fresh and salt water, whether surface or subterranean, petroleum and gaseous springs, or springs of warm medicinal waters.
Shortly after Diaz came into power he induced the government to adopt the plan of granting for a stated term immunity from import and export tariff taxes upon all material brought into the ​country and used in founding any new business enterprise, which would be for the direct economic benefit of the nation, and all products of such business that should be shipped out. In this, of course, the nation did nothing further than to-day is being done by probably a hundred enterprising cities in our own country where manufacturing enterprises are attracted by the grant of immunity from local taxes for a certain number of years, or, where the law prohibits such favours being granted by municipal governments, by contributions to the cost of land for factories, and other advantages.
Messrs. Doheny and Canfield went to the government and calling attention to the fact that at that time Mexico had no oil wells and that fuel was one of the great economic needs of the country, announced that they proposed to invest a large sum in endeavouring to develop the petroleum deposits, and asked to be granted a concession which would enable them to conduct their business for a term of years free of national import and export duties. As the law providing for the granting of such a concession required that the enterprise should represent a new business of a character not developed, before they could secure the concession for which they asked they were compelled to obtain a certificate from the government of every state in the Mexican Union certifying that no oil development had been made in any such state, ​in order to establish the fact that the business which they proposed to conduct would really add a new business to the industrial life of Mexico. Having obtained these certificates, they secured a "concession" which granted to the enterprise of developing petroleum, which they proposed to conduct, immunity from all national import and export taxes on any material which they might bring in for use in their business, or any product thereof which they might ship out of the country for a period of ten years. This was the sole advantage ever given Mr. Doheny and his associates by the Mexican Government. Having obtained this concession, they then proceeded to invest several millions of dollars in the purchase of land and clearing it, drilling wells, providing pipe lines, tankage facilities, refineries, vessels for transporting oil, and all the other equipment required for the successful prosecution of the business which eventually added greatly to the economic wealth of Mexico. In order to do this, of course, they staked millions of dollars upon the chance of finding oil in paying quantities.
There is no doubt that, owing to the habit of speaking of work done by Americans in the development of petroleum and other enterprises of that character as "concession," there is a general impression that the lands have been obtained as a gift from the Government, perhaps ​with other valuable privileges in addition. Possibly this erroneous impression may be traced in the first place to the translation of the Spanish word "concesión," which means merely a franchise or a permit to do business, as the equivalent of the English word "concession," which means something quite different.
After the discovery of oil in paying quantities by Mr. Doheny and his associates the attention of other large oil interests was attracted to the Mexican field and in due time the Standard Oil Company, the Waters-Pierce Company, and the English interests represented by Lord Cowdray, as well as other less important organizations, secured territory in the oil fields by purchase or lease and commenced the production of petroleum. Not in one instance, however, did any American company secure any part of its oil territory as a grant, gift, or concession from the Mexican Government, although the contrary has been asserted in numberless false-propaganda pamphlets and articles that have been distributed by the Mexican revolutionists in this country.
Much of the oil territory still belongs to Mexican citizens and is being operated by various companies under leases from the land owners, just as hundreds of thousands of acres of oil land belonging to farmers have been operated under leases providing for stipulated royalty payments in the ​various oil-producing states of our own country. These Mexican owners of petroleum lands have held meetings at Tampico, and have submitted vigorous protests to the Carranza government against Article 27 of the new constitution, which is being used by the Carranza administration in an attempt to rob them of the contents of their lands which the law has heretofore assured to them; but, as the oil industry is to-day one of the few in that country that are paying and as the Carranza government is constantly in need of money for the use of its dissipated army officers, efforts to consummate the scheme of robbery under the so-called new constitution have by no means been abandoned.
The millions of dollars which American oil producers risked in their enterprises were of enormous economic value to the country. The oil from their wells, and from those developed later by other foreign interests, furnished fuel for the Mexican railroads, a considerable mileage of which was controlled by the government, cheaper and of a better quality than they had ever been able to obtain before. It furnished fuel which resulted in the establishment of gas plants in Mexico City and elsewhere — an economic development of peculiar value, on account of the moderate climate in which gas furnishes the cheapest and best possible fuel for household purposes. These plants have all been ruined by the revolution. The ​asphalt residuum from the distillation of the crude oils furnished paving materials, with the result that numerous Mexican cities that had never known a yard of good pavement became the possessors of beautifully paved streets. In addition, it has furnished employment for thousands of Mexican workmen at wages several hundred per cent greater than any that they had ever received from their own countrymen. Furthermore, the "concession" obtained by Mr. Doheny and his associates conferred no immunity from state or municipal taxes.
In entering upon the development of oil in Mexico, these citizens of the United States and other foreigners did nothing more than was done some years ago by a great European corporation, financed by the Rothschilds, known as "The Shell Oil Company" (Royal Dutch), in securing large areas of oil territory in the state of California; the only difference being that production in this territory had been developed as a profitable business before these foreign interests acquired their property, while those Americans who first entered upon oil development in Mexico assumed all the risks of failure which confront every pioneer in a mining venture. The foreign company which has acquired oil properties in California sells some of its products in this country and ships quantities of it to other markets, while all the profits of the ​operation, of course, go to the stockholders abroad. Yet, any citizen of the United States who would complain that the Shell Oil Company has done a deadly wrong by acquiring and exploiting oil lands in this country, and should demand therefore, that its property be confiscated, would be regarded as either a lunatic or a criminal. However, the Carranza party finding that foreigners, by their intelligence and enterprise and the investment of millions of dollars, have developed a natural resource into a valuable economic asset, decides that those foreigners have imposed a grievous wrong upon the country which it has attempted to cure by adopting Article 27 of the Constitution of 1917, which provides:
"In the nation is vested direct ownership of all
solid mineral fuels; petroleum and all hydrocarbons solid, liquid or gaseous."
Under the authority of that article the Carranza government is now attempting to make the petroleum companies pay it "rentals and royalties" for the privilege of taking the oil from lands that have been in the possession of private owners for nearly four hundred years, and were acquired for a price supposed to be full value paid by the foreigners as the first step in creating an enterprise which has benefited the people of Mexico in a ​hundred ways. What would the farmers of Pennsylvania, West Virginia, Oklahoma, Texas, and California, upon whose lands oil has been developed, think if the people of their states should adopt constitutions providing that the oil was public property and insist upon collecting the royalty which the private owners of the land have heretofore received?
Of course, no people that is not so congenitally immoral as to be incapable of appreciating the moral character of an act would undertake to perpetrate such a wrong upon the owners of private property as the Carrancistas are endeavouring to inflict upon the owners of oil lands. But it is safe to say, that, so long as the present government feels that it has the power to carry out this scheme of robbery, no protest made by native or foreign landowner will be of any avail.
Our own country has recently instructed its diplomatic representative in Mexico City to make such a protest and it has been done. It would appear that our country is prepared to use force to make that protest effective, to prevent the robbery of American citizens.
RAILROAD SUBSIDIES AND FOREIGN INVESTMENTS IN MEXICAN RAILROADS
Apologists for the confiscatory actions of the government now in power in Mexico have had a great ​deal to say about the concessions for building railroads granted to foreigners by Diaz. They have denounced these concessions in unmeasured terms as among the greatest wrongs inflicted upon the Mexican people by that government. These apologists for the acts of the Carranza government in taking possession of the railroads and failing to pay either interest upon their bonds or dividends to stockholders, allege that these roads were originally built at the cost of the public.
In investigating the history of subsidies for railroad construction in Mexico, it is well to bear in mind that prior to the period when the principal concessions were granted, almost all railroads in our own country were the recipients of subsidies for the purpose of defraying a part, or all, of the cost of their construction. This particularly applies to the West where, on account of the country being sparsely settled and recognition of the fact that years might elapse before sufficient business could be developed to make the operation of the railroads profitable, it was understood that no such great public improvement could be made at the entire cost of private investors and that these improvements promised to be of such great value to the nation at large as well as to the sections of the country directly served, as to justify the public in contributing to their construction. It is probably not an over-statement to say that every ​county and city in the Middle-Western states, for whose service railroads were constructed, contributed something in the form of subsidies; and, as we shall presently see, the National Government gave enormous sums to the Union Pacific and the Central Pacific companies.
Similar conditions in Mexico produced similar results in railroad construction. But those who now seek to excuse their confiscation of all the great investments made by foreigners before or during the Diaz régime, have sought to charge Diaz and his government with the responsibility for all subsidies granted to Mexican railroads. In point of fact, the encouragement of railroad construction in Mexico by subsidy was entered upon years before Diaz came into power in 1876, and was an important part of the efforts made by the great patriot, Juarez, to improve native land and elevate the condition of his countrymen. A history of Mexico says:
"While it would be difficult to determine exactly the date at which Mexico emerged from her condition of insularity and took her place among the nations of the world, it would not come amiss to mention that under the wise administration of Senor Lerdo she certainly laid the foundation for her coming prosperity. That marvel of engineering skill, the Mexican Railroad, which had been in progress of construction sixteen years, was ​formally opened in January, 1873, and the coast of Mexico at Vera Cruz was connected with its capital. By a decree of Congress in 1874 [two years before Diaz came into power] a concession was granted for another line northwardly from the City of Mexico, which was the initial step taken in the great movement connecting the capital with the chief cities of the United States. Roads and telegraph lines were now projected in all directions; commerce, both external and internal, developed with great rapidity, and in the fiscal year of 1878 the exports from Vera Cruz alone amounted to more than $16,000,000."
It may be noted in passing that the line referred to by the historian when he says: "By decree of Congress in 1874 a concession was granted for another line northwardly from the City of Mexico," is one of the lines named in a Carranza propaganda pamphlet which alleges that Diaz "paid his first debts by concessions for the building of two railroad lines from the Texas border to Mexico City." The fact is that the concession for this line was granted under the administration of President Lerdo de Tejada, two years before Diaz came into power.
The most important railroad concession and subsidy granted by the Diaz government was for the line which subsequently became known as the Mexican Central and this on account of its importance and extent, may be taken as being fairly ​illustrative of that character of all. It is of particular interest to Americans for the reason that the company which built the railroad was organized by Boston capitalists. For these reasons, the law embodying this concession, given in Appendix I, will repay careful study by those who are desirous of knowing the exact truth about Mexican railroad concessions and subsidies about which so much has been said. It will be noted, as among the most important provisions of this law, that the concession provides:
First: that at the end of ninety-nine years the road shall revert to the nation free of all encumbrances.
Second: that the mails were to be carried free by the proposed railroad during the life of the concession, to wit: ninety-nine years.
Third: that maximum tariffs for the carrying of freight and passengers are named in the concession which, by comparison with the rates charged for years by our own Western railroads constructed with the aid of government subsidies, will be found to have been very much lower than the latter.
Fourth: the government gave to the company a subsidy of $9,500 for each kilometre of constructed road, equalling $15,311 per mile, payment of which should not commence until after the completion of the first one hundred and fifty kilometres.
​In order that a comparison may be made of the terms upon which the respective governments aided railroad construction in Mexico and in our own country, the grants by the U. S. Government to the Union Pacific Company and the Central Pacific Company, are set forth in Appendix II. By this it will be seen that in addition to an outright gift to the companies of 12,800 acres of government land per mile of railroad constructed, a subsidy was granted in the form of a cash loan "equal to $16,000 per mile for that portion of the line between the Missouri River and the base of the Rocky Mountains; $48,000 per mile for a distance of one hundred and fifty miles through the mountain range; $32,000 per mile for the distance intermediate between the Rocky Mountains and the Sierra Nevada range; $48,000 per mile for the distance of one hundred and fifty miles through the Sierra Nevadas."
The original act provided that the cash subsidy should be a first mortgage upon the road, but by a subsequent amendment it was made a second mortgage, the company being authorized to issue its own bonds to an amount equal to the Government's issue as a first mortgage on the lines. It will be noted that there is no provision for any reversionary interest of the Government in these lines, for which the aid afforded was much greater than any subsidy ever granted by the Mexican ​Government and no provision was made for carrying mails free. There was a provision for the transportation of United States troops and this stipulation, it is said, was inserted because it was recognized that probably United States troops would have to be moved over the lines for their protection against Indians. Even this small benefit to the Government was afterward reduced by a ruling that the stipulation regarding the transportation of troops meant only that there should be no charges for trackage, but did not oblige the company to furnish cars free. It is also worth while for those who appear to feel that Mexico should be rescued from the consequences of improvident railroad subsidies granted, to consider the manner in which the subsidies were dealt with by the interests building the Mexican and the American railroads respectively.
Nothing with which foreigners have been connected in Mexico has been more bitterly denounced by Carranza propagandists than the railroads built by American investors with the aid of subsidies. One of the bitterest and most mendacious of these denunciations appears in a somewhat portentous volume by DeLara and Pinchon published in New York under the title of "The Mexican People: Their Struggle for Freedom" a few months after the Carranza revolution began. In a chapter entitled "The Railways" are some statements ​which we quote as examples of the kind of propaganda circulated by the Carrancistas. The italics appear as in the book:
"Not a dollar of American capital has been expended anywhere or at any time in the building of Mexican railroads. They were built entirely by Mexican capital. And what is more, they were so immensely oversubsidized, that in many cases they were built solely for the sake of the subsidy, and in such a fashion as to be useless for transportation: e.g., the lines from El Paso and Laredo to Mexico City. It is true that these railroad stocks were the playthings of American speculators; and that such railroads as Mexico possesses have come into a bastard existence as a result of the cupidity and lawlessness of American promoters and stock gamblers, but this indicates the limit of America's service to Mexico in this respect
"These much-lauded railroads and government enterprises cost the nation unnumbered millions procured by the most extortionate taxation. Not a dollar of foreign capital was used in financing them. They were wrought out by the toil of the common people and financed by the money of the common people. Even so, for every million dollars expended in actual construction, at least three million dollars was wasted in bribery and embezzlement."
That part of the above quotation which says: "They were built solely for the sake of the subsidy, in such fashion as to be useless for transportation: ​e.g. the lines from El Paso and Laredo to Mexico City," refers to the Mexican Central Railroad which was built under a subsidy of $5,311 per mile granted by the law appearing as Appendix I. If, as stated in the foregoing quotation, "for every million dollars expended in actual construction, at least three million dollars was wasted in bribery and embezzlement," then the portion of the subsidy granted for the Mexican Central Railroad actually applied to its construction was $3,828 per mile. A little analysis will show how much credence this statement deserves.
If the line was laid with 75-pound steel rails, 132 tons per mile would have been required which at $28 a ton, the standard price for years, would have amounted to $3,696, f. o. b. the mills at Pittsburgh or Chicago. This would leave a balance of $132 to pay for such essentials as angle bars, bolts, spikes, and ties, not to mention such details as freight charges for all material for long distances, grading, track-laying, and equipping the line. It does seem doubtful that so much could be done for $132 a mile, even in Mexico.
As a matter of fact, the Mexican Central runs for several hundred miles through a desert in which construction was exceptionally expensive because, not merely all material, but food for the men, forage for the animals, and even drinking water for both had to be transported long distances at great ​expense. The desert terrain between the Rocky Mountains and the Sierras, through which the Central Pacific was constructed is similar to that through which the Mexican Central was built. A reference to Appendix 1 1 will show that in addition to a subsidy of 12,800 acres of land per mile a cost of $64,000 per mile was provided for, one-half being loaned by the Government on a second mortgage, the other half to be raised by the company on its first mortgage bonds. While the cost of constructing the Central Pacific was excessive, beyond question, the excess could hardly have been near 50 per cent, of the total cost. Yet we are asked by these champions of the Carranza revolution to believe that the "American speculators" who constructed the Mexican Central Railroad, accomplished that expensive work for a cost of $3,828 per mile, and that they did a great wrong to Mexico by accepting the government subsidy of $15,311 per mile, although it carried with it the obligation to transport mails free of charge for ninety-nine years and the provision that at the end of that period the road should become the property of the government free of all liens or encumbrances without the payment of additional compensation.
To say that the statement above quoted, that "not a dollar of foreign capital was used in financing" these subsidized railroads is false, would ​hardly express the reckless disregard for truth which characterizes the writers of the book referred to as well as every other Carrancista propagandist who has endeavoured to poison the minds of the American people with their outgivings. Furthermore, the Mexican subsidized railroads, after their construction, were managed with such honesty that, some years before the end of the Diaz administration, it became evident that it would be a good investment for the Mexican Government to purchase the controlling interest in the stock of the Mexican Central Railroad, which the writer quoted says "was built solely for the sake of the subsidy and in such fashion as to be useless for transportation." This purchase was made by the Diaz government and its wisdom as a business venture is shown by the fact that when Diaz went out of power the net earnings of the Mexican Central Railroad were sufficient to pay interest on all of its indebtedness and to pay an annual dividend of 5 per cent, upon its preferred stock. The road never found it necessary to go through a receivership, nor was its operation ever crippled by financial reverses. Compare this with the record made by the companies constructing the Union and Central Pacific lines.
Notwithstanding the enormous land and bond subsidies granted the Union Pacific Railroad, its promoters were so greedy that they attempted ​to secure additional advantages through national legislation. This attempt resulted in what has come to be known as the Crédit Mobilier scandal. An investigation by Congress disclosed a shameful scandal involving the bribing of a number of its members. The inquiry culminated in a report recommending the impeachment of two Congressmen. In addition to this, so improvidently, recklessly, and dishonestly were the finances of the Union Pacific managed that it passed through two receiverships before it finally reached a position of stable financial organization.
While the Central Pacific was never permitted by its promoters to reach a condition of bankruptcy, it is a well-known fact that the four men who promoted it organized the "Contract and Finance Company," which acted as an intermediary between the railroad company and the Government, doing the construction work, and collecting the cash subsidy. When the road was finished and put into operation, it was found that the organizers of this construction company, who were men of very moderate means when they undertook the enterprise, had all become millionaires. This fact, together with the scandals which were unearthed by government investigation of the Union Pacific, suggested similar investigation of the Central Pacific construction. When this investigation took place and it became necessary ​to examine the books of the "Contract and Finance Company" in order to ascertain the actual cost of the construction work upon which the government subsidies had been drawn it was found that they had all been destroyed.
The fact is that there can be no comparison between the care shown for the interests of the Mexican Government in the handling of aid to railroad construction and the utter lack of care exhibited by our own Government under similar circumstances.
In order to justify their dishonest invasion of the rights of foreigners who made investments in Mexico previous to and during the Diaz period, the Carrancistas have assumed the attitude that foreigners who financed the construction of railroads, either by buying the bonds of the nation issued to secure the cash subsidies granted or by supplying the additional cost committed a great wrong against their country. Certainly no one will undertake to argue that the railroads are not a valuable economic asset to the country. Even under the wretched and dishonest management that they have had at the hands of the Carrancista government, they have contributed greatly to the welfare of Mexico. It is very certain that unless these roads had been constructed by foreign capital they would not have been built at all, for the government was unable to pay the subsidies save by ​selling bonds to foreigners, and the subsidies granted did not anything like defray the cost of constructing and equipping them.
A country as wealthy as the United States has been for many years was not able to finance the construction of her railroads. At one time, in addition to holding the major portion of the bond issues of our principal railroads, foreign investors, as shown by Wm. G. Ripley in his work on "Railroad Finance and Organization," in the period from 1890 to 1896 held the absolute majority of the stock issues in at least five of them; namely, Illinois Central, 65 per cent.; Pennsylvania, 52 per cent.; Louisville and Nashville, 75 per cent.; New York, Ontario and Western, 58 per cent.; Reading, 52 per cent. At the present time, on account of the great prosperity which the industry and thrift of the people of our country have produced, the foreign holdings of the stocks and bonds of American railroads have been almost entirely wiped out by the purchase of these securities by American investors.
The difference between this country and Mexico under her Latin-Mexican masters in their treatment of foreign investors is well illustrated in the matter of investments in railroads in the two countries. The Americans welcomed foreign capital in the development of great business enterprises and depended upon their own industry and thrift eventually to acquire the properties by purchasing ​the securities. To-day almost every dollar of foreign capital that was invested in our railroads has been returned and the bonds and stocks which represent this capital are owned by our people. As a result, we were able to finance the billions of expenditure for the war by floating national bonds at a lower rate of interest than any other country involved was able to secure.
The controlling elements in Mexico have found what they conceive to be a much easier method of balancing their account with foreign investors by confiscating the railroads and refusing to pay a dollar upon the principal or interest of the securities issued for their construction. The result is that to-day Mexico's credit is so poor that although she has been desperately endeavouring to raise money in the markets of the world for the last three years she has been unable to secure one cent from foreign investors to meet the needs of her government. Do not these contrasting conditions suggest to those of our own citizens, among whom are some of our government officials, who have been encouraging, or at least palliating and excusing, the actions of the Carranza government that they are really doing a deadly injury to that country?
FOREIGN INVESTMENTS IN MEXICAN MINES
The supporters of the present order, or more correctly disorder, now existing in Mexico, in their ​efforts to win the sympathy of the world, dwell with much insistence upon the allegation that foreigners, particularly Americans, have exploited, to their benefit and to the injury of the country, its mineral resources, more especially gold, silver, and copper.
While it is true that considerable foreign capital, mostly American, during the past seventy-five years and particularly during the Diaz régime when law and order reigned, was invested in mining, history shows that the enterprises carried on by foreigners really resulted in taking very little from the mineral resources of the country that was available and valuable to its inhabitants.
Mexico, when conquered by the Spaniards, was enormously rich in gold and silver, and for the first three hundred years of Spanish control it contributed immense amounts of those metals to Spain. During this time, the Mexicans became excellent prospectors, and were so successful in discovering the rich deposits of gold and silver that during the last hundred years few new deposits have been found that were sufficiently rich to pay for working by the primitive methods employed by the natives. Furthermore, during the period when foreigners became interested in Mexican mining, it was impossible for Diaz, or any other head of the government, to grant any special privileges, or rights, to favoured beneficiaries, for ​the reason that a very carefully thought-out and excellent code of mining laws prescribed, as do those of the United States, the methods by which mineral deposits might be secured and worked. A study of the history of precious-metal mining in Mexico during the past three quarters of a century will show that the principal enterprises conducted by foreigners were of three kinds and usually involved securing the mines from private owners.
First: the reopening of mines upon which work had ceased because the Mexican miners had carried the workings down to a depth at which it became impossible with their primitive equipment to control the water, and they had been driven out. The foreigners, by applying modern high-powered pumps, were enabled to unwater these mines and to follow the deposits to greater depths than could ever have been reached by the Mexicans.
Second: the handling of large deposits of low-grade ores which by the primitive methods of the Mexicans could never have been treated with profit, but which, by the application of modern improvements, permitting large quantities of ore to be handled cheaply, enabled the foreigner to make a profit.
Third: in re-working great dumps of material that had once been worked by Mexican miners whose primitive methods failed to extract all the values. From these old dumps the foreigner with ​his modern methods and machinery was able to extract a profit.
During the first three hundred years following the conquest of Mexico, very much the larger part of the richest deposits of gold and silver had been discovered and exhausted to the extent that the Spanish methods of mining permitted. When the revolution against Spain began, mining was nothing like as important as it had been; and, of course, the disturbed conditions during the eleven year contest for freedom further reduced that industry. Little was done to revive it until sometime after 1830 when, encouraged by the hope that the country would have a government of some stability, the English were first among foreigners to begin taking an active part in mining. A brief resume of the development of the principal silver and gold-mining centres in Mexico follows.
SILVER MINES
Pachuca, State of Hidalgo. This camp was discovered by the Spaniards and operated by them for many years. In this operation, most of the deposit available under Spanish methods of mining was exhausted and that fact, together with the unsettled conditions produced by the revolution beginning in 1810, resulted in a suspension of mining activity in this centre. About 1830 English capital became interested in these mines and by ​installing steam-driven Cornish pumps, the new owners were able to operate them with considerable success until work was greatly curtailed in 1893 by the drop in the price of silver. Later, American capital joined with British in working these mines and the American engineers, by introducing the cyanide process of treating the ores, and cheap power for operating the pumps and mining machinery from hydroelectric developments in the vicinity, again brought prosperity to this section, so that shortly before the revolution of 1910, Pachuca production of pure metallic silver was about 1.5 tons per day, making it the leading producer of silver in Mexico and one of the most important in the world. But this result was achieved with low-grade ores which could never have been mined or reduced at a profit by Mexican methods.
Guanajuato, State of Guanajuato. The history of this section corresponds closely to that of Pachuca, although the ores are of a somewhat lower grade. After work under Mexican methods of mining had been suspended for a period, Americans undertook to apply modern processes of mining and ore-reduction and, in doing so, invested large sums. They applied cheap electric power, supplied by the Central Mexico Light and Power Company owned by capitalists of Colorado Springs, Colorado. Much of the ore treated came ​from the old dumps in which it had been left owing to the inefficient methods of the Mexicans, and much other ore was obtained from the workings where it had been permitted to remain as being of a grade too low to be treated by the old methods.
At one time there were employed in this camp about 12,000 Mexican miners and mill men. Some of the money paid in wages to these men reached the farmers in the vicinity who raised crops to feed the mining population, and produced a condition of great local agricultural prosperity. This work was suspended when our Government ordered all Americans to leave Mexico and return to the United States, and these thousands of Mexican labourers who were-making a good living and the Mexican farmers, who were furnishing the food for the labourers, have been the greatest sufferers.
Sierra Mojada, State of Coahuila. This important producer of lead silver ores is located in a waterless desert and, contrary to the general rule, was not discovered by the Spaniards. Work upon it was begun in 1880 by a number of Mexican miners and mining companies. The work proceeded with indifferent results due to inefficient smelting methods and lack of transportation until 1890 when American capital built a railroad eighty-five miles in length connecting the camp with the main line of the Mexican Central Railway, thus affording an outlet for the ores which, because of ​their character, had to be treated in modern smelting furnaces in order to recover the silver they contained. At first the ores were shipped to Argentine, Kansas, later to El Paso, Texas, and still later to smelters in San Luis Potosi and Aguas Calientes, also built and operated by Americans. At one time prior to the present revolution, the camp of Sierra Mojada produced ore at the rate of about 1,000 tons per day, from which one ton of pure silver was extracted. A number of the more important mines remained in the hands of their original Mexican owners, but were operated under the direction of American mining engineers. The camp is now entirely inactive due to the precarious railway transportation and because of its exposed situation inviting bandit raids. In the meantime, of course, thousands of Mexican miners, who were earning good livings, have been thrown out of employment and have really been the greatest sufferers by this suspension of an important industry carried on by American capital and enterprise.
Santa Eulalia, State of Chihuahua. This important camp on the outskirts of the city of Chihuahua was discovered and worked by the Spaniards at an early date, but the output was never very important, because the operators tried to smelt the lead silver ores in antiquated furnaces made of stone and adobe. Production here did not reach full tide until American capital erected ​large smelting works at Chihuahua which enabled the mines to produce profitably a large tonnage of relatively low-grade ore. In point of tonnage, this camp surpassed Sierra Mojada just before the present revolution, but a portion of the output of the mines was zinc ore which was shipped to Kansas and Oklahoma to be treated by modern methods, aided by cheap fuel.
Parral, State of Chihuahua. This had been one of the old bonanza camps of the Spaniards, who, after extracting the high-grade and easily worked ores, abandoned it as unprofitable. Activities were not resumed until Boston capitalists extended a branch of the Mexican Central Railroad to Parral and Santa Barbara in 1900. Following this there was a period of great activity involving the investment of many millions of American capital in the development of mining properties and the erection of large cyanide and concentrating mills. Perhaps half of these yielded favourable results, although on the whole the camp has never returned more than a small fraction of the money spent by the Americans. The camp was not supplied with cheap hydroelectric power, although a Canadian company had about completed a large plant for this purpose just before operations had to be suspended on account of the last revolution. One of the best-known mines of the camp was the Palmilla, owned by a native Mexican named Pedro ​Alvarado. This mine was unusually rich, and for a time Alvarado demonstrated his prosperity to the world in rather a spectacular fashion, among other things, offering to pay the national debt of Mexico, and in constructing a palace at Parral said to have cost about half a million dollars. However, when his bonanza was worked out and after he had spent most of his fortune in search of another, he decided to dispose of his mining interests to a strong Boston company, which built a large cyanide plant, installed machinery, and invested money and intelligent effort in developing the low grade ores which Alvarado had left behind as valueless. This camp has remained inactive since the last American there was murdered by so-called revolutionists, although some small undertakings were subsequently carried on under German auspices.
The other and less important silver camps of Mexico were scattered all over the republic and are too numerous to specify in detail, but with hardly any exceptions they had been exploited by Spaniards or Mexicans at one time or another, had then been abandoned as unprofitable and later taken up and worked by American or European capital, usually expended under the direction of American mining engineers or practical miners who had no interest other than that of an employee earning his livelihood by his ability and education, ​teaching American methods and the use of American mining machinery to the native Mexicans, thereby increasing their value to their families and to their country.
GOLD MINES
El Oro, State of Mexico. In recent years, this camp has been the most important producer of gold in Mexico. It was not worked by the Spaniards or Mexicans who overlooked it because the ores did not out-crop on the surface. The professional knowledge of mining engineers was required to reveal the existence of the ore under the surface. The large mines were developed by British and French capital, the former being expended under the direction of American mining engineers, who also built the railway connecting the camp with the outside world. Before the revolution, this camp gave employment to about 7,000 men. The ores were treated by the cyanide process introduced by Americans.
San Pedro, State of San Luis Potosi. The vast gold deposits of this camp were discovered by the Spaniards and since that event mining activity has never ceased. Due to the fact that the mines were dry and the ores were amenable to smelting in primitive adobe furnaces, Spanish methods were unusually successful and resulted in the production of gold by them to the amount of some hundreds of ​millions. So valuable and successful were these mines that the City of San Luis Potosi, said to have been at one time the second largest centre of population in Mexico, was built near them. However, the exhaustion of the high-grade ores destroyed the prosperity of the city and it was later reduced to the population of a small town. Long before 1890, the high-grade ores had been exhausted and operations were confined to the efforts of Mexican miners scratching around in the old workings for a few remnants of the former great bonanza and in picking over the old dumps and waste material rejected during the bonanza days. Later, an American company built a modern smelter in the city of San Luis Potosi and this enabled the Mexican owners to increase their operations-and handle certain refractory ores to which their own methods could not be applied. Thus a measure of prosperity returned to the camp and was continued until 1903, when it again became necessary to reduce operations to a negligible minimum on account of the low grade of the ores and the primitive methods employed in their extraction. The American company owning the smelter was then induced to take a lease on the mining property at San Pedro under a system of tribute, or royalty, to the native Mexican owners, which is still in effect. Because of large sums expended in development work, new shafts, ​modern machinery, and the construction of a railway from the smelter to the mines, the output gradually increased until in 1911 it amounted to about 700 tons of ore per day and gave employment to some 2,000 people. Again hydroelectric power, supplied by American capital, was a factor in the successful operation of these low-grade properties where the product was made up exclusively of material rejected by the Spaniards and Mexicans, who gutted the best part and allowed the rest to cave and become mixed with valueless country rock.
COPPER MINES
With a few unimportant exceptions, the Spaniards were never able to exploit copper ores in Mexico successfully; therefore, all of the copper mines which have been operated in the recent past were developed by foreign capital. In the order of their importance, these copper properties are located and owned, as follows:
Cananea, State of Sonora. Owned by American capital.
Boleo, Lower California. Owned by French capital.
Tetziutlan, State of Pueblo. Owned by American and Italian capital.
Matehuala, State of San Luis Potosi. Owned by American capital.
​Aguas Calientes, State of Aguas Calientes. Owned by American capital.
The refractory nature of these copper ores, all of which are sulphide, required the expenditure of large sums for the erection of blast furnaces and accessories, and the skill and knowledge possessed by American engineers. In the course of developing these mines, a great number of unsuccessful enterprises were undertaken and a vast amount of American effort and money expended without the return of any profits.
In conclusion, it should be noted that cheap coal and coke, the use of cheap hydroelectric power, together with effective railway transportation, all of which were supplied by foreign capital, have played a most important part in the development during the last thirty years of Mexico's great mining industry.
None of the mines owned or operated by foreigners was ever acquired as a concession or grant through the favouritism of Diaz, or any other head of the Mexican Government. They were, in nearly all instances, either purchased or leased from Mexican owners and were all acquired under the general laws governing the acquisition of mineral properties. Very much the larger number of them represented a character of mining which the Mexicans would not, and could not, have pursued because they had not the initiative, the ​capital, or the engineering knowledge required. Whatever wealth was taken out of them by the foreigners would never have been accessible to the Mexicans. The employment of tens of thousands of natives and the distribution of much money in the form of wages, cost of food stuffs, and so forth, represented just so much economic value which would never have been acquired save for the investment of foreign capital and intelligence.
Any one who may be inclined to doubt the possibility of the exhaustion of easily worked gold and silver mines in Mexico during the three hundred years of Spanish rule will find the history of gold mining in California enlightening. A pamphlet issued by the California State Mining Bureau entitled "California Mineral Production for 1915" contains a very carefully compiled table showing the annual gold production of that state from the time of the discovery of gold by Marshall in 1848, to and including the year 1915. That table shows that the total production for the sixty-eight years amounted to the enormous value of $1,631,183,696. The precious metal, it will be borne in mind, was first found in large placer deposits easily accessible by primitive methods of mining. The production in 1848, the year of the discovery of gold, amounted to $245,301. The annual production increased so ​rapidly that in 1852, the fifth year after the discovery, it reached the maximum production of $81,294,700. More than half of the total production for the sixty-eight years was made in the first twenty years after the discovery of gold. The production rapidly decreased after reaching its maximum in 1852, until it had fallen in 1889 to $11,219,913. Meanwhile the exhaustion of the easily accessible placer deposits had directed the attention of miners to the values carried in veins and in low-grade placer deposits which could only be worked by the expensive mechanical process known as dredging. Both vein mining and placer dredging require the investment of large sums of money and the use of a much higher degree of skill. By these methods, the gold production of the state has been gradually increased until in 1915 it reached the value of $22,442,296, but it has never approached the maximum realized in the fifth year after the discovery of gold.
When it is recalled that the population of Mexico was much more dense than that of California when gold was discovered and that for three hundred years the people had been engaged in gold and silver mining, and the development of that industry had been stimulated by the urgent demands of the mother country for the payment of tribute in these precious metals, it will be seen that the probability of the exhaustion of the easily ​accessible deposits after three hundred years was very great, and that these deposits were so exhausted everyone familiar with the history of mining in Mexico knows.
Careful study will show the accusation, so often repeated by revolutionists bent upon confiscation, that the Mexican people have been robbed of great mineral wealth by foreigners, to be a pure invention of men desirous of justifying, or palliating, the wrongs they have perpetrated. The net result up to date of the seven years of revolutionary aggression upon the foreign-owned mining investments is that some hundreds of thousands of Mexican labourers, who were earning wages many times greater than they were ever paid by their former Latin-Mexican employers, have been denied the opportunity to make a living, and have been reduced to conditions of misery and suffering almost without a parallel even in the history of their own turbulent country.
FOREIGN INVESTMENTS IN MEXICAN LANDS
Since Mexico became self-governing the agrarian question has been most often assigned as the cause for the political unrest which has formed so large a part of her history. As, previous to the Diaz régime with its enforced law and order, few foreigners had acquired land in Mexico, the complaint against agrarian conditions prior to that ​period was that the lands were monopolized by the Latin element, which had originally acquired them in large holdings after the conquest by Cortes. This condition it was asserted, and with much truth, had been continued by the successors of the original Latin conquerors, thus denying the native or peon population an opportunity to acquire an interest in the lands.
It is true that since Mexico became independent there has been considerable change in the ownership of lands. Every revolutionary movement has been characterized by the looting of personal property and, in the vast majority of cases where revolutions have been successful, they have been followed by the confiscation of real property, owned by the supporters of the losing faction, for the benefit of the successful revolutionists. But, inasmuch as the confiscated lands were distributed to the leaders of the successful party and they were almost universally representative of the ruling Latin race, the relation of the peon masses to land-holding was little affected by these changes in ownership.
It is true that Juarez, after he returned to power at the end of the Maximilian epoch, did confiscate numbers of large real-estate holdings of the Church with some that had been owned by supporters of Maximilian, and provided for their division among the working class. He did this because, being of ​pure Indian blood, he was most sympathetic with the peon class and because, being an honest man and a patriot, he made an honest effort to carry out the promises he had made to redress unfavourable agrarian conditions. But his tenure of office, and life, ended soon after the beginning of this effort to establish conditions more just to the masses, and the beneficiaries of his distribution of lands being unable to hold them against the machinations of the governing Latin element, Juarez's efforts to readjust agrarian conditions met with the same ultimate failure that had followed the few other attempts to put the masses of the people into possession of some of the lands.
When Diaz succeeded to power there was no very marked change in the ownership of large real-estate holdings, but it appears that shortly after his accession a number of the revolutionary leaders under him became owners of extensive tracts of land, and the acquisition of some of these from the public domain was probably facilitated by the government. However, these changes in ownership, like others that had been made as the result of various triumphant revolutions, did not work any improvement in agrarian conditions for the peon masses, because the new owners still represented the governing Latin element and held the land in large tracts.
During the three hundred years of Spanish ​control and for some time after its close, the industrial interests of the nation were almost entirely agricultural, pastoral, and mining. Intelligent and persistent effort to develop railroad construction, manufacturing, and other new business enterprises appears to have been first begun under the patriot, Juarez, continued under his successor, Tejada, and to have been most successful under Diaz, because of the long period of law and order which his stern methods maintained. Previous to the attraction of foreign capital to Mexico her original industries had been conducted in the primitive and slip-shod manner characteristic, even at the present time, of most Latin-Mexicans. As a result there was little or no attempt at intensive cultivation of the lands, assisted by comprehensive modern methods of irrigation, which so large a part of the lands require. The same condition existed in the pastoral industry, which was little assisted by any intelligent effort to increase the value of its product by improvement of breeds and supplementing the food supply of the natural ranges by the production of forage crops.
Shortly after foreign capital became interested in Mexico under Diaz, it was only natural that the attention of investors should have been attracted to the opportunities for making money by acquiring lands and applying modern methods to their management. It became evident to foreign ​investors that Mexico offered unusual opportunities for profit in the production of coffee, of cattle by improving the grades and producing forage crops for feed and, later, by the production of rubber which had become, by the invention of the auto vehicle, of such great importance in the economic life of the world.
It was also discovered that large tracts of arid land could be made wonderfully productive by irrigation in a comprehensive way involving the investment of large sums of money. Within the last thirty years considerable sums have been invested in land in the tropic regions which was unproductive jungle until put by foreign purchasers to profitable use in the production of coffee and rubber. Foreigners have also invested in large areas of ranch lands which have in every instance been purchased, most often from private owners, but, in rare instances, from the government at prices fixed by law. These properties, by the application of modern methods of management, were made much more valuable than they would ever have been in the possession of their original Latin-Mexican owners.
There have been also established by Americans a number of agricultural colonies where the lands were divided into small holdings which were occupied by American families and were cultivated under the methods, and with the improved ​machinery, used in the United States. This latter development should have been of peculiar economic value to Mexico, for, in addition to producing a large amount of permanent taxable values for the country and giving employment to many of the common labourers at wages in excess of anything they had ever received from native land-owners, they furnished a constant example to the people of modern methods of land cultivation which in time should, and doubtless would, have benefited that larger part of the population engaged in agriculture.
A most important development of foreign land-ownership has been brought about in the last twenty years by the investment of foreign capital, principally from the United States, in great reclamation projects. Comprehensive and costly systems of irrigation have made arid lands, previously of no economic value, very productive. An example of this may be found in the vicinity of Torreon, where English and American capital utilized the waters of a river in irrigating many thousands of acres of land formerly arid that for some years past have produced large and valuable crops of cotton. I have had some opportunity of observing an irrigation enterprise carried out during the past fifteen years by American capital. Here by utilizing the waters of a river, nearly a hundred thousand acres of arid land, which ​previously had never produced a dollar, has been made to yield great crops of cotton and forage. This one enterprise alone has added millions in value to the permanent taxable property of Mexico and it is to-day paying taxes to the extent of more than a hundred and fifty thousand dollars annually to the territorial government in which the land is situated. While the taxes are high, the owners of this particular investment are somewhat consoled by the fact that the territorial government, in marked exception to the general rule, has at its head an honest and efficient executive who sees to it that these revenues are used in maintaining order, constructing highways, maintaining public schools, and for other public improvements.
Since early in the Diaz régime and during its continuance, Mexico had a system of land laws which provided, as do similar laws in our country, for the sale of public land at prices and upon terms named therein. After these laws were enacted and until they were set aside by the Carranza government, it was never possible for Diaz, or any one else, to make a grant or gift of any public lands to any citizen or foreigner. A somewhat careful investigation has failed to discover a single instance in which land in Mexico is held by a citizen of the United States by virtue of any public grant or concession in the nature of a gift. As in the case of mining and oil properties, what lands have been ​acquired in that country by our citizens have been bought at a price which represented the full value of the land to the owners; and if, under the management of the foreign owner, the lands became worth more than was paid for them, as they undoubtedly did in most cases, this increased value was attributable entirely to the energy and intelligence of the foreign owner.
This success of the foreign owner, while producing some profit to him, has necessarily been of great economic value to the people and nation, because it has furnished employment for labour at rates in every instance greater than the Latin-Mexican landowner paid; it has increased by millions the taxable property of the country; and it has afforded an object lesson in improved methods of management and cultivation which should have been of great value to the people of the country. Yet, the American investor, who has thus added to the prosperity of Mexico, is denounced by the element now in power as a robber of the people. We shall see in another chapter how these foreigners have been deprived of their properties, their homes wrecked and ruined, and many of them, with their families, murdered. In nothing more than in the treatment, by the people now in power, of the foreigner who has acquired landed interests in Mexico, as contrasted with the treatment of the foreigner who has acquired land in our ​own country, is the difference between the policies which direct the government of the two countries shown.
The largest privately owned tract of land in the United States is the great Maxwell Ranch, in New Mexico. This tract, consisting of about 1,470,000 acres, has for years belonged to Dutch capitalists and is devoted principally to stock grazing. But nobody has heard any accusations that these foreign investors have inflicted a grievous wrong upon our people by becoming owners of this great holding. Probably every citizen of New Mexico would resent indignantly any suggestion that he desired to see his state, or its citizens, become the possessors of this land by confiscation. The industrious Scandinavian peoples, who settled the great Northwest, and made their homes upon land acquired for a very small part of its actual value from the Government, and who are to-day the most responsible factors in the prosperity of states like Minnesota and Wisconsin, rendered the same service to this country that the industrious Americans who settled in a number of agricultural colonies and made their homes and developed lands there rendered to Mexico.
I have in mind an Italian colony established some years ago upon cheap land in a sparsely settled section of my native state, Arkansas. These industrious Italians, on land that before had ​produced nothing of value, have established beautiful farms and vineyards, have built an attractive little town where the fine church and school buildings are the pride of the community, and have turned a section of country which was almost unproductive into a garden spot, the site of many happy homes of an industrious people. So proud is the state of what these people have done that their achievements are described and illustrated in books and pamphlets advertising the resources of the state.
The only reference to similar enterprises which have been established by Americans in Mexico that will be found in the propagandist literature issued by the Carranza party takes the form of denunciation of the foreigners who have established these little centres of industry and production as robbers of the Mexican people. The fact is that the Latin-Mexican element which at all times has been in control of the government and which, until foreigners became interested and developed valuable properties there under the encouragement of the Diaz regime had busied themselves in using a hundred revolutionary movements to confiscate the property of each other has found that to-day the properties most valuable and which, therefore, appeal most to its lawless greed, are those built up by the intelligence, enterprise and industry of foreigners. This ​element is now industriously engaged in confiscating these properties, and is endeavouring to justify and excuse its acts by accusing the people who have built them up of being robbers of their country.
In the United States we welcome the investment of the money, the intelligence, and the industry of foreigners, and recognize them as assets added to the prosperity of the country. Because we have pursued that policy we stand to-day without a peer in national prosperity, wealth, and credit. The powers now in control in Mexico, in gratifying their greedy desire for property created by the foreigner, have so destroyed the prosperity of their country that thousands of their people within the past five years have died of starvation, other thousands are on the brink of destruction, and the credit of their country is so low that they are unable to raise a dollar by public loans. Surely such a comparison of results should give pause to those who may feel inclined to encourage or to tolerate such a spirit as is now dominant in the management of governmental affairs in Mexico.