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within 6 months after the date of the promulgation of this law, in regard to their participation in such corporation, with the understanding, that if they do not do so, the acquisition will be considered as made subsequent to the promulgation of this law.

ARTICLE 7. The Executive is empowered to regulate the provisions of this law.

ARTICLE 8. The present law shall take effect from the date of its promulgation.

812.5200/17: Telegram

The Ambassador in Mexico (Sheffield) to the Secretary of State

MEXICO, October 22, 1925—11 a. m.
[Received 8:47 p. m.]

205. Department's telegram 221, October 10.22 Newspapers today announce that Senate Committee in secret session yesterday favorably reported bill regulating section 1, article 27, of the Constitution approving it in principle. It is further stated that Chamber of Deputies will consider the bill next week. Under these circumstances I should regard it as opportune to enter protest immediately and therefore request Department to telegraph appropriate instructions. SHEFFIELD

812.5200/34a: Telegram

The Secretary of State to the Ambassador in Mexico (Sheffield)

WASHINGTON, October 29, 1925-7 p. m. 240. [Paraphrase.] Department has carefully considered the matter and is transmitting below the following conclusion for your personal guidance.

1st. It is not advisable to send formal note setting forth that law under consideration is clearly retroactive in respect to property acquired before the Mexican Constitution went into effect and therefore confiscatory. Article 27 is general in its terms, and the Supreme Court of Mexico in the case of the Texas Company 23 and other cases 24 has held that the article is not retroactive so far as it relates to persons holding petroleum lands who have, before the Constitution went into effect, performed some positive act showing an intention to exercise the petroleum rights. It is not clearly specified in the bill, and the language thereof does not necessarily imply, that it is the


Not printed.

23 For text of decision, see Foreign Relations, 1921, vol. II, p. 464.


In four amparo cases instituted by the International Petroleum Company and the Tamiahua Petroleum Company. See Estados Unidos Mexicanos, Semanario Judicial de la Federacion (México, Antigua Imprenta de Murguía, 1922), quinta época, tomo x, p. 1308.

intention of the bill to cover lands, rights and interests of stockholders acquired before the Constitution was promulgated. The full effect of the bill, if it becomes a law, would depend upon interpretations made by the courts and by the Mexican Government. If a law prohibiting foreigners from owning lands and being stockholders in Mexican corporations does not affect vested rights acquired before the Constitution was promulgated, then it relates to a purely domestic policy, and this Government has no suggestions to make thereon. American interests which have protested against the law have not conclusively proved that it would necessarily affect rights acquired before the Constitution was promulgated. According to the familiar principles of construction applied under the Constitution of the United States and practice, the courts must construe a statute, whenever possible, so as to preserve its constitutionality, and I incline to the view that the bill under consideration is capable of being construed in a way which would prevent it from affecting American interests vested before the Constitution came into force. 2d. If, under the Constitution of Mexico after it was promulgated, Mexican companies having American stockholders legally could acquire lands, waters, and the appurtenances thereto, or could secure concessions to develop mines, waters and mineral fuels, either within or without prohibited zones, according to our understanding of the practice, this law seemingly would deprive them of that right since by the first part of section 6, those aliens who may have acquired in prohibited zones any real property rights to waters and their accessions [appurtenances?] as shareholders in Mexican companies before the law came into force, must relinquish the same within 3 years, etc.

3d. Under these circumstances the Department deems it unwise to address a note on this subject to the Government of Mexico at present. It is our feeling that if the present Government intends to pass the bill, a note from this Government would not stop its passage. In fact, such action might hasten its passage and even render it difficult for the administration to amend the bill, were it so inclined.

4th. The Department believes that the proper course at the present time is for you to obtain an interview with the Foreign Minister and in a frank and friendly way point out to him those provisions in the bill which if applied retroactively would affect American vested interests both before and after the promulgation of the Mexican Constitution as set forth above. Possibly in the course of your conversation you can obtain a clearer idea of the scope of the bill. The United States-Mexican Commission reached an understanding regarding the effect of the Mexican Constitution on those vested rights,25 and I hesitate to attribute to the Government of Mexico the


See Proceedings of the United States-Mexican Commission Convened in Mexico City, May 14, 1923 (Washington, Government Printing Office, 1925).

intent to enact confiscatory and retroactive laws contrary to that understanding. [End paraphrase.]

5th. Following are some of the pertinent questions which occur to us as proper for you to have in mind for the purposes of your interview:

I. With respect to land within the prohibited zone:

a. Does this mean that, without regard to the time when his interest was acquired, no foreigner may be interested hereafter or continue to be interested in a Mexican corporation owning lands or water rights or their appurtenances? (Article 3).

b. Does this mean that any foreigner holding such interest, regardless of when acquired, must dispose of it within three years or acquire Mexican nationality? (Article 6).

II. With regard to lands or water rights or their appurtenances outside the prohibited zone:

a. Does this signify that, without regard to the time when foreigners acquired their interests in a corporation, such interests in excess of 50 percent must be disposed of before the corporation may hold real estate? (Article 5).

b. Does this signify that, regardless of the time when he acquired such interest, a foreigner already interested in such corporation must renounce his national rights? (Articles 3 and 6).

III. Do the provisions of Article 4 signify that, regardless of when they were made, contracts transferring property to foreigners and by which they hold a present interest therein are to be held without force and effect unless such foreigners renounce their national rights with respect to such property?

IV. Are the provisions of Article 5 and the last half of Article 6 intended to relate as well to foreign corporations as to Mexican corporations?

V. Is the proposed legislation intended to apply to subsoil deposits?

812.5200/40: Telegram


The Ambassador in Mexico (Sheffield) to the Secretary of State

MEXICO, November 5, 1925—10 a. m.
[Received 8:35 p. m.]

223. Department's telegram 240 October 29, 7 p. m. I saw the Minister for Foreign Affairs yesterday afternoon and was received by him with entire courtesy and friendliness. I informed him that I had come for the purpose of requesting information regarding the purport of the bill sent to the Chamber of Deputies September 30 last regulating the first section of article 27 of the Federal Constitution and that I had not come to enter into any discussion of the matter. He said that the bill had been substantially modified since its introduction and intimated that for this reason discussion at this time might be inopportune. Having pointed out that the purpose

of my visit was merely to elucidate certain obscure points I proceeded to put to him the questions raised in section 2 of your telegram mentioned and received the following answers.

With regard to question I (a) and (b), the period within which foreigners may divest themselves of real property interests within the prohibited zone whether held directly or through a Mexican corporation will be extended probably to 10 years but such divestiture must be effected regardless of the time when the interest was acquired.

With regard to question II (a), interests of foreigners in corporations in excess of 50 percent acquired before the proposed law becomes effective will be respected. Question II (b), the declaration to be made regarding the interest held by foreigners in real property outside the prohibited zone will not be directed specifically to the renunciation of rights as an alien but will be designed to determine the character of alien ownership with a view to recording necessary information regarding alien holders of such interests.

With regard to question III, article 4 of the bill is not intended to have retroactive application.

With regard to question IV, article 5 of the bill has been modified in affirmative terms to the effect that foreigners may acquire not to exceed 50 percent ownership in companies for agricultural purposes and will not have retroactive effect. The declaration contemplated by the second half of article 6 will also be descriptive merely to obtain necessary records of ownership by aliens.

With regard to question V, the proposed law is merely designed to regulate section 1 of article 27 of the Constitution and does not affect the stipulations of section 4 of article 27, which latter has to do among other things with subsoil deposits.

The Minister explained that the general purpose of the proposed law is to obviate complications with foreign governments resulting from the application of agrarian laws to real property owned in fee by aliens or by corporations owned by aliens and that it has no bearing upon industrial mining and other nonagricultural corporations which latter will still be able to acquire, own and administer the lands necessary for their establishments and for the services necessary for carrying out their objects having in mind of course the concession principal so far as subsoil deposits themselves are concerned. I understand in brief that the proposed law will not be in conflict with the provisions of section 4 of article 27.

[Paraphrase.] I agree with the Department that a formal note should not be presented at this time. I should add that during the past few days a substantial change of attitude in the Government

has been noted, and this fact has made it easier for me to secure the above information. [End paraphrase.]



The British Ambassador (Howard) to the Secretary of State

WASHINGTON, November 6, 1925.

MY DEAR MR. SECRETARY: With reference to my conversation with you on Tuesday last, in which you were kind enough to inform me of the instructions which had been addressed to the United States Ambassador in Mexico in the matter of the Mexican Draft Corporation Law, I write to say that I have now received a communication from His Majesty's Government, stating that they have instructed the British Representative in Mexico City to address verbal enquiries to the Mexican Government on similar lines to those which the United States Representative has been authorised to make. In approaching the Mexican Government, Mr. King has been told to avoid any reference to the possible attitude of His Majesty's Government in the event of the bill in question only being intended to apply to the future. Should his enquiries elicit the information that the Mexican Government intend to give retroactive force to this legislation, Mr. King has been instructed to direct their attention to the provision in Article 14 of the Constitution, according to which, "no law may be made retroactive to the prejudice of any person". His Majesty's Government have also pointed out to him that he should use every endeavour to secure the amendment or withdrawal of clauses in the bill relating to foreigners, which, if given retroactive force, would have such a prejudicial effect upon the position of British subjects holding investments in industrial concerns in Mexico. He has also been instructed to keep in close touch with his United States Colleague, and with the Representatives in Mexico City of the other Governments whose nationals are affected.

Believe me [etc.]

812.5200/50: Telegram


The Secretary of State to the Ambassador in Mexico (Sheffield)

WASHINGTON, November 13, 1925-7 p. m.

254. Your 231, November 12, 11 A. M.26 and previous. Further consideration of this matter leads to the belief that new detailed discussion of the proposed legislation affecting foreign property in Mexico is inopportune and perhaps useless, and that the situation

20 Not printed.

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