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New Laws and Nationalism in Mexico

FOR some thirty years Mexico was at peace with herself and the world. Her people were law-abiding and respectful of all authority. Her national finance was sound and her credit good. Foreigners and foreign capital were welcomed and accorded generous protection. Large enterprises received governmental encouragement, and business prospered. Church and state coöperated in the maintenance of law and order.

Then, in 1911, as the outcome of a short and decisive rebellion, the military dictator who had ruled Mexico for some three decades was supplanted by a civilian outsider. From 1910 until the middle of 1924 armed revolutions prevailed. In the last seventeen years the Republic has set up twelve presidents, of whom two were shot to death and most of the others forced into exile. Only one has succeeded in serving out the full presidential term.

The Diaz régime, which Madero so easily overturned, had outlived its purpose. A new political order had become inevitable. At that time the control of public affairs had long been in the hands of an exclusive and venerable coterie known popularly as the Cientificos -- the scientific rulers. Although entirely without official corporate recognition, this body of men constituted a sort of presidential privy council. Even the Supreme Court and the national congress took orders from them. Such orders were always transmitted orally and were appropriately dubbed consignas, or watchwords. Political elections throughout the country were purely formal, the candidates to be chosen being designated in advance from the president's palace. Clearly, such a régime was too aristocratic to endure indefinitely. It made no provision for the civic development of the middle classes. The slogan of the victorious Maderistas, "Effective Suffrage -- no Reëlection," is still the official national motto.

A second important factor in the success of the anti-Diaz and later rebellions was the condition of the indigenous population, the peasantry. As a result of ill-advised legislation the Indians had, for the most part, lost possession of their lands, and of course readily espoused any cause which promised their restitution.

THE NEW POLICIES

But the political aspirations of the middle classes and the so-termed "insatiable appetite" of the Indian for lands and water were not the only ideals of the revolutionists. This is apparent from the official and semi-official pronouncements of their recognized leaders. In 1918, Venustiano Carranza, constitutional president for three years, in his reply to a formal protest made by Great Britain against certain petroleum legislation, based his justification on the following socialistic doctrine:

"According to the modern conception, property is nothing more than a social function bound up with the prosperity of the state."

In the formal declarations made to a representative of the New York World, June 27, 1921, by General Alvaro Obregon, then president, and the only chief executive since 1911 who has served the full legal term, will be found a trenchant expression of the new official attitude toward foreign capital:

"Today we profess the principle that the natural resources of the nation belong to the nation. Never will the Mexican people tolerate a government not founded upon this principle . . . . This does not imply, in any sense, a policy of isolation. Mexico is not so obtuse as to think that she can live or work alone, nor has she any such desire; but in the future we shall demand an equitable participation in her development. We have broken forever with the policy of gifts, bribery, and submission. We shall invite foreign capital, and it will be treated justly, but we will not concede excessive privileges at the cost of the rights of the people."

The foregoing statements are recited with approval by Señor A. J. Pani, speaking as Secretary of Foreign Relations, in a formal note addressed to the American Ambassador, May 24, 1922. The same note contains also this significant statement:

"It is necessary to point out, finally, that the grants and restitutions of commons of land [to village communities] should be viewed rather as a tardy obedience to the just order issued by King Phillip [of Spain] at the dawn of the eighteenth century, than as a manifestation of acute and advanced Bolshevism."

Licenciado Fernando Gonsalez Roa, one of the two commissioners who represented Mexico in the drafting of the United States-Mexican claims conventions of 1923, and now the Mexican member on the Special Claims Commission appointed thereunder, is a recognized exponent of the revolutionary ideals. The following extracts are taken from an address given by him in 1922 before the Second National Congress:

"Property rights are not immutable, but must be made subject to the limitations demanded by the progress and well-being of society."

"The régime of private ownership [of metal and petroleum deposits] is essentially unjust, because minerals are the products of nature and not of man."

"Throughout the world there has recently taken place a marked movement toward the nationalization of industries, not merely with fiscal aims but as a social reform. The tendency is to centralize in the hands of the community, as an entirety, the public utilities and means of production, and to distribute, in so far as may be possible, the wealth owned by the few."

In an address given by President Plutarco Elias Calles before a labor convention in March of last year, the economic policy of the present administration was proclaimed in these terms:

"I have endeavored to demonstrate that Mexico can, with its own resources alone, be developed and win its economic freedom. . . . My object has been to achieve the economic independence of our country, because without economic independence political independence is impossible . . . . You may rest absolutely assured that this we will do -- Mexico, economically, shall be independent."

President Calles has now been in office some two and a half years and the policy of his administration continues to be the achievement of political independence for Mexico by the way of economic independence.

The essence of political revolution is force. Success is its immediate justification. Sooner or later, however, it must adapt its victorious ideals to economic necessity and international demands. This is Mexico's present problem. In the main, the international demands made upon her relate to property acquired by foreigners before the revolution, or in legal terminology, to pre-revolution vested rights. Since, in addition, the industrial development of Mexico has always been and still is very largely a product of foreign capital, her difficulties become most apparent in the domains of economics and international law. Her struggle is to satisfy the foreign capitalist and foreign home secretaries that her revolutionary legislation is in harmony with the basic principles of sound business and of equity as commonly conceived.

THE NEW JURISPRUDENCE

Article 27 of the Political Constitution of 1917 contains a short passage deserving of careful perusal, since it embodies in succinct form the gist of Mexico's new socialistic legislation. It reads:

"The nation shall have at all times the right to impose upon the private ownership of property such qualifications (modalities) as the public interest may dictate, as also to regulate the enjoyment of the natural elements susceptible of appropriation, in order to achieve an equitable distribution of the public wealth and to safeguard its conservation."

Under the new Mexican jurisprudence the restriction, modification, or curtailment of a right by the state does not entitle its holder to compensation. Indemnity may be claimed only where there is an expropriation of the property itself. For instance, the legal requirement that a foreign company must dispose of its control of agricultural lands to Mexicans within ten years is viewed merely as a curtailment of its ownership rights and not as a condemnation. On the same principle the owner of a large tract may lawfully be compelled, without state compensation, to subdivide his land and to sell it out to colonists. Or the holder of oil deposits may be required to exchange his fee ownership for a government franchise limited to a term of years. The foregoing illustrations are culled from recent Mexican laws. Belonging to the same new jurisprudence is the doctrine that property ownership carries with it the legal obligation to use and develop. Owners are no longer to be permitted to allow property to lie idle and unproductive. This doctrine of compulsory use has been applied tentatively even to property vested before the revolution, but such action has always provoked diplomatic protest when foreign interests were involved.

An effective nationalization (in the current Mexican sense) of the larger industries would prove difficult of attainment if the law did not provide for the condemnation of property, as distinguished from a mere curtailment or restriction of rights. The new Constitution provides, accordingly, that property may be expropriated "on the ground of public utility and by means of indemnity." It specifies also that the subdivision of large landed estates, the creation of new centers of agricultural activity, and in general, the conservation of property and of the natural elements in the interests of the social organism, are each and all matters of "public utility," the promotion of which is legal warrant for the condemnation of private property, with payment of indemnity to the expropriated party. By virtue of this broad constitutional sanction, successive recent laws have declared virtually all the leading industries to be of public utility, thus rendering lawful the condemnation of property in their promotion. That an industry declared to be of public utility may lawfully be engaged in by the state, acting for the common weal, is deemed a necessary corollary of the principles above enunciated.

In the matter of the indemnity, the departure from precedent has been radical. Under the Constitution of 1857 and the related practice, the compensation was made in money, paid over prior to the act of expropriation, and as a result of a judicial award based upon a market appraisement of the property. Under the present practice the compensation may be in the form of bonds, with liquidation spread over a number of years, and fixed as to amount by the administrative authorities on the basis of tax valuation. Some leading Mexican jurists contend that the current practice cannot be justified under the terms of the Constitution. Foreign governments also, acting in behalf of their nationals, have protested on grounds of natural equity.

THE SOIL, THE SUBSOIL, AND THE MINING LAWS

Before examining in detail some of the salient features of the recently enacted mining and petroleum laws, a word should be said in preface. The reality jurisprudence of Mexico, unlike that of the common law, is based on the theory of a juristic separation of the surface soil from the sub-surface deposits. Furthermore, during the Spanish domination, deposits of at least the precious metals belonged exclusively to the king. In the picturesque language of the period, they were jewels encrusted in the royal crown. When Mexico gained her independence a century ago this crown ownership passed to the Mexican nation, represented by the central or federal authority.

Under the different mining laws in force since 1884, and until the promulgation of the new code in May of last year, mineral ground was granted out to the first applicant, under federal franchises popularly termed concessions. The grant was in perpetuity, subject only to the payment of a tax or rental. This was computed upon an acreage basis and fixed periodically by Congress. Failure to pay the tax resulted in a reversion of the mineral ground to the state. In effect, the concessionary was absolute owner of the mining claim so long as he paid punctually his acreage tax. Since 1892 and up to August of last year, the mine owner was free to work his claim or to leave it idle. The provision of Article 27 of the Constitution of 1917 which requires all concessionaries to work their holdings continuously, had never been enforced in regard to mines, except sporadically during a short period of the Carranza administration.

The new Code of Mining Industries, as it is styled, was promulgated May 3 of last year and became effective as of August 1 following. The related detailed regulations were promulgated on the twelfth of the same month. The outstanding features of this important mining legislation are here summarized:

The old system of granting concessions to the first applicant is substantially retained. But the duration of the term of the grant is limited to thirty years, renewable for a second like term; maximum franchise areas are established for the different classes of minerals; and a monetary deposit is required of the grantee to guarantee performance of the conditions of his concession.

The requirement of continuous and regular operation, which had been abolished since 1892, is restored.

National ownership is resumed in the case of several important classes of minerals formerly deemed private property, including coal, the mineral fertilizers, the ochres, amber, industrial chemicals, and the like. In general, the proprietary rights of the landowner are restricted under this legislation, to the soil proper, its vegetable growth, the substances available as materials for construction, and certain very limited water rights.

The government collects a royalty on all minerals extracted, the rate being fixed annually by Congress. This royalty is in addition to export, refining and other taxes.

Engagement in the milling, smelting, refining, warehousing, or mechanical transportation of minerals, now calls for a special federal franchise, except when these operations are confined to the area embraced in the mineral grant.

Foreign individuals, but not foreign companies, may obtain concessions under a special executive permit, subject to formal waiver by the concessionary of foreign protection in respect of the rights to be acquired. A foreign company is absolutely barred from acquiring any right or interest whatsoever in a concession issued under the new Code.

In every mining or related industry, from 50% to 90% of the different grades of higher employees, and 90% of the laborers, must be Mexicans.

The recording of all mining titles and contracts is centralized in Mexico City.

Provision is made for a marked increase of governmental intervention and control in all branches of the mineral industry.

The new Code recognizes the validity of the mining titles issued under prior laws, but the exchange of such old titles for concessions to be governed by the new Code is encouraged.

NATIONALIZATION OF PETROLEUM DEPOSITS AND THE NEW PETROLEUM CODE

The petroleum industry in Mexico is the growth of barely a quarter of a century. "El Ebano," which was the first well in the Republic to produce oil in merchantable quantities, was not brought in until the year 1901, and the famous "Dos Bocas" did not gush until 1908. The Mexican oil fields were not any considerable factor in the petroleum production of the world until some time after 1910, the year of the Madero outbreak. Prior to 1884 the Mexican laws contained nothing specific regarding the ownership of petroleum deposits. The question had not yet become of commercial interest. Under the mining codes of 1884, 1892 and 1909 oil deposits were declared to be the exclusive property of the owner of the land and to be freely exploitable by him without need of any government grant or permit. By virtue of these codes, in the opinion of most American and many Mexican jurists, the state formally relinquished all ownership rights to petroleum existing in private ground.

The struggle to nationalize the petroleum industry began in the year 1914. In 1917 the new Constitution declared all oil deposits to be national property. By 1920 the rule that no well may be drilled anywhere in the Republic without a federal permit had become firmly established, not only in law but likewise in practice. At the present time the industry is effectively controlled by the federal power.

Obviously a legal revolution of this magnitude could not be consummated without a serious conflict with vested interests and much legal controversy. Briefly, the contention of the Mexican Government is that the three mining codes above referred to created in favor of the landowner merely a faculty or expectancy in respect of the petroleum, and did not vest in him the ownership proper; that to acquire ownership some positive act of appropriation of the petroleum was necessary; that where, prior to May 1, 1917, the surface owner or his assignee had clearly expressed his intention to appropriate the oil deposits, he acquired vested property rights therein, but not otherwise; and that such act of appropriation became impossible after the adoption of the new Constitution nationalizing all mineral deposits. Reduced to plain terms, the government's position is that its relinquishment of the petroleum was merely a revocable gift -- since withdrawn wherever acceptance cannot be proved; and that, in any case, a man cannot acquire a thing the very existence of which he does not even suspect.

The above reasoning is in general the basis of the so-called Texas Oil decisions of the Mexican Supreme Court rendered in 1921. Substantially, these decisions confirm the vested rights of the large oil-producing companies. As to the private landowner, who perchance dreamed of hidden oil wealth in his estate but did nothing before 1917 toward realizing his dreams, he is without recourse in Mexico. If he is a foreigner his government may press his claims. The State Department at Washington seems disposed to do this. In the meanwhile he must console himself with the sop (conceded to all landowners by the new petroleum code) of a 5 percent royalty of the oil produced on his property.

For nine years after the adoption of the new Constitution nationalizing all petroleum deposits, the industry was regulated entirely by executive orders and decrees. No congressional petroleum law was enacted until December of 1925. Under the comprehensive code then promulgated and the detailed supplementary regulations published in April of last year, the exploration, extraction, transportation by pipe-line, and refining of oil are now permissible only by virtue of a federal concession. The basic provisions of the new legislation are:

A concession to explore for oil is legally distinct from one to extract, the latter being obtainable, as a general rule, only by a person already holding a concession first to explore the ground solicited.

Exploration concessions may be for a term of from one to five years; extraction concessions may not in general exceed thirty years.

The ground embraced by a concession may not exceed 250,000 acres in lands which are known to be potentially petroliferous; nor twice that area otherwise.

A concessionary with right only to explore must expend annually the equivalent of from ten cents to one dollar per acre in exploration work, the rate depending upon the amount of the acreage and the known nature of the ground, the smaller and more promising the area, the higher the rate. Where the term of the concession exceeds two years, the rate applicable for the first two years is materially reduced.

A concessionary with right to extract must either produce a daily minimum of two cubic meters of oil per 250 acres or expend in the exploration the same annual amounts which are required of concessionaries with right only to explore -- indicated in the last preceding paragraph.

Where the extraction is in public or national land, a royalty is payable to the government of from 5% to 15% of the daily gross product of each well; the higher the production, the higher the royalty percentage collected.

When the extraction is in private land not bought or leased for oil prior to May 1, 1917 (the date on which the new Constitution became in general effective), the concessionary must turn over to the freehold owner, or assignee of his rights in this regard, 5% of the gross production. This is by way of indemnity to the freeholder for his former so-called expectancy rights in the oil deposits, which were lost in the process of nationalizing these deposits.

The above royalties are payable in addition to export, production, and other taxes.

Concessionaries are required to make substantial monetary deposits with the government to guarantee due performance of the conditions of their franchise.

At least 90% of all the workmen engaged in any petroleum enterprise must be Mexicans; and of the other classes of employees the native proportion required is 50% of each grade during the first year of the concession, augmented annually and progressively to 90% in the fifth year.

In regard to the much-controverted question of vested oil rights, these are to be confirmed by means of concessions granted in accordance with the provisions of the new law, but without obligation to furnish the monetary deposit referred to above. Claimants of vested rights are required by the code to produce (before the expiration of the year 1926) an instrument of lease, sale, option or assignment, executed before May 1, 1917, and evidencing an intention to appropriate the oil deposits. The confirmatory concessions are issued for the term of fifty years, reckoned as from the date the vested interest was acquired, and may be renewed upon expiration under certain conditions.

Holders of vested oil rights are not exempt from the constitutional requirement of continuous operation indicated above, but they are permitted to prove past expenditures of money in liquidation of the future annual disbursements demanded under the new law, in cases where the oil production does not attain the legal minimum established.

The diplomatic correspondence exchanged recently with the Mexican Government indicates that the State Department at Washington regards as confiscatory the forced exchange of vested petroleum rights for restricted concessions of limited duration; also that, in its opinion, the new Mexican policy of making the use and development of property compulsory upon the holder cannot lawfully be applied to rights which vested prior to May 1, 1917. These and other like questions relative to the vested rights of foreigners in Mexican property are still the subject of active international controversy.

THE AGRARIAN ISSUE

Up to within comparatively recent times, land tenures in Mexico were either communal or quasi-feudal. Untrammeled individual ownership of rural property is of later development in the Republic. Until the middle of the last century collective ownership by the Indian village community existed side by side with tenure by the Catholic Church or by wealthy mestizo or foreign families. Under all of these three conditions of ownership the indigenous natives (who today still constitute the great bulk of the population) were cultivators of soil in which they had a direct personal interest, either as communal owners or as tenants in some form. When they were cultivating as tenants, the rentals consisted usually of a share of the produce or of services to be rendered, or of both. The relation between landlord and tenant was largely personal and feudal in character.

As a consequence of the mortmain reforms of the 'fifties of the last century, supplemented by the capitalistic legislation of the Diaz régime, the collective ownership by the village community was deprived of legal recognition, and property then so held rapidly passed into the hands of the wealthy plantation or cattle owners or of land speculators. By degrees, also, the system of cultivation of large estates by means of service tenants, who toiled alternately on their own small holdings and on the plantations of their landlord, was extensively superseded by the system of day-labor paid for on a monetary basis. With communal ownership and the quasi-feudal tenancies both eliminated, the Indian soon became a mere peon or serf, bound to the soil by a labor contract or in consequence of advances made against his future earnings. He had lost his stake in the land, and the low wage he received effectively stifled any hopes of economic betterment.

The return of the land to the indigenous population is perhaps the most fundamental part of the revolutionary program. During the past eleven years over two thousand village communities have received awards of agricultural lands, totalling some fifteen million acres. This agrarian policy, as it is called, is still in active prosecution. The awards made have been either in the form of a restitution of lands of which the Indian community had been dispossessed, or in the form of a land endowment sliced out of some large private estate. In a few instances the endowment has been made out of public lands. The practice followed generally has been to appease the Indian with expeditious physical possession, questions of legal title and possible compensation to dispossessed parties being left for subsequent determination. Regarded practically, this was the only course open to the leaders of a successful revolution so largely agrarian in its platform.

Under recent legislation the legal tenure created by these restitutions and endowments is made quasi-communal in character. The tillable land is divided into lots, to be held by single families as a homestead. The lots cannot be sold, mortgaged, or attached for debt, and are administered by the head of the family for the family benefit. The wooded and pasture lands and the water rights are made the collective property of the community, to be administered by a committee elected by the villagers. It will be seen that the law aims to effect a partial restoration of the communal tenures to be found in early village communities. It is too early yet to estimate the economic wisdom of such an attempt.

Another and somewhat distinct feature of the revolutionary agrarian policy is the development of new agricultural colonies. The means employed, as detailed in a law enacted April 5, 1925, are the compulsory subdivision and sale in small lots of large estates. Where the landlord will not subdivide his property voluntarily, the land may be condemned and the colonization undertaken by the federal government. Colonization enterprises formed hereafter may operate only under a federal permit or franchise. Provision is made in the law for a large measure of governmental control and supervision of such enterprises, even to the extent of fixing the terms on which lots are to be sold. A certain proportion of the colonists must be Mexicans. A limit is set to the area that may be held by any one colonist. The administration of the colony interests must be coöperative.

As in the case of the petroleum industry, the program of nationalizing the agricultural sources of wealth has encountered stubborn opposition from the holders of vested interests, principally because of the scheme of indemnization adopted. The basis of compensation is the assessed tax valuation, plus 10 percent, payment to be made in the form of 20-year government bonds carrying 5 percent annual interest. In the great majority of the cases of land condemnation the matter of compensation is still pending, chiefly for the reason that the parties in interest have declined to accept bonds in liquidation of their claims. The bases of indemnity indicated have been characterized as inequitable by foreign governments speaking in behalf of their nationals.

WATERS AND FORESTS

In most regions of Mexico the annual rainfall is low. Consequently agriculture involves irrigation. Up to the close of the last century the waters of all springs and streams and lakes were either privately owned or deemed to be the patrimony of the public at large. Over the more extensive bodies of water the federal government did indeed exercise a large measure of control, but this was jurisdictional rather than proprietary. Since 1902, however, the number of streams and lakes declared to be federal property has been rapidly augmented, resulting in the present complete nationalization of virtually all the inland waters of the Republic. Their private use for irrigation purposes or for the development of electric power is now permissible only under a federal franchise.

A law enacted January 4 of last year paves the way for the execution of extensive irrigation projects in different parts of the country. Landowners may be required under this statute to construct and maintain irrigation works in all cases where public benefits would accrue therefrom, in the judgment of the federal authorities. If the landowners decline to undertake the work, the government may act in their stead, recouping the expense involved by a sale of part of the lands benefited. By a presidential decree of June 4 of last year the underlying principles of this law are made applicable also to private irrigation enterprises already in existence, thus permitting of their nationalization on grounds of public utility.

In the process of nationalizing the fresh waters of the Republic, previously-acquired interests have inevitably suffered diminution. Indeed, the recent legislation expressly provides for the "modification" of existing water rights and franchises in the public interest. To what extent compensation may be made later for such modification of interests, is uncertain. Under the new jurisprudence, as already indicated earlier in this study, indemnity is due only where the property itself is condemned, and not where a property right is modified or curtailed. The current national policy in regard to all the natural sources of wealth is to demand their active development by existing holders, failure to so develop being ground for an equitable distribution of such wealth in the interests of society at large. The passive conservation of rights by private owners with a view to possible future exploitation is diametrically opposed to the spirit of Mexican nationalism.

A law of April 5 of last year places all timber lands throughout the Republic under the direct control of the federation. Privately-owned timber may now be cut only under a federal permit and subject to detailed regulations prescribing the method and extent of the exploitation permissible. The purpose of the law, as expressed therein, is to conserve the timber resources of the country against waste and devastation.

BANKING, TRANSPORTATION AND TRADE

Early in the Madero revolution the government took possession of the banks throughout the Republic, with few exceptions, and appropriated the funds. Likewise it seized and operated the railroads. Both banks and the railroads have since been restored to private ownership, the return of the railways occurring at the close of 1925. The government is making an effort to reimburse to the banks the funds appropriated and to make compensation to the railroad companies for the loss and damage suffered during the federal administration of the lines. Mexico acknowledges her liability in this connection, but her financial situation is retarding liquidation. The same is true of the service on the national bonded indebtedness, which was suspended from the year 1914 until June 30 of last year, when the service was resumed.

Prior to the revolution a number of the state and national banks were authorized to issue paper currency. Under the new legislation this privilege is restricted to the Bank of Mexico, created in 1925, which is in effect a government institution. Its bills have now been in general circulation for some two years and maintain their face value in the money market, in striking contrast to the various paper currencies issued by the different revolutionary governments during the early years of the rebellion. All banking in the Republic is now controlled directly by the federal authority.

In regard to trade, in the narrower sense of the term, Article 28 of the Constitution of 1917 prohibits the monopolization, cornering, or controlling of the market, as likewise any other act "constituting an undue, exclusive advantage in favor of one or more determinate persons to the prejudice of the general public or of any class of society." On June 28 of last year the president promulgated a law-decree, effective throughout the Republic six months thereafter, regulating these constitutional provisions. This law prohibits the storing of goods of general consumption if done to raise the market price; as also any other act tending to eliminate competition with a view to raising prices. A producer of wheat may not acquire or operate a flour mill. No single person or company may own or operate flour mills in different parts of the Republic. A person engaged in the commercial production of electric power is barred from engaging in the flour-mill business. Loans on stocks of grain, flour, lard, sugar and the like are forbidden, unless made to the producer himself. The aim of the law is to prevent the consolidation of allied industries or enterprises to the prejudice of the actual producer or of the purchasing public. Municipal authorities are expressly required to regulate sales of food stuffs, building materials, and other goods of popular consumption, and to report the regulations so enacted to the central government.

THE ATTITUDE TOWARD ALIENS

The tendency of the legislation from 1824 to 1911, when the Diaz régime fell, was to remove restrictions on the foreign ownership of property in Mexico, both real and personal. With very limited qualifications, applicable only to frontier and coast zones, the foreign individual, and the foreign company registered in Mexico, were placed finally on the same footing as the national in the matter of property rights. Equality had become the rule: the discriminations were negligible.

But under the new order, constitutionally inaugurated in 1917, the property status of the alien has been changed radically. A foreigner is now prohibited from acquiring, either directly or indirectly, land or waters within a zone of 100 kilometers (62 miles) along the frontiers and 50 kilometers along the coasts. In regard to land and waters elsewhere and to other forms of real estate, whether within or without the zones, the federal executive may, if it sees fit, grant to an individual alien special permission to acquire such, provided that he formally renounces all right of appeal for foreign protection in the enjoyment of property so acquired. So far, applications for such permits have rarely been denied. Foreign companies, even though they happen to be domiciled in Mexico, can no longer take title to real property there.

The freely-admitted purpose of Mexico's recent alienship legislation, in so far as it affects vested interests, is the progressive Mexicanization of all foreign titles to real estate. In the frontier and coast zones, lands and waters now owned by aliens may be conveyed hereafter only to a Mexican; other real estate, regardless of its nature or location, is transferable either to a Mexican, or to a foreigner who obtains a special permit and waives foreign protection in respect of such property. A foreign heir is allowed five years within which to Mexicanize the title to inherited real estate. In certain cases a foreign company must Mexicanize its stock control within the next ten years. A foreigner cannot lawfully use a Mexican company as a cloak to control real estate.

The new alien ownership law and its related regulations were promulgated in the early part of last year. They have been the subject of a copious diplomatic correspondence between Washington and Mexico City. The records show that differences of opinion still exist between the two governments as to the international legality of certain of its provisions and related regulations.[i]

THE OUTLOOK FOR THE FUTURE

Ten years have elapsed since the new Constitution was adopted. Have its radical economic provisions become a dead letter? Clearly they have not. The three men who virtually have administered Mexico's national affairs since 1915 -- Presidents Carranza, Obregon and Calles -- have pursued essentially the same policies. During the two years that President Calles has been in office the nationalistic tendencies of Mexico have been accentuated. The recent laws reviewed above show that in relation to mines, petroleum, agriculture, waters, timber, banking, trade, and aliens, as well as labor and the church, which have not been dealt with here, the cardinal tenets of the revolutionary creed have been given detailed and specific legislative expression. In the administrative execution of these laws President Calles has shown himself both able and determined. There is scant indication from any quarter of a reversion to the old régime. Any general reaction, even if it be eventually inevitable, as many observers believe, is at least years distant.

Those of us who are conservative in temperament, both Mexicans and foreigners, have difficulty in appreciating the depth and breadth of the Mexican upheaval. It is hard for us to become convinced that the revolution was no mere accident but a direct response to long-suppressed new needs and desires, forcing themselves to the surface from every strata of society.

During the half century which preceded the Madero rebellion of 1910 the public policies of Mexico were controlled by three harmoniously working elements: the Mexican landlord, the foreign capitalist, and the Catholic priest. Since 1910 her policies have been directed by successive revolutionary leaders, supported in the main by the native public. The old type of Mexican landlord has been largely eliminated as a result of the agrarian legislation; and the status of the foreign capitalist and the Catholic Church is undergoing a radical transformation.

Nationalism has been defined as the self-consciousness of a nation. The form that the awakening has taken in Mexico is fourfold: popularization of the ballot; centralization of authority; Mexicanization of property; and socialization of economic activities. The new order in Mexico is patriotic as distinguished from cosmopolitan; is characterized by increasing centralism as opposed to sectionalism; is strongly socialistic in tendency; favors labor as against capital; and is markedly democratic when compared with the aristocratic rule of the old Cientificos.

Prior to the revolution the suffrage was an open farce. Since then much has been done toward encouraging a genuine expression of the popular will at the polls. The ballot has become a part, however small, of the national life. The best evidences of this are the acts of turbulence which so frequently attend its exercise.

The rebellion was, in its inception, chiefly a successful revolt against a centralized dictatorship. Since 1917, however, the movement has been toward an increase of the federal power in relation to the authority of the state governments. During the administration of General Calles there has been a marked strengthening also of the presidential authority. This is traceable in part to the vigorous personality of the present incumbent and in part to the national instinct of self-preservation. In this respect Mexico is following the same road as the new democracies in Europe.

Webster's dictionary gives a definition of socialism which seems to the writer to epitomize the economic aspirations now prevailing in Mexican official circles -- "A political and economic theory of social organization, the essential feature of which is governmental control of economic activities, to the end that competition shall give way to coöperation and that the opportunities of life and the rewards of labor shall be equitably apportioned."

The spirit now in control in the Republic is no longer destructive or anarchical, but rather constructive and socialistic. The necessity of building up rather than of tearing down is gaining recognition. Among the civilians it is the skilled laborer whose political influence is in the ascendant. On just what levels a working compromise will finally be reached as between the conflicting claims of capital and labor, of autocracy and democracy, of the federation and the states, and of the native and the foreigner, cannot of course be predicted. Mexican nationalism is still in the experimental stage. All that can be stated with certainty is that the old order is dead and that several more years must elapse before the new order can become fully stabilized.

[i]For more detailed discussion of Mexico's new alienship legislation, see the writer's article published by the Department of Commercial Laws, of the Department of Commerce, Washington, D. C., in the Comparative Law Series for June of last year (C. L. No. 130).

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