you on the 14th instant by the Secretary of the Treasury, wherein it is stated that the amount in question was collected in pursuance of sections 4219 and 4225 of the Revised Statutes of the United States, cited in my aforesaid note, and not because the vessel had failed to present the proper papers on her arrival, for which reason that officer thinks that there is not sufficient ground for exempting the Monserrat from the payment of that duty, or for refunding the same.

The International Company of Mexico, which is the owner of the steamer Monserrat, paid the money under protest, thinking that the lack of entrance papers was the only ground for the imposition of that duty, and that said duty was collected provisionally pending the furnishing of evidence by the company that the Monserrat was a Mexican vessel, by means of a document having the same force as the register. It now appears, however, that the duty was collected simply because the vessel did not belong in the United States. If such was the reason for the collection of that duty, it seems as if it ought to be collected on all Mexican vessels and those of other nations, provided that rights acquired by law or by treaties with the United States are not thereby violated.

As regards Mexican vessels, I think it proper to state that, in my opinion, section 14 of the shipping act of June 26, 1884, was violated by the collection of the duty of $1 per ton. Section 14 of that act limits the tonnage duty on all vessels entering any port of the United States from a foreign port to a maximum of 6 cents per ton at each entry, and to another annual maximum of 30 cents per ton.

The collection of $1 per ton from the Monserrat at San Diego appears to be in contravention of the provisions of section 14 of the act of June 26, 1884, if such collection was made solely because that vessel did not belong in the United States; and the power of the Secretary of the Treasury to return the amount of that duty appears to be clearly estab lished by section 26 of the same act, inasmuch as it was a charge that was improperly imposed, and by section 30124 of the Revised Statutes of the United States, inasmuch as the duty was paid under protest.

It is to be hoped that Mexican vessels entering United States ports may not be compelled to pay the excessive charge of $1 per ton which is expressly prohibited, in the case of foreign vessels, by the act of June 26, 1884, and I trust that when the Treasury Department reconsiders this case it will be found that the duty in question was collected in contravention of a law of the United States.

Be pleased to accept, etc.

No. 852.

M. ROMERO.

Mr. Bayard to Mr. Romero.

DEPARTMENT OF STATE, Washington, February 10, 1888. SIR: I have the honor to transmit, for your information, in connection with my note of the 3d ultimo, the inclosed copy of a letter from the governor of Texas, dated the 3d instant, covering a report by Mr. J. M. Dean, district attorney for the thirty-fourth judicial district of Texas, in regard to the complaint of the Mexican Government of the injurious effects to the inhabitants of Paso del Norte from a certain

sewerage drain or pipe constructed on the American side of the Rio Grande at El Paso, Texas. The conclusions of the report, after a full examination of the subject, are that it is difficult to see how the health, comfort, enjoyment or convenience can be directly or remotely affected by the drain-pipe in question.

Accept, etc.

[Inclosure 1.]

Mr. Ross to Mr. Bayard.

T. F. BAYARD.

EXECUTIVE OFFICE,

Austin, February 3, 1888.

SIR: In reference to your communication of January 3, which inclosed a communication from the Mexican minister at Washington, complaining of the effect a certain sewerage drain or pipe constructed on the American side of the Rio Grande was having on the inhabitants of the Mexican side, I have the honor to state that on the 8th of January I directed the Hon. J. M. Dean, the district attorney of the thirty-fourth judicial district, to make a thorough examination of the whole matter and report thereon. This report I inclose for your consideration, and am, etc.,

S. S. Ross.

[Inclosure 2.1

Mr. Dean to Mr. Ross.

MARFA, TEXAS, January 30, 1888.

SIR: In accordance with your communication of the 8th instant I have made a thorough examination and investigation of the matters complained of in the annexed communication of Señor M. Romero directed to Hon. Thomas F. Bayard. The following I most respectfully submit as the facts in the matter:

(1) The Rio Grande at El Paso, Texas, flows in an easterly direction.

(2) The city of Paso del Norte, Mexico, is on the south side of said river, and El Paso, Texas, on the north side of same, nearly if not quite opposite Paso del Norte. (3) All the water used by the citizens of Paso del Norte and vicinity, in Mexico, for any purpose whatever, is taken from what is known as the "Acequia Madre." Said Acequia taps the Rio Grande above or west of Paso del Norte about 14 miles, and about the same distance west or up the river from El Paso, Texas.

(4) The drain-pipe complained of has been constructed by the municipal authorities of El Paso, Texas, and is about 12 inches in diameter, is wholly on the north or American side of the Rio Grande, and empties into said river at a point on the same about 2 miles east or down the river from the point where said river is tapped by the "Acequia Madre" of Paso del Norte.

(5) Except Paso del Norte and its adjacent orchards, farms, and inhabitants, all of whom, as before stated, use water from Acequia Madre, the territory along the Rio Grande on the south side is wholly uninhabited for a distance of about 20 miles east of the point where said drain or sewer pipe empties into said river.

(6) That said drain-pipe crosses no territory belonging to the Republic of Mexico. (7) The Rio Grande at the point where said drain-pipe empties into it, and for many miles east thereof, is exceedingly muddy whereby it is considered by experts to be impossible for the discharge of sewage from said pipe to injuriously affect the waters of said river for a greater distance than 2 miles.

(8) From the nature of the river bank on the south side of the Rio Grande it would be almost an impossibility to take out a ditch or acequia to be used in Mexico any nearer the drain-pipe on the east or down the river from said pipe than 10 miles.

(9) The waters of the Rio Grande are rarely, if ever, used unless first taken therefrom in acequias, as it is by Paso del Norte.

(10) That all of the inhabitants who reside near the Rio Grande for a distance of 20 miles east or down the river from said drain-pipe are on the north side of said river and are inhabitants of the United States of America.

The above being the facts of the case, it is difficult to see how the health, comfort, enjoyment, or convenience of any citizen of the Republic of Mexico is to be in any way directly or remotely affected by said drain-pipe. Were the facts reversed and the drain-pipe up the river or west of the mouth of the Acequia Madre, then there might be some apparent cause for complaint.

H. Ex. 1, pt. 1——80

The above conclusions of my own I find upon investigation to be also the opinions held by various prominent citizens of Paso del Norte, Mexico, and notably of exGovernor Samaniego, of Chihuahua, now residing in Paso del Norte, Mexico.

Hoping that my investigation and report of this matter is adequate to the needs of your excellency,

I am, etc.,

LEGATION OF MEXICO,

Washington, February 10, 1888. (Received February 10.)

Mr. SECRETARY: I have observed, both in the correspondence of the representatives of the United States in Mexico, which has been published by their Government, and in statements made by prominent persons in this country, expressions and opinions respecting the free zone which exists in the portion of Mexico bordering on the United States which I consider wholly unfounded; it has consequently seemed proper to me, from a due regard to the good understanding and harmony between our two countries, to offer some explanations, whereby I trust that the erroneous impressions that now prevail on this subject will be rectified.

I think I do not hazard much in saying that in both official circles in the United States and outside of those circles it is believed that the free zone was established in Mexico as an act of antagonism, if not of hos tility, to the United States, and mainly, if not solely, for the purpose of encouraging smuggling, to the prejudice of the fiscal interest of this country. It will not be difficult to show how unfounded these opinions

are.

When, in pursuance of the treaty of February 2,1848, the Rio Grande from El Paso del Norte to the point where it flows into the sea was ac cepted as the boundary line between Mexico and the United States, and when American settlements began to be made on the left bank of that river, two peoples were brought into contact with each other whose economical and commercial conditions offered a striking contrast. In the United States no taxes were levied upon internal trade, and it was not otherwise restricted. The import duties on foreign goods were at tuat time relatively low, and the country was just entering upon an unexampled career of progress, while in Mexico, which had inherited the Spanish system of taxation, taxes were levied which largely increased the cost of domestic goods; the collection of these taxes rendered internal custom-houses necessary, and the restrictions placed upon trade were numberless; import duties on foreign goods were so high as to be prohibitory; in addition to this, the importation of various kinds of goods was prohibited, among them some of prime necessity, such as provisions.

The result of this state of things was that while in. Brownsville, and other towns on the left bank of the Rio Grande, domestic articles of daily use, such as provisions, clothing, etc., were sold at a comparatively low price, in the Mexican towns on the right bank they cost twice and even four times as much, and that foreign goods also were much cheaper on the one than on the other side of the river.

This difference of circumstances necessarily brought about one of these two results: It either caused the inhabitants of the Mexican towns to emigrate to those of the United States in order to enjoy the advantages which were to be had in that country, or it induced them to purchase the goods which they needed in the United States and then to smuggle them over to the Mexican side.

In 1849, that is to say in the year following that in which the new boundary line was adopted, the situation on the Mexican frontier became so disquieting, that the Federal Congress was obliged to pass a law, on the 14th of April, which may be considered as the first step toward the establishment of the free zone. This law authorized, for a term of three years, the importation through the frontier custom-houses of the State of Tamaulipas of such provisions as were for the use of the people of the frontier, which goods, up to that time, had been prohibited by the existing tariff or had been subject to very heavy duties.

This law did not meet the exigencies of the situation; and in 1858 the free zone was established by the governor of Tamaulipas as an absolute necessity of the State.

On the 5th of February, 1857, the constitution was adopted which is now in force in Mexico, and which went into operation on the 16th of September following. On the 1st of September, Don Ignacio Comonfort, the constitutional President was inaugurated, and unfortunately a pronunciamiento was issued by him on the 17th of the same month against the constitution; he also dissolved the Federal Congress. which was then in session. For this reason several Mexican States, especially such as were at a distance from the center, reassumed their sovereignty, and their legislatures granted extraordinary powers to the governors, in order to enable those officers to protect their institutions. In virtue of these powers the governor of the State of Tamaulipas issued, on the 17th of March, 1858, a decree which was designed to afford a remedy for the hardships that were then suffered by the frontier population of that State. This decree established what has since that time been known as the free zone, in which foreign goods intended for the use of the frontier towns of the State and of the ranches in their jurisdiction, or for trade between those towns, were to be exempt from all Federal duties, but not from municipal or State taxes; an unlimited right of bonding being, moreover, granted to those towns. Thus it was that foreign goods imported there could remain stored indefinitely without paying any duties to the Federal treasury. The said goods paid no import duties except when they were removed from those towns to be shipped to the interior of Mexico.

Nothing could furnish a better explanation of the true object of the decree issued by the governor of Tamaulipas, if there were room for any well-founded doubt with regard to it, than the grounds on which he based his action, which were as follows:

Whereas the towns on our northern frontier are in a state of actual decadence owing to the want of laws to protect their trade; and whereas, being situated in close proximity to a commercial nation which enjoys free trade, they need similar advantage, in order to avoid losing their population, which is constantly emigrating to the neighboring country: Now, therefore, desiring to arrest this serious evil by means of franchises which have so long been demanded by the frontier trade

The decree of the governor of Tamaulipas of March 17, 1858, was submitted to the legislature of the State and also to the Federal Congress for their approval, and it was approved by the latter body July 30, 1861. This brief statement will, I think, be sufficient to show that the estab lishment of the free zone was a step taken in fulfillment of the duty of

self-preservation, so to speak, and that it was by no means a measure adopted in a spirit of unfriendliness, much less of hostility, toward the United States, as has been believed in this country.

The second impression which prevails here with regard to the free zone is equally unfounded.

The events connected with the foreign intervention did not permit the effects of the free zone to be felt in Mexico until the Republic returned to its normal condition, as it did when peace was restored.

In the report made by the Secretary of the Treasury to the Congress of the United States September 16, 1869, that officer stated that one of the causes of the then depleted condition of the Mexican treasury was the large contraband trade that was carried on through the free zone enjoyed by the frontier towns of Tamaulipas. The Secretary remarked at the same time that the custom-houses of those towns were scarcely able to meet their expenses, which showed that that region had not prospered, notwithstanding the franchises granted to it by the free zone, and that the said zone was not the proper remedy for the evil which it was intended to cure.

It is true that the privilege granted by the free zone to the inhab itants of the northern portion of Tamaulipas to import foreign goods without paying import duties, to store them in their own houses, and to keep them in bond for an unlimited time was, and has been, a powerful incentive to smuggling, with a view to repressing which recourse has been had in Mexico to a costly and complicated system of inspec tion. Protection to smuggling was not, however, the object had in view by the creators of the free zone, nor has it been possible for smuggling to be carried on to the prejudice of the United States to the same extent to which this has been done to the prejudice of Mexico.

Inasmuch as the duties levied by the Mexican tariff are much higher than those of the United States, it is evident that the most lucrativo contraband trade is that which is carried on to the detriment of the Mexican treasury. That trade is, at the same time, carried on with less difficulty, because the Mexican frontier is very sparsely populated, in consequence of which the difficulty of guarding it is greatly increased, while the frontier of the United States is more thickly settled and better defended against smuggling.

It does not seem to me conceivable that, in order to encourage smuggling, to the detriment of the United States Treasury, which might be counted as one, smuggling could be encouraged to the detriment of the Mexican treasury, which might be counted as ten (i. e., in order to injure the United States the Mexicans would not be willing to injure themselves ten times as much); and if the smuggling which is carried on through the free zone were a sufficient reason for the abolition of the latter, the interest of Mexico in this matter would long since have settled this question.

There is another consideration to which I think proper to call your attention before concluding this note, and which, in my judgment, may be regarded as an advantage to the United States accruing from the free zone. As I have already stated, the Mexican system of legislation concerning customs and excise duties has generally been restrictive and even prohibitory, both by reason of the high import duties established in my country and of the existence of interior custom-houses; also on account of State and municipal taxes, which necessitate vigilance and restrictions that can not do otherwise than hamper business transactions. I have frequently seen complaints on this account in official documents of this Government, and I confess that some of them have