The foregoing considerations illustrate the purposes and justification of the laws of payments; and will assuredly facilitate the explanation of the concrete points objected to by the Embassy of the United States. The first objection refers to Article 3 of the law of payments of April 13, 1918, transcribed at the beginning of this memorandum. This article may be divided into two propositions:

I. Agreements to pay in metallic currency, incorporated in skeleton forms or printed documents, called de cájon, have no value, with respect to obligations assumed during the period of fiduciary money circulation, when the debtor may have received paper or bills, even though the document should specify payment in metallic currency.

II. The agreements entered into during the period of fiduciary circulation stipulating only that payment would be made in the money circulating at the termination thereof, are considered by the law as simply productive of the effect of payment in money of legal value, reduced to metallic currency at the rate existing at the time the transaction was closed, in accordance with the equivalence tables established by law.

Before entering upon a defense of these two points, it is expedient to explain the reasons for the law, in order that it may not appear that such important rulings in civil law as those mentioned have been inspired by caprice.

It is known that, with respect to certain contracts, the custom among us is to utilize printed standardized forms or skeleton blanks, which are commonly on sale at small notions stores, and which generally are signed, without being read, by those interested. These standardized forms, based upon wording adopted long before the establishment of the paper money régime, contain, among many other stock clauses, the renouncement of the right to pay in paper money, and contain the obligation to make payments in gold or silver specie. During the paper money period, people could not suppose, and much less foresee, that the fiduciary specie would disappear brusquely and be substituted by gold and silver; and as the laws governing the issuance of paper granted to debtors the right to pay their obligations in this money, even though the agreement may have been gold or silver, and as, furthermore, paper money was of forced acceptance, without discount, for all classes of payments, it can be readily seen that the parties interested, in case they noticed the said clauses, gave them no importance, as they could not imagine the brusque and incredible change which was to take place as regards the circulating medium.

The change took place, and then, obligations initially assumed in paper and deriving their being from the said paper (but made payable in gold and silver by virtue of a clause to which the debtor gave no attention, and the possibility of which did not enter his mind), were suddenly increased to a sum immensely greater than the value thereof. Nothing could be more unjust.

In view of such injustice, the law purposed to interpret the intention of creditors as well as debtors; and in so doing established that, when the debtor actually received paper money, it should not be considered that he obligated himself to pay in something different from that which he received, notwithstanding evidence to the contrary consisting of the fact that he signed a standardized form, for the reason that the facts, the practice, and the customs of the place all agree in that the said forms are generally signed without being seen, read, and even without a superficial knowledge of their contents. The law, therefore, sought justice, ignoring formulae. If a person delivered bills at a given time, the law does not injure him, as it commands that he be given in return an amount in gold equal in value to what he delivered.

The explanation of the second part of Article 3 consists in the necessity of interpreting those clauses in which the interested parties stipulated that in complying with the obligation payment would be made in the money in circulation at a future date. As the interested parties could not foresee the brusque and unexpected disappearance of paper money, it is clear that the employment of the phrase circulating medium must refer to the paper which might be in circulation at the time the obligation was to be paid; and the law, interpreting the purposes the parties had in view, has formulated this definition with a view to avoiding the injustice which would result were he who received paper with a value of one centavo national gold on the peso be forced to repay the same on the basis of one hundred centavos national gold on the peso; that is to say, ten thousand per cent more than he received.

The foregoing explanations make manifest the reasons for the existence of the law, its purposes, and its justification; they prove that the charge made by

the Embassy of the United States that Article 3 of the law of 1918 is unjust is absolutely untenable.

Justice, as regards transactions in which in one form or another money is involved, consists in that the value received by the debtor be equal to the value returned by him to the creditor. This is what the law of payments seeks. The contrary would, precisely, be injustice; as there is no doubt that no honest opinion would sustain that justice consists in that, for example, if a debtor received in specie equivalent to say seventy-five ten-thousandths of a gram of pure gold, he should be obligated to pay a hundred fold; that is, seventy-five onehundredths of a gram of the same metal.

The second charge made by the Embassy of the United States against the legal precepts stated, has reference to the retroactive nature thereof.

Referring to the first part of the precept; that is, to the nullification of the stock clause contained in printed blanks relative to payment in gold or silver of obligations assumed in paper, the charge is, to say the least, surprising, that the legislator of 1918 is guilty of establishing the retroactive principle, in view of the fact that the law of payments, in its Article 3, does not establish any new precept, but simply reproduces and confirms precepts already existing, decreed a long time previously.

In effect, the decree issued at Hermosillo on December 28, 1913, by the First Chief of the Constitutional Army, by virtue of which the interior debt created by decree of April 16, 1913, was increased, states in Articles 3 and 4:

ART. 3. The bills shall be of forced acceptance for the value they represent; therefore, the public offices of the Federation and those of the States, as well as all establishments, companies, and persons, shall be obliged to accept them in payment of amounts owed to them, without any limitation whatever.

ART. 4. The provision of the foregoing article is not subject to renouncement. Consequently, any stipulation to the contrary shall be absolutely null and void, and therefore, Articles 1453 and 2690 of the civil code of the Federal District are annulled.

It is easy to see that Article 4 of the said decree of December 28, 1913, proposed to govern future transactions and declared the nullity of all stipulations in agreements renouncing the right to pay an obligation with paper money and freeing the creditor of the obligation of receiving the same.

In effect, there is no doubt that Article 4 refers to the future, for the reason that in stating that the provisions of the law are not subject to renouncement, it is clear that its intention is to govern transactions to be entered into at a future time, since no law can be renounced prior to its becoming effective.

Then, again, Article 4 annuls agreements wherein a debtor and a creditor might agree to liquidate an obligation contracted during the paper period by means of any tender other than paper, such as an obligation to make payment in gold or silver to the exclusion of paper.

The agreements referred to in Article 3 of the law of payments of 1918 are the same ones declared to be null and void by the decree of December 28, 1913. The law of payments refers to those express agreements to pay in metallic currency and not in paper which appear in printed doc.ments, entered into with reference to obligations assumed during the period of fiduciary circulation. On its part, the law of 1913 refers to express agreements to pay in metallic currency to the exclusion of paper, contained in all classes of documents, and entered into with reference to obligations contracted during the period of fiduciary circulation. As may be seen, the identity is complete between these two laws, but that of 1913 is even more ample than that of 1918, because whereas the former declares the nullity of all classes of agreements, the latter refers only to those entered into by the use of pri..ted blanks or standardized forms. With respect to the charge that the law of 1918 is retroactive in its effects, no further argument is necessary than that, in conformity with the law of 1913, such agreements were already absolutely null and void, so that it is not the law of 1918 which has deprived them of their value. Such agreements were valueless from the moment they were entered into, and the law of 1918 is limited to recognizing a juridical fact consummated in conformity with previous laws.

In order for the law of 1918 to be retroactive, it would be necessary that it refer to agreements valid from the moment they were entered into; but as can clearly be seen, it refers to agreements which from that moment were abso

lutely null and void. The charge, therefore, can only be explained by the circumstance that the Embassy of the United States did not have before it the decree of December 28, 1913.

As regards the second question, relative to obligations which it was agreed would be paid in the currency which might be in circulation, the law is also not retroactive, since such agreements could not, closely analyzed, have for their object payment in any money other than paper, since neither the debtor nor the creditor could renounce the right to liquidate the obligation in such currency, by virtue of the prohibition to make such renouncement contained in the law of 1913 to which I have referred. Circulating money could not at that time refer to anything excepting paper money, since any other definition of the precept would amount to an agreement of renouncement, which would be absolutely null and void.

There is another reason why this second part of Article 3 can not be attacked as retroactive. The purpose of the law is, in effect, simply that of interpretation, and it is well known that laws of this nature are retroactive always without prejudice to anyone, since they do not alter existing juridical conditions: they simply make them clear.

If, therefore, the provisions of Article 3 of the law of payments of April 13, 1918, are obviously just and without retroactive effect, since they do no more than confirm the provisions of previously issued laws, the third charge against the said precept made by the Embassy of the United States is without force, since it can not be said that the law of 1918 deprives creditors of a right which the said creditors have never had.

Let us now examine the arguments of the Embassy of the United States with regard to the second paragraph of Article 9 of the said law of payments of 1918, according to which, as regards obligations assumed prior to April 15, 1913, that is, during the period of metallic circulation, interest which accrued thereon from the month of August, 1913, inclusive, to November 30, 1916, shall be considered as having accrued in paper money and shall be subject to payment in national gold at the equivalent fixed by the respective tables contained in the law.

Following the method employed in the preceding article, it is expedient that this precept be examined in the light of the three concrete arguments brought forward by the Embassy of the United States.

During the existence of the laws relating to paper money, it happened that in cases where the debtor made payment of interests accrued on his indebtedness at the precise moment they became due, the said debtor fulfilled his obligation by making payment of paper money in circulation at par with respect to its face value. If the said debtor for any reason, failed to make payment and the creditor did not wish or could not make collection, there is no reason why, simply because a period of time has transpired, the obligation which, had it been fulfilled at the proper time, would have represented a certain specified value in gold, should represent now, without any further reason than that of delay, a value which might be a hundred times greater. Simple delay is not a reason strong enough to alter profoundly the nature of the obligation and the manner of its fulfilment; and justice dictates that the true value of obligations should be computed on the basis of the exact moment of their assumption and not on the basis of the moment they chance to be fulfilled. Now, the payment of interest charges can not be exacted juridically, and, therefore, the obligation to pay does not exist until the date fixed for interest to become due has expired. Even when an agreement governing interest is made at the same time as the obligation covering the principal, the same does not become due at that same moment, but accrues gradually in proportion as the periods set for the payment thereof expire. Interest accrues, therefore, during the monetary régime existing at the moment the same becomes due; and thus it is that those which became due during the time of paper money are payable in that currency. It is not just, therefore, that payments be made in specie having a value very much greater than that in which they became due.

The charge that the precept in question is retroactive, likewise does not apply. It has been said already that the very essence of paper money is that it is retroactive in character, and that it has been so considered everywhere. In effect the law of December 28, 1913, imitating in this all the laws given out in all parts of the globe with respect to paper money, and reproducing the precept of the law of April 26, 1913, establishes that the bills are of forced circulation at their nominal value, and that everyone is obligated to receive

them in payment of debts. This principle governed throughout the period of paper money, and the law of payments could not ignore it, nor could it prevent the natural results thereof. The law of payments can not be accused of being retroactive, since it does no more than recognize the existence of a Juridical situation created by previous laws establishing paper money. Should any retroactive effects exist, they are to be found in previous laws: That of April 26, 1913, and the one of December 28 of the same year, but not in the law of payments which found a situation already created, and which limited itself to recognizing the same.

As regards the retroactive effects of the laws of 1913, this does not appear to be an appropriate time to discuss the same, since the said laws have never been objected to; but should occasion offer, the true doctrine in their regard could be established.

The foregoing considerations demonstrate that the objections made to the laws of payments have been formulated without a perfect knowledge of the question, which is justifiable due to the fact that they come from a source that, being foreign, could naturally not be expected to have a thorough knowledge of our legislation; nor, perhaps, could it be expected that it should make a profound study of Mexican law. This memorandum has demonstrated, not only the reasons of a public order which the Executive of the Union had in view in issuing the laws of payments, but also the innocence of the said laws with respect to the charges made against them. The precepts of those laws are essentially just, they are not retroactive in their effects, and, therefore, they do not take from anyone that which of right belongs to him.

The foregoing ideas may serve as a basis for the report to be submitted to the Department of Foreign Affairs, as requested.

MEXICO, October 21, 1918.

PROTECTION OF AMERICANS AND AMERICAN INTERESTS'

File No. 312.11/8523

The Consul at Guaymas (Simpich) to the Secretary of State

[Telegram]

GUAYMAS, January 3, 1918, 3 p. m. Referring my December 19, 10 a. m.2 State Government took no action to secure additional troops and yesterday's unspeakable massacre occurred. Women and children were cut to pieces with knives, girls were stripped naked and carried into captivity within an hour's ride from Empalme where hundred or more Americans live and where no garrison at all maintained. No aggressive movement has yet been started against the Indians since plans of campaign were [omission] in August. Absolutely no attempt has been made to follow and punish them. After these raids I urgently recommend that Department refuse absolutely any more passports for Mexican west coast points south of Hermosillo where bearers plan coming in by train. Also recommend again that naval vessel be kept in these waters. Would it not be possible to have Navy modify its orders to its commanders allowing them to land armed force Guaymas or Empalme in case Indians attack and endanger Americans? Last commander in here stated that even should Yaquis attack Empalme he would be unable land account lack authority. Embassy not advised.

See also "Protection of American oil interests," post, p. 687. 'Foreign Relations, 1917, p. 1036.

SIMPICH

File No. 812.00/21613

The Secretary of State to the Chargé in Mexico (Summerlin)

[Telegram]

WASHINGTON, January 4, 1918, 8 p. m.

681. Consul, Guaymas, telegraphs that on January 2 Southern Pacific southbound train was attacked by 800 Yaqui Indians near Empalme, about 36 persons being killed and same number wounded. Following Americans were killed or wounded: Henderson G. Poe, killed; Ralph R. Stoval, probably fatally wounded; Albert Jofferoy, seriously wounded; A. Suarez, believed among unidentified dead.

A telegram just received from Consul reads in substance as follows: State Government took no action to secure additional troops and yesterday's unspeakable massacre occurred. Women and children were cut to pieces with knives, girls were stripped naked and carried into captivity within an hour's ride from Empalme where hundred or more Americans live and where no garrison at all maintained. No aggressive movement has yet been started against the Indians since plans of campaign were announced in August. Absolutely no attempt has been made to follow and punish them.

Immediately acquaint Mexican Government with foregoing and urgently request that prompt steps be taken to suppress Indians in Senora, and at same time call Government's attention to Embassy's previous representations to the effect that Americans in Sonora were in danger of attack by said Indians because of inadequate military protection. Add that this Government expects that energetic action will be taken to cope with the situation, and that adequate and permanent garrisons will be stationed at points of danger to travelers and settlers. Request to be informed of action taken by Mexican Government, and telegraph.

LANSING

File No. 312.11/8525

The Chargé in Mexico (Summerlin) to the Secretary of State

[Telegram]

MEXICO, January 5, 1918, 10 a. m. 671. Department's 660, December 22, 7 p. m.1 Foreign Office informs me that the military commander in the region of Yaqui Valley had been ordered to afford protection to the persons and property of American citizens commensurate with the exigencies of the campaign.

SUMMERLIN

File No. 812.00/21613

The Secretary of State to the Chargé in Mexico (Summerlin)

[Telegram]

WASHINGTON, January 5, 1918, 6 p. m. 685. See Department's 681, January 4, 8 p. m. You might suggest as a solution of the grave Yaqui situation that Mexican Govern

1 Foreign Relations, 1917, p. 1037.