The following table gives the Mexican estimate of the new tax rate on the various petroleum products:

When the government refused to repeal the new rates, the companies prepared to stop the export of oil. On July 1, the day the decree became effective, most of the American tankers were withdrawn from the Mexican service, leaving the industry in a paralyzed condition, except as the Aguila Company and other Dutch-Shell interests for a time refused to follow the American lead, and increased rather than diminished their shipments. Even so, the following table shows how seriously the new tax affected the industry:

Exports-Barrels

June
July

.17,591,972
6,357,000

Both the Mexican government and the oil companies were so injured by this reduction of exports that after a deadlock lasting nearly two months, negotiations were begun to secure a resumption of shipments. The detailed results of the agreement finally arrived at have not as yet been made public; but it is known that the tax was somewhat reduced and that the companies resumed activities in September.* The month's output was 16,544,694 barrels.

Shortly after the tax controversy was adjusted, a decision of the Mexican Supreme Court, rendered in an amparo suit brought by the Texas Company, declared that the provisions of Article 27 of the Querétaro Constitution, under which Carranza had attempted to nationalize the oil lands, could not be given a retroactive interpretation. This decision was generally taken by the press in the United States to mean the final settlement of the long controversy over the nationalization program, but more recent expressions from the Department of State indicate that the decision was not sufficient to close the issue. Until this question is definitely set at rest, the petroleum industry in Mexico will not find a satisfactory or an assured foundation.

According to published, but unofficial statements, the tax under the compromise was fixed at 17 cents per bbl, on fuel oil and 20 cents on crude.

SECTION VI-PUBLIC FINANCES, CURRENCY

AND BANKING

THE FEDERAL BUDGET

Prior to the prosperous era of the Diaz régime, the national finances of Mexico were in a state of chronic confusion; but under the skillful control of José Limantour, Secretary of Hacienda for many years, the federal budget was placed upon a sound basis and the national credit brought for the first time to a position where it commanded respect and confidence.

Until Madero's time the government revenue came chiefly from mining taxes, export duties, tariffs on imports, a variety of stamp taxes, a sur-charge of 20 per cent on the taxes laid by the states, and from special taxes paid by the territories and the Federal District directly into the national treasury.

During the year 1907-8, to cite a typical illustration of the budget items under Limantour, appropriations for the various Departments were made on the following percentage basis:

Legislative 1.3; Executive 0.3; Judiciary 0.68; Foreign Relations 2.00; Interior (various branches) 13.99; Justice 1.55; Public Instruction 6.36; Fomento, Colonization and Industry 2.13; Communications and Public Works 15.61; Finance and Public Credit 37.33; War and Marine 18.84.

The following table shows the revenues and expenditures for the decade from 1901 to 1911. The figures given are in pesos and rounded.

Table II gives the chief sources of the government's revenue for the fiscal year 1909-10 and the principal expenditures:

Judiciary..

.46,567,000

501,000

1,098,000

1,107,000

11,685,000

4,660,000

2,167,000

4,709,000

.33,246,000

DISBURSEMENTS

Pesos 1,395,000 243,000

589,000

2,148,000

1,002,000

515,000

1,789,000

8,543,000

380,000

1,547,000

6,605,000

2,656,000

13,339,460

.25,100,000

Department of Foreign Relations.

Department of the Interior

Administrative Expenses.

Public Health..

Rural Police.

Federal District.

Federal Territories.

Department of Justice..

Department of Public Instruction.

Department of Fomento, Colonization and Industry.

Department of Communications and Public Works
Department of Finance and Public Credit

Department of War and Marine...

.19,180,100

Following Madero's ascendency, financial conditions again became as normally chaotic as they had been before Diaz came into power. The treasury was drained of its funds to meet the extraordinary demands of the various revolutionary governments, and because these demands had little to do with the nation's welfare, legitimate needs of the government suffered acutely.

During a large part of the Carranza régime the government's revenue was greater than it had ever been before. However, despite this condition, expenditures for education and public works were curtailed, the National Railways were allowed to deteriorate from year to year, and interest on the public debt was wholly suspended. An increase of revenue was accomplished by raising the export duties on such important products as minerals, henequen, and chicle; by increasing the sur-charge on state taxes. to 60 per cent; by laying a new mining tax; and especially by resorting to a lucrative export duty upon petroleum. The large increase in Mexico's foreign trade, both exports and imports, brought about by the world war, coupled with Carranza's heavier imposts, materially aided this fiscal program.

It is to be regretted that the statistics of Mexican public. finance since Madero's overthrow are fragmentary and unreliable. Since Carranza's inauguration, the Federal Budget has been fixed by presidential decree. For the year 1918 the estimated receipts and expenditures were as follows:

INTERIOR TAXES IMPOSED ONLY IN THE FEDERAL DISTRICT AND TERRITORIES

Package Taxes in Lower California; Tax, 6 per 1000 on metallurgical establishments

10,000.00 p. 10,000.00

p. 103,420,000.00

Additional taxes of one peso “infalsificable”

paper, as per decree of May 29, 1917... . p. 43,000,000.00 p. 43,000,000.00