The New Mexico 



19 



financial condition of the country, both 

 official and private. When he assumed 

 •control, the financial condition could 

 hardly have been more desperate. The 

 revenues of the government since the 

 re-establishment of the Republic had al- 

 most constantly shown a deficit. The 

 public creditors, domestic and foreign, 

 were unsatisfied. For many years the 

 interest on the foreign debt had been 

 defaulted ; its bonds had no value at 

 home or abroad, and were not quoted 

 in the money markets of a single city 

 of the world. There were a few private 

 banks in the capital, but no banking 

 system existed in the Republic. As a 

 consequence, and because of the risks of 

 communication, exchange between the 

 different cities of the country was very 

 high, standing at 5 to 8 and sometimes 

 10 per cent. Although the revenues 

 barely reached $20,000,000 annually, it 

 was very difficult to collect the taxes on 

 account of the sluggish condition of 

 commerce and industries. 



The rigid enforcement of peace and 

 security by General Diaz soon began to 

 bear fruit in a marked improvement in 

 financial affairs. The government early 

 felt its effects in, first, a gradual, and 

 finally, a rapid increase in its revenues. 

 I do not propose to confound my hear- 

 ers with long tables of figures which are 

 the usual accompaniments of the discus- 

 sion of financial and commercial ques- 

 tions. It will be sufficient to state that 

 the revenues, which before had been 

 barely $20,000,000 annually, soon dou- 

 bled, then trebled, and within ten years 

 had increased more than sixfold, reach- 

 ing as high as $140,000,000. 



This marvelous increase had its nat- 

 ural effect upon the policy of the gov- 

 ernment. First, it enabled it to extend 

 its aid toward greatly needed public 

 improvements. It not only granted 

 concessions to an extensive system of 

 railroads, but it also contracted to pay 

 the different companies liberal subsidies, 

 without which it would have been im- 



possible for most of them to be built. 

 It also entered upon an expensive sys- 

 tem of harbor improvements at Vera 

 Cruz, Tampico, and other ports in en- 

 couragement of commerce. It made 

 the long- needed drainage of the Valley 

 of Mexico a success. Every depart- 

 ment of administration felt its whole- 

 some effects — the post-office and tele- 

 gaph service, government buildings, the 

 schools, the army, and the navy. 



REDUCTION OF TAXATION 



This increase in the revenue also en- 

 abled the government to take another 

 important step, to wit, the adoption of 

 a complete revision of the system of tax- 

 ation. Heretofore it had been the prac- 

 tice of the government to rely upon the 

 import and export duties for the greater 

 portion of its revenues. A new tariff 

 was adopted which, while it preserved 

 the protective system, was much less 

 burdensome to foreign commerce, and 

 abolished almost all the export duties on 

 Mexican products shipped abroad. A 

 system of internal taxation was adopted 

 which made the levies much more equal 

 in their effects, but the general result 

 .was a large reduction in taxation. 



This era of financial prosperity put it 

 into the power of the President to re- 

 move a grievous burden upon commerce 

 which had long been the dream of pro- 

 gressive Mexican rulers, the abolition of 

 the "alcabalas," a system of taxation 

 whereby duties were collected on pro- 

 ducts and merchandise passing from one 

 state to another. It had been declared 

 abolished by the liberal constitution of 

 1857, but the poverty of the state treas- 

 uries had heretofore made it impossible 

 of realization. The abounding pros- 

 perity of the Diaz regime had extended 

 to all the states, and in 1896 the " alca- 

 balas ' ' ceased to exist ; and with them 

 has disappeared another mediaeval reve- 

 nue annoyance, the "octroi" taxes, 

 collected at the city gates on all articles 



