SIR: Your instructions of the 23d instant have been received by this Department, and in conformity thereto I present you herewith, for your consideration, a scale of duties proposed to be collected as a military contribution during the war in the ports of Mexico in possession of our Army or Navy by conquest, with regulations for the ascertainment and collection of such duties, together with the reasons which appear to me to recommend their adoption.
It is clear that we must either adopt our own tariff or that of Mexico, or establish a new system of duties. Our own tariff could not be adopted, because the Mexican exports and imports are so different from our own that different rates of duties are indispensable in order to collect the largest revenue. Thus upon many articles produced in great abundance here duties must be imposed at the lowest rate in order to collect any revenue, whereas many of the same articles are not produced in Mexico, or to a very inconsiderable extent, and would therefore bear there a much higher duty for revenue. A great change is also rendered necessary by the proposed exaction of duties on all imports to any Mexican port in our possession from any other Mexican port occupied by us in the same manner. This measure would largely increase the revenue which we might collect. It is recommended, however, for reasons of obvious safety, that this Mexican coastwise trade should be confined to our own vessels, as well as the interior trade above any port of entry in our possession, but that in all other respects the ports of Mexico held by us should be freely opened at the rate of duties herein recommended to the vessels and commerce of all the world. The ad valorem system of duties adopted by us, although by far the most just and equitable, yet requires an appraisement to ascertain the actual value of every article. This demands great mercantile skill, knowledge, and experience, and therefore, for the want of skillful appraisers (a class of officers wholly unknown in Mexico), could not at once be put into successful operation there. If also, as proposed, these duties are to be ascertained and collected as a military contribution through the officers of our Army and Navy, those brave men would more easily perform almost any other duty than that of estimating the value of every description of goods, wares, and merchandise.
The system of specific duties already prevails in Mexico, and may be put by us into immediate operation; and if, as conceded, specific duties should be more burdensome upon the people of Mexico, the more onerous the operation of these duties upon them the sooner it is likely that they will force their military rulers to agree to a peace. It is certain that a mild and forbearing system of warfare, collecting no duties in their ports in our possession on the Gulf and levying no contributions, whilst our armies purchase supplies from them at high prices, by rendering the war a benefit to the people of Mexico rather than an injury has not hastened the conclusion of a peace. It may be, however, that specific duties, onerous as they are, and heavy contributions, accompanied by a vigorous prosecution of the war, may more speedily insure that peace which we have failed to obtain from magnanimous forbearance, from brilliant victories, or from proffered negotiation. The duties, however, whilst they may be specific, and therefore more onerous than ad valorem duties, should not be so high as to defeat revenue.
It is impossible to adopt as a basis the tariff of Mexico, because the duties are extravagantly high, defeating importation, commerce, and revenue and producing innumerable frauds and smuggling. There are also sixty articles the importation of which into Mexico is strictly prohibited by their tariff, embracing most of the necessaries of life and far the greater portion of our products and fabrics.
Among the sixty prohibited articles are sugar, rice, cotton, boots and half-boots, coffee, nails of all kinds, leather of most kinds, flour, cotton yarn and thread, soap of all kinds, common earthenware, lard, molasses, timber of all kinds, saddles of all kinds, coarse woolen cloth, cloths for cloaks, ready-made clothing of all kinds, salt, tobacco of all kinds, cotton goods or textures, chiefly such as are made by ourselves; pork, fresh or salted, smoked or corned; woolen or cotton blankets or counterpanes, shoes and slippers, wheat and grain of all kinds. Such is a list of but part of the articles whose importation is prohibited by the Mexican tariff. These prohibitions should not be permitted to continue, because they exclude most of our products and fabrics and prevent the collection of revenue. We turn from the prohibitions to the actual duties imposed by Mexico. The duties are specific throughout, and almost universally by weight, irrespective of value; are generally protective or exorbitant, and without any discrimination for revenue. The duties proposed to be substituted are moderate when compared with those imposed by Mexico, being generally reduced to a standard more than one-half below the Mexican duties. The duties are also based upon a discrimination throughout for revenue, and, keeping in view the customs and habits of the people of Mexico, so different from our own, are fixed in each case at that rate which it is believed will produce in the Mexican ports the largest amount of revenue.
In order to realize from this system the largest amount of revenue, it would be necessary that our Army and Navy should seize every important port or place upon the Gulf of Mexico or California, or on the Pacific, and open the way through the interior for the free transit of exports and imports, and especially that the interior passage through the Mexican isthmus should be secured from ocean to ocean, for the benefit of our commerce and that of all the world. This measure, whilst it would greatly increase our revenue from these duties and facilitate communication between our forces upon the eastern and western coasts of Mexico, would probably lead at the conclusion of a peace to results of incalculable importance to our own commerce and to that of all the world.
In the meantime the Mexican Government monopoly in tobacco, from which a considerable revenue is realized by Mexico, together with the culture there which yields that revenue, should be abolished, so as to diminish the resources of that Government and augment our own by collecting the duty upon all the imported tobacco. The Mexican interior transit duties should also be abolished, and also their internal Government duty on coin and bullion. The prohibition of exports and the duties upon exports should be annulled, and especially the heavy export duty on coin and bullion, so as to cheapen and facilitate the purchase of imports and permit the precious metals, untaxed, to flow out freely from Mexico into general circulation. Quicksilver and machinery for working the mines of precious metals in Mexico, for the same reasons, should also be admitted duty free, which, with the measures above indicated, would largely increase the production and circulation of the precious metals, improve our own commerce and industry and that of all neutral powers.
In thus opening the ports of Mexico to the commerce of the world you will present to all nations with whom we are at peace the best evidence of your desire to maintain with them our friendly relations, to render the war to them productive of as little injury as possible, and even to advance their interests, so far as it safely can be done, by affording to them in common with ourselves the advantages of a liberal commerce with Mexico. To extend this commerce, you will have unsealed the ports of Mexico, repealed their interior transit duties, which obstruct the passage of merchandise to and from the coast; you will have annulled the Government duty on coin and bullion and abolished the heavy export duties on the precious metals, so as to permit them to flow out freely for the benefit of mankind; you will have expunged the long list of their prohibited articles and reduced more than one-half their duties on imports, whilst the freest scope would be left for the mining of the precious metals. These are great advantages which would be secured to friendly nations, especially when compared with the exclusion of their commerce by rigorous blockades. It is true, the duties collected from these imports would be for the benefit of our own Government, but it is equally true that the expenses of the war, which Mexico insists upon prosecuting, are borne exclusively by ourselves, and not by foreign nations. It can not be doubted but that all neutral nations will see in the adoption of such a course by you a manifestation of your good will toward them and a strong desire to advance those just and humane principles which make it the duty of belligerents, as we have always contended, to render the war in which they are engaged as little injurious as practicable to neutral powers.
These duties would not be imposed upon any imports into our own country, but only upon imports into Mexico, and the tax would fall upon the people of Mexico in the enhancement to them of the prices of these imports. Nearly all our own products are excluded by the Mexican tariff even in time of peace; they are excluded also during the war so far as we continue the system of blockading any of the ports of Mexico; and they are also excluded even from the ports not blockaded in possession of Mexico; whereas the new system would soon open to our commerce all the ports of Mexico as they shall fall into our military possession. Neither our own nor foreign merchants are required to send any goods to Mexico, and if they do so voluntarily it will be because they can make a profit upon the importation there, and therefore they will have no right to complain of the duties levied in the ports of Mexico upon the consumers of those goods—the people of Mexico. The whole money collected would inure to the benefit of our own Government and people, to sustain the war and to prevent to that extent new loans and increased taxation. Indeed, in view of the fact that the Government is thrown upon the ordinary revenues for peace, with no other additional resources but loans to carry on the war, the income to be derived from the new system, which it is believed will be large if these suggestions are adopted, would be highly important to sustain the credit of the Government, to prevent the embarrassment of the Treasury, and to save the country from such ruinous sacrifices as occurred during the last war, including the inevitable legacy to posterity of a large public debt and onerous taxation. The new system would not only arrest the expensive transfer and ruinous drain of specie to Mexico, but would cause it, in duties and in return for our exports, to reflow into our country to an amount, perhaps, soon exceeding the $9,000,000 which it had reached in 1835 even under the restrictive laws of Mexico, thus relieving our own people from a grievous tax and imposing it where it should fall, upon our enemies, the people of Mexico, as a contribution levied upon them to conquer a peace as well as to defray the expenses of the war; whereas by admitting our exports freely, without duty, into the Mexican ports which we may occupy from time to time, and affording those goods, including the necessaries of life, at less than one-half the prices which they had heretofore paid for them, the war might in time become a benefit instead of a burden to the people of Mexico, and they would therefore be unwilling to terminate the contest. It is hoped also that Mexico, after a peace, will never renew her present prohibitory and protective system, so nearly resembling that of ancient China or Japan, but that, liberalized, enlightened, and regenerated by the contact and intercourse with our people and those of other civilized nations, she will continue the far more moderate system of duties resembling that prescribed by these regulations.
In the meantime it is not just that Mexico, by her obstinate persistence in this contest, should compel us to overthrow our own financial policy and arrest this great nation in her high and prosperous career. To reimpose high duties would be alike injurious to ourselves and to all neutral powers, and, unless demanded by a stern necessity, ungenerous to those enlightened nations which have adopted cotemporaneously with us a more liberal commercial policy. The system you now propose of imposing the burden as far as practicable upon our enemies, the people of Mexico, and not upon ourselves or upon friendly nations, appears to be most just in itself, and is further recommended as the only policy which is likely to hasten the conclusion of a just and honorable peace.