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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) 13.89; 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.

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

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Judiciary.

TABLE II

RECEIPTS

Pesos 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:

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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

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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

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Rental and exploitation of the real estate of the federation

Miscellaneous revenues...

Total of Probable Revenues..

12,000,000.00

500,000.00

400,000.00

5,000,000.00

4,000,000.00

10,000.00

10,000.00

100,000.00

100,000.00

769,000.00

167,008,500.00

Owing to the large increase of exports and general business revival due to the post-war boom, the actual receipts of the government for the fiscal year 1920 came to 251,417,393 pesos, instead of the 167,008,500 provided for in the budget, or an excess of 84,408,893 pesos over the estimated income. Actual expenditures during the same year were 212,899,886 pesos.

*The Federal Tax is a sur-tax of 50 per cent on all taxes collected by States, Territories, Federal District and Municipalities as prescribed in the law of June 1, 1906.

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