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It having been made clear in the discussions between the Finance Minister and the International Committee of Bankers on Mexico:

(a) That the external obligations of the Mexican Government held by foreign investors approximate, together with the National Railways debt, and certain internal loans shown on the list attached, the sum of 1,000,000,000 pesos;

(b) That upon such sum, interest accumulated and unpaid since 1913 approximates the sum of 400,000,000 pesos;

(c) That although, owing to successive revolutions since 1913, Mexico has as yet not regained her full economic stability, yet the present Government of Mexico declares its determinations to meet faithfully and promptly its financial obligations to the utmost extent of its capacity;

(d) That the International Committee, recognizing the difficulties with which Mexico has had to contend and the limitations upon her capacity for the immediate payment of all her obligations, due or overdue, and earnestly desiring to find means of safeguarding the interests of the bondholders, and at the same time of co-operating with the Mexican Government in the solution of its problems and in the upbuilding of its credit, is prepared to this end to recommend to the holders of Mexican Government obligations certain substantial diminutions and adjustments of their rights;

(e) That they also recognize that the Mexican Government has other obligations which it is important for it to meet, such as the restitution to the banks of the specie fund, the agrarian debt and arrears of pay, which may have to be cared for by the issue of internal bonds or in other manner later to be considered;

(f) That, as to the minimum sums to be set aside by the Mexican Government for the service of its debt for the year 1923, and for the succeeding four years, the International Committee, after examination of the situation, believes that, under prudent and economical management of its affairs by the Mexican Government, the providing of such sums and the carrying out of this plan is within the capacity of Mexico, taking into account the improvement which should result from the settlement of the debt question and the declared intention of the Government to maintain a sound administration: and the fact that the plan itself, if adopted, may readily result in greatly improving the economic situation of Mexico;

(g) That the interests of the people and Government of Mexico, on the one hand, and of their external creditors, upon the other, being identical in that, for the benefit of both, the increasing prosperity of Mexico must be assured, therefore, the individuals now composing the International Committee give assurance of their continued interest and desire for helpful co-operations;

Therefore, in accordance with the foregoing, the following plan for the adjustment of the external obligations of the Mexican Government and of the National Railway System and of certain internal obligations appearing on the schedule annexed has been agreed to by the Mexican Minister of Finance and by the International Committee, which will do its utmost to arrange for its acceptance by the holders of the obligations listed in the schedule annexed.

* The importance of this agreement has been emphasized in the Historical Summary, 1921-4. Its special purpose was to provide a practical method of enabling Mexico (a) to resume interest payments on her national bonds, suspended in 1913; and (b) to restore the railroads seized by the government, but never paid for. to private ownership. The principal fund to accomplish these objects was to be supplied by the export tax on petroleum.

Up to the present time Mexico in part has lived up to the terms of this agreement; but at this writing (May 15, 1924), it is reported that the new Secretary of the Treasury, Alberto J. Pani, is about to cancel the agreement and devote the funds previously set aside to meet the interest on the national debt to other purposes. It is earnestly to be hoped, for the sake of Mexico's future credit, that this report is not true.


The payment in cash of all interest due and payable on or before January 2, 1923, on both the government and the railway obligations, is to be waived by the bondholders.

The payment of interest upon all arrears of interest due and payable on or before January 2, 1923, on both the government and railway obligations is to be waived by the bondholders.

The coupons for interest attached to the bonds are to be detached (if permitted by the various mortgages and indentures) and deposited with some trustee satisfactory to the International Committee who will issue receipts or certificates to the bondholders for the face amount of coupons so detached. The government will set aside annually, beginning on January 1, 1928, substantially equal annual sums sufficient to retire at par in proportionate annuities all said receipts or certificates within a period of forty years ending January 1, 1968. The annual amounts to be paid by the Mexican Government shall be paid by it through the financial agency of the Mexican Government in New York to the agencies that the Committee may designate and the Committee will determine the method of retirement. If for any reason the coupons cannot be detached from the bonds, some other plan for effecting the above arrangement satisfactory to the Committee shall be adopted. If there are any bonds to which coupons representing any back interest have never been attached the Mexican Government will supply such coupons for the purposes of these bonds so that the bondholders may be able to deposit them.


All sinking funds to be postponed for a period not to exceed five years, from January 1, 1923.


All Government notes which have matured or are about to mature will be extended for a reasonable length of time. [The maturity of the railway notes was extended to January 1, 1933.]


Payment of current interest to be resumed as follows:

(a) The Government will provide and set aside a fund which, for the first year, shall amount to 30,000,000 gold pesos present standard and shall be increased each year for a period of four years by not less than 5,000,000 pesos, so that the payment of the fifth year shall be at least 50,000,000 pesos. (See addendum, Exhibit B.)

(b) If, during the five-year period, the funds provided for do not in any one year reach the guaranteed minimum amount, the Mexican Government will provide out of its other sources of revenue a sum sufficient to bring the amounts up to the guaranteed minimum and at such time and in such amounts as are required to meet current interest payments according to the schedule to be submitted to the Ministry by the Committee.

(c) The entire oil export taxes (which the decree of June 7, 1921, provides for) and any increases thereof and the tax of 10 per cent on the gross railway revenues hereafter provided for and the net operating railway revenues, if any, shall be paid as collected, in a manner to be agreed on with the International Committee, which will make arrangements for distribution of the sums so received among the holders of the obligations listed in the schedule attached, to which may be added such other issues as the Minister and the Committee may jointly agree should be included in the Government's external debt and railway debt. Part of such fund may be used in the discretion of the Committee in buying or retiring scrip for current interest. The Committee may retain and distribute the entire amounts received on account of the taxes specified in this section (c) although they may be in excess of the guaranteed minimum annual payments.

(d) Any difference between the amounts of cash paid on account of current interest (in accordance with the arrangements for distribution of current interest according to the schedule to be submitted by the Committee) and the full amount due therefor during the period of five years, beginning January 2, 1923, is to be dealt with in scrip. Such scrip shall be issued by the Mexican Government for the full amount of such difference and delivered through the Committee for distribution to the holders of obligations in such form as the Committee may determine. This scrip will become due and payable in 20 years. It will not bear any interest during the first 5 years but, for the balance of 15 years, it will bear interest at the rate of 3 per cent, payable half-yearly. The Government will have the option to buy this Scrip in the market for cancellation, in a manner to be arranged with the Committee, or to call all or any part thereof at 105 and interest, accrued and unpaid to date of call, at any time before maturity thereof. During the first five years any surplus of the current interest fund, after paying current interest, shall be applied towards the purchase and cancellation of this Scrip as provided above.

(e) The payment of current interest in cash on the scale to be submitted to the Minister by the Committee will begin for interest becoming due and payable after January 2, 1923. Full resumption in cash of the service on the debt including full sinking fund payments will be resumed for payments becoming due and payable on and after January 1, 1928.

(f) The proceeds of the oil export taxes, which since January 31, 1922, have been paid or accumulated under the agreement of September 3, 1921, shall be paid over to the fund forthwith and all future proceeds of such tax shall be paid over from the date hereof; and the proceeds of the tax of 10 per cent on the gross railway revenues shall be currently paid over as soon as the tax is created. Payments will be made in a manner to be agreed on with the International Committee.

(g) During the period prior to the full resumption of the service on the debt the Government will continue the export taxes on oil and will not diminish the rate of such taxes payable in cash as the same has been applied since September 3, 1921.

(h) After the expiration of the period of five years at the end of which the Mexican Government will resume the full service of the debt the special provisions made for this period in this paragraph 4 will be at an end except for the obligations of the Mexican Government contained in the current interest scrip and except that if there is still then outstanding any current interest scrip the tax of ten per cent (10%) on the gross railway revenues will be continued and applied through the Committee, for redemption of the current interest scrip in a manner to be arranged with the Committee.

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The holders of outstanding railway bonds and notes shall present their existing securities to be stamped with the agreement of the Mexican Government assuming the payment of principal, interest and a sinking fund of the securities. For all amounts paid by the Mexican Government on account of the railroads for such interest, principal and sinking fund the Government will be a creditor of the Railways in the same manner as is provided in the Executive Decree and Plan of Readjustment and Union of the Mexican Central Railway Co., and National Railroad Company of Mexico with respect to payments made on account of its guarantee of the General Mortgage 4 per cent bonds of the National Railways of Mexico.

The liens created on the railway properties by the present mortgages and indentures in favor of the railway securities now outstanding are to be held by a trustee or trustees satisfactory to the International Committee and are not to be enforced unless the government is in default in its obligations under this plan when they may be enforced in favor of the holders of railway securities.

The government will make prompt return of the railways to private management, details of which are to be arranged.

Ten per cent (10 per cent) annually of the gross receipts of the railways is to be set aside and paid over currently as herein provided towards the government debt service including the railway debt, and proper provision is to be made therefor in the rates by surcharge or otherwise.

Until the full cash payment of current interest on the bonds is resumed the net operating revenues of the railways are to be added to the fund provided for the government debt service and thereafter are to be applied to the service of the railway securities.

The Mexican Government recognizes the obligation to restore the railroads, including rolling stock, to the same condition that they were in when the Government took them over and will make every effort to do it (viz., such restoration) as soon as possible.

Railway notes that have matured or are about to mature will be extended for a reasonable length of time.

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The Mexican Government recognizes all obligations assumed by it, either direct or by way of guarantee and all provisions of the contracts and pledges under which the several bonds were issued, these provisions to be in full operation at the end of five years and prior thereto will be subject to the modifications herein provided for.


The bondholders will resume all their contractual rights if for any reason this plan is not fully carried out during the period of five years.

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Any difficulties that may arise in connection with the execution of this agreement will be settled by a special commission nominated by both parties.

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This agreement is subject to the ratification of the President of Mexico. June 16, 1922.

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National Railroad Prior Lien 42 s.
National Railroad 4s, 1951.

5,850,000. Mexican International Prior Lien 41⁄2 s.


Mexican International Prior Lien 4s, 1977.

2,003,000. Pan American 5s, 1934.

1,484,000. Pan American 5s, 1937.

1,374.000. Mexican Central Priority, 5%.

1,112,456. National Railways Equipment 5s.

33,662,131. National Railways Notes.

2,000,000. Tehuantepec Second Mortgage 42 s.
1,750,000. Miscellaneous.

$243,734,777. Total Railroad Debt.

$508,830,777. Total of Debt.

NOTE: In the foregoing schedule provision has not been made for (1) such bonds of the Huerta issues (following so-called issue "A") which are held by banks as collateral; nor (2) for the bonds of the so-called DeKay issue which the Government does not recognize.

To the above may be added such other issues as may be agreed on by the Minister and the International Committee as provided in the agreement. Amounts are stated according to latest available information and are given in gold dollars.

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