sovereignty, and integrity of the territory of the republic, the negotiations will be opened at Orizaba, to which city the commissioners will repair, and also two of the ministers of the government of the republic, excepting in the case that, by mutual consent, it should be agreed upon to appoint representatives delegated by both parties. 3d. During the negotiations the forces of the allied powers shall occupy the three towns of Cordoba, Orizaba, and Tehuacan, with their natural radii. 4th. In order that it may not, even in the most remote manner, be believed that the allies have signed these preliminaries in order to procure for themselves the passage of the fortified positions which the Mexican army holds, it is stipu lated that, in the unfortunate event of the breaking off of the negotiations, the forces of the allies shall withdraw from the aforesaid towns, and will again occupy the line which is in front of said fortifications in the direction of Vera Cruz, the principal extreme points being those of the Paso Ancho, on the Cordoba road, and the Paso de Ovejas, on the Jalapa road. 5th. Should the unfortunate event occur of the breaking off of the negotiations and of the withdrawal of the allied forces to the line indicated in the preceding article, the hospitals which the allies may have there shall remain under the safeguard of the Mexican nation. 6th. On the day on which the allied forces shall commence their march to occupy the points mentioned in article 2d the Mexican flag shall be raised in the city of Vera Cruz and upon the castle of San Juan de Ulloa. La Soledad, nineteenth of February, one thousand eight hundred and sixty-two. I approve these preliminaries, in virtue of the ample powers with which I am invested. SIR: I avail myself of the kindness of Dr. Bennet, who leaves at four o'clock to-morrow morning, to advise you of the present state of affairs here. The allies are encamped in healthy positions on the table-land between Vera Cruz and Mexico. When the additional French troops arrive they will have in this country from fifteen to twenty thousand troops. The conditions upon which I am instructed to aid Mexico will forbid me to do anything which Mexico can accept, for the following reasons: First. If (as I am instructed) the allies are to be satisfied and leave, before the desired aid is given, the public lands and church property will have to be given to them as security for the performance of treaty stipulations, so that the United States then would have no security for any loan of either her credit or money, and I have not yet been authorized to advance either money or credit upon the national faith of Mexico. Secondly. Mexico wants money now, pending negotiations with the allies. These allies have said they come here to establish order and restore peace. They wait only for a plausible reason, or perhaps a pretext, to interpose their armies on one side or the other. Since they landed, the various insurrectionary chiefs have united all their forces, numbering about three thousand men. They are said now to be at Yguala, about two hundred and fifty miles from this city. To subdue these guerrillas effectually, men, and consequently money, are wanted; and this money cannot be raised here without resorting to forced loans, and the fear of this has caused those having money, for the last two years, to send their money and effects out of the reach of the government. If, then, this fragment of the church party is not put down very soon, it is feared France, and perhaps Spain, will unite in restoring it to power, and their reason given to the world will be that peace must be given to disturbed Mexico, and this was their mis sion. If Mexico were able now to keep up her forces on the line to Vera Cruz, and pursue the united forces of the church party with effect, then the allies nor either of them could have no apology for armed interference. My fear is that if the allies ever take the field to establish a government here that Mexico will henceforth be a European colony in fact. If they should, by treaty, get control of all the public lands, the same effect will, though not certainly, yet probably, follow. We have a rumor here that New Orleans has surrendered to the north. I fear it is not true, though from intelligence recently received here from the armies of the west I had hoped New Orleans would soon be in our hands. I remain your obedient servant, THOS. CORWIN. Hon. WILLIAM H. SEWARD, Secretary of State of the United States, Washington, D. C. 1 No. 20.] Mr. Corwin to Mr. Seward. LEGATION OF THE UNITED STATES OF AMERICA, SIR: The monthly British courier offers a safe conveyance to Vera Cruz, of which I avail myself to advise the department of passing events here. Since my last despatch a dispute has arisen between the allies and Mexico, concerning the possession of the custom-house at Vera Cruz, and the disposition of the revenue accruing there. Unfortunately, nothing was said or agreed on touching this point in the preliminary treaty, a copy of which I sent some time since to the department. Two commissioners on the part of Mexico, a week ago, went to Orizaba, to meet Sir C. Wycke and General Prim, to endeavor to arrange this matter. I have this moment learned by telegraph from Puebla that the commissioners are on their return to Mexico, having arranged this question to the entire satisfaction of all parties. Another matter threatening disturbance of friendly feeling is a tax of two per cent. on all capital, including foreigners, recently levied. All foreigners here seem to think that property owned by them is to pay no taxes, especially if they can make out plausibly that such tax is, in their own favorite phrase, an “extra ordinary tax.” The British, Prussian, and French ministers, object to this tax, and write angrily and vehemently to their fellow subjects here, as well as to the government, against it. I have thought it my duty to hold a different opinion on the subject, and wrote to the American consul at Acapulco (at his request an opinion, giving also to American citizens here the same opinion. I send herewith copies of my correspondence with the consul at Acapulco. As the arguments of the other foreign ministers on this subject had been published by themselves, at the earnest request of the minister of foreign affairs, I allowed the government to publish my opinion given to American citizens resident here. I hope the course I have judged it proper to take in this business may meet the approval of your department. It has brought upon me the universal censure of all foreign residents here, including our own Americans, who, with few exceptions, look upon Mexico as a place wherein to make their fortunes as rapidly as possible, and carry them to some other country as soon as possible. The minister of foreign affairs here expressed much regret that my instructions in your despatch No. 37 were so stringent in regard to the terms on which a loan could be had from the United States. This government wants money now more than it probably will a year or two hence. Its great effort now is to show the allies that they are able to crush out the remnant of the reactionary bands that still roam over the country, dashing into the more fruitful and well culti vated portions of it unexpectedly, robbing and assassinating wherever they go, for a brief time, and then suddenly retreating to some of the inaccessible mountain holds which abound in this country. The reactionary chiefs yet remaining, aware of this necessity of the government, recently united all their forces, numbering about three thousand. An expedition was set on foot by the government designed to surround and capture or kill this entire force. Five thousand men were assembled for this purpose, and I know they were detained here for a whole week, for want of funds to feed them on their march. The requisite amount was only obtained five days since, by a forced loan. During this time the minister of foreign relations frequently assured me he could raise this money from capitalists here readily, if he could assure them that a loan of a few millions was to be expected from the United States. It is quite impossible for any one, not having the knowledge which I have acquired by one year's close observation, to estimate the depth to which the exhausted resources of this country has fallen by forty years of civil war, and our own invasion and conquests in 1847 and 1848. Now when three powerful nations are here, threatening to precipitate half of Europe upon them unless they treat on terms such as they dictate, Mexico, with all her faults and follies, is an object of sympathy to all who regret to see weakness trampled in the dust by strength. I do not believe that some of the allies intend to deal harshly with Mexico, but I am not satisfied that this is either the feeling or intention of one at least of the three powers. More light will be thrown upon the point by the events of the next month. I have the honor to be your obedient servant, Hon. WM. H. SEWARD, THOMAS CORWIN. Secretary of State of the United States, Washington, D. C. Mr. Van Brunt to Mr. Corwin. C 1, with No. 20.] CONSULATE OF THE UNITED STATES OF AMERICA, SIR: There has been published at this port a decree of the general government of Mexico, authorizing a tax of two per cent. on all property, whether native or foreign. I send an especial courier to know your opinion on the same for my guid ance, as I shall be called upon by citizens of the United States for protection in case the tax be enforced, which has not been at the present writing, but I have authority to state will be, and believe is only deferred by the presence of a United States vessel-of-war in port, whose protection I shall seek in case the necessity arrives to stay proceedings until I have your reply. I would state the Pacific Mail Steamship Company have a large amount of valuable property here, and this tax would fall heavily and injuriously on them, this being merely their depot, granted to them by the general government as such. By the wording of the decree, it would fall upon them equally with others. Hon. THOS. CORWIN, United States Minister, Mexico. Mr. Corwin to Mr. Van Brunt. C 2, with No. 20.] LEGATION OF THE UNITED STATES OF AMERICA, SIR: I have just received your letter of the 26th of February, asking my opinion as to the legality of the tax of two per cent. on all capital owned by citizens or foreigners in Mexico. I have carefully considered the subject some time since, and have come to the conclusion that American citizens are obliged to pay this tax. Congress, at its last session, by a decree of that body, conferred upon the cabinet all the powers of government, legislative and executive. I have entertained serious doubts whether, under the constitution, this act was valid; but on full consideration, I am satisfied that is a question for the supreme judicial authority; and as the present government is accepted as the only legitimate one, and been so recognized by all foreign powers represented here, its acts must be regarded as legal, and binding upon the citizens of all nations resident in or claiming property within the territory of Mexico. The taxing power is one belonging to all organized governments, without which it is obvious no political organization could exist. The limits of this power over foreigners are fixed either by the law of nations or by treaty. National law on this point is positive and universally recognized by all modern writers. One of the most accurate and learned treaties in modern times on national law has thus defined this power: Every independent state is entitled to the exclusive power of legislation in respect to the personal rights and civil state and condition of its citizens, and in respect to all real and personal property situated within its territory, whether belonging to citizens or aliens."(See Wheaton's International Law, page 112, part II, chapter II, section 1.) The legislative power here given over the property of foreigners has always been considered as including the power to tax the property of foreigners. It has been the constant practice of the United States government, as well as the governments of the separate States, to tax the property of foreigners just as they tax the property of citizens. This power may, however, be limited by treaty. The only treaty stipulation on this subject between the United States and Mexico is to be found in the ninth article of the treaty of 1831, which is now in full force, that treaty having been revived by the treaty of 1848. That article reads as follows: "The citizens of both countries, respectively, shall be exempt from compulsory service in the army or navy; nor shall they be subjected to any other charges or contributions or taxes than such as are paid by the citizens of the States in which they reside." This treaty, in my judgment, obliges citizens of Mexico resident in the United States to pay in the United States all "charges or contributions, or taxes" which are paid there by the citizens of the United States, and as clearly binds all citizens of the United States resident in Mexico to pay all "charges or contributions, or taxes" which are paid here by the citizens of Mexico. If, therefore, a Mexican citizen is bound by law to pay this tax, then, by the treaty of 1831, the American citizen resident here is bound to pay it also. The treaty makes no distinction between ordinary and extraordinary taxes, between local or general taxes. I have no doubt that at this moment taxes that may well be termed "extraordinary" are levied, both by the federal and State goverments, in the United States, which operate alike upon the property of the citizens of the United States and Mexicans resident there. With these views, I cannot consent to any forcible opposition to the payment of this tax on the part of American citizens. The citizens of other governments will regulate their conduct by the opinions of their own diplomatic representatives. The tax may be too high, or it may be in other respects impolitic; but these are questions to be determined by the power having the right to tax. So long as American citizens are taxed in the same way as Mexican citizens, I am satisfied that, under our treaty with Mexico, to which I have already referred, the government of the United States cannot interfere to shield American citizens from the payment of such tax. If other nations have treaties forbidding such taxation on their citizens here, of which I am not aware, all that can be said is that they are more fortunate than the United States in this respect. Our citizens, in common with citizens of Mexico, may remonstrate in respectful terms against this tax as being onerous or impolitic, but they can claim no exemption from its payment which a Mexican citizen might not claim with equal propriety. As to the steamship company's property, no part of it afloat is subject to taxation. Only land, houses, or other property located on Mexican soil within the territorial limits of the Mexican republic, can be subject to this or any other tax levied by the Mexican government, whether state or national. If, however, any American citizen shall believe that he is not bound to pay this tax, he can pay it under protest and make it the subject of reclamation if he chooses, but in my judgment such payment would form no just ground of claim on the Mexican government. D. B. VAN BRUNT, Esq., United States Consul, Acapulco. THOMAS CORWIN. Mr. Corwin to Señor Doblado. C 3, with No. 20.] LEGATION OF THE UNITED STATES OF AMERICA, SIR: The undersigned has the honor to enclose herewith a copy of a letter from the United States consul at Acapulco, with reference to the tax of two per cent. lately levied by the Mexican government. The undersigned also encloses his reply to this letter, in order that your excellency may know the advice which he has given to the Americans residing in this republic. Similar letters have been sent by the undersigned to other American consuls in different parts of Mexico. But as Sir Charles Wycke, her Britannic Majesty's representative in Mexico, has addressed to the undersigned a private letter from Vera Cruz, re |