Page:Mexico and its reconstruction.djvu/119

Rh the Diaz régime, however, there was no general revision of the taxing system.

In 1902 steps were taken to protect the public revenue against the consequences of fluctuation in the value of silver. The rate of exchange for the foreign debt services was fixed in the years following the greatest fall in the price of silver, 1892-5, to allow gold 100 per cent premium. Silver later went down still further, the premium on gold rising to 150 per cent. The actual income of the country collected in silver shrank proportionately whenever it was necessary to make payments on a gold basis. It was decided, therefore, to reckon the import taxes not in silver, at their face, but in the equivalent of the rate in gold at a fixed exchange rate—220 per cent. The amount of any tax was then reconverted into silver pesos at the prevailing rate of exchange of the day.

The policy of the Diaz government in the management of the financial affairs of Mexico was fully justified by the result. Income finally came to exceed expenditure, and the adjustment of the tariff system removed the effect of the shifting value of silver on the total customs receipts. By the middle '90s the ordinary income showed a good margin above ordinary expenditure, a condition which continued through the rest of the