Monterrey, the Capital of the State of Nuevo Leon, Mexico, is built on the site of the old village of Santa Lucia de Leon, which was established in 1583 by the Governor of the Kingdom of Leon, Don Luis Carabajal. Four years later Carabajal was imprisoned by the Inquisition, and the village of Santa Lucia was abandoned by its few inhabitants. In 1596, Captain Diego Montemayor, a resident of Saltillo, in the adjoining State, wishing to render a service to his king, Philip II of Spain, assembled his friends, and on September 20th of that year, proceeded to establish a town on the site of the old village on the northern side of the principal spring at the place. The town was named "Nuestra Senora de Monterrey" (Our Lady of Monterrey), after the Count of Monterrey (Ojos de Santa Lucia y Valle de Extremadura), the ruling Governor of New Spain, as Mexico was then called. Monterrey is approximately in the center of the State of Nuevo Leon, 1 deg. 12' west of Mexico City, and in latitude 26 deg. 40' N. It is a distributing railway center on the main line of the National Railroad, 270 km. from the Rio Grande at Laredo, 1,022 km. from Mexico, and 520 km. from Tampico by the Mexican Central Railway. It is the center of many large industries, and is the second largest manufacturing city in the Republic. THE CONCESSION. The works described in this paper were carried out under a guaranteed concession granted by His Excellency, General Bernardo Reyes, Governor of the State of Nuevo Leon, to Messrs. James D. Stocker and William Walker, of Scranton, Pa. The concession is dated October 19th, 1904, and is for 99 years from that date; the works for a complete water and drainage system were to be finished in 3 years from the time of their commencement. Before the works were designed and begun, the concession was acquired by Mr. William Mackenzie, of the firm of Mackenzie, Mann and Company, Limited, of Toronto, Ont., Canada, who, on May 4th, 1906, organized the Monterrey Water-Works and Sewerage Company, Limited (Compania de Servicio de Agua y Drenaje de Monterrey, S. A.), under the laws of the Dominion of Canada, of which company he is President. Mr. Mackenzie is also President of the Monterrey Railway, Light, and Power Company, Limited, which was constructing the street railways of Monterrey concurrently with the water-works. Under the provisions of the concession, the Government appointed a Financial Interventor, who had authority to examine and check the company's expenditures, and also a Technical Inspector to examine and report on the construction. The duties of these officials also apply to the operation of the system when the construction is finished. The Government has the right, after the system has been operated 40 years, to purchase the entire property, subject to 6 months' notice, for a sum equal to 16-2/3 times the average annual net proceeds during the 3 preceding years. This right may be