I recently got on somewhat of a tangent looking into this song. A modern singer, Willie Watson, has a great version of this song he titles "Mexican Cowboy" (click), referenced by gillymor above. As best as I can find, the CD has no liner notes to indicate where his version comes from; I'll post the lyrics below for comparison.

I started this distraction because I was listening to Sam Bush's "Diamond Joe" (listen). His version is mostly similar to the Bob Dylan-styled version in the DT here. Now, what struck me is that both versions have the line about a string of horses so old they couldn't stand. Diamond Joe is, as far as I've found, the only other song which uses that line, meaning Watson's version is really an amalgam of Diamond Joe and Hills of Mexico.

Additionally, several versions of Diamond Joe have been linked to The State of Arkansas, most directly through melody and the line about corn dodgers (more via Richie's BluegrassMessengers site). That means that we've got a sort of triumvirate of connected songs here, all interrelated though distinct. I just found that kind of interesting. Watson's version is not as clearly linked to State of Arkansas, though it is reminiscent.

Here are the lyrics to Watson's version as copied from the "Genius" lyrics website with a few modifications for readability by me:

Swinging in to old Fort Worth in 1883
Some old Mexican cowboy come steppin' up to me
Sayin' "How are you young fella? When would you like to go
And spend another season with me in Mexico?"

I had no employment, back to him did say
"It's according to your wages, according to your pay"
Said "I'll pay you good wages and often, too, you now
If you spend another season with me in Mexico"

I went up to this cowboy, I offered him my hand
But he gave a string of horses so old they couldn't stand
And I nearly starved to death boys, I mean to let you know
And I never saw a dollar in those hills of Mexico

I got up on that steamboat and back to home did go
How th?m bells, they did ring, those whistl?s did blow
How them bells, they did ring, those whistles did blow
On that godforsaken fortune 'neath those hills of Mexico