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MEXICO AND ITS
RECONSTRUCTION
BY
CHESTER LLOYD JONES
SOMETIME PROFESSOR OF POLITICAL SCIENCE IN THE UNIVERSITY
OF WISCONSIN, COMMERCIAL ATTACHE" TO THE AMERICAN EMBASSY
TO SPAIN, ETC. ; AUTHOR OF "THE CONSULAR SERVICE OF THB
UNITED STATES," "STATUTE LAW MAKING IN THE UNITED STATES,"
"CARIBBEAN INTERESTS OF THE UNITED STATES," ETC.
D. APPLETON AND COMPANY
NEW YORK : : 1921 : : LONDON
COPYRIGHT, IpZI, BY
D. APPLETON AND COMPANY
TO
MY WIFE
CAROLINE S. LLOYD JONES
PREFACE
The developments in Mexico during the period that has come
to be known as "the old regime" were of peculiar interest to the
more advanced nations of Europe and America. It seemed as
if here was a republic that was proving that self-government
and the guarantee of public order were not incompatible with a
geographical position in the sub-tropics and a population pre-
dominantly of Indian blood.
What has happened since the fall of Diaz would have been
more closely followed by the western world had not the World
War absorbed its energy and attention. Mexico became for the
moment a factor that was considered less for itself and more in
its possible relation to the general conflict. With the end of the
war events in Mexico assume greater importance. The revo-
lution has proved that the government was not yet on a founda-
tion so firm as was supposed. The task of the reformers is to
find means to make it firm. The brilliant economic show of the
Diaz regime must be supplemented by a transformation in social
and political conditions. Efforts to bring the new day will be
closely watched by those who have capital invested in Mexico
itself, by those with economic interests in other undeveloped
regions, by students of international affairs, especially in Eu-
rope and America, and by students of government the world
around.
At the beginning of the century the less informed had come
to look upon the problems that might arise in Mexico as simi-
lar to those which might arise in the United States, in Great
Britain, or in France. Many of those who knew Mexico best
held the same belief the economic foundation of the country
was secure, only time was needed for the elimination of the back-
vii
Vlll
PREFACE
ward conditions still characteristic of the national life. Such
a judgment was mistaken and unfair to Mexico. The republic
was not yet to be measured by the standards of Western Europe.
Nor is it fair to expect that the internal problems that con-
front the governments that follow the revolution can be solved
in a period of a few years no matter how favorable the aus-
pices under which the reforms are undertaken. It is too easy
to be encouraged by a temporary or local improvement in con-
ditions. There will be many surprising advances and disap-
pointing backslidings before Mexico is surely on the road to
becoming a modern state.
It is because he overlooks these facts that the judgment of
the average man in Europe and the United States upon con-
ditions in Mexico and the policy that should be adopted toward
the republic is of such little weight. He measures Mexico by
the standards to which he himself is accustomed, and what in-
formation he possesses is usually derived from the accounts of
current events in periodical publications. As a matter of fact,
what happens to-day or to-morrow in Mexico, whether this
leader or that is in control, defeated, exiled, or killed, is prob-
ably of little importance. Such items are worthy of study only
as they indicate a general tendency of development in domestic
affairs or possible complications with foreign powers. Unfor-
tunately it must be admitted that current events for the past
decade in Mexico have too often been so confused that no con-
structive development could be discerned.
To understand Mexico and the Mexican problem it is neces-
sary to study more than current political happenings and trade
exchange. It is necessary to know, among other elements, the
racial endowment of the people, the character of the govern-
ments under which they have lived, the obligations the govern-
ment has assumed toward other nations and their citizens, the
social and economic organization of Mexican society, the char-
acter of internal and foreign commerce, the development of
transportation facilities, the position of those of other than
Mexican nationality who have made the republic their home,
PREFACE ix
and tKe relations of Mexico with other states, particularly its
neighbors.
No state in our day lives unto itself alone. It must be in
touch with the outside world and especially with the nations
upon which it borders. It is for this reason that the relations
of the United States to Mexico have become so important and
are sure in the future to be of even greater moment. What
affects one cannot fail to affect the other. Already the more
obvious of international relationships between the two are em-
phasized in an unusual degree. American investments in Mex-
ico far exceed those of any other foreign country. The for-
eign trade of Mexico with the United States is more important
for Mexico than that with all the rest of the world combined, a
condition which the developments during the World War have
accentuated. The foreign relations of the two countries have
an intimate connection neither can feel itself safe without the
friendship of the other. Failure to realize their political unity
of interest might endanger the foreign policy which the United
States has for a century defended, to assure the free develop-
ment of all the American republics.
No single volume can give a detailed picture of such complex
elements as those cited in the preceding paragraphs. It may,
however, help to indicate the various factors that must be taken
into consideration by the individual and by the state of which
he forms a part in arriving at a judgment of what may fairly
be expected of a government working under such conditions as
will confront Mexico during its trying period of reconstruction.
It is hoped that this book may assist its readers in forming
such a judgment and may stimulate them to further study of
the problems which it outlines. How important an intelligent
understanding of these problems is for both Mexico and the
United States is realized by only a small portion of the peoples
of the two republics.
The materials used in the preparation of this book have been
largely the official publications of Mexico and of the United
States. These have been supplemented by the studies made by
x PREFACE
students of the republic both Mexican and foreign. From
neither of these sources alone nor by both together is a satis-
factory picture of Mexican conditions derivable, and at many
points the testimony of periodicals and of residents of the re-
public must be accepted as the best information available. This
is true especially for recent years, but in a measure also in dis-
cussing the earlier periods, for the formal history of Mexico,
economic, political and social, is to an unusual degree unwritten.
My thanks are due to the authorities of the University of
California and to those of the Library of Congress at Wash-
ington for facilities placed at my disposal. I am indebted also
to friends too numerous to mention for suggestions and criti-
cism, to Dr. Norman Bridge, who has read the manuscript, and
to Mr. Edward L. Doheny, whose establishment of the Doheny
Foundation made available valuable source materials relating to
Mexican-American relations.
CHESTER LLOYD JONES
CONTENTS
FAGX
PREFACE vii
I. WHY MEXICO Is A PROBLEM 1
II. THE POPULATION OF MEXICO 10
III. THE GOVERNMENT OF MEXICO: EXECUTIVE GOVERNMENT . 28
IV. THE GOVERNMENT OF MEXICO: ELECTIONS 42
V. THE GOVERNMENT OF MEXICO: THE STATE AND LOCAL GOV-
ERNMENTS 58
VI. MEXICAN FINANCE: FOREIGN LOANS AND FOREIGN CLAIMS . 66
VII. MEXICAN FINANCE: CURRENCY AND THE BANKS ... 83
VIII. MEXICAN FINANCE: PUBLIC INCOME AND EXPENDITURE . . 94
IX. THE MEXICAN LABORER 104
X. THE MEXICAN LABORER: His CONTRACT 114
XI. THE MEXICAN LABORER: His WAGES AND DEMANDS . . . 135
XII. THE MEXICAN LABORER: His OPPORTUNITIES .... 148
XIII. TRANSPORTATION 161
XIV. INDUSTRY AND INTERNAL COMMERCE 175
XV. THE FOREIGN COMMERCE OF MEXICO: BEFORE DIAZ . . . 187
XVI. THE FOREIGN COMMERCE OF MEXICO: THE DIAZ REGIME AND
AFTER 199
XVII. COLONIZATION 220
XVIII. THE FOREIGNER IN MEXICO: His PROPERTY .... 239
XIX. THE FOREIGNER IN MEXICO: His LEGAL POSITION . . . 253
XX. THE TROUBLESOME BORDER 271
XXI. MEXICAN-AMERICAN RELATIONS 297
BIBLIOGRAPHY .... 311
INDEX . . .... 821
xi
MEXICO AND ITS
RECONSTRUCTION
CHAPTER I
WHY MEXICO IS A PROBLEM
A GENERATION ago few Americans recognized that
Mexico was a problem and still fewer that it was one
that deeply concerned the United States. For more
than a half century it had been a country in which civil
dissension was seldom absent. It was a land almost un-
known, one in which the stagnation of the Spanish colo-
nial system of government had been succeeded by the
stagnation which comes from lack of enterprise, lack
of education, and lack of intelligent and efficient gov-
ernment. The dictatorship which had been set up re-
cently had shown signs of strength, it is true, greater
than its short-lived predecessors, and railway building
had made a promising beginning but the outside world
still looked upon Mexico as a problem to itself and a
matter of comparative indifference to others.
But the past generation has seen an internationaliz-
ing of the affairs of the world that has made it impos-
sible for any state to remain isolated from the affairs
of its neighbors. Strictly speaking, of course, national
interests are not bounded by national frontiers and they
never have been. They are less so now than ever before.
As communication and commercial interchanges develop
international contacts become more important. As emi-
gration from one country to another increases the obliga-
tions of countries to protect the rights of resident for-
eigners increase. Independence is replaced by an inter-
locking of interests that demands a recognition of the
fact that no state can longer be independent as it was
in times past.
The emphasis of duties of this sort does not greatly
increase the burdens of the stronger powers nor those
of the lesser states that have created orderly govern-
ments capable of protecting life and property. Weaker
nations are able to give a less effective guarantee to for-
eigners and to their own citizens. As a result, in spite
of the theory of equality of states, in practice the more
advanced states exercise a constant pressure upon the
weaker to assure that they exert themselves to guaran-
tee safety for life and property. The pressure may be
veiled but it is none the less real. If the responsibility
is not assumed, there is always the possibility of recourse
to force. Many examples could be cited. The demands
made upon Venezuela in the opening years of the cen-
tury and the claims for indemnities arising from the
Boxer rebellion in China are illustrations of the ways in
which reparations may be sought. That there is pos-
sibility of abuse in such circumstances is beyond dispute,
but the alternative to allow the weaker state a free
hand in the persecution of foreigners would be a pol-
icy even less endurable. Such a policy is intolerable un-
der modern conditions when both population and capital
WHY MEXICO IS A PROBLEM 3
pass frontiers in normal times with insignificant difficul-
ties and do so in response to invitation and even solicita-
tion by foreign countries and their citizens.
All around the world the problems of the weak states
promise to hold the front of international attention dur-
ing the coming decade. In fact the elimination of "un-
redeemed lands" and the efforts to exploit resources now
undeveloped will emphasize the international importance
of unprotected interests in disordered states. Though
it does not greatly increase their domestic problems the
passing of the day when each state was a law unto itself
creates new international responsibilities for the stronger
nations toward the weaker.
The regions of the world in which the problem of the
protection of foreign interests promises to be most im-
portant are three. In eastern Europe and the Near
East it is evident that the settlements following the
World War cannot set up states that will at once be
able to discharge easily all the responsibilities toward
their neighbors and toward resident foreigners that the
great powers will wish to have assumed. The Far East
will have important problems of adjustment.
Finally there is the unstable area in America ex-
tending from the Rio Grande to northern South Amer-
ica. Africa will probably be less important in matters
of this sort because, but for Abyssinia and Liberia, it
has ceased to be a region in which there are so-called
sovereign states and its other native peoples under
European influence, except in Egypt and Morocco, have
shown no nationalistic aspirations or aptitudes.
In the American area control by the most powerful
4 MEXICO AND ITS RECONSTRUCTION
American state over its weaker neighbors has been grow-
ing steadily for two decades. The responsibilities as-
sumed in Cuba and Panama have been followed by
others, which now include practical protectorates over
all of the West Indian republics and a complex of re-
sponsibilities in Central America.
Although this extension of influence has been steady
it has not been the result of any well thought out plan,
indeed, 'to a very large degree, it has been a product of
circumstances rather than of policy. It is not an in-
crease of control which the government or people of the
United States has actively desired and it is not one which
either wishes to see further extended. Nevertheless it
can but be evident that the circumstances that are de-
veloping in the world will make the policy to be followed
toward the countries encircling the Caribbean one of the
leading factors in American foreign policy in the imme-
diate future.
One of the most important problems that American
statesmen will have to face and one of the most difficult
of the adjustments that must be made during the period
of reconstruction following the World War involves
the relations of the United States and Mexico. The
foreign policy adopted toward this, the most important
of the Latin republics of North America, may be the
outstanding factor in American international policy in
the next decade. The solution arrived at will be impor-
tant for the world at large, and especially for the United
States, for a large number of reasons.
T. From the broadest international viewpoint it will
be significant because it will show what standard is
WHY MEXICO IS A PROBLEM 5
found practical by a power that has prominently de-
clared its altruistic motives in its actions toward weaker
nations. Though the United States has a better per-
spective in such matters now than at the beginning of
the century, it is still less experienced in dealing with
weaker peoples than Great Britain and France, the chief
European powers that in the near future will be called
upon to deal with similar situations. As a consequence
the United States approaches the Mexican problem with
perhaps greater possibility of error but less bound by
precedent.
2. Contrasts in civilization are present in high degree
in the Mexican problem. Anglo-Saxon and Latin cus-
toms and languages meet. Within Mexico itself there
are many contrasts and conflicts arising out of the na-
tive elements of the population and the lack of com-
munication between the various districts of the country.
From a cultural standpoint these have kept the republic,
to a great degree, a collection of units rather than a
single state and will make a satisfactory solution of
Mexican relations difficult.
3. The great natural wealth of Mexico makes it a
region in which the adjustment of its political and eco-
nomic relations with the rest of the world is of great im-
portance.
4. What may be called the resident international in-
terests within Mexico emphasize the fact that arrange-
ments concerning its government are not merely of local
concern. During the Diaz period of orderly govern-
ment an inflow of foreign capital occurred that makes
what happens to the investments in the country a mat-
6 MEXICO AND ITS RECONSTRUCTION
ter of unusual international interest. Of the invest-
ments made those representing American capital are by
far the most important.
5. Its international trade exchange makes a country
of importance in international affairs. The economic de-
velopment of Mexico since the '80s of the past century
has made it one of the most important of the American
republics in foreign commerce. In both the imports and
exports of Mexico the United States plays a part far
more important than any other power.
6. Mexican affairs are of special interest to the
United States, furthermore, because Mexico is the near-
est of foreign countries. The two republics are neigh-
bors with adjoining properties and what affects one
must have an effect upon the other.
7. The developments that occur in Mexico will have
a wider influence on American foreign policy than ap-
pears at first sight, for Mexican relations are in a pecu-
liar way a thermometer for Pan-American relations.
Whether the assumption is justified or not, any measure
adopted toward Mexico is apt to be taken by other Latin
American states as a measure of what may be expected
for themselves, however different the conditions to be
met in the two cases may be. This is unfortunate but
true. Obviously that which may be demanded from
Haiti for the protection of the rights of the United
States would be unnecessary in a country of the orderly
character of Argentina or Chile. Nevertheless the Latin
American countries consider themselves a group with
common interests and a step that affects one is looked
upon as indicating a policy toward the rest. There can
WHY MEXICO IS A PROBLEM 7
be no doubt that whatever is done by the United States
in Mexico will have a very clear repercussion on the
Pan- Americanism of which the United States has been
an exponent and defender. What the policy has meant
has never been definitely stated. The idea greatly needs
clarifying. Pan-Americanism of the sort that has been
popular in some quarters in the past will become more
and more difficult to maintain. The actual develop-
ments in world affairs promise little for any policy that
can be interpreted as inconsistent with a recognition
that "independence" carries great and increasing re-
sponsibilities toward foreign states and individuals.
8. The relations of the United States and Mexico
have an interest not limited to America. In dealing
with Mexico the northern republic will have a complex
problem involving contrasting civilizations and the meet-
ing of a people with wide experience in democratic in-
stitutions with one almost unexperienced in popular gov-
ernment, though nominally devoted to its ideals. Its
policy will be influenced by the measures taken to de-
velop the latent natural resources and the already im-
portant foreign trade and investments. Mexico is the
greatest and wealthiest of the weak states of predomi-
nantly aboriginal population that lie near to a great
Western power. Obviously the political and economic
adjustments that are found possible under such circum-
stances cannot fail to be of interest to all the world and
especially to those powers which have close contact with
the less developed independent nations.
9. Finally, the Mexican problem is one that has un-
usual interest for the world and especially for the
8 MEXICO AND ITS RECONSTRUCTION
United States because it seems sure to have a rapid de-
velopment. Had not the World War absorbed the at-
tention of the world, the conditions that have developed
south of the Rio Grande would almost surely have been
followed before now by international action. The in-
terests of the United States would have prompted it
but, even if the desire not to offend the susceptibilities
of the other Latin American states had delayed action,
and even if those who believe that the government owes
no responsibility to its citizens who invest their lives
and property in foreign lands had been able to hold back
the hand of the administration, some forward step would
almost certainly have been found necessary.
Even if the United States had been willing to suffer
and wait, it seems little likely that other powers would
have been content to do so. That they would not have,
been willing is indicated by the action taken by European
powers toward Haiti in the days immediately preceding
the World War. The larger interests held by the citi-
zens of European governments in Mexico would have
prompted them to take measures io protect their in-
terests there if the United States would not. A threat
to do so is the easiest way to force the American hand.
As in civil society, so in international affairs, the
shortcomings of the weak are the problems of the strong.
As the period of reconstruction progresses, Mexican af-
fairs will again assume importance not only in American
international policy but in that of all the great powers.
There must be created within the republic a government
that can establish order, that will respect individual
rights, put the great resources of the nation again at the
WHY MEXICO IS A PROBLEM 9
service of those living within its borders, and enable it
to contribute its due share to the maintenance of the
family of nations. To make that possible all true
friends of Mexico and all true friends of the United
States must strive.
CHAPTER II
THE POPULATION OF MEXICO;
ONE of the most easily understood errors into which
we fall is to suppose that political boundaries coincide
with those of race and culture. Before the World War
how many could have named the lesser peoples who, in
the course of the conflict, raised their claims to the right
of self-determination and political independence? Few
indeed.
When we think of Mexico, we fall into the same error.
There have been no important population movements
within the territory of the greatest of the Latin republics
in North America since the region has been known to
Western civilization. There has been no immigration
from abroad that has brought in an element that puts
forth a claim for a government independent of the rest
of the republic. There have been no racial or social
barriers which had to be broken down to allow Mexico
to become a unit in fact as well as in name. Neverthe-
less there is to-day no Mexican people, though we speak
of one. There never has been one. The feeling of na-
tionality is here one of those artificially created phenom-
ena, the strength of which so often proves out of all pro-
portion to that of the base upon which they rest.
The description of the ideal state conceived by some
theorists, "an ethnic unity living within a geographic
unity" is fully applicable to but few, if any, nations. It
is far from describing the population of Mexico. The
10
THE POPULATION OF MEXICO 11
Mayas, the Zapotecs, the Yaquis, these are all Mexican
citizens but the political bond is almost the only one that
unites them. Historically, culturally, economically they
have little in common that indicates that they should
owe a common allegiance.
Above the native stocks are the mixed bloods who
have at least the common bond of their racial connection
and above these are those of European lineage, descend-
ants of the immigrants of colonial times or of later ar-
rivals. These two latter classes, by their adaptability
and by their more intimate contact with the civilization
of the outside world, are the cement of the Mexican
peoples.
It is hard to secure information that will give a satis-
factory picture of Mexican life because neither the gov-
ernment nor any private agency has ever attempted a
thoroughgoing survey of economic and social condi-
tions. 1 There has never been an accurate census of the
peoples of Mexico that established even their number
much less one that gives a picture of their economic and
social status and organization. For the earlier years
only the roughest estimates are available and for the
later ones enumerations by the government must be re-
lied upon, which, while nominally complete, have not
been based upon an actual count in many parts of the
republic.
The records of colonial times are more complete, in
fact, than those of the first fifty years of the republic
because for the estimates referring to that time the par-
1 An excellent recent study in this field is Wallace Thompson,
The People of Mexico, New York, 1921.
12 MEXICO AND ITS RECONSTRUCTION
ish registers of all who were born or who died in the re-
public were available. The first general census was not
taken until the close of the nineteenth century but even
after that event an authoritative Mexican work declares
that "nothing can be asserted honestly about the growth
of population of Mexico considering the want of facts
and the defectiveness of the few we possess." 2 In spite
of this stricture the various estimates that have been
made from time to time are presented to indicate, if not
the exact conditions, the opinion of those best informed
concerning them.
A report to the king in 1793 represented the popula-
tion as totaling 4,483,529. Humboldt estimated it to
be 5,783,750 in 1803. In 1823 it was thought to be about
6,998,337. 8 The census of 1855 put the population at
8,069,046.* In 1877-8 it was announced by the govern-
ment as 10,577,279, an average of 4.89 per square kilo-
meter.* The central states such as Aguascalientes and
2 Justus Sierra, editor, Mexico, Its Social Evolution, vol. i, p.
19. The first general census was taken in October, 1895.
*The estimates for 1793, 1803, and 1823 are quoted from Joel
Eoberts Poinsett, Notes on Mexico, accompanied by an historical
sketch of the revolution, Philadelphia, 1824, p. 109.
* fstadistica de la republica mexlcana. Estado que guardan la
agricultura, industria, mineria, y comercio; Anexo num. 3 a la
memoria de Hacienda 'del ano economico de 1877 a 1878, Mexico,
1880, p. 420. Carlos Butterfield, in United States and Mexico,
p. 58, published in 1861, quoting the "latest and best authenticated
returns," gave tEe population as 8,283,088. Antonio Garcia Cubas
and George F. Henderson in The Republic of Mexico, in 1876,
estimated the population at 9,495,157 souls.
* Estadistica de la republica mexicana. Estado que guardan la
agricultura, industria, mineria, y comercio; Anexo num. 3 a la
THE POPULATION OF MEXICO 13
Puebla had between twenty and thirty people to the
square kilometer, the south was less populated. Chiapas
averaged about nine and Yucatan three. The north was
sparsely populated and large districts were practically
unoccupied. Sonora had only about 1.5 to the square
kilometer, Coahuila 1.4, Chihuahua 1.2, and the arid
territory of Lower California one person to six square
kilometers. In 1890 the total was estimated at 11,-
632,924, 8 and the census of 1910 declared that there were
15,160,369 souls in the republic. 7
It appears that through all the history of the republic
the population has had a slow but fairly steady increase.
It has never been sufficient to develop the resources of
the country, an inability accentuated by lack of capital
and lack of technical education. The country may still
be divided into three zones as to density of population
as at the beginning of the Diaz regime. First there is
the group of border states next to the United States, a
memoria de hacienda del ano economico de 1877 a 1878 t Mexico,
1880, p. 420.
The following schedule of estimates for the first part of the
Diaz regime is quoted in Luis Pombo, Mexico: 1876-1892, Mexico,
1893, p. 1:
1874 9,343,470 (Garcia Cubas)
1878 9,384,193 (Secretaria de Gobernacion)
1880 10,001,884 (Emiliano Busto)
188610,791,685 (Bodo von Glumer)
188811,490,830 (Direccion General de Estadfstica)
188911,395,712 (Garcia Cubas)
189011,632,924 (Antonio Penafiel)
For further discussion of this subject see Wallace Thompson,
op. cit. f pp. 56-85.
7 Boletin de la direccion general de estadistica, 5, Mexico,
p. 18.
14 MEXICO AND ITS RECONSTRUCTION
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THE POPULATION OF MEXICO 15
large portion of the area of which is taken up by moun-
tains and by great plains of scant rainfall. This area
has always been sparsely populated and, it seems, must
continue to be so. The percentage of white blood among
its people is higher than in other regions and they have
contributed beyond what would be indicated by their
numbers to the initiative for development that has been
shown in Mexico.
The Gulf and Pacific coast states form another group.
The former are on the average less thickly populated
than the latter, though Lower California is an excep-
tion, great areas being still without population. Jalisco,
Michoacan, and Oaxaca have been the most thickly
populated and important states of the Pacific group.
Now as always, however, the greater part of the Mex-
ican population is found in the states of the central
plateau, where the civilization of the country also finds
its best development.
If it is difficult to ascertain the population of Mex-
ico, it is even more difficult to find out the proportion in
which the various racial elements are represented. The
report to the king in 1793, above referred to, gave the
total number of Europeans as 7,904, white Creoles 677,-
458, castes 1,478,426, and Indians 2,319,741. This
would have made the percentages .2; 15.; 33.; and 52.,
respectively. 8 An approximate picture of the racial de-
velopments since that time may be secured from the
estimates, official and unofficial, made at various periods
as shown in the table opposite,
8 Compiled from the figures in Poinsett, op. cit.
16 MEXICO AND ITS RECONSTRUCTION
The proportions of these racial classes vary greatly
in different parts of the country. In the north the In-
dian tribes as such have practically disappeared. The
Tarahumaras and Tepehuanas and especially the
Yaquis, living in regions until recently little valued by
the whites, by their resistance to further encroachments
on their rights have had more attention drawn to them
than their number warrants. In the south the indigenes
are in general a larger part of the population. Guer-
rero and Michoacan inhabited by the Tarascas ; Oaxaca
with its Miztecs in the west and Zapotecs in the east;
and Yucatan, Campeche, and Chiapas, in which the
population is very largely of the Maya group, are the
most distinctively Indian areas.
The number of the pure Indians has decreased rela-
tively with the gradual spread of intermarriage with
whites and mixed bloods and doubtless will continue to
do so. In a large part of the republic, however, they
are the most important part of the population numer-
ically and they are the chief source of the labor sup-
ply- 8
The descriptions of the Indians of Mexico at various
periods in the history of the republic are almost inter-
changeable. In general they have kept, with but slight
modification, the customs they had four centuries ago
when America was discovered. In many parts of the
country they continue to live in almost complete isola-
tion, sufficient unto themselves. Even now they con-
9 See a discussion of these points in Erich Gunther, Handbuch
von Mexico, Leipzig, 1912, p. 65 el seq., and Wallace Thompson,
Op. cit., pp. 3-34 and 56-85.
THE POPULATION OF MEXICO 17
sume little from abroad and their demands are so few
that they produce little that enters into general trade
within the country itself. Nor do they contribute to
export trade in proportion to their numbers. They are
not now and they never have been important in the
creation of public wealth. 10
At the other end of the racial scale is the white popu-
lation which, since the time of the Spanish dominion,
has shown a preference for life in the cities, especially
the capital. In Mexico, however, there does not exist
any sharp social cleavage such as separates those of color
from the Caucasian in the United States. This has
always been the case. The Spanish colonist did not as
a rule bring with him a wife or wife and children but
took unto himself a native wife and from such unions
have sprung the mixed bloods who form the increasing
percentage of the population of Mexico. There are
among the upper class Mexicans many who are proud
of pure Castilian descent and who evidence a desire to
pass it on to their children, but this feeling appears to be
one resting on tradition and family pride rather than on
racial feeling. There is little if any disadvantage under
which a person of mixed blood works in business life or
in the seeking of public office."
The mestizo population, which has arisen between the
10 Memorla de hacienda y credito publico . . . 1 de Julio de 1891
a 30 de Junio 1892, Mexico, 1892, p. 21 et seq. For a very similar
description of the Indian population in 1824 see Poinsett, op cit.,
pp. 109-141.
11 An interesting discussion of race mixtures at the beginning of
tke Diaz regime in Mexico is found in Antonio Garcia Cubas and
George F. Henderson, op. cit., pp. 12-20.
18 MEXICO AND ITS RECONSTRUCTION
unleavened Indian peoples and those of white blood,
constitutes at the present time over half of the total. It
is the hope of some friends of Mexico and the despera-
tion of others. In the opinion of most observers it is
an improved stock as compared to the aborigines, quick
to learn but inconstant in the application of the lessons
taught. At present this population drifts as far as may
be into the lighter occupations. Unfortunately it shows
an unwillingness to undertake manual labor and a de-
sire for an education of a literary or professional sort
that will assure that physical labor will be unnecessary.
These are the people upon whom the future Mexico
will depend, but from whom she has not yet received
constructive leadership. Their ability to develop the
qualities of constancy and responsibility, which they
now lack, will determine whether Mexico assumes the
independent position economically and politically that
her physical endowment indicates is possible. Unless
the trend of immigration changes, thus upsetting the
racial developments now in progress, Mexico seems
destined to become a mestizo republic. It is already
far on the way to becoming one.
Perhaps no characteristic of Mexican life speaks
more plainly of the diversity of the elements entering
into its composition than the languages spoken by the
peoples of the republic. To appreciate the degree to
which the existence of the many tongues found in use
indicates lack of unity one must bear in mind the im-
mobile character of the population, the low state of
education, and the lack of facilities for communication,
all elements that work for particularism.
THE POPULATION OF MEXICO 19
The great majority of Mexicans, of course, speak
Spanish. Of those included in the language enumera-
tion in 1914, 88 per cent used Spanish as the usual
means of communication. The rest were divided among
48 enumerated tongues. The Nahuatl or Mexicano was
still used by over half a million, the Maya by 227,883,
the Zapoteco by 224,863, and the Otomi by 209,640.
None of the others were spoken by as many as one hun-
dred thousand and some were evidently disappearing
remnants. 12 Nevertheless that the Spanish tongue has
not been adopted by so large a proportion of Mexicans
in the four hundred years since dominion was estab-
lished is an indication that the church, the school, and
the government have all failed to bring a large number
of Mexicans into touch with European standards of
civilization.
One of the least satisfactory of the schedules of any
census is that dealing with religion, because the declara-
tion of membership in a church made to the enumerator
may mean merely an occasional attendance or an almost
inherited membership. The religious census of Mex-
ico is not an exception. The conversion of the country
to Christianity after the conquest was accomplished un-
der circumstances similar to all those of the time. It
was a surface conversion and often hardly that. Even
up to the present time though 99 per cent of the popu-
lation are listed as Catholics, the depth of the belief of
a large part of the ignorant lower classes is obviously
not great.
12 Boletin de la direccion general de estadistica, 5, Mexico, 1914,
p. 159.
20 MEXICO AND ITS RECONSTRUCTION
That there is, on the part of the natives, even in re-
mote corners of the country, a formal devotion is beyond
question. Even in the villages of interior Yucatan, miles
from a railroad or from anything which elsewhere would
he dignified by the name of a wagon road, each oval mud
and stake hut has its family altar with its Virgin and
such ornaments as its barefoot proprietor and his wife
can provide. In such communities, it appears that the
church has exercised quite as much influence as the state,
which is the more remarkable because of the relations
that the two have borne to each other since the Juarez
period.
The fact is, however, that in the districts away from
the centers of civilization and the railroads neither the
state nor the church is a very important factor in the
life of the people. The functions of each are formal to
a large extent, and skillful agitators can sway the popu-
lace to an attack on one as easily as upon the other.
Of the two, if anything, the church seems in the weaker
position. To be sure, in some states like Puebla, it
seems that the revolution surged about the bases of the
cathedrals yet, as a rule, left them unharmed ; but taking
the country in general the churches fell before the hands
of the revolutionists with but little popular protest.
That so small a minority as that which grasped the
standard of revolution in Yucatan, for example, could
dominate the population so completely and make them
allow, when they did not abet, the general destruction
of church property does not show that the church held
the position in the lives of the people that the census
statistics would indicate.
THE POPULATION OF MEXICO 21
The fact is that the church has been held up before
the people, since the Laws of Reform, as an influence
threatening the life of the republic. It has been used as
a bogey by the liberals to support their power and guard
against the possibility that the clergy might return to
their former position of influence among the people.
For a generation and a half at least it has been unim-
portant as a political influence. There is no Catholic
political party and even devoted Catholics have been
agreed, at least until recently, that it would be inadvis-
able to form one. The position that has been forced
upon the church by political developments has not only
destroyed its political influence very largely, but has
undermined its prestige. It has not been able to con-
tinue as effectively as formerly its work for the educa-
tion of the Indian population nor for its real conver-
sion. It is admitted even by enthusiastic churchmen
that in the districts away from the larger cities the In-
dian is reached only in a formal way by educational in-
fluences and that to his religion he is attached without
an understanding of any but its most simple teachings.
Nor has the church maintained its hold upon the so-
called upper class. Formally these too are in large ma-
jority Catholic but regular church attendance has ad-
mittedly become less general, especially among the men,
a large number of whom are more or less openly
agnostic.
If, however, the official figures be relied upon to give
a picture of Mexican religious conditions, there is little
to show that the campaign against the Catholic church
by political leaders, the missionary work of Protestant
22 MEXICO AND ITS RECONSTRUCTION
churches, or the gradual infiltration of foreign influ-
ences have had much effect in this land, which, like
others under Spanish dominion, was once Catholic ex-
clusively and perforce. Of the 15,160,369 Mexicans
listed in the census of 1910, 15,011,176 were Catholics;
68,839 were Protestants; 6,237, Buddhists; 602, Mo-
hammedans; 630, Greek Orthodox; 254, Israelites; and
5,605 of other faiths. 13
Even the latest statistics of the Mexican population
give no adequate basis on which a statement can be made
concerning the general education of the people. The
school system is not well developed. Illiteracy is still
very high. With the figures available it is impossible
to make more than general statements concerning either
the total population unable to read and write or the
relative illiteracy in different parts of the country. The
census of 1910 reports that among the 15,160,369 per-
sons enumerated, 7,065,464 are persons 12 years of age
or over who do not know how to read or write. Com-
parisons of census figures in other countries indicate that
the portion of the population less than 12 years of age
is roughly one-sixth. This would indicate that the illit-
erate population 12 years of age or over constituted
about 52 per cent of the total. As a basis of compari-
son may be taken the statement that of the population
of the United States over 10 years of age in 1910, 7.7
per cent were reported illiterate. The figures make a
13 Ibid., p. 155. A good discussion of the cKurcK as an element
in the social life of Mexico is found in Wallace Thompson, op. ctt.,
pp. 170-194. See also Manuel Calero, Ensayo sobre la reconstruc-
tion de Mexico, New York, 1920, p. 12 et seq., and p. 37 et seq.
THE POPULATION OF MEXICO 23
much more favorable showing than those in unofficial
estimates. These indicate an illiteracy ranging between
80 and 85 per cent. 14 Some of such estimates are based
on the total population, which is evidently an unfair
standard if education is being considered in relation to
ability to understand public affairs as presented through
the printed page and in relation to ability for self-gov-
ernment. The estimates of many careful observers
agree, however, that the census returns, even making all
allowances, present the picture in a very favorable light
and calculate the illiteracy of even the adult population
at near to 70 or 75 per cent.
Whichever standard most closely approximates the
truth, it is clear that literacy in Mexico, as elsewhere,
if taken as a test of general intelligence must be con-
sidered along with the actual amount of reading done
by the population, the circulation of books, magazines,
and newspapers, and the general intellectual activity of
the community. In these respects the life of Mexico,
with the exception of that in the cities, is backward,
even more so, it seems clear, than the official figures or
individual estimates indicate.
Accepting the official figures as a basis for compari-
son of the relative prevalence of illiteracy in different
districts it appears, as would be expected, that the
northern states and those in which the larger cities of
14 T. Esquivel Obregon, Influencia de Espana y los Estados
Unidos sobre Mexico, Madrid, 1918, p. 102, asserts that 93 per cent
of the voting population of Mexico is illiterate. Jorge Vera-
Estanol in his Carranza and His Bolshevik Regime, Los Angeles,
1920, p. 33, estimates the illiterates at "over four-fifths" of the
population.
24 MEXICO AND ITS RECONSTRUCTION
the central plateau are located make a better showing
than the rest of the country. These are the regions
where foreign influence has made itself most felt and
where the government supervision of education has been
most effective. 15
The census of 1910 does not classify the population
in a way that makes possible more than a very general
statement concerning the activities to which the people
devote themselves. In some cases there is great detail,
as in the enumeration of the single archeologist and the
lone apiculturist with which the country is credited. In
another case 58,840 persons are lumped as "workers in
industrial establishments." The enumeration of the
chief classes given in the table below is valuable only
for the general picture it gives of the proportion as-
signed to the larger divisions, and as an indication of
the undiversified character of the national economic life.
CHIEF OCCUPATIONS IN MEXICO 16
Unproductive, chiefly minors and students 5,423,170
Domestic workers 4,673,804
Agricultural workers, including 3,130,402 peons . . . 3,570,674
Industries 723,023
Commerce, including 236,278 listed as merchants. . . 275,130
Mining ., 95,878
15 The examination of the reports for individual states, however,
does much to destroy faith in the value of the educational enumer-
ation. The difference in the percentage of illiteracy announced in
various districts seems much less than what must be the fact when
the known inadequacy of the school system in some states is con-
sidered and seems to indicate that the census must have been taken
very carelessly or that the test of what was to be considered ability
to read and write was very low.
16 None of the other general classes includes 100,000 souls. There
THE POPULATION OF MEXICO 25
In point of numbers the foreign-born population is
negligible. They do not reflect in even a faint degree
the extent to which foreign enterprise and foreign cap-
ital have entered the country. Mexico never received
from the mother country a great stream of immigrants
that in a true sense Europeanized her population nor
have other lands greatly contributed. How many there
are of the foreign-born or of those who keep their for-
eign nationality through inheritance though born in
Mexico cannot be exactly determined. It is generally
estimated at a higher figure than the census indicates,
though the official enumeration, in this case, may be
more nearly correct than for the people as a whole be-
cause the foreigners are generally in the industrial areas
where the count is more easily made. In 1854 there
were 9,864 foreigners in Mexico who had taken out
"Letters of Security," of these 59 per cent were Span-
ish, 22 per cent were French. English, Germans, and
Americans formed about 6 per cent each. A generous
estimate of those in the country in 1861 places the total
foreign population at 25,000. 17
All told there were enumerated in the census of 1910
only 115,972 foreign born and of these only 658 had ac-
cepted the nationality of the land of adopted residence.
are evident inconsistencies in classification. Railway workers, for
example, are not classified under transportation though sailors are,
and under miscellaneous are placed many classes that should appar-
ently go under industries. The figures are from Boletin de la direc-
clon general de estadistica, 5, Mexico, 1914, p. 95. A more detailed
analysis of occupations in Mexico is given in Wallace Thompson,
op. cit., pp. 315-47.
11 Carlos Butterfield, op. cit., p. 11.
26 MEXICO AND ITS RECONSTRUCTION
The foreigner in Mexico is not on the road to becom-
ing a citizen, as is the case in the United States. He is a
foreigner and he intends to remain one and that his son
even though born in Mexico shall be one. In only about
one case in 175 does he who can remain a foreigner be-
come a Mexican. In 1910 of those enumerated who
had become Mexicans, a little less than one-third were
Spaniards and one-fifth were citizens of the United
States. One Spaniard in every 140 became naturalized,
one American in every 155. Forty-five per cent of the
naturalized citizens lived in the Federal District and 32
per cent in the states along the northern frontier.
Eleven per cent lived in Puebla. A naturalized citizen
elsewhere in Mexico is a rara avis.
Of the 115,314 foreigners who had kept their nation-
ality 25 per cent were Spaniards, 18 per cent were
Guatemalans who had crossed the southern border
chiefly to stay in the coffee districts, and almost 18 per
cent were Americans. Eleven per cent were Chinese
and another 11 per cent was made up of French, Ger-
mans, and Cubans. More than half of the Americans
resident in Mexico were reported from the northern
states, Chihuahua, Sonora, Coahuila, and Nuevo Leon,
ranking in the order indicated. 18
No study of Mexican conditions can show the under-
lying causes making the republic a problem to itself and
to its neighbors which overlooks the elements that have
been briefly sketched in this chapter. A varied popula-
tion, native, mestizo, and white, without a cultural basis
18 The above figures are compiled from Boletln de la direction
general de estadistica, 5, Mexico, 1914, pp. 18, 32, 39, 53, 65 and 75.
THE POPULATION OF MEXICO 27
upon which to create a uniform civilization, living in
territory of wide climatic contrasts, of necessity has seri-
ous problems to solve.
The population of Mexico is a group of peoples
among whom primitive tongues are still spoken by a
considerable portion, and among whom the standard of
life, even among those speaking a European tongue, is
still of a very simple type. They are peoples largely
illiterate and among whom literary and professional,
rather than vocational, education has been held up as
the standard to be sought for. They are non-industrial
and, up to the present, as a rule non-industrious. The
development of the resources of the country has fallen
into the hands of foreigners who, however great the
benefits they have conferred upon the country, do not
become a part of its political life as well as of its eco-
nomic life. Those who seek to bring Mexico out of these
conditions into the course of the civilization that we have
come to know as European have before them no easy
task.
CHAPTER III
THE GOVERNMENT OF MEXICO: EXECUTIVE
GOVERNMENT
CITIZENS of the United States take a certain pride in
stating that the governments of the new world are re-
publican, that they are set up under constitutions, and
depend upon popular vote. Probably the great major-
ity, when they make such statements, think of our own
political institutions and assume that those of the other
republics from the Mexican frontier to Cape Horn are
similar in their organization. But republican govern-
ment, democratic institutions, and popular elections in
the sense in which the people of the United States are
accustomed to use such terms flourish only under special
conditions, conditions that the majority of the republics
of the new world have not attained.
Even in the most advanced states the rules under
which citizens actually live are determined by the admin-
istration of the laws as well as by their spirit ; but if re-
publican institutions and democracy mean anything in
practical affairs, they mean a rule of practice as well as
an ideal to which the leaders of public life profess al-
legiance. They mean that the standards set forth in the
law must correspond at least approximately to those
observed in the everyday life of the community, and
that neither the executive nor any other part of the gov-
ernment can act contrary to the popular will as ex-
28
EXECUTIVE GOVERNMENT 29
pressed in the constitution and the laws. In many states
of the New World that standard has not been reached
it has not been reached in Mexico.
It is not necessary to review the history of the various
constitutions of Mexico to show that there the funda-
mental law has outlined an ideal standard of action and
not a rule for everyday observance. A comparison of
the norm set by the constitution of 1857 under which the
republic lived through all the orderly period of its exist-
ence with the practice of the government in the same
period will illustrate the degree to which even in time of
peace the observance of the constitution has continued
to be an unrealized ambition.
In its main outlines this constitution, like its predeces-
sors, was very much like the Constitution of the United
States of America. There was an attempt to establish
a division of powers among three branches of the gov-
ernment. The legislative function was vested in a Con-
gress composed of the Chamber of Deputies and the
Senate. The members of the former were elected for
terms of two years by Mexican citizens qualified to vote,
from districts of a population of 40,000 or major frac-
tion. Those elected must be at least 25 years of age,
residents of their districts, and not members of ecclesias-
tical orders. The senators were elected by an electorate
qualified as was that which chose the deputies, two being
selected from each state. The requirements for can-
didacy were the same as for the deputies except that the
senators had to be at least 30 years old. Their term was
six years.
The executive power was centered in the President of
30 MEXICO AND ITS RECONSTRUCTION
the United Mexican States, elected indirectly for a terra
of four years, 1 and, by an amendment to the constitution
of 1857 under date of December 20, 1890, eligible for re-
election indefinitely. Candidates for the Presidency had
to be native born Mexicans, at least 35 years of age,
residents of the country at the time of the election, and
not members of ecclesiastical orders. A cabinet assisted
the President in the administration of the government.
The judicial power was vested in the Supreme Court
of Justice and district and circuit courts elected by the
people indirectly for terms of six years. The jurisdic-
tion of the federal courts was very similar to that of the
federal courts in the United States.
The rights of the citizen against the government were
carefully guarded in a bill of rights. All men born in
the republic were declared free. Slaves became free on
touching Mexican soil. Freedom of thought and of the
press were guaranteed. The right of petition was rec-
ognized as was the right to bear arms and the right
freely to travel in the republic. Private property could
not be taken for public use without due compensation,
quartering of soldiers in time of peace was prohibited
as was search without warrant. Titles of nobility, im-
prisonment for civil debts, and imprisonment without
trial for a period longer than three days were abolished.
There could be no cruel and unusual punishments nor
1 The term was made six years in 1904 after "unanimous appro-
val of the legislatures of the States." The final declaration by the
Mexican Congress is published in Papers Relating to the Foreign
Relations of the United States, 1904, p. 491. The elaborate in-
auguration ceremonies are described at p. 493.
EXECUTIVE GOVERNMENT 31
monopolies, except certain ones which the state might
set up.
A degree of responsibility was given to the individual
states similar to that given the states of the American
Union. They had like limitations. In law their gov-
ernments were described as republican, representative,
and popular. They had the same general divisions of
powers as the central government. The legislative
power in the majority of the states was vested in a single
representative body called a Congress. The members,
in most cases, were chosen indirectly for terms of two
years. The executive power was in the hands of a gov-
ernor chosen almost without exception indirectly and
serving four years. The majority of the states had su-
preme courts with a system of inferior courts and
judges.
In short, the Mexican constitution of 1857 set up a
frame of government that had all the nominal guaran-
tees necessary for the establishment of a popular gov-
ernment of the sort that had been created north of the
Rio Grande in a sister republic, whose constitution Mex-
ican statesmen, almost without exception, have ad-
mired. 2
The theory of the Mexican constitution was never put
into practice in either the central government or the
states. The fundamental concept of the division of
powers between the three departments was never ob-
served. In the period of confusion between the issuance
2 A cogent criticism of the influence of the example of the United
States upon Mexico is found in T. Esquivel Obregon, Influencia de
Espana y los Estados Unidos sobre Mexico, Madrid, 1918, passim.
32 MEXICO AND ITS RECONSTRUCTION
of the constitution of 1857 and the Diaz regime, public
and private right were so disturbed that it is useless to
attempt a discussion of the degree to which the various
leaders sought to observe the commands of the consti-
tution. With the coming of Diaz the theoretic balance
of power was lightly brushed aside and an executive
government was established that used the legislative
and judicial branches as its agents.
One of the leading Mexican newspapers, contrasting
law and fact, declared in 1878, "The constitution of
1857 is an ideal law, made for an abstract man; it is
necessary to make it a Mexican law, adapted to our
present condition and endow the state with all the vigor
to recover from the long and dolorous experience of a
half century of civil disturbances." It concludes, "legal
precept is not in consonance with the necessities of life,
arbitrary power and despotism are the only regimen
possible in societies like ours." Under the existing con-
ditions perhaps the conclusion was justified and the best
that could be done, since the form of the constitution
was not changed, was to keep it as an ideal, though not
a measure of existing rights. Theoretically, of course,
the policy adopted was altogether indefensible. Its jus-
tification was that it might keep Mexico from falling
to pieces, raise the country in the estimation of the
world, and bring to it that solid basis for economic de-
velopment, which must be the foundation of any consist-
ent national progress. 4
3 Quotations from La Libertad in Papers relating to the foreign
relations of the United States, 1878, p. 658.
* See a discussion of federal as opposed to centralized govern-
EXECUTIVE GOVERNMENT 33
The first functions of the government in the opinion
of those who supported the new regime were the estab-
lishment of order and the collection of funds by which
the foreign obligations could be met and property pro-
tected at home. Policing and taxing were the most im-
portant, and, at first, the only important services ren-
dered. Government as an expression of general pub-
lic opinion, as a factor in the citizen's life because it was
a part of him and he of it, that sort of government did
not exist. It was not a spontaneous outgrowth of the
national character but something imposed from above
by a group, whose control was justified by the ac-
quiescence of a people that had no public opinion organ-
ized for determining upon whose shoulders the respon-
sibility of governing should rest. A true republican
government could not come into existence, it was ar-
gued, by the fiat of a constitution. It could not become
an actuality until there was born a public opinion rest-
ing on education and common ideals. It could not rise
until the diverse elements of which the nation was com-
posed developed a solidarity of interest founded on a
better basis than common oppositions and the accidents
of history.
The degree to which the policing function demanded
and received the attention of the government is reflected
in the appropriations for military expenditures through-
out the Diaz regime. This was a period after the two
invasions by foreign troops that the republic has suf-
fered. It was one in which the military problems were
ment in Mexico, by L. S. Rowe, Annals of the American Academy
of Political and Social Science, vol. 54, p. 226, July, 1914.
34 MEXICO AND ITS RECONSTRUCTION
almost exclusively domestic yet the army continued to
figure largely in the national budget.
In the late '70s the federal government maintained
an army of 30,000 men whose demands required two-
fifths of the entire revenue. Notwithstanding this the
chief item of expenditures of the states was also for
military purposes. These forces, usually called state
guards, might be expected to be necessary in the out-
lying regions where the arm of the national government
could not be relied upon. In fact even populous states
near the capital maintained them. The State of Mexico
itself spent about 30 per cent of its revenues on its sol-
diers. Puebla, Jalisco, and others among the more ad-
vanced of the Mexican units did the same. Doubtless
these local forces were at times needed for policing pur-
poses, but their existence made the raising of a revolu-
tion against the national government easier. It was the
natural impulse of the central government to bring them
under ifs own control as far as possible in order to mini-
mize the chance that its own power might be questioned.
Commenting on a report made to the federal Con-
gress by one of its members a Mexican editor analyzes
governmental conditions in 1879 as follows: 8
The vast territory of this country is in its greatest part
divided into petty kingdoms, subject to the whims of little local
tyrants, who inflict upon their unfortunate subjects every class
of outrage and vexation. Neither life nor property, nor any
of the other individual rights, have guarantees of any kind ; of
5 Papers Relating to the Foreign Relations of the United States,
1879, p- 835 et seq.
8 Ibid., p. 826 et seq.
EXECUTIVE GOVERNMENT 35
the administration of justice there exists nothing but a vain
pretense, and public morality has passed into the category of
unrealizable dreams.
To remedy such conditions President Diaz at once
set his hand. The army was the instrument on which
he relied. One of the developments with which he was
best satisfied at the end of his first term was the "great
and undoubted progress . . . made in the organization
of an efficient police, both metropolitan and rural; the
latter being distributed not only in the federal district
but throughout the various states of the republic."
Throughout his period of control the President con-
tinued to rely on the military power as the factor that
should keep the nation in equilibrium.
The emphasis of the policy of policing the country
by forces increasingly under the control of the central
government, of itself emphasized the executive func-
tions of that government. The ignorance of the people
and their inexperience in self-governing institutions
prompted doubts as to the possibility of truly popular
elections and as to the advisability of entrusting more
than the form of power to legislators or judges who
might be selected by them. As a result, to protect
itself, the executive and the small circle that surrounded
him came to consider it a necessity not only to control
the administration local and central, partly through the
political organization and partly through the army but
also to take from the legislature and the courts any real
7 Paraphrased from address of President Diaz to the Mexican
Congress in ibid., 1889, p. 553.
36 MEXICO AND ITS RECONSTRUCTION
freedom of action. These became bodies that in prac-
tice registered the will of the administration.
Even though a state has not a people who have risen
to conditions that may make a true popular government
possible, it may have a constitutional government if the
small governing class is organized for expressing its
own divisions of sentiment and disposed to respect the
provisions of the constitution by abiding by the deci-
sions so expressed. Mexico has not arrived at that
status. Admirable as are the intellectual qualities of the
upper-class Mexican, he has not yet developed a spirit
of cooperation and forbearance which leads him to com-
ply with constitutional standards in the choice of public
officials even by the small class to which he belongs. He
has not shown a willingness to give obedience to the
standards that the opinion thus narrowly determined de-
mands. Unfortunately for Mexico her political life has
seldom indeed risen above a camarilla stage and the rul-
ing camarilla has seldom been strong enough to control
the man who for the moment was at its head.
No government in power in Mexico in the old regime
ever failed to control the elections that it called. To
be sure there were dissenting groups that did succeed
not infrequently in defeating the government candi-
dates in the Congressional elections but they never rose
to the dignity of true parties and their success could
have been cut down doubtless had the administration
felt it necessary or politic to do so.
Even a class government may be a step toward de-
mocracy. Mexico, properly speaking, has never had a
governing class. She did not have it under Diaz and
EXECUTIVE GOVERNMENT 37
the failure of the dictator to take effective steps to create
either a governing class that could fight out within
itself the national policies, or a popular educational sys-
tem that would prepare the people as a whole for self-
government was a signal failure of the government he
created.
Under the old dictatorship Mexico drifted on into
the twentieth century, into a century in which the
changes that had come in her national life and her short-
comings both stood out in sharp relief. It was a new
economic Mexico with railroads, telegraphs, newspa-
pers, and an increasing number of foreigners, all of
which brought enlightenment through touch with the
outside world. But among the advantages that had
come from the new day, ability in self-government was
not numbered. Economic improvements had been in-
troduced from abroad and had become a vital part of
Mexican life. But the political training of the people
was given no attention.
In the actual problems of ruling themselves, the
rough give and take of political contests properly so
called, the Mexican at the winning of independence was
still fairly comparable to the Mexican of the conquest.
He had seen the light, wanted to follow the ideals that
republicanism and self-government stood for in other
countries, but he was almost totally inexperienced. To
say that in the interval between independence and the
beginning of the twentieth century the Mexican had
made no advance in self-government would be unfair
but it is true that he had not markedly improved his po-
sition. Republicanism and self-government had come
38 MEXICO AND ITS RECONSTRUCTION
to mean more in 1912 than they did in 1812 but, rela-
tively speaking, the Mexican people were little if any
nearer the standard set by the leading self-governing
peoples of the world after a century of independence.
Disorder followed by dictatorship had hindered the
development of true political institutions or the success-
ful adoption of the examples offered in the experience
of other nations. The Mexican had advanced in mat-
ters of government but had not gained on the leaders.
He had buffeted through a long list of revolutions but
without a broadly constructive political experience. He
had developed political leaders but no political parties.
The degree to which the government of Mexico was
executive can be appreciated by analyzing the way in
which public authority was exercised in the first years
of the twentieth century a period when the power of
the old regime was well established and when continued
peace had developed what for Mexico could be consid-
ered normal conditions.
Power continued to rest in the hands of the President
of the Republic as it had rested in the hands of the exec-
utive in the colonial period. In practice the President
controlled the elections, he determined thus whether he
should succeed himself and who should constitute the
legislatures, federal and state. 8 To him the obedient
Congress gave power to legislate by decree on specific
8 In some cases in the latter part of the Diaz period there seemed
to be the elements of an independent party organization. The most
important was the development under the leadership of Bernardo
Reyes in the north. Sporadic defeats elsewhere in local elections
were not unknown.
EXECUTIVE GOVERNMENT 39
matters or on entire subjects, or it passed, with only a
show of discussion, the drafted legislative measures sub-
mitted to it by the President.
The exercise of these wide powers by the executive
did not originate with Diaz; it did not end with his fall.
By decree even such fundamental matters as tariffs and
other forms of taxation were decided upon by the dic-
tator and the same method has been followed by his
successors. Congress abdicated to President Diaz the
power to issue in his discretion bonds against the credit
of the state. 9 By his authority a controlling interest in
railway lines was acquired, Congress merely giving its
assent after all the details were arranged. In a word,
the powers of Congress had never been recognized as of
the nature and extent that the constitution outlined.
They had not atrophied, for they had never truly de-
veloped.
The Congress, in fact, was never independent either
in personnel or in powers. 10 It was a body composed
largely of persons who did not live in the districts they
represented, a gathering of carefully selected men often
of decided oratorical powers, a dignified body in which
true clash of opinion occurred only on such matters as
were indifferent to the executive. 11 Some, at the time
8 A similar power was conferred upon President Carranza.
10 The constitution is considered by many to have contemplated
legislative ascendancy. See R. Garcia Granadas, La Constitution
de 1857 y las leyes de reforma en Mexico, passim.
11 A description of the way in which opposition sentiment was
controlled early in the old regime is found in the Nation, vol. 41, p.
394, November 12, 1885. See also T. Esquivel Obregon, op. tit.,
passim.
40 MEXICO AND ITS RECONSTRUCTION
of their election, were already state or federal office-
holders and by the vote of the indulgent Congress to
which they had been chosen were allowed to hold both
the old and the new offices at the same time.
The courts have never been a coordinate part of the
government in Mexico, though that has regularly been
an announced ideal. The federal judges under the old
constitution were nominally elected and those of the
state courts were generally chosen by the governor. In
any case, the executive, state or federal, regularly con-
trolled the selection. Since the federal executive had
influence in the choice of the governors of the states,
the courts from the highest to the lowest, in practice,
were his own creatures.
In its treatment of the courts in the latter part of the
Diaz regime the executive seems to have found itself
drawn between conflicting impulses. The President was
urged by certain of his advisers to make the ideal of an
independent judiciary a fact and it is alleged he
desired to do so. He is said to have hesitated to
put property rights under the unrestricted control
of the courts because of the unfortunate effects
both national and international which such a step might
involve. From the national point of view it was of the
greatest importance that the flow of foreign capital into
Mexican investments should not cease. If anti-foreign
prejudice in the courts, especially the local courts, pro-
duced decisions that would discourage investment, it was
argued that the economic development of the republic
would be hindered. Furthermore if foreigners were
denied justice, they might take their claims to their own
EXECUTIVE GOVERNMENT 41
governments with diplomatic complications as a result.
If the executive kept an effective control over the courts,
such unfortunate circumstances could be avoided. The
traditional policy of concentration of power, so far as
it affected the courts, could be bolstered evidently with
arguments of a concrete character. To the end of the
Diaz regime the often promised freedom of the judi-
ciary remained an unrealized ideal.
The fact is, then, that the government of Mexico,
when it has deserved that name, has been an executive
government. When the executive has been responsbile
and has had effective control, life and property for citi-
zens and foreigners have been safe. If the executive
has become irresponsible, life and property have been
insecure. When the executive has lost control, Mex-
ico has become a geographical expression and not a gov-
ernment. 12
12 An article describing the development of executive control in
the Gonzalez period is found in the Nation, vol. 34, p. 399, May
II, 1882. The executive influence exercised in modifying the con-
stitution before the last election of Diaz is described in the Nation,
vol. 78, p. 4,4,8, June 9, 1904.
CHAPTER IV
THE GOVERNMENT OF MEXICO: ELECTIONS
TRACING the details of Mexican politics before the
Diaz regime gives no picture of principles or system.
Each triumph announced is followed at a short interval
by what appears to be the overthrow of all the triumph
stood for. ]NTor indeed did the government, which
brought peace in the late '70s, mean triumph of prin-
ciple. Of the principles for which it stood no reelec-
tion and free suffrage one was overthrown by the
leader who proclaimed it and the other never was given
a trial. There was established a system of government
that brought peace, freedom from pillage in the name
of the people, and at least a greater measure of freedom
for the economic development of the country, but the
political ideals of the revolution were brushed aside and
ignored.
How Mexico came to the belief that peace at any
price was the first need of the republic is the theme of a
great part of its early history. In the generation fol-
lowing the revolution against Spain the contests had
been between the Conservatives, or supporters of the
church, and the Liberals. These were divisions on prin-
ciple but ones in which the conflicts of opinion were
settled, as a rule, by violence and not by appeal to the
ballot. At the restoration of the republic in 1867, the
French intervention having come to an end, the Liberal
42
MEXICAN ELECTIONS 43
party was completely victorious. Its opponents have
never recovered their prestige, nor indeed have they
even attempted actively to enter political life. Juarez
was elected President on the prestige of his leadership
against the Conservatives and the European interven-
tion. There was practically no opposition. A large
minority of the people constituting the Conservative
party had eliminated itself as a political factor.
At the next election the single group that was left
divided into the supporters of President Juarez, Lerdo,
and Diaz. The discord that had formerly existed be-
tween the parties invaded the organization of the Lib-
erals. Even the general participation of the Liberal
party in politics was soon to disappear. In the election
Juarez was again declared President. Diaz appealed
to arms in the so-called revolution of La Noria. With
the revolution still in progress Juarez died. Lerdo, in
accordance with the law, succeeded and later was elected
without contest and with very little popular participa-
tion. The Liberal party, so far as it had vitality, was
breaking down.
In the election of 1876 Lerdo again declared himself a
candidate. Diaz announced that an election would be a
farce since Lerdo controlled the election machinery.
His supporters took no part in the election but started
the revolution of Tuxtepec on the platform "no reelec-
tion and free suffrage." The Lerdistas held their elec-
tion in July, armed opposition being in full swing and
the Conservatives not voting. The revolution headed
by Diaz was successful and its leader ordered a new
election for President and members of the supreme
44 MEXICO AND ITS RECONSTRUCTION
court early in 1877. In this only the Diaz men voted.
The other branches of the Liberal party and the Con-
servatives abstained. The election of Congress the fol-
lowing year showed no more vitality.
The new system of Mexican politics had been ushered
in. It was a brave show of popular government but
one in which the people had no real part and took no
real interest. It was not even a true contest among the
upper class. It was a procession only, not, in fact, a
struggle in which high aspirations were announced by
rival candidates for the approval of the multitude but
a sham display in which decisions already taken were
confirmed. From 1877 to the end of the Diaz regime
elections in Mexico were not functions reflecting na-
tional opinion but ceremonies consecrating the estab-
lished order.
It is wrong to suppose that the succeeding elections
in Mexico all rested on active general display of force.
They did not, nor was comment in the press at an end.
The criticisms of the government in the opposition pa-
pers were often lurid. Mexican journalism is nothing if
not colorful. But active repressive measures were un-
necessary as a rule because there was no active opposi-
tion. Peace had come, a peace that, laying its strong
hand upon the people, took away from them the right of
self-government, which they had used only to abuse it.
Peace had come to bring to the country the longed for
economic development that might make Mexico one
of the leading countries of the New World. Pity that
the peace that came to Mexico had not also within the
folds of its garments that uplift for the Mexican people
MEXICAN ELECTIONS 45
that would have made them capable of solving by peace-
ful methods the very problems that peace and material
development left at their door!
The election of 1882 illustrates the conditions at the
beginning of the new regime. There were no true party
organizations, practically no public gatherings, and little
discussion of candidates or issues in the press. There
were no nominating conventions. The candidates were
chosen in private juntas of very select character. High
flown editorials appeared concerning the solemnity of
the electoral function but even the date of the election
passed almost unnoticed and the announcement of the
result was not of sufficient public interest to receive more
than casual mention. 1 Even the solemn public show of
compliance with constitutional formulas, which charac-
terized the later "elections," was not observed. Mexican
leaders seemed to have tired of factional struggles and
were willing to let the government in power rule if it
could assure peace.
By its organization the electoral system in force con-
tributed to make it easy to impose the will of the party
in power. It was so complicated that it obscured the
1 A good description of political conditions during the election
of 1882 is found in the Nation, vol. 34, p. 399, May 11, 1882, and
the Nation, vol. 35, p. 198, September 7, 1882. These articles
discuss the conditions under Gonzalez. The conditions surrounding
earlier elections are described in Papers Relating to the Foreign
Relations of the United States, 1878, p. 567 et seq. Later elections
are described in Alfred Bishop Mason, "The Cause of Revolution
in Mexico," Unpopular Review, vol. 3, April, 1915, and Henry
Lane Wilson, "Madero's Failure," Annals of the American Academy
of Political and Social Sciencce, vol. 54, p. 148 et seq, July, 1914,
discussing the government control of elections under Madero.
46 MEXICO AND ITS RECONSTRUCTION
result of any development of popular opinion. 2 While
a system in some respects similar has resulted in the
United States in an approach to direct popular control
through the creation of agencies which, while keeping
the form of the constitutional provisions, changed their
spirit, in Mexico the indirect system enabled the execu-
tive to destroy all popular control.
The various states were divided into electoral dis-
tricts of 40,000 inhabitants. These in turn were divided
into sections of 500 inhabitants. Every alternate June
the people of a section chose an "elector." The electors
assembled in July to vote for one Congressman for each
district and two Senators for each state. Every fourth
year they voted also for the President. The result of
the voting of the electors was canvassed by the Congress
in the case of the Congressmen and the President, and
by the State legislatures in the case of the Senators. 3
The state elections, also based on popular vote, oc-
curred simultaneously with the choice of the federal
officers but aroused no more popular interest. The state
officers were regularly supporters of the government
who lived in the state capital, though representing, in
the case of legislative officers, outlying districts in which
they were often very little known. Often the members
of the state legislature might also be executive officers.
Besides this practice of allowing an individual to hold
2 Papers Relating to the Foreign Relations of the United States,
1878, p. 567 et seq.
3 Various amendments were introduced before the end of the
Diaz regime, but the general character of indirect choice was not
affected thereby.
MEXICAN ELECTIONS 47
executive and legislative positions at the same time,
there grew up the custom of divorcing representation
from even the requirement of a nominal residence in the
district represented. This was true in both the state and
central governments. The law required that mem-
bers of Congress should be citizens and residents of the
districts represented. Nevertheless it frequently hap-
pened that those elected were neither, and in some cases
had never even been physically within the district from
which they were "elected." Curious situations arose
thus. In 1878 one of the prominent members of Con-
gress was elected from a district in his native state but
not that of his residence. He was also chosen from a
district in another state. As he was at outs with the
local governor he accepted the election in the second.
At the next election he was chosen Senator from a still
different state and seated.
These practices continued throughout the Diaz re-
gime. In 1904 three states were represented in Con-
gress by Senators and deputies none of whom had ever
resided in their districts and only two or three of whom
had ever been in the states they represented.* Actual
residence, even when claimed, was, in fact, often nom-
inal since the real abode of many of the representatives
was regularly the capital the attractions of which made
life in the provincial towns seem dull.
As the Diaz period progressed the elections became
more important events in the national life. They were
given greater publicity and attracted more popular at-
tention. Nevertheless they did not represent a clash be-
* Nation, vol. 79, p. 194, September 8, 1904.
48 MEXICO AND ITS RECONSTRUCTION
tween two great political parties nor a free-for-all con-
test between a number of groups. There was no po-
litical organization such as is characteristic in Anglo-
Saxon countries and in continental Europe.
The election of June, 1904, illustrated the smooth
working of republican government of the type the Diaz
administrations created. Election boards were chosen
in strict accordance with the letter of the law and polling
places were specified. In the campaign period there
were "spontaneous demonstrations of the masses" an-
nounced by government papers. Small crowds gath-
ered at political speeches to enjoy the music that was
furnished and to be thrilled by oratorical appeals to
general principles. On election day there was little
real public interest evident. When the votes, which in
most districts were few, were counted, the candidates
who had been announced as having the support of the
government were found elected. They had had little
opposition, indeed they generally had no opponents.
The election over, the work of the various electoral
colleges proceeded with all due ceremony. The follow-
ing summary is based on the official proceedings of one
such body as published in the official Gazette of the
State: 6
At the first meeting, the jefe politico, or governor, of the
district presided, until the meeting, composed of sixty-odd
electors, had chosen its officers, after which he withdrew and
the meeting adjourned for the day. At the second meeting,
the "credentials" of the members elected . . . were all pro-
5 The facts concerning the elections of 1904 are taken from the
Nation, vol. 79, p. 194, September 8, 1904.
MEXICAN ELECTIONS 49
claimed correct, and the meeting adjourned. At the third
meeting, a Deputy for that District and a Senator for the
State were chosen, by unanimous vote, together with a substi-
tute for each. The fourth meeting brought out the vote for
President and Vice President. Diaz was unanimously chosen,
after which a telegram of congratulations was sent to him, and
felicitations were exchanged with the Governor of the State
during an informal recess ; then Corral was voted upon for Vice
President, receiving 50 of the total of 66 votes, the rest being
a few scattering expressions of individual choice. At the last
meeting the two justices of the Supreme Court . . . received
formal approbation. Thus, five days, with sessions of an hour
or less each, were consumed in the process.
By this time repression of public discussion in the
spoken word or in the newspapers had almost disap-
peared. 8 The dictator in the latter part of his regime
is said to have welcomed criticism so long as it did not
touch himself. Whether this was done from desire to
promote the development of true parties, which might
later become responsible agents for carrying on the gov-
ernment, or as a means to provide a safety valve for in-
creasing public opinion is not clear. There was, how-
ever, no group of thinkers that announced a platform
of real reform. The opposition press was no more con-
structive in policy than that which supported the gov-
8 The control over the casting and counting of votes, however,
was not lessened and extreme measures were taken when an election
threatened to become more than a formality. See an interesting
discussion of widespread arrests and other corrupt practices em-
ployed to control the Diaz-Madero election, in Dolores Butterfield,
"The Situation in Mexico," North American Review, vol. 196 p.
649, November, 1913.
50 MEXICO AND ITS RECONSTRUCTION
eminent. The statements of the papers presented the
most amazing contradictions. The work of the reporter
and of the newspaper in the elections too often were in-
terpreted not as involving a duty to report the facts
but as an opportunity to damage the candidate opposed
by misstatement and invective.
The degree to which popular government did not
exist in Mexico in the old regime may be judged by the
number of votes actually cast for the Presidential can-
didate. Going back before the Diaz regime we find
the votes at the second election of Juarez to number
12,361 in a reported population of 8,836,000. Lerdo
was chosen in 1872 by 10,465 votes with less than 1,000
in opposition. The control of the government in 1876
was determined by revolution. In 1880, 11,528 votes
were cast for Gonzalez with a scattering opposition. 7
Popular interest did not rise even with the establishment
of peace. Throughout the Diaz regime there continued
the apathy on the part of the general electorate which
must be shaken off before Mexico can lay any claim to
being a representative or popular government.
Since the passing of the old regime no issue has been
presented to the people under conditions that would en-
courage a free expression of popular opinion. The pri-
vate instructions sent out for the Huerta election in
1913, which was the veriest farce, showed on their face
the desire to preserve an apparent respect for popular
will and to assure that it should be defeated.
Political parties and citizens were to be "given full
freedom in the polls which may operate, allowing them
7 Figures cited in the Nation, vol. 34, p. 399, May 11, 1882.
MEXICAN ELECTIONS 51
to make all kinds of protests, providing they refer to
votes in favor of any of the candidates appearing before
the people" and those who were chosen to manage the
polls were to be persons who would "inspire absolute
confidence" and who were "well versed in the electoral
law."
The private instructions sent out provided, it is re-
ported, that the persons in charge of the polls were to
be "absolutely reliable, so that they may follow the in-
structions given to them." It was planned to prevent,
where possible, the election in two-thirds plus one of
the polls in each district, to make the choice void. In
all the polls that did operate blank tickets were to "be
made use of in order that the absolute majority of the
votes may be cast in favor of General Huerta . . ." and
if these means failed the returning officers were to fal-
sify the result. 8
The government recognized in the election of 1917
that the executive influence exercised in the elections
of the old regime did not square with true democratic
standards and announced its intention to have the voting
unaffected by official pressure. First Chief Carranza
announced that the reports that some of the candidates
for governorships were official candidates were un-
founded. He declared "the Constitutional government,
which I have the honor to represent, will not sustain or
protect any popular candidate whatsoever. ... In vir-
tue of this in some of the States, where the provisional
8 This interesting set of directions, dated October 22, 1913, is
published in the Congressional Record, vol. 51, part 9, p. 8517,
May, 1914.
2 MEXICO AND ITS RECONSTRUCTION
governors have placed their influence in favor of certain
candidates, they have been removed, so that the will
of the people shall not be trampled upon." 9 Whether
the election was free in fact is disputed. The opponents
of the government alleged that the announcement that
the election was free was made only to strengthen the
government in the opinion of foreign nations.
It seems clear that in some sections at least the elec-
tion of 1917 did awaken a greater interest in public af-
fairs, and resulted in more voluntary voting. In some
cities activity in the election appears to have produced
spirited contests, 10 but these seem to have been gener-
ally the result of enthusiasm in support of rival candi-
dates within the same party and not of a true
inter-party clash. In Mexico City there were over 600
candidates for the 24 positions to be filled a fact which
in itself shows scattered enthusiasm rather than good
political organization. The official Congressional can-
vass showed 797,305 votes cast for Carranza, 11,615
for Gonzalez, 4,000 for Obregon, and a number of scat-
tering ballots for other candidates. 11 On the evidence
available it appears clear that the election of 1917 was
9 Mexican Review, vol. 1, No. 9, Washington, June, 1917. The
announcement was dated at the National Palace, Mexico, April
7, 1917.
10 A description of this election is found in the semi-official Mexi-
can Review, Washington, vol. 1, No. 8, May, 1917. See also
Arthur Ruhl, "Mexico's First Real Election," Collier't, vol. 48,
No. 7, p. 19, November 4, 1911.
""Mexican Review, vol 1, No. 9, Washington, June, 1917, p. 8.
A table is included showing the votes by states. See also Bulletins
of the Mexican News Bureau, June 19 and 21, 1917.
MEXICAN ELECTIONS 53
less affected by official influence than those of the old
regime. There was greater popular enthusiasm and
the largest vote in the history of the republic was cast.
On the other hand, the circumstances surrounding
the election were so exceptional that the returns can-
not properly be taken as indicative of what may be ex-
pected in the average case. The choice occurred shortly
after a successful revolution, when a widespread oppo-
sition could hardly be expected. This was the first
election in which the Mexican people voted under the
new constitution providing for a direct vote for the
President, a change which in itself would encourage a
heavier poll. The desire of the administration to make
a good showing naturally made its supporters anxious
to get the voters to the polls. The opposition did not
vote. Many of its leaders were in exile. The govern-
ment could have made the vote larger doubtless if it had
wished, just as the Diaz government could have in-
creased or decreased the polling if it had been felt worth
while. The lack of secrecy of the ballot, especially
among a population so largely illiterate, is another fac-
tor that makes the result doubtful as a reflection of the
popular will.
Events after the election of 1917 have not been en-
couraging for those who hope for the early develop-
ment of popular elections in Mexico. The violent death
of President Carranza followed, after the provisional
Presidency of de la Huerta, by the unopposed election
of Obregon in August, 1920, does not show that a new
era in Mexican politics is at hand.
The most unsatisfactory feature of these elections is
54 MEXICO AND ITS RECONSTRUCTION
their unanimity. No nation of 15,000,000 people vot-
ing under normal conditions shows such community of
opinion. There was not before the revolution and there
is not now in Mexico a vigorous party organization that
brings a clear-cut clash on candidates and policies. The
test of the Mexican people as a voting body lies not in
the elections of 1917 and 1920 but in the elections to
come, when the personal ambitions and differences of
opinion of the various leaders have free play. There
may then arise the old personalism that has been the
fatal element in Mexican politics. The mutterings of
discontent already beginning to be heard may make
applicable again the lament of a member of the Su-
preme Court who, over a generation ago, declared : 12
We have frequently asked ourselves what the divisions of the
Liberal party in Mexico signify. Proclaiming the same prin-
ciples, entertaining the same aspirations, united in the same
history of abnegation and sacrifices . . . the numerous mem-
bers of this great family have separated . . . when they should
. . . combine their efforts and unitedly advance to the attain-
ment of a great object, the progress and prosperity of the
country. . . .
Many times, we have asked ourselves, is reconciliation among
the different members of the republican family possible? . . .
And in case of the absence of sufficient abnegation for the con-
summation of so meritorious a work, what is the fate which
awaits, not merely a certain political organization, but the
country disunited, debilitated, impotent to control the disorder
which consumes it ... ? If the contentions of personal fac-
12 I. M. Vigil in Monitor Republlcano, August 7, 1878, article
quoted in Papers Relating to the Foreign Relations of the United
States, 1878, p. 571.
MEXICAN ELECTIONS 55
tions are to continue as up to the present, ... it will neither
be possible to establish a durable government nor to restrain
crime which, under a thousand forms, may invade society, the
country being condemned as it seems to inevitable dissolution.
One cannot study the political history of Mexico
without reaching the conviction that the political leaders
have not faced the facts with which they have had to
deal. There has never been a determined and united
effort to raise the people to that status in which true
enthusiasm and ability for self-government is born.
The better educated have made sporadic efforts to do
so but those efforts have broken down almost as soon
as made. Great advance has occurred in economic lines
through the cooperation of the foreigner. Mexicans
have not had cooperation from outside the country in
political affairs and have indicated their unwillingness
to accept it. If Mexico is to work out her own political
salvation, as all her friends hope she may, a great
responsibility rests on that small class which, by its
wealth, social position, and education, is free from the
limitations that surround the electorate as a whole.
Orderly government has heretofore meant one-man rule
in Mexico. That basis must be broadened, to include
de jure and de facto at least those who, by education
and experience, have the intellectual equipment for self-
government.
Before those to whom Mexico has given advantages
lies this opportunity for patriotic service and upon them
rests the responsibility of learning the lesson of cooper-
ation cooperation with those of like and of unlike polit-
ical faiths. They must lead their country and must
56 MEXICO AND ITS RECONSTRUCTION
govern it, they must prepare the common people of
Mexico to discharge the duties of self-government,
which a century of experience has shown they do not
yet possess.
The failing of Mexican statesmen in the past has
been the one that has beset Latin American countries
generally from the day of their independence. They
have not realized that true ability for self-government
on the part of the people at large comes with the slow
growth of national ideals and the gradual adjustment
to more advanced standards of political thinking and
action. The constitution makers have placed their faith
in forms of government. They have overlooked the
fact that high sounding phrases cannot at a stroke
endow a people who have never enjoyed self-govern-
ment, and who are without experience, therefore, in its
exercise and without the critical public opinion on which
it must rest, with the ability to cast off the past like a
cloak and start anew.
This is the fundamental truth that makes all the
detailed comparisons of the old and new constitutions
carried on in and out of Mexico futile. The old con-
stitution did not fit the facts. The new constitution
does not do so. The people of Mexico will never truly
rule themselves until the day when by evolution through
education, industry, and habits of political association
they fit themselves to do so. 13 Unfortunately the adop-
13 The political organization considered practical by the advanced
revolutionary leaders is discussed by V. Carranza in his "Report
to Constitutional Congress at Queretaro," December 1, 1916, New
York, Latin American News Association (pamphlet).
MEXICAN ELECTIONS 57
tion of no constitution alone will give them that endow-
ment. Till this slow development is under way political
power will rest in the hands of some new Diaz or in
the hands of a small but widening group, which, with
or without foreign aid, will undertake to prepare the
people for responsibilities of self-government.
CHAPTER V
THE GOVERNMENT OF MEXICO: THE STATE AND
LOCAL GOVERNMENTS
THE constitutions of Mexico have attempted to set
up states with a sphere of action in large degree similar
to that of the states in the United States but the sys-
tem has never taken root. There has never been a vig-
orous system of local self-government. Public opinion,
here as in the central government, has been inactive and
unorganized. The absorption of functions by the cen-
tral government left the localities little to do. The
choice of local officials in the elections was seldom more
free from the influence of the central executive power
than was the selection of members of Congress and the
same influence exerted after the elections made the de-
liberations of local bodies trivial. They did not have
sufficient freedom of action, nor sufficient command of
funds to put through the legislation needed by their
localities or to arouse public interest in their pro-
ceedings.
Most of the state legislatures consisted of a single
house of from 12 to 30 members. Their sessions under
the old regime were normally two per year, each lasting
nominally three months. On the days when the houses
met, the sessions were ordinarily limited to two hours.
Their proceedings were often brilliant, and the members
were often exceptionally able parliamentarians. When
58
LOCAL GOVERNMENT 59
the legislature was not in session, it was represented by
a permanent deputation whose announced function was
to protect the rights of the legislature from encroach-
ment by the executive.
Public revenues could be increased only with great
difficulty in most of the states. The central govern-
ment monopolized the customs duties as a matter of
course. Since the industrial development of the coun-
try was small, the states had in their power to tax local
developments, a less valuable resource than in better de-
veloped lands. The desire of the states and that of the
national government would naturally be to burden en-
terprise as little as possible in order to encourage the
entry of capital. Thus they hoped to create greater
local wealth, raise the national standard of life and in-
crease the ability of the government to collect greater
amounts in taxes without checking the advance of the
country.
The taxing system actually in use had its origin in
the system developed in Latin countries long before the
period of independence. With some exceptions the rate
of levy was low. There was in all the states, except
Yucatan, a general tax on property, usually reckoned
on a percentage of value officially determined for dif-
ferent classes of real estate. Taxes on industry and
commerce were general throughout the republic. Both
these levies are alleged to be based on practice intro-
duced into Spain through the Roman law. There was
a tax on professions, called the patente, drawn on the
model of a French tax instituted in 1791. Consump-
tion taxes on various articles were collected, familiar in
60 MEXICO AND ITS RECONSTRUCTION
the colonial period as the alcabala. When formally
abolished, these were, in later Mexican history, substi-
tuted by municipal duties and an increase in the quotas
of other state taxes. Some states had poll taxes or taxes
on all persons over 14 years of age. They were not an
important source of income. 1 Besides these there were
a large number of other sources of revenue, few of
which gave important yields, many of which were sur-
vivals, and some of which were merely curious. How
weak the state governments were financially may be
illustrated by the fact that for the government of the
great area of the State of Chihuahua there was col-
lected even as late as 1907 only $1,307,489 Mexican, an
amount that was even less than it appears, for the ser-
vices performed by the municipalities in many other
countries are largely performed by the state in Mexico. 2
Weak as the state governments were, they were
much stronger than those of the municipalities. In
fact just as the central government absorbed the func-
tions of the states, these in turn took over municipal ser-
vices. No feature of Mexican public life shows more
clearly the lack of real self-government in the republic
than the condition of the cities and towns during the
Diaz regime. It is almost axiomatic that where a vig-
orous local public life is found there is good soil for the
growth of self-governing institutions, the foundation
1 M emoria de hacienda y credito publico . . . 1 de Julio de 1910
a 30 de Junto de 1911, tomo 2, Mexico, 1912, p. 657 et seq.
2 Memoria de hacienda y credito publico . . . 1 de Julio de 1909
a 30 de Junio de 1910, Mexico, 1Q10, p. 719- This document con-
tains an excellent analysis showing the various sources of state
funds.
LOCAL GOVERNMENT 61
upon which a strong and effective public opinion and
public authority may be raised. Mexico has never en-
joyed that blessing.
Local government, as a result, lacked reality and
seriousness; it was not a vital part of the life of the com-
munity. Democracy was dead at the root. Town feel-
ing became sentimental not fundamental. The most
evident and often the most important work done by the
local government was the furnishing of entertainments,
such as band concerts and the maintenance of a munic-
ipal theater. Financial difficulties brought it about that
the water supplies of the larger towns, with the excep-
tion of that of the capital, as a rule, were put in by the
state governments which kept a control over the rental
charges so as to be able to pay for the expenditure. In
some cases the apathy of the local population toward
their own interests forced the adoption of control by the
larger units if certain services were to be performed in
more than a farcical manner. In Jalisco, for example,
the state government found itself under the necessity
of administering the schools and poor relief because the
local government was too weak to do so. 3 The states of
3 A good criticism of Mexican local government is found in L. S.
Howe, "Notes on Municipal Government," Annals of the American
Academy of Political and Social Science, vol. 21, p. 532, December,
1903. See also C. W. Dabney, "A Star of Hope for Mexico," New
York, Latin American News Association (pamphlet). The reasons
for the decay of the municipal government system introduced by
the Spaniards and of the local government that the Indian com-
munities had developed are outlined in T. Esquivel Obregon, ln~
fluencia de Espana y los Estados Unidos sobre Mexico, Madrid,
1918, pp. 213-226.
62 MEXICO AND ITS RECONSTRUCTION
Durango and Michoacan, at the end of the first century
of independence, did not collect any municipal taxes.*
There was little freedom of action allowed the cities.
Their small budgets had to be submitted to state author-
ities for approval before they could go into effect. In
most states the same was true of all the more important
municipal decisions even if not of a fiscal nature.
There were some variations in local government but
the municipality had no wide range of organization such
as we are familiar with in the United States. The ayun-
tamiento, or town council, was elected by an indirect sys-
tem. The people voted for electors who in turn chose
the councilmen. The powers of the council were largely
deliberative. The real executive officers were not under
its direction or control. The municipalities regularly
had but small power to raise money. They could not
undertake important public works.
The general character of their income may be illus-
trated by the list of taxes levied in the municipalities of
the State of Aguascalientes at the end of the first cen-
tury of Mexican independence. It comprised levies on
irrigation, public amusements, slaughterhouses, stables,
vehicles, professional licenses, weights and measures,
rentals, on fattening hogs, bandstands, pawnshops,
buildings in construction, restaurants, stands or chests
in the portals of churches, gambling places, warehouses,
saloons, lotteries, firearms, traveling salesmen, checks,
and certain classes of peddlers. 5 Some of these branches
* Memoria de hacienda y credito publico . . . 1 de Julio de 1910
a 30 de Junto de 1911, tomo 2, Mexico, 1Q12, pp. 216-23.
6 Ibid., p. 221 et seq.
LOCAL GOVERNMENT 63
in a country better developed might have been made
important sources of revenue. They were not in
Mexico.
The most important link between state and municipal
governments and the chief means by which the former
came to control the latter was the jefe politico, the po-
litical chief, appointed in each municipality by the gov-
ernor and responsible to him alone. In some cases, as
in Morelos, these officers came to be formally recog-
nized as the presidents of the municipal councils. In
their hands rested the execution both of the general law
and of regulations passed by the municipal councils.
They were thus Janus-faced officers who had duties in
two directions but who in practice could be held respon-
sible only by the state functionaries.
Their double position and the very wide and largely
unwritten powers which they came to exercise made
them one of the chief reliances of the Diaz system of
actual government. An able and benevolent official
could do much to assure order, contentment, and prog-
ress in his district. Unfortunately a bad one who,
through the inertia of the higher officials or corrupt in-
fluences could count on the support of the state and na-
tional military forces, might become an oppressor very
difficult to call to account or remove.
In the later years of the Diaz regime the jefes po-
liticos became the subject of widespread criticism. How
great the abuses came to be it is hard to determine.
That there were many instances of wrongdoing shel-
tered by these officials is beyond doubt. They seem to
have been in some districts the chief stay of the peonage
64 MEXICO AND ITS RECONSTRUCTION
system. It was to be expected that when the old regime
came to be called to account the office of the men who
governed in the locality but were not subject to its will
would be one of the points of attack. The revolution
promised to do away with the jefe politico and to set up
the free municipality.
The new system of local government that it is sought
to introduce starts out under far from favorable condi-
tions. The political inertia of the local population in
the great majority of municipalities is a heavy handi-
cap. Centralization is such a well established tradition,
acquiescence in a government imposed from above has
gone on so long, that it will be difficult to arouse the
cities and towns into a vigorous life. A steady and uni-
form advance in municipal government is too much to
expect.
No one who walks through the streets of a Mexican
town off the line of the great trunk railroads can be en-
thusiastic as to the prospects of success of real local gov-
ernment in the immediate future. There will probably
be many backslidings and the standard, which the en-
thusiasts of the present reforming government speak
for, will not be achieved in their day nor in that of their
grandchildren. But, whatever their errors in other di-
rections, there will be little doubt in the minds of most of
Mexico's friends that the revolutionary statesmen are
standing on bed rock when they insist upon the impor-
tance of creating a keen interest in local government
and the problems associated therewith.
The municipalities are the first school of government.
Within these units, involving such simple problems as
LOCAL GOVERNMENT 65
will be dealt with by the average Mexican city, mistakes
can be made with comparatively small harm while po-
litical experience is being gained. Through experience
in self-government in the towns there may be built grad-
ually the foundation of a new Republic of Mexico, a
republic of greater stability and strength than the one
that rested on economic advance alone. Whether Mex-
ico can build such a state from its present population
may be doubted even by the friends of Mexico but there
can be little doubt that if it can be built, the foundation
stones must be laid in the municipalities.
CHAPTER VI
MEXICAN FINANCE: FOREIGN LOANS AND FOREIGN
CLAIMS
IN discussing the financial operations of a well or-
dered country the layman's order of approach may be
to review the expenditures that it undertakes and their
purposes, the resources from which it draws its revenues
for meeting current expenses, and, finally, the debts
contracted outside the course of its ordinary life and
the provisions made for paying them. But in studying
many of the Latin American republics the conditions
seem to counsel studying the debt first and then look-
ing to what financial resources there are from which
to pay the interest and sinking fund charges and the
expenses of current activities. In some cases the na-
tional debt or a portion of it dates from before national
independence and has been an important factor in the
national politics throughout the life of the state.
In new and undeveloped countries also the national
debt takes an unusual prominence in discussions of na-
tional finance because it is regularly a foreign debt, at
least in majority, and carries with it, therefore, possible
complications with other powers. Often its payment
will have been undertaken at a time when the national
credit was so low that the capitalists were not willing to
accept the state's general promise to pay but insisted
66
LOANS AND CLAIMS 67
on the assignment of some specific income, such as the
revenue from a stamp tax or a percentage of the cus-
toms dues at a certain port. Such arrangements make
the creditor's claim one still more intimately connected
with both foreign relations and domestic politics.
Mexico's financial history both that of her foreign
and of her internal financial operations is a tangle that
cannot be reviewed here except in the most general out-
line. 1 From the beginning to the end of the Diaz regime
there was a fairly steady improvement in the interna-
tional standing of the republic. Defaulting, which was
formerly a steady habit, disappeared after order was
established, and bonds could be sold with interest and
rate of issue which did not make them usurious. This
had by no means been true in early Mexican history.
In 1824, for example, when obligations of a face
value equivalent to $16,000,000 were issued for Mexico
by the British house B. A. Goldsmidt & Co., the five
per cent bonds had to be floated at 58. 2 A six per cent
loan the following year brought 89% per cent. After
1827 the interest went unpaid for a time and later was
paid only irregularly.
Between 1837 and 1839 the debt and unpaid interest
were refunded. The total of the obligations recognized
1 A more detailed review of the foreign debt is found in the
Forty-fifth Annual Report of the Council of the Corporation of
Foreign Bondholders . . . for the year 1Q18, London, 1919 from
which the figures in the following paragraphs are largely taken.
See also a careful analysis by W. F. McCaleb, The Public Finances
of Mexico, New York, 1921, passim.
2 The figures in this chapter are in Mexican gold except where
otherwise stated.
68 MEXICO AND ITS RECONSTRUCTION
was now about $54,573,730. At this time, too, the
debtors took an added security for the risk they assumed
in the grant of one-sixth of the customs receipts of Vera
Cruz and Tampico, the two important east coast ports,
for the service of the debt. But arrears arose again and
in 1842, in return for raising the share of the customs
receipts devoted to the loan from one-sixth to one-fifth,
the creditors accepted non-interest bearing "debentures"
at the rate of one dollar for each two dollars actually
due.
In 1846 the creditors agreed to another cutting down
of their claims. Various classes of bonds were rescaled
at 90 to 60 per cent of their face, the outstanding for-
eign liability of $56,206,875 being decreased to $40,533,-
425. A new five per cent loan was issued to cover this
and certain other liabilities. This time the security in-
cluded besides one-fifth of the collections of the two
ports, a fifth of the tobacco duty and the export duty on
silver shipped from the west coast.
The agreement had hardly been made when war came
with the United States and as a result the ports of the
east coast fell into possession of the enemy, thus cutting
off part of the guaranteed income. A similar agreement
was put into force again in 1851. Interest payments
fell into arrears. A new refunding issue was put
through in 1864 but payments almost immediately fell
behind again.
In 1864 the government of Maximilian floated a loan
in London and Paris of $61,825,000 at 63 to secure
funds to crush the republican forces. These obligations
were later partly converted into a second loan. When
LOANS AND CLAIMS 69
the empire fell the republic definitely repudiated both
sets of debts. A part of these issues was later repaid
to the bondholders by France.
Further borrowings abroad were not resorted to until
1886. The new regime then and in 1888 put through
refunding measures. In 1889, it sponsored the Tehuan-
tepec Railway Loan, paying five per cent, issued at 77
to the amount of $13,500,000. In 1890, an issue of
$6,700,000 of six per cents was made at 65 to secure
money for the Monterey and Mexican Gulf Railway.
In 1890, an external six per cent loan was made of $30,-
000,000 face, issued at 93% per cent secured by 12 per
cent of the total proceeds of the import and export du-
ties. Three years later another 12 per cent was pledged
for the service of a loan of $15,000,000 bearing six per
cent and issued at 68.
Just at the end of the century the five per cent Ex-
ternal Consolidated Gold Loan was put through which
is the oldest of the direct external loans now outstand-
ing against Mexico. For its service there was to be set
aside 62 per cent of the national import and export du-
ties. The face total of the obligations was $113,-
500,000.
Mexico was now reaping the fruits of the establish-
ment of order. Foreign capital was flowing across her
borders from all directions seeking opportunity to de-
velop her resources. Her international credit stood on
a better basis than ever before. In 1903, the City of
Mexico was able to sell at 85, bonds amounting to $12,-
000,000, bearing five per cent interest. The next year
the central government floated at 94 a loan of $40,000,-
70 MEXICO AND ITS RECONSTRUCTION
000 bearing only four per cent and that without setting
aside any specific portion of the national revenues for
its service.
These were days in which Mexico did indeed seem
to be coming into its own. It took up its older obliga-
tions bearing higher rates of interest, it paid off by the
new loan amounts it had borrowed at six per cent to en-
courage building of railroads, and started public works
under government support at its less favored ports on
both coasts.
In 1910, another refunding operation took place.
The loan of 1899 paying five per cent was changed to
one bearing four per cent. The half of the new loan
issued in Paris in July sold for 97.625 per cent. It was
guaranteed by the 62 per cent of the import and export
duties, which had protected the loan of 1899.
The cloud of revolution was already gathering but
the world would not believe that its threat was serious.
Progress in Mexico had been so steady for a generation
that it was pointed to as the greatest of Latin American
states. A country, which in 1890 saw its six per cent
bonds sell at 65 per cent, now sold its four per cents
at less than three points below par.
Its government, it seemed, was at last truly in a po-
sition to give protection to life and property. It could
now look forward to an intensive development of its
national resources sure to be as wonderful in its results
as their extensive exploitation of the last quarter cen-
tury had been. The government could undertake pub-
lic works without having to pay high rates of interest
and, most needed of all, the friends of Mexico felt that
LOANS AND CLAIMS 71
now had come the time when the government, at last
securely on its feet, should and could give greater at-
tention to improving the social and economic well being
of its people.
All told the direct external loans, those of 1899, 1904,
and 1910, now amounted to $140,709,065 plus the other
issues guaranteed by the government. These latter to-
taled $104,071,950. The two classes together made a
debt of $244,781,015; or, if the $50,747,925 General
Mortgage Four Per Cent Gold Bonds of the National
Railways of Mexico be included, $295,528,940. This
was a debt easily borne by a nation of 15,000,000 people
whose territory was developing as had that of Mexico
in the last quarter century.
But the financial history of Mexico since 1910 does
not justify the confidence which the investing world
then placed in her nor the hopes that her friends then
held. The revolution was not a passing and unimpor-
tant storm. It soon became evident that it was a much
more fundamental demonstration than even the Mex-
icans best informed appear to have believed at the be-
ginning. One of the indirect results that have followed
in its train has been the temporary paralysis of Mexican
foreign credit. When it was realized that the revolution
was a serious movement, borrowing at once became
difficult.
In May, 1913, a six per cent loan amounting to $80,-
000,000 was authorized by Presidential decree. It is
certain that $8,100,000 worth of these credits were
issued and it is understood that a very large proportion
of the balance has been used for various purposes. No
72 MEXICO AND ITS RECONSTRUCTION
further loans appear to have been made abroad. 8 To
the difficulties of raising a loan brought about by the
revolution there were added those caused by the World
War none of the lending nations of Europe had
money to lend after August, 1914; and through much
of the period since that date neither the government nor
the people of the United States would have been will-
ing to loan important amounts in Mexico.
But the World War is not the cause of the failure to
keep up the services of the foreign debts of Mexico.
All but one of the Mexican external debts, direct and
indirect, were in default after July 1, 1914, a month be-
fore the outbreak of the war in Europe and since Jan-
uary 1, 1915, no payments whatsoever have been made.
Meanwhile the obligations grow. By January 1, 1919,
they had come to total $336,344,080, not including the
bonds of the National Railways of Mexico.
When the foreign debt service will be resumed, of
course, no one can tell. On September 1, 1918, Presi-
dent Carranza in his message to Congress stated that
Congress had authorized him to contract abroad or in
the republic three loans amounting to $300,000,000.
But these were not apparently for the service of the for-
eign obligations already incurred. The government
issued an official statement in January, 1919, to the
effect that it intended to resume the payment of inter-
est and settle arrears of interest on the foreign debt "as
soon as the external commercial life of the Nation has
been regulated." Claims have been put forward since
* The various issues of the revolutionary period not taken up
above are discussed in W. F. McCaleb, op. cit., passim.
LOANS AND CLAIMS 73
that time that those now at the head of the affairs of
the republic control practically the entire national area
and that its foreign trade has been unusually prosper-
ous. Nevertheless the recovery of normal conditions
and the resumption of the services of the foreign debts
seems to outsiders still in the indefinite future.
Unfortunately, when the revolution is over, the in-
ternational obligations of Mexico will not be measured
by the loans the government had made previous to the
outbreak of the civil war and the accumulations of un-
paid interest. In every civil war there arise large num-
bers of claims by individuals for damages, which the
government is called upon to settle. These, so far as
the citizens of the country are involved, can be disre-
garded if the government so decides, but the damages
suffered by foreigners are not so easily put aside.
The destruction wrought by the armies of various
leadership that for the past decade have been keeping
Mexican public life in a turmoil, and the destruction due
to the actions of the governments themselves, especially
in interfering with the operation of railroads and banks,
the property of foreign interests, will be the basis
of a host of claims that will probably amount to at least
as much as the outstanding public debt. When peace
comes to Mexico, the national obligations to others than
its own citizens will thus have grown out of all propor-
tion to those carried before the Civil War. It is not pos-
sible at this time to give a satisfactory estimate of the
claims that will be presented for payment. A large
number, and probably the most important, will be those
of companies, especially those which were engaged in
74 MEXICO AND ITS RECONSTRUCTION
services affected with a public interest such as the rail-
ways, tramways, and light and power companies. On
July 31, 1919, the Department of State of the United
States reported that 942 claims had been filed by Amer-
ican citizens. Of these 789 made a statement of the ex-
tent of damages suffered totaling $26,629,397.61. The
claims of the largest companies operating in Mexico ap-
pear not to be included. No information is available
showing the extent of damages of citizens of other na-
tionalities. On November 24, 1917, President Carranza
by decree established a commission for the consideration
of all claims by foreigners against the government, but
the procedure provided was of such character that the
United States did not find it possible to approve it. 4
It is not possible at this time to state the amount of
the debt of Mexico which involves the rights of foreign-
ers. The current discussions are seldom detailed.
Thomas R. Lill, an American accountant, in the service
of the Carranza government, stated before the Senate
Committee on Foreign Relations, on September 23,
1919, that the total debt left by the Diaz regime was
about $425,000,000 Mexican gold. He declared the
bonds approved by the Madero Congress and issued by
Huerta amounted to another 190,000,000 pesos; loans
due to banks, 53,000,000 pesos; and back salaries due
to employees to 25,000.000 pesos. This would make a
total of 693,000,000 pesos, 5 not including about 170,-
* Senate Document 1, 66tK Congress, 1st Session, May 20, 1919,
and Senate Document 67, 66th Congress, 1st Session, August 1,
1919.
8 C. Adolfo de la Huerta in his Presidential address reported in
LOANS AND CLAIMS 75
000,000 pesos interest due. Luis Cabrera, Secretary of
the Treasury in President Carranza's Cabinet, reported
the total national debt as about 1,000,000,000 pesos,
or $500,000,000 United States gold. This estimate did
not include a number of important items said to be
claimed by several foreign governments. 6 The secre-
tary of Hacienda announced that the total debt as of
December 31, 1920, including foreign, internal, and
state delegations, amounted to $426,791,555 Mexican.
Accrued interest and Tehuantepec Railroad bonds
amounted to $197,707,142 Mexican. The total of these
items is $624,498,697 Mexican. 7
These estimates by employees of the Carranza and
Obregon governments are much smaller than those of
some of the best informed Mexicans outside governmen-
tal circles. A calculation published under the direction
of a group of Mexican economists places the interior and
exterior debt in August, 1920, at $1,200,000,000 Mex-
ican. The obligations that the country has incurred
through damages to banking, railway, and other inter-
ests belonging to nationals and foreigners is referred to
as an additional large but unnamed sum. The cash
the Diario Oficial, September 2 et seq, 1920, reported the entire
obligations, foreign and domestic, as totaling 657,599*122 pesos,
including interest due.
* These statements are based on the summary in the Commercial
and Financial Chronicle, November 15, 1919, p. 1837. The testi-
mony as to the amount of the Mexican debts is presented in detail
in Investigation of Mexican Affairs, Hearing Before a Sub-commit-
tee of the Committee on Foreign Relations of the United States
Senate, 66th Congress, 1st Session, pursuant to S. Res. 106, part
8, Washington, 1919-
1 Commerce Reports, June 14, 1921.
76 MEXICO AND ITS RECONSTRUCTION
taken over from the banks manu militari amounted to
about $54,000,000 Mexican "according to the official
figures of the Carranza government."
Before leaving the discussion of the foreign debts of
Mexico it is worth while calling attention to several fea-
tures of their history which may have a bearing on what
may be expected or what should be demanded by in-
vestors in the period of reconstruction.
First of all, it is often asserted by Mexicans and by
mistaken friends of Mexico that the republic has always
meticulously fulfilled its financial obligations. The
facts concerning the foreign debts above outlined make
it necessary to interpret these words in a very special
way if they are to be held to state the truth. As has
been indicated, the earlier history of Mexico shows im-
portant readjustments of the claims of foreign creditors
which cut down the amount they were to be paid. To
be sure the creditors agreed to the scaling of their
claims and it may be insisted that Mexico did not repu-
diate the obligations, except in the justified cases of the
Maximilian era. Nevertheless, it is true, of course, that
the reduction of claims was not a free-will offering upon
the part of the creditors. They consented because the
finances of the republic had come to such a state that
they felt it desirable to sacrifice part of their property
in order to obtain a chance to save the rest. Mexico
may not have repudiated her obligations actually but
8 Manuel Calero, Ensayo sobre la reconstruction de Mexico, New
York, 1920, p. 89. This review published by a group of nine promi-
nent Mexicans headed by Manuel Calero is a good summary of
moderate progressive opinion on Mexican affairs.
LOANS AND CLAIMS 77
the effect upon the creditors was the same as if they had
held the notes of a corporation that had become bank-
rupt and could not pay its creditors in full. It need
hardly be said that this is not a way of fulfilling its
financial obligations that contributed to the credit of the
republic.
The claim so often made in connection with Latin
American countries that their revolutions are not to be
taken seriously and that they have no important effect
on the national economic life, has no application when
the foreign loans of Mexico are under consideration.
When Mexico has not had a stable government, she has
not paid regularly interest on her debts and the prin-
cipals of the debts have been paid by new borrowings.
The only long period in which interest payments were
punctually made was in the Diaz regime.
Unless some guarantee of payment of interest and
principal can be secured that will be enforceable and
that will be enforced by some other government if Mex-
ico fails to do so, the loan of money to any Mexican gov-
ernment that has not proved its stability is a highly
speculative venture. The interest rate that the investor
will have to demand will naturally be higher, that is
Mexico will have to pay more, if there is no guarantee.
These are facts, which those who refinance Mexico in
the reconstruction period will have to take into serious
consideration. It may well be doubted whether the
dangers to national independence alleged to attend for-
eign loans are less when money is borrowed in the open
market at a high rate by a weak nation, than when made
at a lower rate under the guarantee of a more power-
78 MEXICO AND ITS RECONSTRUCTION
ful country that it will help so to shape conditions that
the stipulations of the contract may be fulfilled.
Thirdly, the declarations on the part of certain Mex-
ican statesmen that any sort of special guarantee for
the payment of debts is without precedent, a reflection
on the national honor and not to be considered, are dec-
larations that lack straightforwardness. The financial
record of the republic shows numerous cases of hypothe-
cation of special revenues for the service of the foreign
loans. In fact the republic, except for the first quarter
century of its existence, the record shows, has never been
without special claims on the national income in favor of
certain of its foreign creditors.
The direct external loans now in force are all, with
the exception of the gold loan of 1904, nominally under
the protection of special guarantees. The loans of 1899
and 1910 are secured on 62 per cent of the national im-
port and export duties and the bonds of 1913 issued dur-
ing the revolution are a lien upon the rest.
Governments avoid such agreements if they can, but
Mexico has not been able to do so. She seemed to be
approaching that condition in 1904 and doubtless the
loan of 1910 might have been negotiated without spe-
cial guarantee but for the fact that it was a refunding
measure and the creditors were in a position to demand
the continuance of their former security. It seems
hardly to be expected that any project for financing the
reconstruction of the country will lack features of this
sort.
What guarantees of this sort actually mean is not
clear. In times of peace, with a responsible government
LOANS AND CLAIMS 79
in control, they constitute a check on the spending power
of the government and promote promptness of pay-
ments. But under normal conditions a responsible gov-
ernment pays even without such guarantees. In time
of civil disturbance in Mexico none of the passing gov-
ernments has apparently felt the agreements to be ones
it must obey. At the only time when reliance needed
to be placed on the special guarantees they did not serve,
and the bondholders find themselves in a position in
which it appears the local government does not recog-
nize its responsibility nor can they force it to do so by
calling on their home governments to aid in securing
the fulfillment of the contracts.
If is true, of course, that the Mexican debt service
clauses may at any time be held to mean more than
has appeared to be the case. The debts went into de-
fault just before the outbreak of the World War, and
had peace continued elsewhere during the later period
of the revolution it is possible that pressure would have
been put upon the government of Mexico to live up to
its contracts.
If this is not the case, it appears clear that the form
of guarantee found in Mexican loan contracts is of little
value whenever a government wishes to disregard it,
whether in time of peace or of civil disturbance. If a
guarantee cannot be secured, which means that the for-
eign government shall have a right to see to its enforce-
ment, and if the enforcement by the foreign government
cannot be considered reasonably certain, then investors
in the securities of unstable countries must consider their
money risked in a speculative venture for which they
80 MEXICO AND ITS RECONSTRUCTION
must be compensated by high interest rates or low rates
of issue or both.
That such a basis for the financial rehabilitation of
Mexico would be unfortunate is clear. If the debt serv-
ice guarantees furnish a basis upon which other coun-
tries may help her to help herself, she may secure do-
mestic order and a responsible government sooner than
would otherwise be her lot. If those debt service con-
tracts now in existence do not furnish such a basis and
the Mexican government refuses to enter new ones that
will do so in the future, then it must borrow on the
chance which it has, unaided, of being able to meet the
obligations it assumes. It will perforce load the people
with greater obligations than would be necessary other-
wise and delay the real reconstruction, which every
friend of Mexico must hope may soon begin and rapidly
progress. Some sort of effective international guaran-
tee of the foreign loans seems highly desirable, not only
for the protection of the investor and not even prin-
cipally for him, but for the benefit of Mexico and of her
people.
The basis on which debts should be paid in justice to
the lender often bears a strong contrast to that which
is practical. What has occurred in a number of in-
stances in the past may again prove to be the case in
Mexico. At first sight even the highest figures dis-
cussed do not appear to be an overwhelming load for
the nation to bear. Compared to the burden that the
World War has put upon many Western nations, the
debt seems small. Even assuming that the total may
be as great as $1,500,000,000 Mexican, the debt per
LOANS A&D CLAIMS 81
capita would be only about one-fourth as great as that
which the people of the United States are now called
upon to carry. But such comparisons are deceptive for
they fail to take into account the economic weakness of
the Mexican population even in comparatively prosper-
ous times, a weakness now much accentuated by a dec-
ade of civil disturbance.
Mexico, in the old regime, mortgaged her future to
secure economic advance. She now finds herself called
upon to mortgage the future to pay the cost of the up-
heaval that destroyed much of the advance attained.
Unfortunately the pressure to meet her obligations
comes upon her at a time when she is least able to make
favorable terms. The post-revolutionary governments
face a world money market in which the French govern-
ment has to borrow abroad at eight per cent and in
which that interest rate is a fair average of the payments
on the loans of the most favored of European countries.
It is hardly to be expected that under such circum-
stances those who loan their money in Mexico will not
expect an unusual return.
When the Mexican governments look to the resources
upon which they can count to meet the interest on their
borrowings, past and to come, the prospect is far from
encouraging. In a country even now not completely at
peace with itself money must be raised from agricul-
tural interests badly disorganized, cattle resources hard
hit by the drain of ten years' army requirements, mining
still suffering from the results of disturbed industrial
conditions, and a labor supply depleted of many of its
most enterprising elements by emigration. What com-
82 MEXICO AND ITS RECONSTRUCTION
merce can be taxed must move over roads and railways
very badly neglected and must rely on banking facilities
still sadly inadequate. To this discouraging outlook is
to be added the declining price scale of the chief com-
modities that Mexico sends to foreign markets.
Confronted by such an economic outlook it is not to
be wondered at if the Mexican governments fall into
believing that the end justifies the means and like a
drowning man catch at straws.
CHAPTER VII
MEXICAN FINANCE: CURRENCY AND THE BANKS
As has been indicated, the debts of Mexico to its own
citizens are not ones that involve the possibility of in-
ternational complications. If Mexican property is de-
stroyed, the only recourse for the injured is to the Mex-
ican government. To what degree the governments of
the reconstruction period will feel themselves bound,
or find themselves able, to make restitution to Mexican
citizens for property confiscated, or taken over in return
for warrants issued by the various generals, can not be
indicated. There is little reason to believe that any seri-
ous effort will be made for a general restitution. Much
of the property was taken or destroyed under such con-
fusing conditions that it would be impossible to deter-
mine what justice demands. In addition, the govern-
ment will not pay because it cannot if it would. Heavy
as the foreign obligations of Mexico are, the domestic
ones are on their face still greater.
Much of the property loss suffered by the Mexican
people occurred in connection with the various issues of
paper money authorized by the passing governments
and put in circulation under circumstances that made
them practically the equivalent of forced loans. In fact
far the greater part of the nominal value represented by
them already has been finally repudiated and whatever
loss occurred will never be repaid.
83
84 MEXICO AND ITS RECONSTRUCTION
All but a small part of this money, it is true, never
circulated at its face value, if indeed any of it ever did,
a fact that has disposed those who have come into power
to refuse to redeem it at its face. It is beyond doubt,
however, that the rates at which the issues that have
been "redeemed," were paid for, were lower than those
at which they were originally issued and that this loss
has fallen on the people of Mexico.
The extravagant character of the paper money regime
through which Mexico passed and from which she has
recently made successful efforts to free herself can be
judged best in the light of the currency system, which
had been created previously.
Through a large part of Mexican history the coinage
has been intimately connected with the taxing system.
Precious metals were so important a part of the exports
of the country that the expedient of taxing them was
early resorted to. The system that came into use was to
require all gold and silver extracted to be taken to the
mints where it was made into coin at a charge of about
five per cent. In addition, an export duty of five per
cent on silver and one half per cent on gold was levied
on the metal leaving the country. In 1872 export of
silver in bars was allowed, providing it went through the
mints and paid taxes almost as heavy as if coined. On
November 1, 1882, all export duties on metals were re-
moved. Under these conditions currency in Mexico ap-
proached more nearly to the character of merchandise
than in most countries.
The Mexican eagle dollar coined in the early years of
the Diaz regime weighed .869 of an ounce and was of
CURRENCY AND THE BANKS 85
.901 fineness. It sold abroad by weight usually at a
slight discount as compared to bar silver though occa-
sionally it had a premium for export to the Far East
where it circulated as coin. 1
By Presidential decree of March 25, 1905, and the
monetary law of December 9, 1914, the Mexican mon-
etary unit was declared to be the silver peso the value of
which was fixed by the law at the equivalent of $.4985
in United States gold coin. This legislation placed
Mexico among the countries using the gold standard.
Those in control of the government in the first years
of the revolution avoided the use of paper money but a
more radical policy was adopted to furnish funds to
finance the revolution headed by Carranza. On April
26, 1913, to help pay the expenses of his army Carranza,
by decree, authorized the issue of $5,000,000 Mexican
in paper since known as the Monclova issue. These bills
were to pass at face as legal tender. Those who re-
fused to accept them faced jail sentences.
As often has been the case when governmental author-
ities have yielded to the temptation to issue fiat money,
it became in this case impossible for them to summon the
resolution not to do so again. It was an easy way to
meet expenses. The bills issued were poorly printed
and counterfeits soon appeared from all directions, in-
cluding United States ports. Even the official issue
1 Reports from Her Majesty's Diplomatic and Consular Officers
Abroad, Commercial No. 36 (1883), . . . Part VII, . . . Report
by Lionel E. G. Garden on the trade and commerce of Mexico, gives
a good description of the conditions in the early eighties of the last
century.
86 MEXICO AND ITS RECONSTRUCTION
was soon exhausted. Another decree of November 28,
1913, raised the total by $20,000,000 Mexican and was
Soon followed by others necessitated by the continuing
needs of the army and the steady decline in the rate at
which the bills were currently accepted. Meanwhile
Villa, Zapata, and others were issuing rival currencies
forced into circulation in the districts they controlled.
*Later Carranza was forced to retire to Vera Cruz and
from that city he issued quantities of "Vera Cruz bills."
The value of Carranza paper continued to fall, and
counterfeits continued. It was evident that soon the
"bilimbiques," as his paper was nicknamed, would be so
low in value that they would not circulate at all.
Under these circumstances a decree was issued July
21, 1919, alleging that counterfeits had destroyed the
confidence of the people in the paper issued and author-
izing another issue of "infalsificable" notes, which were
to retire all Carranza paper previously authorized. The
issue was of $500,000,000 Mexican and was to be backed
by metallic reserves which never were created. These
bills were printed in New York and, unlike their pred-
ecessors, were well made. Previous issues of the Car-
ranza government, not counterfeits, were to be re-
deemed at a set rate until June 30, 1916. All paper cur-
rencies, except the new issue, were then declared no
longer legal tender.
All told there had been some 200 issues of various
origins current in the republic, most of which had rap-
idly declined in value after their appearance as the
"infalsificables" now proceeded to do.
,The total paper currency "legal" and "counterfeit"
CURRENCY AND THE BANKS 87
put out in 1913-16 is estimated to have had a face value
of over $2,000,000,000 Mexican. The Carranza issues
alone totaled about $1,250,000,000 as follows : 2
Monclava $ 5,000,000
Ejercito Constitucionalista 25,000,000
Gobierno Provisional (Mexico City) 42,625,000
Vera Cruz (Provisional Government) 599,329,321
Infalsificable 599,329,321
The record of the effects of the paper money issues
upon the economic life of the nation reads like pages
from the Arabian Nights. As long as the money, issued
in large quantities, had any appreciable value, those who
could command gold and who were in a position to profit
by a rapidly falling exchange were able to build up f or-
$unes in a way little short of fantastic.
Wages remained nominally at their former standard
for a time and then adjusted themselves but slowly to
the new money values. Large debts could be paid off
with money the current value of which in gold was as
low as five per cent of its face. When the government
took over the banks, it found itself caught between its
own decree that its paper must be accepted for payment
of all obligations and the fact that the loans and mort-
gages of which it had taken charge could be paid off
in the same money.
Real estate purchases from sympathizers with the old
regime or persons despairing of the reestablishment of
2 These figures and the facts cited above concerning paper money
issues are taken from W. F. McCaleb, The Public Financeg of
Mexico, New York, 1921, pp. 223-39.
88 MEXICO AND ITS RECONSTRUCTION
order were made on the most remarkable of terms. The
property might be heavily mortgaged to a neighboring
bank, but the owner might at the same time have an
equity representing a considerable capital. Neverthe-
less, in the face of the revolutionary storm, his first im-
pulse was to save what he could and make his way out of
the country to safety. He would sell his property at its
former value accepting payment in depreciated paper
at its face, pay off his mortgage to the bank in the same
paper, and leave the country.
The result of such operations was peculiar, the ad-
venturous buyer got the property for perhaps a twen-
tieth of its real gold value, yet he paid a fair price in
the money that the government was forcing the people
to accept. The seller was equally well satisfied for he
paid off his debt to the mortgagee under terms that the
government itself upheld and he saved at least a little
from ruin. The government, which had brought on
these conditions and which through taking over the
banks was under obligation to receive its own depre-
ciated currency as the measure of the non-metallic assets,
into possession of which it came by that act, was the only
party to the transactions which might be disappointed.
In the background, for the moment at least, were the
former stockholders of the banks who saw their assets
vanishing with only a hope that they might be reim-
bursed for their loss at some distant time.
The period of wildest financial inflation fell between
October, 1914, and October, 1916. On the whole the
course of all the paper issues was steadily downward.
By the latter part of 1915 Vera Cruz bills, for example,
CURRENCY AND THE BANKS 89
were worth about one per cent of their face. When the
"infalsificable" came out in April, 1916, it was accepted
at a gold value of about 20 cents Mexican. The govern-
ment forced its acceptance by decree. For a time the
old Vera Cruz issue was exchanged against the new
money at ten of the old for one of the new. Then even
this sort of "redemption" ceased. The "infalsificables"
began to depreciate alarmingly. Eight months after
their issue they had fallen to 80 to one as compared to
gold and at the end of 1916 they were little better than
Vera Cruz bills.
Their subsequent history is brief. They were never
formally repudiated by the Carranza government.
When it had been decided that the "infalsificables" could
no longer be relied upon as the regular currency, it was
arranged to demand that all customs dues be paid in
gold plus an equal amount in "infalsificables." In this
way the issue was to be "redeemed." At first the re-
quirement was little more than formal, for the bills were
practically valueless. By July 10, 1919, $397,119,298
Mexican were reported to have been retired and by
October 18, 1919, their value had risen to $.0765 in
Mexican metallic currency. 8 A summary of the gold
debt issued by Minister Cabrera published in 1920 as-
signs an item of $10,125,000 Mexican for the redemp-
tion of Vera Cruz and "infalsificable" bills. 4
3 Commerce Reports, November 26, 1919.
*El Heraldo de Mexico, March 26, 1920, quoted by W. F. Mc-
Caleb, op. ciL, p. 252. The Presidential address of C. Adolfo de
la Huerta published in the Diario Oficial, September 2, 1920, states
*that the "infalsificables" 'then outstanding totaled $106,787,862
Mexican.
90 MEXICO AND ITS RECONSTRUCTION
The Carranza government had meanwhile decided
that the time for reliance on paper currency had passed
and a decree issued that all payments should thereafter
he made in coin.
This third attempt at regulating the currency system
was inaugurated in December, 1916. It had a success
far beyond what might have been expected and certainly
far beyond that which would have attended it had not
conditions outside the republic become abnormal and
such as to help the Carranza government in its new ex-
periment. The World War was now in its most critical
period. Prices were high and there was an unprece-
dented export demand for all articles that the much-
tried country was able to produce. These conditions
brought to Mexico the unusual circumstance of a favor-
able balance of trade. During previous years a large
part of the gold coinage had been exported, and with
the coming of the paper money era silver disappeared
or fled the country. Even the smaller metallic coins
tended to be withdrawn at one time and had to be re-
placed by little slips of stamped cardboard.
Now, however, with the favorable balance of trade,
gold was flowing back into the country, silver was rising
in price and silver continued, as it had always been, one
of the things produced in large quantities. Between
December, 1916, and July, 1918, the coinage of money
within the country reached the unprecedented total of
$93,900,000, from which coinage, it may be remarked in
passing, the government had profited through the stamp
tax, assay charges, and other levies to the amount of
$6,000,000. This coinage was not only silver. Gold
CURRENCY AND THE BANKS 91
produced in the country which the government could
coin, it would not allow to be exported. It had to be
sent to the mint. Gold bearing ore could be exported
only if an equivalent value in gold was returned to Mex-
ico. Silver could be exported only if an equivalent of
25 per cent was returned in gold. Evidently events had
turned in such a way that the creation of a metallic basis
for the currency could be accomplished much more eas-
ily and quickly than would have been the case in nor-
mal times. By June, 1918, there were reported to be
250,000,000 silver pesos in circulation in the republic.
The next development was the monetary decree of
November 13, 1918, induced by the continued rise in the
value of silver. The old pesos were withdrawn and a
new series issued about three-fourths the size of the old
ones, weighing 181/2 grams of which 141/2 were pure
silver. New subsidiary coins were also issued. The
gold basis for the currency was not disturbed. In the
process of the change from one basis to the other large
amounts of the coins of the old issue were melted down
and sold as silver by those who had hoarded them. The
transfer from the old to the new currency does not seem
to have involved serious difficulties to local commerce.
A review of the financial problems that confront the
republic must include at least a brief mention of the
more recent banking developments. 6 Before the revolu-
tion the banking system of Mexico was based on the
law of 1897, which divided financial institutions into
5 A detailed discussion of Mexican banking is found in W. F.
McCaleb, Present and Past Banking in Mexico, New York, 1921,
passim.
92 MEXICO AND ITS RECONSTRUCTION
three classes: (1) banks of issue; (2) mortgage banks,
which made loans on urban and rural properties and
issued bonds secured by a similar guarantee; and (3)
banks of promotion to encourage mining, agriculture,
and industry. Under this law there were established,
between 1897 and 1913, 32 banks of issue of which
20 were in existence in the latter year with assets
amounting to $425,500,000. Mortgage banks also flour-
ished. Four had been established by 1913 with assets
then totaling $43,762,000. Banks of promotion had
been created to the number of six which in 1913 had
assets of $83,000,000.
In addition to these institutions, operating under the
law of 1897, there were a loan bank for promoting agri-
cultural and irrigation enterprises, six branches of for-
eign banks, a number of private banks, and a national
pawn shop, which had some of the characteristics of a
bank.
During the revolution this financial structure was torn
down. The assets of $600,000,000 were wiped out, its
reserves taken over, and the institutions finally declared
insolvent. Since 1914 the country has been practically
without banks as that term was used in the law of 1897.
By an order of September 15, 1916, the government
closed all the regular banks. A few private institutions
have since been in operation but their activities have
been confined practically to purchase of foreign ex-
change and minor commercial credit transactions.
What is to take the place of the former Mexican
banking system is not yet clear. The Congress granted
jto the President power to establish a single bank of
CURRENCY AND THE BANKS 93
issue by decree. In September, 1918, he reported a bill
to Congress and stated that he had not acted on the
authority before because of the uncertainty of the money
market. The measure proposed provided for a single
bank of issue similar in name to those under the law
of 1897 but with more restricted powers. There were
also petroleum banks, for the encouragement of the oil
industry and banks of deposit. Branches of foreign
banks were to be required to come under the law within
six months or cease operations. The foreign banks,
their capital and their employees were to be considered
Mexican for all purposes. Appeal to the home coun-
try could not be taken on their behalf. The program
was one that reflected the general policy of "nationali-
zation" supported by the government. 6 No important
advance in banking legislation has as yet been made by
the revolutionary governments.
* A review of Mexican banking from which the above facts are
chiefly taken and which gives a detailed analysis of the proposed
law is found in Commerce Reports, February 1, 1919, "The New
Banking Law of the Republic of Mexico," by Edward F. Feely.
See also on currency issues and banking Investigation of Mexican
Affairs, Hearing Before a Sub-committee of the Committee on For-
eign Relations, United States Senate, 66th Congress, 1st Session,
pursuant to S. Res. 106, Washington, 1919* part 5.
CHAPTER VIII
MEXICAN FINANCE: PUBLIC INCOME AND
EXPENDITURE
As IN every other country the means at the disposal
of the Mexican government for meeting its foreign and
domestic obligations are determined by the natural re-
sources of the country, the economic development of its
people, and the taxation system that has been adopted.
The latter two elements are capable of gradual changes.
Such have occurred and are in process. But neither can
be revolutionized with the overthrow of one government
and the establishment of another, because each depends
upon the development of the factors that precede it
economic development of the people upon the develop-
ment of the natural resources and taxing practice upon
both.
The collection of public revenue in Mexico during the
colonial period was not according to any well thought-
out plan as to where the burden should lie. There was
no taxing system properly so called, but the govern-
ment merely laid its hands on the sources of revenue
from which returns could be secured most easily. Tax
collection was haphazard; it affected persons, articles,
and places that could be easily reached. Opportunism
and not a fair distribution of burden was its guide, and
many of the levies were thoroughly uneconomic and
94
PUBLIC INCOME AND EXPENDITURE 95
checked progress even in the lines Spain wished to
encourage.
Since foreign commerce did not grow and could not
yield heavily, internal commerce was forced to make
payments at internal customs houses, which beyond
doubt kept back Mexican economic progress.
Nevertheless it is easy to criticize, but hard to see
what other method could have been pursued by Spain.
Her hold over the country was after all so far from
that which under modern conditions is possible, the
transportation system was so poor, and the persons
upon whom she could rely for honest appraisements
and collections so few, and at best so unfitted to deal
with the problems that faced the colony, that while all
can see that the taxing methods used were unfortunate,
it is harder to state what could have been better adopted
under the then existing conditions.
There were four classes of taxes in the Spanish
regime.
1. Taxes that were sent back to Spain, such as those
on quicksilver and tobacco.
2. Special taxes, the tenths, the ecclesiastical sub-
sidy, and a few others of like nature, which were destined
to particular uses and not available as general income.
3. Another class was separate incomes known as
ajenos. Such were the Pious Funds of the Calif ornias,
the taxes on pawn shops, income from prohibited liquors,
and certain levies on mining. These were not resources
that were covered into the treasury. Some of them were
collected, however, by the administrative officers and
spent by the government directly.
96 MEXICO AND ITS RECONSTRUCTION
4. Finally there were the levies classed as common
taxation. They did not differ in nature from the fore-
going but they were the source of the public treasury
income from which the general colonial expenses must
be paid. These taxes themselves fall into classes, those
on the production of metals, especially silver and gold,
formed an important part of the total. There were
taxes on other products, the entry or production of
which could be easily controlled such as salt and silk,
powder and pulque. Stamp taxes on business docu-
ments and many others, paper taxes, anchorage dues,
and taxes on commerce for maintaining or building cer-
tain fortifications were included in the list. Lotteries
were taxed, and there were some unimportant returns
from levies on land. Highly important were the alca-
balas, the taxes on internal commerce.
When the country won its independence from Spain,
the public treasury was empty and private property
burdened by the destruction that had occurred during
the struggle. Some of the taxes mentioned, especially
those in the first classes, were abolished but there was
no general reform. The problem continued to be how
to get income to run the government, rather than the
ideal way in which to get it. Many of the old taxes
were continued, although they had long been a source
of complaint. Before any comprehensive reform could
be put into operation the Mexicans had begun the long
series of internecine conflicts that kept them too busy
to consider tax laws except as a means of satisfying the
immediate needs of the government. In fact, it is not
possible to ascertain either the amounts collected or all
PUBLIC INCOME AND EXPENDITURE 97
the tax laws that were nominally in force in the period
following the winning of independence.
The tobacco tax under the republic went into the
national treasury. Stamp taxes were continued, alca-
balas remained one of the most important in some
years far the most important source of revenue. Bul-
lion and pulque taxes were kept up. In general, the
old Spanish system was continued, as was to be ex-
pected. 1
A review of the measures adopted to increase the
public revenue in the next half century of Mexican his-
tory reveals no policy. There were numerous tariffs,
some of which declared for developing local industry.
Some progress was made in doing so in a few lines.
There were scattered efforts to reduce, and later to
abolish, the alcabala taxes but revolutions overturned
all efforts for financial reform and made revenue of the
highest importance at the same time that they made it
harder to secure. This, of course, was at the bottom
of the repeated default on foreign loan interest pay-
ments, already noted, and the reason why independence
seemed to outsiders so fruitless of economic and cultural
advance.
In fact, the struggle for a sufficient income to pay
the foreign debt service and leave a working balance
X A discussion of the tax system under Spain and in the early
years of independence is found in Memoria de hacienda y credito
publico . . . 1 de Julio de 1910 a 30 de Junio de 1911, Mexico,
1912, p. 210 et seq. See also W. F. McCaleb, The Public Finances
of Mexico, New York, 1921, the most detailed review of this field
in English.
98 MEXICO AND ITS RECONSTRUCTION
for the development of the country extended well into
the Diaz regime. When at last order was established,
the group in charge of the government gradually came
to realize that transportation must be improved if the
country was to be put in touch with the outside world
and to develop a foreign trade that could assist in put-
ting it on an economically sound basis. The policy of
encouraging railroad building was adopted and develop-
mental projects of other kinds were also given public
support.
To what extent such plans justify themselves depends
on the rapidity with which the country adjusts itself
to new conditions. It was far-seeing statesmanship to
put off the day when a balanced budget could be secured
if a rapid expansion of national economic power could
be obtained thereby, but for no nation is it possible in-
definitely to cover annual deficits by loans, especially
when the interest on such loans is high as is regularly
the case in undeveloped regions. Mexico wisely decided
to take the risk of increasing for the time being the
national obligations in order to increase the national
wealth and through it the financial ability of the gov-
ernment.
By the early '90s, when a period of financial stress
was affecting the whole continent, the railway mileage
had been greatly increased. Subventions had pushed up
the obligations of the government and those in power
had to consider whether it was not time to wait before
contracting further debts until the country should have
responded more fully to the stimulus of its new trans-
portation facilities and the resulting contact with the
PUBLIC INCOME AND EXPENDITURE 99
outside world. The foreign commerce and the federal
income had almost trebled in the 12 years preceding
July, 1892, but recurring deficits made conservatism in
public expenditure wise. "It is, therefore, indispensa-
ble" "to summon the determination to make our bud-
gets balance" declared the treasury officials, "making,
on the one hand, all the economies compatible with the
necessity of preserving the public and on the other in-
creasing the taxes as far as the crisis through which
the nation is passing will permit." "The wise and far-
seeing public policy indicates the necessity of holding
in the granting of subventions . . . and waiting for
some time until the horizon clears." 2
But to secure the advantages made possible by the
railroads one important change in taxing policy was
seen to be needed even with the adoption of this more
conservative program, that was the abolition of the in-
ternal customs houses at which were collected the alca-
balas. Whatever apology could be made for such taxa-
tion in the colonial era it was now thoroughly indefensi-
ble. The constitution of 1857 had done away nominally
with taxes of this sort but the various ministers of the
treasury had not dared to put the rule into effect. In
1892 the federal treasury was still receiving $2,000,000
from the tax, an income which in the Mexican budget
of that time was apologized for because it was "of con-
siderable size, established for several centuries, and ac-
2 Memoria de hacienda y credito publico . . . 1 de Julio de 1891
to 30 de Junio de 1892, Mexico, 18Q2, pp. 1-15, contains a discus-
sion of this policy. A balanced budget was secured in 1895, the
first since 1822.
100 MEXICO AND ITS RECONSTRUCTION
cepted by the country." Nevertheless the economic
inadvisability of continuing the levies, which were such
a serious drag on commerce, was so plain that the gov-
ernment undertook their prompt abolition, a move that
subsequent experience fully justified.
The federal taxing system underwent but slight mod-
ification in the Diaz regime. The increase of income
arose not so much from the creation of new taxes as
from the increased receipts from old ones. From 1876
to 1892 no changes were made. The sources of income
were first and most important the duties on imports
and exports. These always have been the greatest con-
tributors to Mexican revenue. Next in importance were
the stamp taxes levied on all sorts of business transac-
tions, contracts, sales, receipts, leases, promissory notes,
bills of exchange, and the like. These two sorts of taxes
together yielded well over four-fifths of the total rev-
enue. Import and export duties alone made up about
three-fifths.
Among the minor sources of income the most im-
portant were those from such things as lotteries, tele-
graphs, mines, and the post office. These were about
10 per cent of the entire collections. Direct taxes
known as predial, professional, and license taxes yielded
about three per cent and the octroi a similar amount.
In 1892-3 a few other minor imposts were created by
law and later Congresses added a few. To the end of
8 Ibid., pp. 11-15. See also M. Romero, "Wages in Mexico,"
published in Commercial Information Concerning the American Re-
publics and Colonies, 1891, Bulletin No. 41, Washington, 1892.
PUBLIC INCOME AND EXPENDITURE 101
the Diaz regime, however, there was no general revision
of the taxing system. 4
In 1902 steps were taken to protect the public rev-
enue 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 pre-
mium on gold rising to 150 per cent. The actual in-
come of the country collected in silver shrank propor-
tionately 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 equiv-
alent 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. 5
The policy of the Diaz government in the manage-
ment of the financial affairs of Mexico was fully justi-
fied by the result. Income finally came to exceed ex-
penditure, and the adjustment of the tariff system re-
moved 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 expendi-
ture, a condition which continued through the rest of the
* A review of the taxing system in the early '90s is found in Luis
Pombo, Mexico: 1878-1892, Mexico, 1893, p. 95 et seq.
6 Put in force November 25, 1902, Memoria de hacienda y credito
publico . . . de 1 de Julio de 1902 a 30 de Junto de 1903, Mexico,
1907, pp. 7-8.
102 MEXICO AND ITS RECONSTRUCTION
Diaz regime. 8 The adoption of the gold standard in
1905 still further stabilized the financial system.
The public finances, however, were still far from a
satisfactory condition from a social point of view. The
balances were made favorable only by neglect of some
of the greatest social needs of the republic. Education
was still backward, sanitation, outside the big towns,
was poor, and transportation facilities, in spite of the
great advance over the pre-railroad period, were still
inadequate. The taxes were not adjusted in such a way
as to give proper impulse to national industrial develop-
ment nor to stimulate the exploitation of the country's
agricultural resources. A system of land taxation that
would fall upon unproductive holding of large estates
was still lacking. There was need of a large amount
of social legislation so adjusted that the republic would
become a truly modern nation throughout her national
life. This was a task immensely greater than the finan-
cial rehabilitation which the government, under the dic-
tatorship, had so successfully carried out. It was a task
in which but little progress had been made and which
the government, in spite of the evidence so clearly pre-
sented in the reports of many of its officials, had never
resolutely faced.
Whether the old regime could have carried through
the great socialization program that was needed may
be doubted. The dictatorship had not shown itself
capable of encouraging the broadening of privileges and
6 See tabulation in Memoria de "hacienda y credlto publlco, cor-
respondiente al ano enconomico de 1 de Julio de 1907 a 30 de Junio
de 1908, Mexico, 1909, p. 5,
PUBLIC INCOME AND EXPENDITURE 103
opportunities even within the small circle of whose who
were its servants. There can he no doubt that the fail-
ure to face the great humanitarian work, which should
have accompanied the economic regeneration of the
country, was the greatest weakness of the old regime
and the fundamental cause of its spectacular and tragic
downfall.
CHAPTER IX
THE MEXICAN LABORER
THE Aztec civilization, which the Spaniards found
in Mexico at the time of the conquest, depended pri-
marily upon the labor of the hands of the people. Do-
mestic animals, as in all America, were conspicuous
by their absence. Agriculture was of the most primi-
tive sort.
One of the most important changes in the economic
life of the country brought by the Spanish conquest,
greatly increasing the labor power of the country, was
the introduction of European foodstuffs and domestic
animals. European cereals and other foods were intro-
duced in the highland regions and the horse, burro,
sheep, and swine became common elements in the life of
the country. Chicken raising spread rapidly, wool be-
came important as a material for clothing. Later
potato culture was extended and rice and coffee were
introduced. European methods improved the yield of
the mines and minted coins made exchange easier and
gave a new impulse to the weak local commerce. 1
In spite of the introduction of these favorable ele-
ments the life of Mexico did not change as much as
1 A good description of the changes in the life of the people
introduced by the Spanish conquest is found in Karl von Sapper,
Wirtschaftsgeographie von Mexico, 1908.
104
THE MEXICAN LABORER 105
might have been expected. Mining drew attention away
from other developments, such as agriculture, but most
of all the trade policy of the mother land kept the coun-
try in a backward condition. It shut out the foreigner
who, by his example, might have stimulated the Indian
to adopt a civilization in which industry played a greater
part than in his own. It restricted the foreign trade
that would have opened up the natural resources and
that would have created greater necessity for labor and
would have increased its reward. When the Spanish
restrictions were removed, the influences that formerly
hindered development largely vanished, but the country
did not advance. Disorder, which discouraged capital
investment and robbed the workman of the fruit of his
labor, retarded progress. Not until after half a cen-
tury of intermittent revolutions did Mexico right itself.
Under the discipline of a strong government it grad-
ually removed the more important survivals of the anti-
quated Spanish commercial policy, and the republic for
the first time came into real contact with the current
of world economic developments.
For these reasons the Mexican laborer as a laborer
has only recently had a chance to prove his merits and
even now his possibilities cannot be definitely stated. 2
The estimates of the Mexican workman given by those
who have employed him in large numbers vary as greatly
as the Mexican himself varies. In some railroad con-
struction w r ork overseers who have had wide experience
with all kinds of unskilled labor declare him to be the
2 See Wallace Thompson, The People of Mexico, New York,
1921, pp. 315-348.
106 MEXICO AND ITS RECONSTRUCTION
best material they have ever had to deal with for doing
rough work. Others think him "next after the Irish,"
"fully the equal of the Italian," and "as good as any
immigrant labor I ever dealt with." Estimates of less
favorable character are quite as numerous, and the Mex-
ican employer appears to have quite as much to say
about the shortcomings of the native laborer as does
the foreigner. The fact that the estimates of his abil-
ity are not regional, that there is no ethnological nor
sociological unity among the population, and that some
foreign and some Mexican employers have marked suc-
cess in using native labor in districts where others find
it very inefficient makes it hard to arrive at any esti-
mate of the Mexican as a laborer that is fair.
In whatever part of the country that is under discus-
sion the laborer is, as a rule, an Indian laborer. He
is the fulcrum of Mexican society. As one of the most
thorough of Mexican students says, "Amidst the most
terrible sufferings and crushed by all sorts of hardship
the indigenous population is sustaining us, socially
speaking : it carries on the agricultural labor throughout
the Republic, works the mines, and effectuates all hard
and heavy toils." "Our subordination to the indigenes
is so patent that our actual existence depends exclu-
sively on them."
The work that the Indian has been called upon to do
thus far has been, as a rule, such as to test his physical
endurance and industry but has given him little oppor-
tunity to show his abilities in skilled trades. The most
3 Justus Sierra, editor, Mexico, Its Social Evolution, vol. I, p. 30.
THE MEXICAN LABORER 107
important exception is found in the textile mills. There
ignorance has stood in the way to prevent advance to
responsible positions. In the few cases where this has
not been the case the better paid places have not infre-
quently been reserved for foreigners by the manage-
ment or, if Mexicans were put into places of responsi-
bility, they were given lower wages than were paid to
Europeans doing similar work. The success of certain
of the native employees in the face of these difficulties
shows that some, at least, have aptitude for the skilled
trades. There is no doubt that even in the textile mills
the abilities of the native population have not been fully
tried out in the past.
The government has done little to furnish education
which would develop the latent industrial ability of the
people. "By the change of regime in the present cen-
tury the indigenes have made no advance, they have
only changed their tutors and tutor Congress, to tell
the truth, has done less for them than the tutor Vice-
roy." *
Under these conditions it is evidently unfair to judge
what the Mexican laborer can do from what he has done.
He has never had a chance to prove his worth and his
cause has been an unpopular one even in his own coun-
try. The ruling class have consistently alleged his great
possibilities and especially in late years not a few, when
comparing themselves to foreigners, have developed a
sort of Indian cult and have professed themselves of
* Ibid., p. 31. See also Alberto Robles Gil, Memoria de la sec-
retaria de fomento presentada al congreso de la union, Mexico,
p. 500.
108 MEXICO AND ITS RECONSTRUCTION
Indian blood and declared themselves proud of their in-
heritance. Nevertheless, in domestic politics, the Indian
has been a subject of general neglect. Mexico has rec-
ognized that her greatest problem is at bottom a race
problem, but she has made only the feeblest of efforts
for its solution.
The criticisms of the Indian laborer by his employers
are those frequently alleged against the colored races,
especially those living under tropical or semitropical
conditions. The Indian laborer is alleged to be lazy,
of few wants, preferring a low standard of life with
little exertion, physical or mental, to hard work and
the satisfaction of new desires. He is stolid, taciturn,
melancholy, fatalistic, deceitful, and unambitious. He
is declared childlike, quick to anger, devoted, and re-
vengeful. With other peoples at a similar stage of
development he shares a fondness for strong drink.
"He never becomes an initiator, that is to say, an agent
of civilization . . . the native people is a static peo-
ple." 5 Unlike some of the native population of the
United States he is said to be usually docile, easy
to handle if his prejudices are not offended, and, as a
rule, not a lover of fighting for its own sake. Custom
plays a large part in his life and he yields to new
influences but slowly. Though there are those whose
experience seems to prove the contrary, it is the
general testimony that the native lacks powers of
sustained attention and industry. He is easily di-
verted from the task in hand. He shows, in short, in
8 Justus Sierra quoted in Luis Pombo, Mexico, 1876-1892, Mex-
ico, 1893, p. 7.
THE MEXICAN LABORER 109
the work that he undertakes, an immaturity of char-
acter comparable to that of a child. These character-
istics are emphasized in the hot regions. 8
Other ethnic elements besides the Indian play an un-
important part in the manual labor supply of Mexico.
The mestizo population, a growing proportion of the
whole, has not turned to agricultural or industrial pur-
suits. What education it has received has turned its
attention to the "polite professions" rather than the
more fundamental occupations. That such is the case
is one of the most unfortunate features of Mexican life.
There is no economic bridge between the laboring classes
and those who, from a false perspective, believe that
working with their hands is beneath them. The educa-
tion which the state has provided is literary, the envied
careers are those in the law courts and diplomatic circles.
Even those who receive training in engineering, agri-
culture, and like careers too frequently consider them-
selves qualified thereby for government positions or for
the responsibilities of directors whose work is sharply
cut off from actualities.
From these conditions results one of the most strik-
ing contradictions in Mexican life. The mestizos have
developed as the owners of the greater number of small
properties in the republic, they have monopolized many
lines of small trade, they are the middlemen. They
hold the great majority of public offices. But they have
no unity of interest and feeling with the laboring classes.
6 See on this point Alberto Robles Gil, op. cit., p. 94. The "vig-
orous" element in the hot zone are one-twentieth of the population.
In the temperate regions they are one-tenth.
110 MEXICO AND ITS RECONSTRUCTION
Mexico, it is true, has no hard and fast race line such as
is found in the United States. It has a line of economic
and social demarkation which is no less unfortunate.
"Ever since the independence the Mexican mestizos and
the Creoles . . . divided into two parties, both of them
distanced from the nature of things because of their
ignorance of the actual world; not knowing the true
needs of Mexican society" have "continued to agitate
it" but have not established Mexico upon a sound eco-
nomic, social, and political foundation. 7
Foreigners, as an element in the labor supply and in
office holding, can be disregarded. They have devoted
themselves to trade, banking, and the development of
the natural resources of the country, the latter almost
exclusively through the use of the local labor. They
represent a part of Mexican wealth disproportionate to
their number and their enterprises have an important
influence on the economic position of the country and its
inhabitants, but they do not form an important part
of the labor supply.
If the average Mexican laborer of the present day or
of a generation ago is compared to the American
laborer, he makes no favorable showing. For the dollar
of wage received he does not yield more than the highly
paid worker in the United States. The chief causes
advanced in explanation of this fact are that he is poorly
fed, poorly educated, less ambitious, and in large areas
of Mexico less able to work because of climatic condi-
tions. The plateaus are so high that the rarefied air
* Austin Aragon in Justus Sierra, op. cit., p. 81.
THE MEXICAN LABORER 111
makes sustained effort difficult and the atmosphere of
the lowlands is so hot and humid that the laborer cannot
endure the continuous physical labor of which men of
northern lands are capable. 8 Some of these are disad-
vantages that can be overcome. Some are inherent in
the conditions under which the Mexican laborer lives.
Making all due allowances for the disadvantages
under which it works, it is clear that the laboring popu-
lation of Indian blood is one that reacts but slowly to
new surroundings and one the abilities of which are still
to be determined. The mestizo class, which is gaining
in numbers as compared to the pure Indian, will sooner
or later be forced to take a larger part in the labor of
the community. The Mexican Indian as an Indian
seems destined to disappear by absorption. Even
though under the stimulus of foreign example and eco-
nomic compulsion he should take on European habits
of life, rapidly develop new wants, and become a greater
factor in the national life, there is little chance of his
surviving as an Indian. The chance would be less per-
haps than if he continued his present mode of life, for
his blending with the rest of the population would prob-
ably be hastened by unity of economic interest.
Mexico is now predominantly a mixed blood state
and it seems probable will become more so. The Mexi-
can laborer of the future, it appears, will be a mestizo
and not an Indian, a condition that will be hastened
by the absence of the social cleavage on racial lines,
8 M. Romero, "Wages in Mexico," in Commercial Information
Concerning the American Republics and Colonies , 1891, Bulletin,
No. 41, Washington, 1892.
which is found elsewhere. The aboriginal races, which
formed so important a factor in the early history of the
United States, have disappeared as an important factor
in the national life by a process of elimination, those
of Mexico, which have been, until now, the foundation
on which the state has been built, will disappear by inter-
marriage.
What effect this development will have upon Mexi-
can economic and political life it is, of course, impossible
to say. Whether through faulty education or other
causes, the mixed bloods, up to the present, have not
shown themselves an industrially able population. In
politics they have been wonderfully facile and disap-
pointingly unstable. Whatever the changes that the
revolution brings in the labor conditions of Mexico may
be whether the Indian for the time being comes to
play a more or a less important part in the national life
and whether or not the mestizo rises to his opportunity
it is clear that Mexican labor problems will be in the
future, as they have in the past, to a large extent, race
problems. They must depend for the success of their
solution upon the degree to which the Indian, and for
the future the mestizo, population show themselves
adaptable to the demands of industry.
It is not fair, however, to assume, as is often done,
that given the chance to develop wants the Indian and
mestizo populations have shown no tendency to do so.
In fact, the Indian has been brought into contact with
the habits of civilized life so casually, if at all, that his
adaptive impulses, which appear naturally slow, have
been but feebly aroused. The mestizo has taken on a
113
surface culture but has missed the lesson that civiliza-
tion means work and responsibility for those who do
not labor with their hands as well as for those who do.
He has developed new wants but they have not sunk
deeply enough into his nature to make him, in fact as
well as in appearance, a person of Western European
civilization.
Along the railroads and at the seaports, wherever
the currents of commerce have penetrated, demands for
the simpler and cheaper manufactured articles have
developed, and if education and economic changes,
which would open greater possibilities of economic in-
dependence, were to reach the people, they would doubt-
less progress faster toward a European standard of
wants. 9 Until those elements that a modern state con-
siders it essential to furnish its citizens are introduced
in Mexico, it will be too soon to judge what the capa-
bilities of the local population are and the degree to
which they will be able to keep their country their own
both in an economic and a political sense.
9 A good description of the position of the Indian in Mexican life
is found in Luis Pombo, op. cit., p. 7 et seq.
CHAPTER X
THE MEXICAN LABORER: HIS CONTRACT
ONE of the greatest handicaps to the progress of the
laboring classes especially among the less advanced
populations is the "lack of wants." In highly devel-
oped industrial communities a sudden increase of in-
come for the laborer does not result immediately in a
wise expenditure of his surplus for the general better-
ment of his standard of life. But where the examples
of those who have had greater opportunities and greater
income are constantly before the worker and his family,
the transit from the old to a new standard comes with
no great delay. New desires are felt which demand all
the increase of income and more. Thus occurs the con-
stant and insistent pressure from below for a better
standard of living, which is so marked a characteristic
of the civilization of Western European peoples.
But in tropic or semitropic lands, such as Mexico,
the conditions that surround the laborer do not produce,
or at least have not heretofore produced, that whole-
some unrest which is the dynamic element in countries
less favored by nature. Life is too easy. Poverty is
always near but actual starvation is known hardly by
report. Contrasts in habits of life outside the larger
towns are not so great as to furnish incentive to enter-
prise. The working man feels himself a part of the
community and occupies a traditional position within
114
THE LABOR CONTRACT 115
it. He is not conscious of great wrongs nor disposed
to question the fitness of things as they are.
Nominally all labor in Mexico has been free during
the entire life of the republic, but the desire of em-
ployers to secure a lever by which the Indian could be
induced to work brought the continuance of a system
inherited from colonial times which, while not legally
slavery, had to a large degree the economic effects of
a slavery system.
In this as in many other matters of public policy
political theory outran practice. The constitution of
1857 under which the republic continued to live until
the adoption of that of 1917 provided that "nobody
should be obliged to render personal service without
proper compensation and his full consent," and pro-
hibited laws that sought to recognize contracts involv-
ing the "loss or irreparable sacrifice of the freedom of
man through work, education, or religious vows." These
clauses were considered to abolish the prevailing peon-
age system. On September 25, 1873, the rule was
made to read: "The State cannot allow the fulfillment
of any agreement, contract, or covenant which may, in
any manner impair, destroy, or irrevocably sacrifice
man's liberty either through work, education, or reli-
gious vows."
Neither clause brought a change in fact. Local ef-
forts to make the law square with practice did not up-
1 The above quotations are from Ma Has Romero, "Wages in
Mexico," published in Commercial Information Concerning the
American Republics and Colonies, 1891, Bulletin No. 41, Wash-
ington, 1892.
116 MEXICO AND ITS RECONSTRUCTION
root the well established characteristics of the employ-
ment contracts. It is true, of course, that labor con-
ditions during the Diaz regime varied widely in differ-
ent parts of Mexico. The men were not uniformly
good workers, they were not uniformly content with
their lot as they found it, and the conditions of their
employment varied with the traditional arrangements
observed and with the degree to which foreign influences
had come in to upset the unprogressive but generally
contented habits of the slow-moving local life. But
none of these influences created a general demand for
betterment of the condition of the laborer. The labor
problem was in the greater part of the republic one
which, to the employer, meant how to get labor, not how
to satisfy the demands of an organized labor class.
The Mexican government has never had a thorough
study of the labor conditions among its own people. It
does not know officially to-day in more than the most
general way the usual terms of contract, the wages, or
the living conditions of the laboring classes. The best
picture that can be given must be based on incomplete
official surveys supplemented by the observations of
travelers, the experience of the many foreigners who,
in their enterprises, have come into contact with the
Mexican peon, and the testimony of those who have
been prominent in support of the recent labor move-
ment or in its opposition. In the years 1885-8 the gov-
ernment published the results of a labor survey of Mex-
ico which is even up to the present time the most com-
prehensive effort of the sort that has been made in the
republic. Though the answers to the questionnaires
THE LABOR CONTRACT 117
sent out are by no means of even merit, they give a fair
picture of the status of the Mexican laborer in the early
part of the Diaz period. 2
Complaints concerning the condition of the laborer
were even at this early time frequent. The discussion
shows that the desire for change did not come from the
peons, who were, in fact, then and later as a class un-
protesting and fairly well satisfied. The labor system
was criticized rather as a factor in the national life
which was neither economically efficient nor one which
promoted the creation of an independent citizenship.
The reports that were asked from the officers of all
the states and their subdivisions reveal a surprising va-
riety of customs affecting the labor contract. There
was no generally accepted system of peonage. Rates
of pay often varied greatly in communities at short dis-
tances from each other. As a rule the contract was for
shorter periods in the south and the wages were better
in the north. The enterprises in some districts fur-
nished only seasonal employment for a few men and
employers found it difficult to secure help even on these
short-term contracts. In other cases there were two,
three, and even four different kinds of servants recog-
nized, each with their separate wage arrangements.
In some communities pay was by the task or by the
day in advance, in others by the week in advance. In
others, payment came at the end of the period of serv-
2 These reports were published in great detail in a series of docu-
ments with slightly varying titles in 1885-7. The general title
is Informes y documentos relatives a comercio interior y exterior,
agricultura e industries.
118 MEXICO AND ITS RECONSTRUCTION
ice. There were year, two-year, and even five-year con-
tracts. There were share farmers of various kinds and
casual laborers. The longer contracts might or might
not involve such elements as ration, the furnishing of
tools, clothes, medicine, housing, and a large number
of other elements. To speak of Mexican peonage as a
system was to use a misnomer. Nothing less deserved
the name. It was a tissue of widely varying rules partly
resting on state legislation but largely on local custom,
the origin of which was not found in written law even
in the colonial regime.
Study of wage rates, though they are carefully re-
ported in the inquiry referred to, does not allow defi-
nite conclusions. Actual income in one district as com-
pared to another was not measured by the money wage.
Ration allowances, land for the peon's use, and hunt-
ing privileges modified conditions. A centavo had a
very different value in Chiapas from that which it pos-
sessed in Durango, the wants of the peon in the one case
were fewer than in the second and he would stop work-
ing sooner, no matter what the wage offered.
It is also impossible to give any intelligent discussion
of the hours of labor in a country where presence on the
job has such an indefinite relation to the work done.
This is true in all non-industrial countries in which there
are wide variations of climatic conditions. The peon
started work in many districts at four in the morning.
He finished at eight at night or later. The working
hours were variously reported within the 16-hour period.
Yet the number of Mexican laborers who worked
straight through the reported working period or straight
THE LABOR CONTRACT 119
through the day, except for meal hours, was small in-
deed. There were rests, lunch periods, siestas, periods
for smoking, and the unavoidable interruptions that
seem to be inherent in the work of any aboriginal or
semi-aboriginal labor group. All these made the actual
effective labor hours much less than their nominal total.
There were so many variations in labor conditions
that no average standard can be discussed without de-
stroying the most distinctive feature of the picture, its
variety. Illustrations from the south, the center, and
the northern part of the country at various periods give
a fair idea of the sort of contrasts encountered.
In Chiapas in the Department of Pichucalco in the
middle '80s the laborers were of three classes: free and
debt servants and intermittent workers. The first re-
ceived 25 centavos and subsistence, or 38 to 50 centavos
without subsistence. Such servants were hard to find.
Few "liked to work by the day."
The debt worker presented himself to the intending
employer and received an advance of wages and a so-
called card account, carta cuenta, stating the amount
owed. This was recognized before a legal authority,
before whom was also drawn up a statement of the
term regularly one or two years for which the man
agreed to work every day but feast days. The pro-
prietor promised to pay the wages agreed upon, fur-
nish stipulated food, and make the necessary advances
in cash, clothing, and tools. Often the formal legaliza-
tion of the contract did not take place, the card account
being issued and both relying on custom to determine
their rights and duties. The services of the wife might
120 MEXICO AND ITS RECONSTRUCTION
or might not be included in the laborer's contract.
When the laborer wished to move to another farm, he
made arrangements with its owner by which the latter
would pay the former employer the amount of the labor-
er's card account. The man was then transferred. The
advances on card accounts often reached 500 pesos or
more. The wage of the debt laborers in cash was four
pesos a month, in addition to which they received 500
ears of corn, 20 pounds of beans, salt, house rent, medi-
cines, and two bottles of alcohol.
The intermittent workers were bound to work only
four days out of each week. They received lodging and
four pesos a month without any supplemental allow-
ances.
In other parts of Chiapas still other variants were
found. In some districts there were meseros, or month
workers, usually Indians who owed more than they
could pay. Their contracts differed from those of the
debt servant above described in that they worked one
month for the master and one for themselves. They
did not live on the farm but in their own homes, which
were often distant from the place of work. As in the
case of the other debt peons the master assumed their
debt and paid them their wages and a ration of corn.
Another class were the baldios, who lived on the place
but worked land for themselves, built their own houses,
and paid from two to four days' labor per month for
their privileges. They were under obligation to work
for the master for a peso or nine reales a week when he
called upon them. Occasionally there were share work-
ers and advance-payment week workers. The best paid
THE LABOR CONTRACT 121
laborers on the haciendas were a class called punteros,
a sort of foremen found only on the larger places. They
distributed the tasks of the day and themselves worked
with the group of men of which they were given charge.
The labor difficulty in the south was then what it is
to-day. Life was too easy to encourage habits of indus-
try. The great majority of the population were In-
dians who felt no necessity to work. Only a few of
the native towns furnished laborers. The people of the
rest of the towns relied on their corn patches and hunt-
ing for their livelihood. In the average case, there was
little oppression possible on the haciendas, since the In-
dian could escape and the arm of the administration was
not strong enough to hold him to his duty. The land-
owner had to do the best he could to keep peace with
his laborers and by various expedients try to induce
them to work. The scarcity of voluntary labor made
the temptation to force the Indian to work greater and,
where the employer could get the effective aid of the
authorities, abuses of this sort were not infrequent.
Some of the worst wrongs of the peonage system oc-
curred in the southern states. 3
A very large share of the population in the southern
states worked for no master and but little for them-
selves. They were satisfied with their native villages
in which there were few social necessities. They lived in
palm leaf houses, they needed almost no clothing. What
little they used the women wove from local cotton in
the hot lands. Those from the colder plateau districts
3 See Wallace Thompson, The People of Mexico, New York, 1921,
p. 325 et seq.
122 MEXICO AND ITS RECONSTRUCTION
obtained cotton by trading fruit or other natural pro-
ducts for it. A few had flocks of sheep.
The diet of these people was chiefly corn, beans,
fruits, and game. They bought salt and occasionally
beef. The chief indulgence was alcohol. They were
all but self-sufficient, they were almost untouched by
taxes, unaffected by commerce and industry. Among
such a population labor was scarce though potential
laborers many.
In some of the southern states work by the task, the
so-called faena, or tarea, was frequent in the middle
'80s and in some municipalities it was the only way of
hiring labor. In Cuaatla, Morelos, in one of the sugar
districts there were day and task laborers. The latter
did a set amount for 25 centavos. An active man could
do three tasks but most stopped after doing one or
one and a half, although the day laborers might still
be at work. Those who worked by the day were of
two classes. Both worked all day. Those of both
classes were required to do a certain amount of work
before sunrise. In the afternoon those who did not
live on the estate had to do another equal task com-
pleted by eight o'clock on regular week days without
increase in pay. On the other hand, they could come
to work at noon on Monday and stop Saturday after-
noon at two or three. All the men were paid twice
a week, on Tuesday what they had earned to that time,
called the socorro, and on Saturday the ray a.
Farther north in the State of Puebla some laborers
worked by the day or week for 3114 centavos a day dur-
ing the unusual stress of hay or wheat harvest. Those
THE LABOR CONTRACT 123
who worked by the year, the contract regularly begin-
ning with Holy Week, were paid at the rate of 25 cen-
tavos a day. At the beginning of the contract the em-
ployer took over the laborer's previous debts, gave him
clothing for the season an act repeated on the first day
of November and a certain amount in cash. He was
obligated to give the laborer 50 centavos a week for
spending money and one cuartilla, about 1.38 liters, of
corn for subsistence. The employer paid the unusual
expenses of the peasant for such items as medicines,
wedding and saint's day celebrations, and the like. The
peon received the use of a quartern of land, seed, and
the tools needed to work the land. Fuel for his domes-
tic use was also furnished.
The lot of the debt laborer in the north appears to
have been less favorable than in the south. In Coahuila
the harsh legislation formerly in force was nominally
softened by the provisions of the constitution of 1857
and by a new servant law of January 28, 1868, which
forbade, advancing to a servant in a year more than he
could pay back in six months. This was intended to
protect the peon against his own improvidence. The
rule was not obeyed. The masters continued to advance
large sums to hold the men as before. On the 20th of
February, 1881, another servants' law was passed. The
master could not dismiss the servant without eight days'
notice nor could the servant leave without paying his
debts. An increasing number of disputes involved this
latter provision. For the servants it was claimed that
it was contrary to article five of the Constitution of the
republic, but in practice the authorities required a run-
away servant to return to the employ of his creditor on
the ground that to abandon employment violated articles
of the penal code and the law of servants.* If a trial re-
sulted, the servant appealed to the Constitution for pro-
tection. Efforts were then regularly made to settle the
case by compromise. Masters feared that if the Consti-
tution was held to apply all servants might repudiate
their debts. Servants were indisposed to run the chance
of having the criminal sentence declared against them.
There were many variant contracts in the north as
well as in the south. For example, in the district of
Comonfort, municipality of Chamacuero in Coahuila,
three sorts of share farmers were found. Renters might
receive from the hacienda owner the use of the land, the
seed, a yoke of oxen, and a load of grain to be paid
back at harvest time. The renter paid one-fifth of the
expenses in harvesting and received from the harvest
one-fifth less than his half. By another plan the yield
was shared equally, the owner furnishing the land, the
seed, an ox, and half of all expenses including those of
the harvest. If the laborer received land, seed, a yoke
of oxen, one peso 50 centavos in cash, and a load of
corn, these last not to be paid back, and did all the work,
he received one-fourth of the crop. 6
During the progress of the Diaz regime there were,
* Penal Code, Art. 407; Law of Servants, Article 10.
6 The description of the labor contract in Coahuila is well de-
tailed in Informes y documentos relativos a comercio interior y ex-
terior, agrlcultura e Industrias, Number 10, April, 1886, Mexico,
p. 92 et seq. From this series the other illustrations given above
are taken. A very excellent discussion of wage conditions in Mexico
in 1891 is given in Matias Romero, op. clt., pp. 125-45.
JHE LABOR CONTRACT 125
of course, marked changes in labor conditions. No great
economic transformation such as that which marked the
period could occur without disturbing the entire net-
work of human relations upon which the national life
rested. Nevertheless, the change in the labor contract
was less fundamental than apparent. Cities grew, com-
merce increased, and the nascent industry of the '80s
achieved an importance in the public economy never be-
fore known. On the routes most visited by foreigners
there were many evidences of the passing of the old and
the coming of a new economic day. But in the back
country life was still stirred from the accustomed rou-
tine only in a secondary way. Local customs continued,
legislation intended to bring the nation into line with
;the developments in the Western World was added as
an embroidery or flourish, but it did not replace the
habits of generations. It was not fundamental in char-
acter. The position of the average Mexican laborer was
still one of status not of contract.
The labor arrangements found in later periods in dif-
ferent parts of the country indicate the degree to which
the relations of employer and employee remained un-
affected by the developments which were transforming
the life of the nation. They show also modifications
which the new conditions introduced in the labor con-
tract.
In Yucatan, at the end of the Diaz regime, debt serv-
ice was still a characteristic of the labor system. It was
still illegal but seldom questioned. The large hacenda-
dos, or owners of haciendas, aimed to keep as many
laborers living on their plantations as they could. Many
126 MEXICO AND ITS RECONSTRUCTION
of the servants on the better managed places had been
born there as had their fathers. They were paid, in
some cases, at a fixed rate under period contracts; in
others, a daily wage according to the number of hene-
quen leaves cut and piled the raising of henequen be-
ing practically the single local industry. The laborers
received houses, garden plots, and medical attendance
free. The masters, in some cases, supplied rations of
corn free; in others it was sold to the laborers at less
than the market price. It appears that there was little
dissatisfaction with the system in this state on the part
of either the men or their employers. The state was
but little stirred by the revolution when it came, in fact
it took no part in the effort to overthrow the old regime.
It was not until after 1914 that the revolution affected
the laboring population. Even then they were roused
against their employers only by insistent propaganda
backed by those in control at the capital.
Chiapas, in the latter part of the Diaz regime, was
still without a sufficient labor supply for its develop-
ment. An American manager for one of the large plan-
tations declares that his company and all those sur-
rounding were so anxious to have labor available that
they were willing to give a plot of land to any Indian
family that would work it. Any land hunger on the
part of the native could thus easily be satisfied. About
150 families were settled on the estate in this way. Gen-
erally the Indian in that region did not want a definite
piece of land, he wished only to burn over a field and
get one or two crops from it by planting directly in the
unplowed soil. When grass and brush began to ap-
THE LABOR CONTRACT 127
pear, he abandoned the field for another, which he could
prepare by burning it over, a process easier than plow-
ing.
Whether given land on a plantation or living in his
own village, the Indian was loath to work. Reliance
still had to be on a system of induced labor. In this
region the majority of the Indians had to be secured
from communities in which the men had their own corn
patches, wheat fields, pigs, chickens, and perhaps even
their own cotton and sugar. The plantation owner had
no legal authority to force these men to work for him,
but by long-established custom every able-bodied man
could be called on to work one week in four. Laborers
had to be summoned to work and in this the civil au-
thority gave its support to the requests of the planta-
tion owners.
In actual practice in this region the plantation owner
hired a man who could speak Spanish and, preferably,
the native dialects to do recruiting. A man represent-
ing the civil authority would accompany this person on
his rounds or the jefe politico might give him a letter
to the head men of the native villages from which the
labor was to be drawn. These head men and the jefe
politico knew how many men there were in each village,
how many had been requisitioned, and whether there
was a balance. Notice was served on the head man and
he would see that the Indians promised reported. If he
were reluctant, he was sometimes given a tip. Those
from each village arrived together, worked together on
the plantation, and left together. Once on the planta-
tion they would usually stay from four to ten weeks un-
128 MEXICO AND ITS RECONSTRUCTION
der special inducements, but they were free to go after
one week. Payment was made directly to the man at the
end of each week by the piece system or at one dollar
Mexican per week, if employed on that basis.
The day's work bore a strong contrast to that in in-
dustrial communities. The men were rousted out be-
tween six and seven in the morning, they came to a cen-
tral house where they received a drink of sugar cane
rum "forty drinks to the liter and so strong you could
burn it in a lamp." Each man got all the beans he could
eat, half of a large corn cake, and a ball of boiled hom-
iny, which latter he took to the fields with him for his
three lunches at nine, twelve, and four o'clock. At noon
there was a two-hour rest. Work was, as a rule, by the
tarea system. There were frequent interruptions.
Though they were paid by the piece, the men had to be
followed up constantly or they would loaf and play. On
the average the work day was about nine hours. Re-
turning at night each man received another drink of
rum, all the beans he could eat, and the other half of his
corn cake.
Along with these Indian laborers there were often
employed in Chiapas another group, generally with
some mixture of Spanish blood, who worked under con-
tracts more nearly approaching the peonage system as
usually reported. The man who wished to become a
peon came to the employer and asked for a loan under
the usual employment contract. This was given. Then,
if the relation was newly established and the man was
without family, he disappeared for an agreed period.
This time passed and the money gone he reappeared,
THE LABOR CONTRACT 129
settled down on the ranch, and became a fixture. Soon
he had a wife, a garden plot, some chickens, and a pig
or two. He worked during the week and on Saturday
night appeared for his wage balance, if any, which he
proceeded to spend on the simple but powerful luxuries
to which his generation was accustomed. Generally he
did not try to pay his debts but to increase them. To
have a heavy debt was for many a sign of standing in the
community, an evidence that the employer had confi-
dence in the employee.
In the latter part of the Diaz regime, in some of the
sugar and coffee plantations of Vera Cruz the day labor,
task and share-rent systems were apparently gradually
displacing the classic form of peonage. A French
plantation operator employing between 700 and 1,000
workmen in the low lands worked his fields by means of
men recruited chiefly from the higher altitudes. Many
of his neighbors had adopted the share-rent system of
employment. He himself preferred to get his labor
through capitanes to whom he paid five per cent of the
wages of the day laborers as premium. Of these la-
borers about one-fourth were induced to live on the
estate, the rest were casuals paid 50 cents Mexican per
tarea or from 56 to 72 cents Mexican, if on a day labor
basis. In this district, as elsewhere, the lack of ambi-
tion was alleged to be a prominent characteristic of the
laborer. He would not do more than one tarea though
he could easily do two. Those who lived on the estate,
though they were given garden plots, seldom cultivated
them efficiently and the share renters, when the return
for the season's harvest was paid them, almost without
130 MEXICO AND ITS RECONSTRUCTION
exception squandered their earnings in the most im-
provident manner.
An engineer formerly employed by the Mexican gov-
ernment reports that labor conditions in Tamaulipas
were practically the same in 1910 as they were a gen-
eration before. The money wage had risen to from six
to nine pesos a month but the historic system controlled
the labor contract. The laborer could not leave until
he paid his debt. Once in debt, he could only with great
difficulty get out and, if not in debt, he could only with
great difficulty remain so. Peons were given a credit
account which, on account of advances usually made at
the beginning of the contract, always showed a debit bal-
ance. They sometimes received the right to live in a
house owned by the employer, sometimes they built their
own bush shacks. If they were ambitious, they could
regularly have land for a garden, but they seldom did so.
These illustrations for both the earlier and the later
period of the Diaz regime are samples of widely varying
practices in which there was an underlying similarity in
that the contracts were not free will engagements. In
this sense they are typical of the conditions under which
a large part of the laboring population worked. They
are not typical in other respects, because the labor con-
tract in different parts of the country and even within
the same region was of such varied character that there
was no type.
Though peonage was found in widely separated parts
of Mexico, both at the beginning and at the end of the
Diaz regime, it is a mistake to consider it to have in-
volved all the population at either period. A consider-
THE LABOR CONTRACT 131
able number of the natives were never touched by it
and, especially with the development of the economic
resources of the country, there came into existence, in
the larger cities, along the railroads, in the mines, textile
working communities, oil fields, and elsewhere a class
dependent upon the wage system such as it is known in '-'.''
other countries. These workmen lived, as a rule, under
conditions less favorable than those found in the United
States. They were better off, however, in both living
conditions and wages, than the average Mexican la-
borer. They seemed to be the beginning of a labor class
similar to those found in more advanced communities.
The pictures that have generally been drawn in the
United States of labor conditions in Mexico at the end
of the Diaz regime are unfair. A great deal of sym-
pathy has been wasted on that portion of the Yaqui
tribes that was transferred from the northwest to Yuca-
tan and Campeche, though there were undoubted abuses
committed in the process. There were, in certain re-
gions in the southern states, labor conditions altogether
indefensible but they were not general. The "shanghai-
ing" of men from the cities, especially the capital, for
work on plantations on the isthmus of Tehuantepec
seems to have occurred in a large number of cases but
such practices were not a real part of the peonage sys-
tem. 8 The worst abuses of this sort, roundly denounced
by all responsible Mexicans, appear to have occurred in
the Valle Nacional of Oaxaca. Such conditions involv-
ing the herding of the victims into barbed wire en-
8 See Wallace Thompson, op. cit., p. 326, el seq.
132 MEXICO AND ITS RECONSTRUCTION
closures and various methods of inhuman treatment
were exceptional, probably not more typical of Mexican
conditions than the story of Simon Legree was typical
of conditions in the southern United States in slavery
days.
That the labor system in force in Mexico was a drag
upon the development of the country was frankly recog-
nized by forward looking Mexicans. None have been
its more acrid critics. Many are the telling contrasts
which they have painted of the conditions to be found
north and south of the Rio Grande. Representative
of these criticisms are the following: "On the border
there is decent labor, supported by justice, with the
rights of man vibrating in every nerve and in every drop
of blood; the agriculturist with his hide boots and his
wage of two dollars gold ; the laborer who works in the
fields by the day, who upon his return home at night,
clean and happy, takes to his arms a flock of strong
children." South of the river "is savagery, dark and
brooding, a silent barbarity . . . which asks nothing of
light, a surrendered right which asks nothing of happi-
ness, a weakened constitution which asks nothing more
than a drink of alcohol . . . and five ounces of caustic
stuff in the stomach; a paternity without sovereignty,
a home without rights, an unhappy wife; a nominal
country, slavery at the price of 100 to 200 pesos. . . ."
"The peon is a drunkard because of hunger ; by custom,
by exploitation, ignorance, dissimulation of the author-
ities, and because of his tendency to laziness. . . . The
family of the day laborer . . . does not exist . . . the
children if ... they escape tuberculosis, hardly reach
THE LABOR CONTRACT 133
the age of maturity before they . . . inaugurate . . .
. . . the . . . life . . . that they learned from their par-
ents." "The world has never known a school before a
home . . . and if we are to believe our eyes, that among
the jornaleros, or day laborers, the family does not ex-
ist, the first thing that we must do is to create it." Un-
der the unfree labor system economic independence is
impossible. "As long as the jornalero cannot eat meat,
as long as he cannot support his children through school
age, as long as he is a legal slave ... he will not be a
civilized man ..."
There have been apologists for peonage both in and
out of Mexico. By them the system is pictured as not
only an essential for the economic development of the
country but as a kind paternalism which is a positive
benefit to the native. Through it he is taught the habits
of industry, he is introduced to the wants that will make
for his own betterment, he is given advances when his
necessities are greater than his slender means, he re-
ceives assistance when crops fail and medical attendance
when his family falls ill. Instances are cited in which
the laboring classes have protested against a change to
a daily wage system that would break the relationship
of protector and protected and throw the latter out upon
the mercies of the world.
It is unnecessary to prove that there are cases in
which the employer has made his relation to his Mexican
employees a means for improving their lot. But though
7 Quotations from speeches in the agricultural congress of the
diocese of Tulancingo reported in Boletin de la secretaries de / 'omen-
to. Numero especial de propaganda, Julio, 1906, Mexico, 1906.
134 MEXICO AND ITS RECONSTRUCTION
the induced labor system as an economic instrument has
many defenders among employers of both Mexican and
non-Mexican nationality, there can be no doubt that it
lent itself to serious abuse, and that it encouraged the
defects with which the laborer was charged. The
wrongs committed are not confined to any single region.
The better class hacendados, as a whole, themselves de-
plored the labor conditions, which they apparently took
no determined steps to remedy.
The arguments of the defenders of peonage do not
convince any large percentage of those who have ob-
served the practices it developed. They are the same
as those used in the United States before the Civil War
to defend negro slavery. No social institution is en-
titled to be judged by what it might be if human nature
were other than we find it or by the beneficent results
obtained under it in isolated cases. Peonage is a sur-
vival in Mexico and an unwholesome one. Even if, as
its defenders insist, its abolition will bring a slower rate
of economic development than would otherwise be pos-
sible, there are nevertheless few in the more enlightened
countries of the world who will hesitate to declare in
favor of its abolition. No nation can afford to sacrifice
the individual liberties of its people to secure greater
economic advantage. Unfree service is a contradiction
in the twentieth century and no effort to bring it to an
end can fail to have the sympathy of those who hope to
see the growth of true self-government among the na-
tions of the world.
CHAPTER XI
THE MEXICAN LABORER: HIS WAGES AND DEMANDS
IN spite of the fact that nominal wages, as is indicated
above, have so little relation to the real return to the
Mexican laborer, a sketch is given here of the payments
made at various periods in different parts of the repub-
lic. 1 In some cases it is doubted whether the real wage
in later years was any better than in the earlier part
of the Diaz regime. Taken as a whole, however, it ap-
pears beyond question that the laborer was better paid
at the end of the period than at its beginning. Only
scattered statements can be obtained indicating the nom-
inal wage rates in any pursuits at any time in Mexico.
Humboldt reported in 1804 that the agricultural laborer
received about 28 cents per day. In 1884, at the be-
ginning of the railroad era, Adolph F. Bandelier re-
ported that the Mexican received daily "as farm la-
borer 25 to Sl 1 /^ cents; as railroad hand 50 cents." Da-
vid A. Wells reported in 1887 that the wages of ordi-
nary farm hands were from 18 to 25 cents per day, the
better class of adults receiving 37 cents per day. The
survey undertaken by the Mexican government, the
results of which were published in 1885-7, showed a
wider range wages for men being in some cases as low
as 12 cents and in others as high as $1.50 Mexican. In
1 See Wallace Thompson, The People of Mexico, New York,
1921, pp. 348-370.
135
136 MEXICO AND ITS RECONSTRUCTION
1893 the Two Republics, an English paper published
in Mexico, stated: "It is officially announced that the
average daily wage in this country is 27 cents." The
paper declared that this was "probably at least 10 cents
more than it was 20 years ago." In 1896 Matias Ro-
mero, one of the best Mexican authorities, stated that
the average wage of day laborers was about 37% cents.
Industrial wages have risen with the growth of Mex-
ican industry. Official statistics showing the usual pay-
ments at various periods are not available. A study
made just before the conditions of the old regime were
upset reported about 117,992 persons as engaged in in-
dustry, of whom 100,717 were men and 17,275 women. 2
The political divisions from which the greatest number
of industrial workers were reported were, in order, Vera
Cruz, the Federal District, Nuevo Leon, Jalisco,
Puebla, Oaxaca, Mexico, and Michoacan. The least in-
dustrial regions were Tamaulipas, Lower California,
Colima, Campeche, Chiapas, and Yucatan. Industrial
wages were highest in the states which had the greater
industrial development. The higher wages for men and
for women were found in the states bordering the
United States and in those in which the stimulus of
foreign enterprise had most deeply affected the local
life. This contrast is true, indeed, in agricultural as
2 Of course, since there are no official statistics available for the
making of which "industry" is closely defined, such statements as
the above can only approximate the truth. There is no way of tell-
ing, for example, whether any attempt was made to include small
household industries, though it appears they cannot have been
covered.
WAGES AND DEMANDS OF LABOR 137
well as industrial wages. There was a wide difference
between the highest and lowest wages in the same states.
In many cases the better paid received five and even
eight times as much as the poorest. Women were paid
much less than men as a rule rather less than the class
of men workers who were most poorly paid. 3
The highest wage reported as paid to any Mexican
laborers in industrial work was $3.00, the lowest 12
cents. The highest wage for women was $1.50, the
lowest six cents. No attempt is made to state an aver-
age in fact the conditions surrounding Mexican labor
are such that no estimate has great value. The lowest
figures announced above, for example, may be for chil-
dren and represent but few individuals. The highest
were paid, it appears, in comparatively few cases.
The practice in individual industrial establishments
or groups of establishments gives the best illustration of
the upward trend of wages. In 1906, wages for adults
in El Oro mine varied from 371/2 to 50 cents a day. It
seems to be the general consensus of opinion that prior
to the revolution the average daily wage for farm la-
borers was about 50 cents. Unskilled laborers on the
railroads received from 62% cents to $1.75 a day.
Laborers in the oil regions about Tampico received
75 cents a day in 1908-9 and $2.00 and even $3.00 in
1914. The average wage of several thousand laborers
in this district was announced as $2.10. In the mining
districts wages ranged as high as $1.70 to $2.50 per day,
3 These comparisons are based on tables in Eric Gunther, Hand-
buch von Mexico, Leipzig, 1912, p. 179 et seq. The wage figures
are in Mexican currency.
138 MEXICO AND ITS RECONSTRUCTION
the average for the whole industry being not less than
$1.00. 4
The payrolls of one of the largest American construc-
tion companies operating in Mexico show that the pre-
vailing wages of their peon laborers in 1909 and 1910
was $1.25. In 1911, the average was almost $1.50. In
1912-13, the average fell gradually, reaching $1.25 in
the latter year. These figures are in Mexican currency,
equal to about half the same amounts in United States
gold. .
The tendency of wages, both the nominal money pay-
ments and the actual return, during the Diaz regime,
so far as indicated by the information available, seems
to have been steadily upward. As a rule, the rates of
payment were lower in the more thickly settled uplands.
The highest average payments, these individual cases,
like the general survey previously cited, seem to show,
were found in the unhealthy lowlands and in the north-
ern states where proximity to the United States and
the prevalence of undertakings by foreign capital ap-
pear to have had a favorable effect. As a rule, the
wages of laborers working for foreign corporations in
the northern states were higher than those paid else-
where. The mining and oil companies showed the high-
est average. The textile mills paid less but still at a
rate appreciably above that for agricultural labor.
The wage conditions created by the revolution were
so abnormal that a study of them does not allow any
* The figures in this paragraph are quoted and summarized from
a discussion by W. B. Parker, of S. Pearson and Son, 280 Broad-
Way, New York.
WAGES AND DEMANDS OF LABOR 139
general estimate as to whether they were higher or lower
than those paid before. Striking contradictions present
themselves on every side. Wages nominal wages
in some parts of the country remained stationary for
months in the face of a rapidly depreciating currency.
In such cases, of course, the laborer, since the nominal
cost of living went steadily up, received less and less.
As one employer in the Puebla district has declared:
"the men kept on working for months when a week's
wages would not have bought them a bowl of beans."
When the readjustment to the depreciated currency
came, there had occurred also such an unsettling of
prices that nothing can be stated as to the actual effect
on the economic status of the laboring classes.
In this and other regions, when the local peasantry
refused to continue work on the plantations at the old
rates, the employers who were able to keep control of
their property and keep it going had to raise the wages
several hundred fold, in many cases so much as to con-
stitute a real as well as a nominal increase.
In still other areas the laboring classes, or those who
claimed to represent them, having secured control of
the government, were able to profit by the peculiar cir-
cumstances of the local industry and to demand extor-
tionate prices for whatever labor they performed. The
best example of this condition was found in Yucatan.
The spectacular rise in the price of sisal, due to the con-
ditions created by the World War, and the exploita-
tion of the hacendados by the revolutionary government
put the agricultural laborers in a position to demand
wages comparable to those paid before the war in highly
140 MEXICO AND ITS RECONSTRUCTION
developed industries in Europe and the United States.
Prices were also extortionate. Ice cream sold at the
equivalent of 45 cents United States currency a plate,
chewing gum at five cents a stick, pears at 40 cents
apiece, and small tin cans of fruit at $1.50 apiece. Yet,
for the time being, the most feverish prosperity was
evident everywhere. The Chinese laundrymen used
automobiles to deliver their customers' shirts, mestiza
market women drove up and down the fashionable prom-
enades of Merida, the state capital, in coaches, and the
local hotels charged prices far above those of similar
character in New York or Paris. For the former peon,
however, though the prices of what he consumed had
also risen, the revolution, because of his increased wages,
was at least a temporary advantage.
The old regime once upset is never reestablished but
it seems clear that coming back to work in time of peace,
in many parts of Mexico, will necessitate painful sacri-
fice on the part of the laborer of many of the exceptional
conditions he enjoyed during the upheaval of the revo-
lution. It is equally clear, however, that the low wage
level of pre-revolutionary days has gone forever.
The labor union movement in Mexico was only be-
ginning in the years before the revolution. The gov-
ernment was indifferent to the rights of labor and dis-
couraged rather than favored the efforts of the work-
men to improve their conditions. The first important
development occurred among railway laborers, whose
union dates from 1904. There developed also, in con-
nection with the nationalization of the railroads, a move-
ment for the nationalization of the railway service. A
WAGES AND DEMANDS OF LABOR 141
policy was introduced, by which no more Americans
were taken on in the railway service, though those al-
ready employed were allowed to stay. At first the new
rule was applied to the lower ranks. The change to
Mexican service came more rapidly than the rule de-
manded, since many of the Americans would not stay
under the conditions that soon surrounded their work.
As a result, by the end of the old regime, Americans
occupied, with a few exceptions, only the higher execu-
tive positions. In other industries, especially textile
manufacture, labor organizations sprang up but had
only a weak and, almost without exception, ephemeral
existence before the revolution. Even as late as 1908
the president of the Grand League of Railroad Workers
reported the unions as including only the Grand League
of Railroad Workers, 10,000 members; the mechanics'
union, 500; the boilermakers' union, 800; the cigar-
makers' union, 1,500; the carpenters' union, 1,500; the
shop blacksmiths' union, 800; and the steel and smelter
workers' union, 600. 5
During the revolution, labor organization increased
rapidly. Unions of all sorts sprang up overnight un-
der the leadership of men who recognized not at all the
limitations of those in whose interests they professed
to be working. Workers in mines and textile indus-
tries, stevedores, public employees, clerks, barbers,
street car men, coachmen, waiters, and a large number
of other groups, formerly unorganized, had their unions
and, under the most irresponsible leadership, made de-
5 From figures published by John Kenneth Turner, Barbarous
Mexico, Chicago,
142 MEXICO AND ITS RECONSTRUCTION
mands upon the employers. This kept labor conditions
generally in a turmoil.
The years of the revolution, with the exception of
the period of control of Huerta, are ones in which there
has been a rapid growth of labor legislation. The >ta-
dero government announced itself the champion of the
downtrodden, particularly of the laboring classes. The
Carranza government professed even greater enthu-
siasm in their defense and improvement of the condi-
tion of the laborer has been at least nominally a part of
the political problem of its successors. The Madero
government created a Bureau of Labor, which subse-
quently became a Department. It intervened in a num-
ber of strikes and succeeded in getting better hours and
wages for the laborers in the textile industry. No im-
portant labor legislation was passed in the latter part
of the period of Madero's control, though a large num-
ber of proposals were made to Congress.
When the radicals came back under Carranza, the
demand for labor legislation became insistent in both
the central and the state governments. The support-
ers of the government included the great majority of
the young radicals. The measures taken with the an-
nounced intent of helping the workers had a wide range
and were often little short of fantastic in their opera-
tion. It is impossible to digest them. Examples illus-
trate their general trend. There were efforts to pro-
hibit bullfights, cockfights, lotteries, the pulque trade
and even all liquor production. Not all the country
would follow the lead of those who wished to do away
with these alleged harmful diversions, and some states,
WAGES AND DEMANDS OF LABOR 143
which professed to do so, did not enforce the laws passed
strictly. The effort to do away with the pulque trade
in the federal district, for example, became one to re-
duce the number of shops where it was dispensed. Yu-
catan, which boasted itself a dry state, was so on little
more than the surface.
Besides these general social legislation measures,
there were others designed to benefit labor at the ex-
pense of the hacendados, and factory and mine owners,
and, in fact, all the interests that were looked upon as
representing the capitalistic regime recently overthrown.
Hours of labor for men, women, and children; rates of
wages; peons' wages; peons' debts; employers' liability;
settlement of industrial disputes; the holding of large
estates; and an indefinite list of similar subjects were
regulated by new legislation. Often these measures
adopted the most advanced standards of legislation
found in European countries or the United States, too
frequently they aimed to put into effect the extreme
demands of the ultra radicals in these countries. There
was little consideration given to the question of the ap-
plicability of the proposed standards to Mexican condi-
tions.
Of course, some measures could be forced upon the
interests affected under threats, such as confiscation of
property or the taking over of its operation by the local
governmental authorities. Others, for example, those
involving land settlements, could be pushed through by
taking property under at least the form of legal process
and distributing it to the persons, whose rights, it was
alleged, former legislation had disregarded. This, for
144 MEXICO AND ITS RECONSTRUCTION
example, was done in numerous cases in the State of
Puebla. In other cases the legislation was so unsuited
to local conditions that it resulted in little more than
arousing the hopes of the laborers only to disappoint
them and to make social conditions on that account in-
creasingly difficult.
While these developments were in process, the Con-
stitution of 1917 was adopted. It reflected the con-
ditions amid which it was drafted. Many subjects that
are obviously ones that should be handled by legisla-
tive authority were crystallized into the new "funda-
mental law" in the attempt to guarantee to the hum-
bler classes of the population rights that it was feared
would not be assured if left to be guaranteed by ordi-
nary legislation.
It is not to be wondered at if the agitators of the revo-
lution found the Mexican laboring classes fertile ground
for propaganda. The agricultural laborer, who is still
the typical laborer in Mexico, had little to lose by the
disturbance of the social order. He received the mini-
mum of subsistence and a revolutionary band offered
him at least that plus diversion which, even if of a
rough sort, furnished an acceptable contrast to his daily
life. Though he was not at heart dissatisfied, the glow-
ing picture which the revolutionist orators painted was
so attractive that it overcame his native conservatism.
That such men joined the revolution blindly and with-
out a clear conception of what their specific grievances
were, nor of the means by which they could be righted,
is doubtless true. That they joined at all is significant.
The fact that there could be aroused within them a
WAGES AND DEMANDS OF LABOR 145
spirit of revolt against the conditions under which they
lived was an indication of the possibility of awakening
new desires, which, properly guided, may prove one of
the means through which the economic life of Mexico
may be transformed and the foundation laid for a new
system of government more nearly approaching the
democratic standards to which Mexico aspires.
Among industrial workers there appears to have been
less voluntary enlistment in revolutionary activities
proper but the disturbed conditions, which marked the
passing of the old regime, were not without important
effects upon their labor conditions also. The changing
fortunes of the revolutionary leaders brought to vari-
ous industries alternating periods of great activity and
slack work. Labor organizers found those working in
industry ready listeners, as easily molded as the peons.
Long established custom was being broken down all
around them. This was the dawn of a new day. The
standards of hours, wages, and living conditions enjoyed
by laborers in other lands were pictured in glowing
colors. The Mexican workman could enjoy the same
blessings if he would but reach out his hands.
That there were abuses in the industrial life of Mex-
ico, even though it was but little developed, is beyond
dispute. The quickest way to bring remedy to wrongs
of which any class is conscious is, of course, for that
class to put pressure on those responsible and this the
industrial workers were assured was their opportunity.
Unfortunately the labor leadership in Mexico, even if
of good intentions, was far from wise. It was, it ap-
pears, chiefly of Mexican origin, irresponsible and lead-
146 MEXICO AND ITS RECONSTRUCTION
ing an impressionable following, whose hopes all the
revolutionary governments appear to have done much
to encourage. It is not to be wondered at if the con-
ditions that developed were often weird in the extreme.
In the textile mills, for example, syndicates set out
on an ambitious program the most remarkable thing
about which, considering the character of the elements
from which it received its support, is not that it has
not worked with any marked degree of success but that
it had the measure of success it did achieve. The unions
forced from the mill owners successive increases of pay,
they put pressure on the workers that made them all
join the syndicate. They succeeded in unionizing shops
with remarkable rapidity. They established resistance
funds by levy on the income of each man, which were
used not only for carrying on the fight against the local
employer, but even in aiding the strikes of fellow work-
men in other cities witness the support furnished by
the workmen of the Rio Blanco Mills to those of Puebla
in 1918.
The extreme methods of class warfare were common.
Sabotage by cutting of cloth in the textile mills was fre-
quent. Theft of yarn and cloth reached a point never
before approached. Inspection was ineffectual because
inspectors were intimidated. The guilty caught in the
act could not be convicted, because the laborers con-
trolled the courts. In the old days the workers declared
they were nothing in the government and the employers
were everything. Now the shoe was on the other foot.
Neither the leadership of these movements nor their
methods deserve approval. Neither could have had
WAGES AND DEMANDS OF LABOR 147
such wide success as they achieved among a working
population truly awake to its own interests and dealing
with a responsible government anxious to advance the
interests of the people it served.
Nevertheless, here as in the protest of the agricul-
tural population, although the dissatisfaction with old
conditions resulted in a following of irresponsible and
ill-advised leadership and the adoption of indefensible
methods to try to secure laudable ends, the fact that the
dissatisfaction with the old system did result in protest
is encouraging. A laboring population that meekly ac-
cepts every rule made by the employer is servile. The
first requisite for a fair adjustment between employers
and employed is the recognition by both that each has
rights and responsibilities.
Before the Mexican laborer can enjoy the solid bene-
fits that should come to him from the break-up of the
old regime and enter a working world in which he will
enjoy greater independence and greater rights than he
has had heretofore, he must unlearn much of what his
teachers have taught him. He must first of all learn
that greater independence means greater responsibility
and that privileges are paid for by sacrifice. The old
system had much that was indefensible about it, the
ideals toward which his self-appointed leaders turned
his ambition were often impractical. Those who are
intelligently to lead the Mexican laboring classes to re-
fuse to allow the return of the old abuses and to avoid
new ones have a delicate task before them. It is one
that is the more difficult because of the present limita-
tions of those whom they attempt to serve.
CHAPTER XII
THE MEXICAN LABORER: HIS OPPORTUNITIES
IT is safe to say that no great colonizing power ever
handled the land problems that confronted it in a new
and sparsely settled territory in a way that later gen-
erations have found satisfactory. To those who, in the
age of discovery, set out to increase the national domain,
the home governments gave grants of what they found
land. Had these large early grants, often with the
most indefinite boundaries, continued in the hands of
their original owners they would have been a great abuse
in practically all the colonies of the world. But they
very seldom did so. The estates fell apart by their own
unwieldiness. Accumulations of property by institu-
tions, notably the church, often held together to a
greater degree but even these in most cases later broke
up by the development of new economic conditions or by
political measures directed against the holders.
Mexico is no exception to the rule. The grants of
the colonial period are not the cause of present-day land
problems, nor is the church an element that complicates
agrarian conditions. The land question of the republic
is of its own creation. To it three elements have promi-
nently contributed, the tendency of the upper classes
to put their capital into land rather than into industrial
ventures, the breaking up of the communal land hold-
148
THE OPPORTUNITIES OF LABOR 149
ings of the Indian communities, and the disposal of "un-
occupied lands" by the government.
Many of the great estates in Mexico arise from a char-
acteristic common to many countries of Spanish civiliza-
tion. Wealth is considered by the local society to be
synonymous with landed property. Extensive real es-
tate holdings give a family position to a greater extent
than other forms of capital. The preference does not
depend only on the belief that real estate is less dis-
turbed by revolution than industrial property. It is
due, also, to tradition. There can be no doubt that many
of the large estates, because of their very size, have
been a burden to their owners and that smaller areas
could have been better administered and made to yield
a better net return. Of the three elements above men-
tioned this is, however, the least important.
The Spanish land policy included the granting to the
Indian villages of certain areas, called ejidos, which
were held in common. This practice was inherited, and
for a generation continued, by the republic. In the
law of June 25, 1856, steps were taken for the distribu-
tion of community lands in lots of the value of $200 or
less. No measures were taken, however, to insure that
the new proprietors should be instructed how to cul-
tivate their lands to the best advantage, nor was legisla-
tion enacted to prevent the prompt alienation of their
holdings. 1 As a result, a measure intended to stimulate
1 The abuses practiced especially in the north and west in the
disposition of the community lands are described by R. B. Brins-
made, El latifundismo Mexicano, su origen y su remedio, Mexico,
1916.
150 MEXICO AND ITS RECONSTRUCTION
individual initiative and to encourage Indians to become
citizens of the republic, with rights and responsibilities
similar to those of the more enterprising classes, failed.
The lands were sold and the native, who formerly had,
in his communal rights, at least a claim on a living of
the standard to which he had been accustomed for gen-
erations, was thrown on the community landless and de-
pendent.
The policy that resulted in this state of affairs has
been condemned both in and out of Mexico and the revo-
lution favored attempts in all parts of the country to
restore the old status. Such steps have not succeeded.
It is seldom possible, after any important change in so-
cial or economic relations, to turn back the clock and
start anew. It is very doubtful whether it would be to
the advantage of Mexico to reestablish any large por-
tion of the Indian population on a communal basis of
life. Land is never used to advantage, at least under
modern conditions, where it is held in that way. Other
countries, notably the United States, have made similar
errors in trying to shift the indigenous populations too
rapidly from the old to a new standard of life, but the
step once taken can not be retraced. The failure to
surround the elimination of the ejidos with proper safe-
guards has complicated the Mexican land problem, yet
former conditions can not be restored by any legislative
act.
In its desire to encourage the development of its agri-
cultural resources Mexico found itself at the winning
of independence in a peculiar position. It had large ex-
tents of public land, at least land that belonged tech-
THE OPPORTUNITIES OF LABOR 151
nically to the state, inasmuch as no one held legal title
thereto. But a survey of the national territory had
never been made and the public authorities of neither
the nation nor of the states could inform inquirers where
the "unoccupied" land lay. In fact, land legally un-
occupied might have been actually subject to possession
by individuals for generations.
The obvious first step, if private property rights were
to be given adequate protection, would have been to
carry out a government survey of the territory and to
try to protect those who were ignorant of the insecurity
of their titles. Unfortunately the government did not
feel itself financially able to adopt this plan. Until
after the middle of the century there was no plan upon
which action had been taken sufficient to allow it to be
called a national policy for the management of the pub-
lic lands. In 1863 a law was passed outlining the con-
ditions under which individuals might secure ownership
of the terrenos baldios, unoccupied lands. For the mo-
ment, however, the French intervention kept the policy
from any practical application. With the restoration
of the republic in 1867 sales became important. By
1876, an area of 1,376,169 hectares had been distributed,
yielding, by the prevailing schedule of prices, $292,-
736.30. From 1877 to 1890 the lands were alienated
at a much more rapid rate. A total of 33,929,256 hec-
tares were adjudicated, valued at $4,421,656.80. 2 The
states in which the greatest distribution occurred in this
2 Luis Pombo, Mexico: 1876-1892, Mexico, 1893, p. 39, from
figures quoted from official publications. Other figures are pub-
lished on p. 47.
152 MEXICO AND ITS RECONSTRUCTION
period were in the dry belt immediately south of the
United States. In Lower California 9,800,000 hectares
were sold ; in Chihuahua, 9,000,000 ; in Coahuila, 7,000,-
000; in Sonora, 3,600,000; in Durango, 1,300,000, and
in Sinaloa, 1,100,000. Up to the middle '80s practically
all the lands distributed went to Mexicans. In 1883 the
American Minister declared that no American in his
senses would try to locate and claim any land because
of the disputes for ownership that would be sure to fol-
low. In the years that followed, however, the survey of
terrenos baldios went on very rapidly by companies, na-
tive and foreign. They obtained shares of the land sur-
veyed in payment for their work. The contracts were
undertaken under the law of December 15, 1883, re-
garding survey and colonization of public lands and un-
der a series of laws passed between 1889 and 1894
known as the Leyes de Deslindes. These measures have
been criticized severely for failure to protect the pub-
lic interests. Up to 1889 there had been surveys author-
ized for 38,249,373 hectares, of which 12,693,610 be-
longed to the surveying companies, 14,618,980 were
segregated for various reasons, and 10,936,783 hectares,
or some 26 per cent, remained at the disposal of the
government. From that time to April, 1892, 3,011,440
acres were surveyed. Statistics for later years do not
appear to have been published.
That there were abuses in carrying out the disposal
of lands is beyond doubt. The "squatters" were fre-
quently dispossessed of holdings of which they had long
been in actual possession. The surveying companies
which took contracts from the government often did
THE OPPORTUNITIES OF LABOR 153
their work in a haphazard manner and received very
large grants in return for very small services. The
government sold large areas at very low prices. Sub-
sequent writers have been unsparing in their criticism
of the policy that allowed such things to occur to the
disadvantage of the public treasury.
It is doubtful whether the real abuse lies in the rate
at which the lands were sold. After all, the settler who
goes into a rough, undeveloped country creates all but
a small portion of the value of the land he occupies and
it is at least open to doubt whether a country in the posi-
tion in which Mexico found itself might not well afford
to give generously of her public land to actual settlers.
The increase of the national wealth caused by their in-
dustry would be more important than the payments for
the land.
The real abuses lie in the other circumstances
sketched. The rights of those in possession were inef-
fectually guarded. The purchasers were not, as a rule,
themselves settlers. Often their contracts provided that
they must bring in families who would exploit the land,
but these provisions were not enforced. In other words,
though Mexico could have given her public land to set-
tlers for small payments and still be considered for-
tunate, what happened was that many of her small
farmers were dispossessed, and she sold her lands for
negligible amounts and did not get the settlement that
would have been her chief reward.
Under 79 contracts for colonization entered into be-
tween 1878 and 1889 about one-half of the total being
made in 1883-4 only some 6,000 colonists had been
154 MEXICO AND ITS RECONSTRUCTION
brought into the country. The number reported in
1892 was only 10,985, and the later years for which
statistics are not available have brought no real im-
provement.
It is not possible to state exactly to what degree large
land holdings came to prevail in Mexico before the revo-
lution. No public record shows the development in a
satisfactory way and discussions by private writers are
almost without exception propagandist. That there
were many enormous holdings and that they were an
abuse, is beyond question. A few examples may be
cited. Before the revolution Luis Terrazas was cred-
ited with holdings in Chihuahua of a larger area than
the sovereign state of Costa Rica ; other large properties
were those of Jose Escandon in Zacatecas, Ifiigo No-
riega in Mexico, Garcia Pimentel in Morelos, Juventino
Ramirez in Puebla, and the extensive possessions of the
Madero family in Coahuila. In the sparsely populated
Lower California there are some enormous extents of
territory held by land companies. Three companies it
is asserted acquired 93,798 square kilometers, an area
larger than Ireland. Luis Haller and Company owned
53,950 square kilometers; the California and Mexican
Land Company, Ltd., 24,883; and Flores and Com-
pany, 14,965. It is asserted that the 18 largest land
companies had an average possession half as great as
Portugal and that 11,000 haciendas comprised 880,000
square kilometers or 44 per cent of the total area of the
republic. 3 ,The state of Morelos is alleged to have de-
B. Brinsmade, op. clt. t pp. 10-13. See also Manuel Calero,
i
THE OPPORTUNITIES OF LABOR 155
veloped the most intolerable conditions. Thirty-two
men are reported to have "owned" practically the en-
tire area. 4
That the large estate system was not a wholesome
element in the life of the republic the government of
Diaz had recognized. The reports by the Department
of Fomento protested against it. The economists of
the country, while recognizing that there were certain
regions that could prosper only under extensive cultiva-
tion and that certain crops could not, under the condi-
tions obtaining, be profitably cultivated on a basis of
peasant ownership of land, were in general agreement
that some change must come. 5 But their beliefs did not
take form in action.
Unwillingness to attack the problem has not charac-
terized the revolutionary reformers. The abolition of
latifundismo has been a prominent part of their pro-
gram. The end toward which they have declared their
intention to work is one that meets general approval.
The reasoning and the methods adopted, however, do
not show that there has yet been worked out a land pol"
icy from which permanent improvement may be ex-
pected.
The central idea in the radical discussion of land prob-
lems during the revolution has been that the native popu-
Ensayo sqfrre la reconstruction de Mexico, New York, 1920, p.
105 et seq.
4 See a detailed but uncritical discussion of the land problem
in F. Gonzalez Roa, The Mexican People and Their Detractors, New
Yprk, 1916, p. 1 et seq.
8 Luis Pombo, op. cit. t p. 44 et seq.
156 MEXICO AND ITS RECONSTRUCTION
lation is inspired by a hunger for possession of land.
One of the manifestos issued reads in part: 6
The man of the fields was hungry and full of misery ; he had
been exploited beyond endurance and at last he took up arms to
win the bread which the rich in their greed had denied him ; to
obtain possession of the lands which were in the grasp of the
selfish proprietors. . . . He embarked upon revolution, not to
win illusory political rights which fail to provide food, but to
procure a bit of ground which would yield him bread, liberty,
a home, independence, and a chance to get ahead. . . . The
greater part, if not all of the territory, which must be "national-
ized" represents land wrested from some small proprietors with
the connivance of the Diaz dictatorship. The second aim is
the restoration of these lands to their original individual owners,
and to the . . . pueblos. This great act of justice will be
followed by presenting those who never had anything with a
portion of the lands confiscated from the accomplices of dic-
tatorship, or expropriated from the spendthrift heirs of the
old land robbers, who do not even trouble themselves to cultivate
their inheritance. Thus will the hunger for land and the appe-
tite for liberty, which are felt from one end of the republic to
;the other be satisfied.
There is little to show that any such general land
hunger exists among the peasant population. Except
in a few districts desire for land on the part of the lower
classes was conspicuous by its absence before the revo-
lution and is not general now.
The manifesto of Zapata from which these extracts are taken
was published in the Voz de Juarez, of Mexico City, August 20,
1914, and later republished in part in the Review of Reviews, vol.
50, p. 630, November, 1914. Though issued by the leader of the
state where land hunger it is alleged did exist, the declaration
applied to the whole of the republic.
THE OPPORTUNITIES OF LABOR 157
The remedies adopted to eliminate the prevalent
abuses are not above question. It is impossible to re-
turn the destroyed ejidos to their original owners, and
to give them to their landless descendants, even when
these can be discovered, is not a step that promises to
solve the land problem. The measures for taking over
land from the larger estates and dividing it among the
peons are also too simple to inspire confidence. The
fact is the land problem in Mexico is much more com-
plicated than the revolutionary reformers seem to have
conceived it. It is a psychological problem more than
a physical one. The land hunger of the peasant does
not now need to be satisfied, it needs to be created.
There are large areas in Mexico in which the price
of land is still ridiculously low. The landowners com-
plain of a lack of labor supply and many of them would
welcome an opportunity to sell small holdings in order
to get the laborers fixed in their neighborhoods. Such
men could be counted on to furnish an auxiliary labor
supply when their time was not demanded by their own
properties.
It must be remembered too that most of the large
landholdings are in regions unsuited to small ownership.
In such areas the "forty acres and a mule" standard of
property endowment, which was talked of in the United
States for the Southern negro at the end of the Civil
War, would be no measure of blessing to a peon. It
would mean starvation for both the animal and his
owner. In some of the regions, where large properties
lie, irrigation might make small ownership practicable.
But, unfortunately for Mexico, irrigation developments
158 MEXICO AND ITS RECONSTRUCTION
imply a technical ability and resources that the Govern-
ment of Mexico has not been able to supply and will
not be able to supply for a long time to come. Such
developments require also the investment of large
amounts of private capital. Until security for property
can be well assured, investments of this sort will con-
tinue to be rare exceptions.
After all is said, it must be frankly admitted that a
great portion of Mexico, if it is to yield as it should,
must be held, so far as the present generation can see,
in large units. Enthusiasts may prove the possibility of
utilization of running water for irrigation and the stor-
age of rainfall in huge reservoirs for the same purpose.
By such means immense areas may theoretically be made
highly productive and suitable for cultivation by small
proprietors, especially educated for their tasks. The
great majority of such schemes are, so far as our pres-
ent knowledge of engineering and construction costs in-
dicate, ones that will not leave the realm of dreams. 7
Small land holdings, to be successful, must be set up
where there is a desire for them. If the reformers turn
their attention to the task of creating the demand for
homesteads, they will have set their hands to a task, the
importance of which it is almost impossible to overem-
phasize. No country that aims to be a democracy can
overlook the importance of the conditions under which
its real estate is held. Where there never has been
7 See a discussion of the merits of various irrigation schemes
presented and an interesting discussion of the colonization problem
in general in Alberto Robles Gil, Memoria de la secretaria de f omen-
to presentada al congreso de la union, Mexico, 1913, passim.
THE OPPORTUNITIES OF LABOR 159
or where there has ceased to be a large class of
property owners living on the soil they own, true repub-
lican government does not flourish. The possession of
no other sort of wealth so surely stimulates respect for
the rights of others and love of order and progress as
does the possession of land. There is no other that
makes its owner realize so clearly that the state is the
guarantor of his well-being and that, by supporting it,
he is working for his own advantage and for that of his
community.
From this point of view there is, indeed, a land prob-
lem in Mexico. The average Mexican does not crave
land ownership. He has not thought of it, because it
is a privilege never enjoyed either by him or by his for-
bears. Giving him land alone will not create the desire
to keep it. Any unguarded division scheme will soon
disillusion those who foster it, because the small peasant
ownership will vanish as did that created by the laws
that divided up the ejidos. More than such a simple for-
mula is needed : the creation of conditions that will give
the Indian land, keep him on it, and stimulate his de-
sires so that he will use it intelligently. Without this
there will be no solution of the Mexican land problem
worthy of the name. It is here that the land question
shows its human side. It is more a problem involving
the capacity of the population of Mexico than the divi-
sion of its acres. Legislation can be adopted that will
break up the big estates where that is needed for the
best development of the country and legislation can
help the landless to acquire land by loans of credit and
the other expedients made familiar by; the experience
160 MEXICO AND ITS RECONSTRUCTION
of other countries ; but the economic impulse cannot be
created by fiat. It can be fostered by building up
around the people a complex of social conditions that
emphasizes the desire to enjoy the best that the com-
munity offers. The love of family, the property sense,
emulation of the economic success of others, the desire
for influence in the community and for the applause of
his fellows, pride in morality, public and private, these
and an indefinite number of similar impulses must rouse
the common citizen of Mexico, if the "land problem" is
to be attacked with any real success. Whether a norm
can be found depends more on the capacity of the Mex-
ican people than upon that of its leaders. These latter
can contribute to shape the conditions that may bring
success, but all their efforts will be in vain unless the
peon, and especially the Indian peon, shows capacity
to become a citizen in fact as well as in name. He must
forsake the economic, social, and civic childhood in which
he has lived and take on the rights and responsibilities
of manhood.
CHAPTER XIII
TRANSPORTATION
AMONG the elements in the life of Mexico, each of
which in succession seems to the student to be the key
that will open the door for the establishment of a well
rounded and stable civilization, are transportation facil-
ities. 1
In the colonial period transportation was improved by
the introduction of riding, burden, and draft animals
and through the building of a few rough roads between
the principal cities. But even at the end of 300 years
of Spanish rule the number of pack trails was small and
the important through wagon roads fewer still. What
passed for roads did exist from Mexico to Santa Fe and
from there to Vera Cruz. Between Mexico and Aca-
pulco and from Mexico to Vera Cruz there were still
only pack trails. The smaller towns were communities
practically shut off from the rest of the country and a
1 Only the internal transportation routes are here discussed.
Ocean communication has shown itself more easy to adjust to the
demands of traffic. The steamship services at the present time,
too, are obviously less involved in the reconstruction in Mexico than
are the roads and railroads. They are more easily reestablished,
their facilities have suffered less in the revolution and will rapidly
respond to any development in the foreign trade. A description
of the development of ocean communication with Mexico up to 1879
is found in Exposicion de la secretaria de hacienda de los estados
unidos mexicanos de 15 de enero 1879 . . . Mexico, 1879.
161
162 MEXICO AND ITS RECONSTRUCTION
large part of the burden bearing continued to be done
by Indian carriers. 2 In the rainy season communica-
tion became almost impossible. A traveler, in 1828,
complains of the roads: "All that can be said about
them is, that they are as bad as they possibly can be
passable only for mules, and that, often, at the risk of
one's life." 8
The very high cost of transportation, which resulted
from poor facilities, made it impossible for Mexico to
develop trade outside the immediate zone of production
in any but highly valuable articles, nor could foreign
trade fare better. Long before the actual building of
railroads it was evident to the more farseeing among the
population that the stagnation from which the country
suffered was due, to a large degree, to poor transporta-
tion facilities.
The first railroad built emphasized this need of the
country at large, although the rates charged were so
high that it continued to cost more to take a ton of goods
from Vera Cruz to Mexico than from London to Vera
Cruz. As soon as the railway reached out toward the
capital, it began to disturb the old economic conditions
far beyond its immediate neighborhood, illustrating the
benefits that were to come from rail facilities and the
great disadvantages that would fall upon cities left off
2 Karl Sapper, Wirtschaftsgeographie von Mexico, 1908, p. 31
et seq and Joseph Nimmo Jr., Commerce between the United States
and Mexico . . . Washington, 1884, p. 20 et seq.
3 Mexican Company; extracts from the report of Justus Ludwig
von Uslar, relative to the Negotiation of Yavesia in the State of
Oaxaca, January 6, 1828.
TRANSPORTATION 163
the new routes. Tampico, for example, had been an im-
portant source of supply in the old days for a number of
the states of the central plateau but, after the railroad
from Vera Cruz to Mexico was established, the trade
of the table lands began to be drained off southward in-
stead of to the Gulf port to the east.
As to railroad policy, public opinion began to divide
into two camps. In one were those who saw that the
new day for Mexico meant investment of large amounts
of foreign capital and the extension of the American
railway net southward to include the Mexican system.
In the other were the conservatives, who shrank from
contact with the aggressive world around them for fear
there might come with the new associations influences
that would threaten the independence of the disorgan-
ized fatherland.
During the period before the Diaz regime the conflict
between those who wanted the building of railroads and
those who did not was largely theoretical, for railroad
enterprise, with the exception of the line to Vera Cruz,
was practically unknown. The poverty and disorder,
which had so long characterized the country, made cap-
ital still reluctant to invest. 4 The reestablishment of
what appeared to be a lasting peace gradually dispelled
this fear and capitalists in the United States began to
look more favorably on Mexican railway projects, but
they showed a disposition not to invest their money "un-
less the protection of the Government of the United
States, by some treaty stipulation or other convention,
* Papers Relating to the Foreign Relations of the United States,
1878, p. 549.
164 MEXICO AND ITS RECONSTRUCTION
goes with it." At the same time the less sanguine Mex-
icans stiffened their opposition to railway enterprise and
especially American railway enterprise. Many illustra-
tions of these prejudices might be cited. A contract
was arranged by the Mexican executive with the Inter- }
national Railroad Company of Texas in 1873, which
provided that all the capital, shareholders, employees,
and all persons connected with the company should be
considered Mexicans in all that related to the enterprise
within the republic and could not maintain claims as
foreigners "even when alleging denial of justice." The
charters of the pre-Diaz period had similar clauses. But
though companies could be formed on such a basis, get-
ting the money to put through the project under such
conditions was found impossible. Capital was wary.
As the American Minister reported, American contrac-
tors would not forswear their nationality for the sake
of building a railroad in foreign lands, nor renounce the
right to appeal for protection to their own government,
a right recognized by international law. 5
Whenever railroads were under discussion in the
Mexican Congress, the more timid showed themselves
8 Ibid., p. 639. A contract of November 12, 1877, similar to
the one cited above, was presented to tHe Congress in which, in addi-
tion to forswearing their rights as Americans, the builders were
required to build the branch to the American border northward
from a point in Mexico instead of southward from the Rio Grande.
The project was defeated because it was too favorable to the for-
eigner. The conditions as to nationality above cited, in their revival
in recent legislation, have caused widespread protest. They are,
in fact, no new thing. They were already a familiar feature of
railway contracts early in the Diaz regime. Ibid., 1879, pp. 776-80.
TRANSPORTATION 165
convinced that the border was in great danger of ad-
vancing southward with the rail heads. There was a
firmly rooted suspicion that the United States had an
ulterior interest in every move taken by its people in-
volving Mexico. It was a part of the general fear of
the foreigner, of the belief that the only safety for the
weak lay in playing off the strong against each other.
Railway building in itself, it was recognized, was desir-
able but railways to the northern border would destroy
the natural defenses of the republic. Although the bills
introduced into Congress included provisions to the ef-
fect that the property of the railroads could never be
made the subject of international claims, the fear of
closer neighborhood with the United States was so great
that the projects met repeated defeat. 8
Contrary to popular opinion in the United States
even Diaz did not see, from the beginning, the impor-
tance of railway development for his country. At least
he was not above playing upon the popular prejudice
against the foreigner to the disadvantage of his political
enemies. In his "plan" dated at Palo Blanco, March
21, 1876, he charges the Lerdo government with having
delivered the country over to an English company by
the grant of a concession to the Vera Cruz railroad. He
declared that it had been agreed to transfer the English
debt to the United States "which is equivalent to selling
the country to the neighboring nation." Such projects
"rob us of our future and sell us to foreigners." 7
6 The Sonora railroad project defeated. Ibid., 1880-1, p. 719.
7 An extract from this proclamation, which is a good example
of revolutionary rhetoric, is found in ibid., 1879, p. 780.
166 MEXICO AND ITS RECONSTRUCTION
In fact, during his first years of control in Mexican
affairs, Diaz was as captious with the rights of for-
eigners as have been some of his successors. In the first
issue of the Government Gazette, published after he se-
cured control of the capital, he declared null railway
contracts made by his predecessor. He later forfeited
railway charters, changed schedules of railway tariffs in
violation of contract, and confiscated construction work
already done. The following quotation from a speech
in the National Chamber of Deputies, on May 22, 1878,
illustrates the sort of anti-foreign opinions that sup-
ported such acts. The executive had made a contract
for a road from Mexico to the Pacific and to the fron-
tier of the United States in Texas or New Mexico. A
speaker opposing the project declared: 8
It is very poor policy ... to establish within our country a
powerful American company ... we are going to establish
within our territory an American influence. . . . Border na-
tions are natural enemies . . . without referring to history, but
considering only contemporaneous acts, who despoiled France
. . . ? The bordering nation, Germany. Who is invading
Turkey at the present time? The bordering nation, Russia.
. . . What war is there between Spain and Russia ? None. It is
a natural law of history that border countries are enemies. . . -.-
Hence, sir, the United States . . . are naturally our enemy*
. . . And will it be prudent in this case to place the enemy
within our house?
There is also another law in history; nations of the North
necessarily invade the nations of the South. . . . Unfortu-
8 Hon. Alfred Chavero, in ibid., 1878, p. 551. See also another
remarkable document in ibid,, 1879, p. 828 et seq.
TRANSPORTATION 167
nately, we do not need to recur to foreign histories; a rich
part of our territory has become the prey of the United States.
. . . Hence, we should always fear the United States.
We have seen that a hundred leagues of railroad from here
to Vera Cruz have given such influence to the English company
that many times this very influence has been sufficient to decide
the votes of the chamber, and shall we be so insane as to con-
sent to the establishment of an American company which will
embrace the whole country ... all our sections and all our
roads?
Would you exchange your beautiful and poor liberty of the
present for the rich subjection which the railroad could give
you ? Go and propose to the lion of the desert to exchange his
cave of rocks for a golden cage, and the lion of the desert will
reply to you with a roar of liberty.
The fears as to the consequences of railway develop-
ment were especially strong in reference to the north-
western territory of the republic, but the circumstances
there could be turned in favor of a liberal policy quite
as effectively as they could be used in opposition. A
representative from that region argued that only by the
development of the border states could they be saved
to Mexico. Their growth would create an equilibrium
with the United States, otherwise "we exist in such a
manner as causes us to represent in the eyes of the other
nations the role of a sickly, decrepit man, by the side of
a hale, robust one. . . ." If development is not brought
about in these states ^"exasperation will drive them
nearer our neighbors than anything alleged by those
who fear that the influence ... of the American union
may produce another mutilation of our territory. . . .
It is very dangerous to see just beyond a conventional
168 MEXICO AND ITS RECONSTRUCTION
line prosperity and wealth, and on this side destitution
and poverty. . . ."
With the cooling off of at least officially expressed
anti-foreign feeling and the establishment of order the
foreigners who were interested in railway development
gradually weakened in their feeling that the right of ap-
peal to the home government must be recognized before
they could undertake projects in Mexico. At the same
time the Mexican Congress came to realize that the ad-
vantage of rail connections with the United States over-
balanced the attendant dangers.
When Diaz assumed control of the government in
1876 there were 666 kilometers of railroad in the coun-
try the line from Mexico to Vera Cruz and proposed
American connections, as is indicated above, were un-
popular. This prejudice was largely removed in the
first term of the dictator and in September, 1880, the
Mexican Central Railroad and the Mexican National
Railroad received permission to build from Mexico City
lines to the Rio Grande border. Thereafter the building
of Mexican railroads was carried on practically without
interruption to the end of the Diaz regime. At its close
in 1910 the 666 kilometers of railway running at its be-
ginning had increased to 24,559 kilometers. There were
then two lines instead of one connecting the capital with
Vera Cruz. There were two transcontinental lines and
two connecting the capital with the American border.
It is hard to overestimate the benefits conferred on
Mexico by the broader policy of railway development
9 Antonio Morano, Senator from Sonora in 'ibid., p. 831.
TRANSPORTATION 169
that had its beginning in the early '80s. Along each
stretch of line there grew up a productive area con-
tributing to national wealth and to the strength and
stability of the government, which had been far sighted
enough to abandon the conservatism and prejudice of
the former generation. Agriculture flourished as never
before. Mining interests could market products that
formerly had been valueless and for industries con-
ditions were created that made possible local production
in many lines, in more than household industries for the
first time in history. 10
The advantages, which the early years indicated, were
continued and increased throughout the Diaz regime.
Heavy freight could now be carried long distances, ore,
lumber, sisal, all the articles of large bulk that enter into
Mexican domestic and foreign commerce came to have
value where they had none before. The railroads were
one of the important links in the chain of circumstances
that made the Mexico of the Diaz regime a possibility
and seemed to guarantee that the republic had entered
at last on a period of peaceful development that would
not be easily interrupted. In international relations,
too, the railroads had had a beneficent influence. The
improved communications had turned a large part of
Mexican commerce in a north and south direction. The
United States had come closer to the republic, not only
in time but in economic interest and in understanding.
10 An excellent description of the effect of the railways upon
Mexican development is found in Bernard Moses, Railway Revolu-
tion in Mexico, 1Q05. See also Luis Pombo, Mexico: 1876-1892,
Mexico, 1893, p. 52 et seq.
170 MEXICO AXD ITS RECONSTRUCTION
The ill will of the pre-railway period had largely dis-
appeared, due in no small degree to the iron bonds that
drew the two republics together. Especially in the
closing years of the Diaz regime friendship had replaced
distrust. The new day, which had come with the rail-
roads and had been hastened by their construction,
seemed to promise continued peace and prosperity for
the republic both in its internal and in its foreign re-
lations.
Although the railroads built before the end of the Diaz
regime did bring a revolution in the conditions of traffic,
they never solved the transportation problem. Large
areas were still far from the rail lines and the old dis-
advantages of isolation still applied to them often al-
most to as great an extent as before the railway era.
There was always need of still further railway extension
to open up the resources of the country.
Moreover, the disadvantages of the railless regions
were accentuated greatly by the lack of good wagon
roads.
Spain did not create, in her colonies, either well kept
trunk lines nor supplemental highways of good charac-
ter. In fact, even to the present day the home country
lacks them. The former colonies have not created
them for themselves since their winning of independence.
One of the most important problems that will confront
the Mexican government of the reconstruction era will
be to extend the transportation facilities of the country
in a way that will effectively unlock the resources now
held embargoed by their lack.
Unfortunately the developments during the revolu-
TRANSPORTATION 171
tionary years have not been such that will let the govern-
ments of the new Mexico begin where the Diaz regime
left off in the construction of means of communication.
Transportation routes, one of the first objects of care
among modern nations in times of peace, are often
among the first to be neglected in time of war. Roads
do not become impassable with temporary neglect and
railroads can run for a time with a small expenditure on
repairs. In the area of military operations they are
carefully protected or ruthlessly destroyed according to
what the contestants think will contribute to their
advantage. The temptation for both parties in a civil
war is to let them deteriorate where they do not directly
contribute to the fortunes of war.
The history of the 16,000 miles of railroads during
the decade of revolution in Mexico has been tragic for
their owners and fantastic for those whom they served.
The instrument that did so much to bring peace and
order was made a means by which first one side and then
the other was able to carry on operations against its op-
ponents more successfully than otherwise would have
been possible. Only illustrations of the sorts of condi-
tions that arose can here be given.
The physical ruin of the roads is all but complete. A
series of governments, each fighting with back to the
wall, has had no resources with which to keep up re-
pairs. The income of the roads themselves has suffered
diminution because of falling traffic and the violent fluc-
tuations of the value of the paper money in which serv-
ices were paid. The extent of the demoralization of the
service is illustrated by the report of the National Rail-
172 MEXICO AND ITS RECONSTRUCTION
ways of Mexico for 1916. 11 The president reported no
receipts from operation and a debit of 21,870,213.02
silver pesos for the year. The debit since the beginning
of the revolution was almost 80,000,000 silver pesos.
The nominal reported receipts were extraordinarily high
in some periods but they did not appear to reach the
treasury and, even if they had done so, their real value
was but a fraction of their face, since they were in the
Vera Cruz issue, which was worth 14 or 15 cents gold
in January, 1915, but later fell rapidly to two cents and
and then so low that it refused to circulate.
The rolling stock gradually disappeared from active
use. The military chiefs confiscated it to military uses
in transporting troops or as spoils of war, if it was cap-
tured while in possession of the enemy. The various so-
called generals used the cars "as barracks and perma-
nent dwellings for the soldiers and their families, and
frequently for freight transportation within their juris-
diction for personal profit."
The railway employees, or at least those in authority
over divisions that were still in operation, seized the op-
portunity to create a system of graft seldom, if ever,
equaled. It is true they are hardly to be blamed, for
they could not live on the salaries the government paid
to them in its own depreciated currency. Government
officials in the railway administration shared the illegiti-
mate returns directly or indirectly. The few cars avail-
able were eagerly sought by those whom rashness or
11 Eighth Annual Report of the National Railways of Mexico,
June SO, 1916, pp. 16-19, signed by Alberto J. Pani, who was presi-
dent of the Railway and Minister of Railways at the same tune.
TRANSPORTATION 173
necessity forced to keep shipping goods under the pre-
vailing uncertain conditions. No cars were forthcom-
ing without liberal gratifications. In short, the revolu-
tion brought to the railways, in the regions it affected,
first neglect and then anarchy.
Unfortunately for Mexico it must face, during the
reconstruction period, the necessity of repairing the sys-
tem of communication, which was thus destroyed. It is
a disadvantage not measured by the damages that must
be paid to those whose property disappeared or depre-
ciated in value because of the use to which it was put
during the conflict. Perhaps even more serious will be
the losses that the people of Mexico as a whole must suf-
fer through the inefficient service, which is all that can
be furnished during the period when the roads will oper-
ate with poor and insufficient equipment. To destroy
the railroad system of a country is not only to destroy
the property it directly represents but also to reduce the
value of the property of the country that the railroad
serves. 12
The recent governments in Mexico have recognized
that the reestablishment of communications is one of the
first essentials for the economic revival of the country.
The roadbed of the railroads suffered less during the
revolution than the rolling stock. Bridges burned or
blown up in the area of military operations first re-
ceived the attention of the government but many have
12 Descriptions of the conditions on the railways brought about
by the revolution, and of the plans of the Carranza government for
improving the railway net are found in Railway Age, vol. 66, pp.
1531-4 and 1549.
174 MEXICO AND ITS RECONSTRUCTION
even now been given only temporary repair. Mexican
railroads lost about 10,000 freight cars and 400 locomo-
tives during the revolution. Large numbers of freight
cars were burned or wrecked and, in order to encourage
getting those that could be repaired back into use at an
early date, a plan was adopted through which any con-
cern might reconstruct cars at its own expense, receiv-
ing in return the right to control them for its own use
for a period usually of one to two years. 18 American
railroad lines allowed their freight cars to go into Mex-
ico when bonds were given for their safe return. On
October 15, 1920, the Pullman Company began letting
its cars enter the country without this restriction. 14 An
arrangement made with the American Railway Asso-
ciation on January 1, 1920, allowed a large number of
freight cars to be taken across the border and the Mex-
ican government announced its desire to set aside $30,-
000,000 Mexican to purchase additional rolling stock. 15
On June 1, 1921, President Obregon appointed a per-
sonal representative to introduce improvements in the
handling of traffic. 16 Though congestion of freight at
the ports still continued to be a serious problem, at least
the first steps had been undertaken toward reestablish-
ment of that standard of communications reached at the
end of the Diaz regime.
18 W. H. Moseley Jr., "Mexico To-day" (pamphlet), New York,
November, 1920.
14 Railway Age, January 7, 1921, p. 113.
15 Commerce Reports, February 18, 1921, p. 993.
16 Commerce Reports, June 21, 1921, p. 1650.
CHAPTER XIV
INDUSTRY AND INTERNAL COMMERCE
INTERNAL industrial development was practically
non-existent in Mexico before the Spanish conquest and
remained negligible throughout the colonial period. In-
dian industry for the supply of local wants continued
throughout the country districts. The civilization was
static both socially and geographically. In the towns,
it is true, some articles of European manufacture were
introduced but they were only those that could bear
high carrying costs. They did not displace native manu-
factures because they reached only those of European
blood, nor did their high price, as a rule, give rise to
local manufacture.
The typical Mexican manufactured products that
found their way into European trade, if the simple
process by which they were produced can be dignified by
the name of manufacture, were the precious metals,
cochineal, indigo, and sugar. Because of the exclusion
of foreigners, the commercial and industrial develop-
ment, so far as it was not in the hands of the native
races, was monopolized by Spaniards.
One of the first industries established a reflection of
the development the Spaniards emphasized in the coun-
try was the coining of silver, which was begun at the
Mexico mint, established in 1537. Toward the end of
the colonial period a beginning of textile manufacture
175
176 MEXICO AND ITS RECONSTRUCTION
did occur, the chief centers of which were Queretaro,
San Miguel el Grande, Puebla, and the Intendanz Gua-
dalajara. The latter two were credited with a produc-
tion of cotton goods valued at over 3,000,000 pesos * in
1802. The industry was in the hands of small spinners
and weavers. Queretaro produced both cotton and
woolen goods. There were a few silk weaving estab-
lishments, this industry having been introduced by a
Frenchman. 8 A few printing establishments and glass
and fayence factories built up a small trade.
The developments in industry in the outside world
during the nineteenth century had a greater effect on
Mexico than in the preceding period. Some Mexican
industries were killed. Cochineal and indigo lost their
place in trade. New lines appeared, lines that had a
more direct connection with the modern conditions,
which, little by little, were coming to affect the life of
the republic. The first quarter-century following in-
dependence was so disturbed that no important develop-
ment of industry occurred and no statistics are avail-
able giving a survey of the efforts made in small estab-
lishments.
Some factors of Mexican life favored industrial de-
velopment in the last half of the nineteenth century. In
the industries in which native labor could be used to
advantage the low labor cost encouraged investment.
The low exchange rate of silver raised the price of im-
ported articles and thus favored local enterprise. Fur-
1 Karl Sapper. Wirtschaftsgeographie von Mexico, 1908, p. 25.
2 Maurice de Perigny, Les Etats Unis du Mexique, Paris,
p. 101, and Sapper, op. cit., pp. 25-30.
INDUSTRY AND COMMERCE 177
ther, the government sought to help industry as it did
agriculture by creating artificial advantages for local
enterprise, not only in a protective tariff but, after 1893,
by special exemptions. In that year the executive was
empowered to give special privileges to those setting up
new industries in the country if their investment
amounted to 250,000 pesos. These privileges might in-
clude freedom from direct federal taxes and freedom
from customs taxes on the machinery and other ma-
terials of construction necessary for setting up the es-
tablishment. 3 The states adopted a similar policy to at-
tract industry to their own territories.
The textile industry is the best known of Mexican
manufacturing developments and the one in which the
Mexican population has had its best opportunity to dis-
play its abilities. Cotton weaving is naturally its most
important branch. The first cotton mill is said to have
been set up as early as 1829. The credit for giving
the industry its first genuine impulse, however, appears
to belong to Esteban Antunano, who set up his first es-
tablishment in Puebla in 1833.
Advance sufficient to justify extensive export has
not been made, in fact, there is still, in normal times, an
important import trade in textiles. The grades of
goods chiefly produced are medium priced cottons, such
as meet a wide demand among the common people.
Fine cotton goods, however, are woven and in their
making the native has shown himself of decided capacity.
In this industry, as in all others established in Mexico,
8 Maurice de Perigny, op. cit., p. 100.
178 MEXICO AND ITS RECONSTRUCTION
the period of rapid development began with the early
'90s. At the outbreak of the revolution there were 324
factories reported as manufacturing cotton and wool
textiles. The most important of the cotton mills were
those of the Compania Industrial de Orizaba, operating
the famous Rio Blanco mill, founded in 1892, and others
at Cocolapan, San Lorenzo, and Cerritos; that of the
Compania Industrial Veracruzana, founded in 1898,
known as the Santa Rosa mill, at Orizaba; that of the
Compania Industrial de Atlixco, near Atlixco, and those
of the Compania Industrial de San Antonio Abad, in
San Antonio Abad, Miraflores, and Colemena. The
capital in these companies is predominantly French.
The most important woolen mill was the Fabrica de
Tejidos de Lana de San Idelfonso in Tlalnepantla.
The most important jute factories are the British owned
Santa Gertrudis in Orizaba, and the Aurora in Cuatit-
lan in the State of Mexico.*
Factories producing sugar, candy, and chocolate num-
bered over 2,196 in 1912. Most of them were small.
Hidalgo led the list in number of establishments with
over a fifth of the total. The other states that ranked
high were in order Jalisco, Nuevo Leon, Vera Cruz,
Oaxaca, and Puebla. 6
Though Mexico has a comparatively high production
of sugar, export has not yet come to be important. A
very important by-product of the sugar factories of
Mexico is rum, which is also chiefly manufactured for
* Erich Gunther, Handbuch von Mexico, Leipzig, 1Q12, p. 181.
6 Statistics in Erich Gunther, op cit., p. 184.
INDUSTRY AND COMMERCE 179
the local market. After the sugar industry the produc-
tion of brandy is the most widespread industry of Mex-
ico. There were 1,417 factories reported before the
revolution, depending chiefly upon sugar cane and corn
as raw materials. About 40 breweries were in opera-
tion and they were, with few exceptions, in German
hands. 6
Tobacco manufacture has become one of the wide-
spread industries of Mexico. There were 482 factories
in operation at the outbreak of the revolution. The
greatest number were found in the cities of the central
plateau and in the Gulf coast states of Vera Cruz and
Tamaulipas. The states of the southeast and most of
those of the northern belt were poorly represented. 7
Electrical power development is limited in Mexico
because of the torrential character of most of the rivers,
the uneven flow of which makes the power actually
available very irregular. Nevertheless, there are a
number of power plants of importance, among which
are that on the Rio Blanco owned by S. Pearson and
Son, a British interest controlling also an electric light
and power company in Vera Cruz, which operates water
rights on the Rio Antiguo and the Rio Octopan. The
Atoyac Irrigation Company is a hydraulic electric com-
pany with rights on the Atoyac River, which uses the
spent waters for irrigation. At the outbreak of the
revolution it was controlled by a Puebla company,
which also had concessions on the Portezuelo and the
6 Ibid., p. 185.
7 Statistics of the location of factories are published in ibid.,
p. 183.
180 MEXICO AND ITS RECONSTRUCTION
Rio Blanco. The power rights at Nexaca Falls are
owned by the Mexican Light and Power Company, a
British interest. 8
The development of industry has been hindered in
Mexico, as it is in many other countries, by lack of a
good supply of coal. What industrial development has
occurred has had to depend largely on the great forests
of the country for fuel. As those lying within easy
reach of the railroads have been exhausted, the price of
wood has naturally risen and efforts to obtain substi-
tutes have been increased. Imported coal continues to
be expensive. Some advance has been made in the util-
ization of water power, especially in the textile indus-
tries but the country's rivers are not of sufficiently
steady flow to make reliance on that resource satisfac-
tory. Fortunately, the development of the oil regions
along the Gulf coast has now placed Mexico in a favor-
able position, so far as the fuel requirements of her in-
dustries are concerned, a factor in which the republic
is now as favored as it was formerly unfortunate.
Indirectly, the progress of the local industrial de-
velopment is reflected in the foreign trade returns of
the two decades preceding the revolution. Imports of
manufactures ready for consumption increased but
little. The total value, for example, of such articles as
cloth, chemicals, liquors, paper, vehicles, arms, and ex-
plosives was $17,157,000 in 1896. In 1906 it had risen
to $25,982,000, but, while the first figure was 40 per cent
of the total, the latter was but 24 per cent. In the same
*Ibid., p. 179.
INDUSTRY AND COMMERCE 181
period, machinery imports doubled, animal products in-
creased 170 per cent, vegetable products 133 per cent,
and mineral products including fuel and metals more
than fourfold. Apparently the growing industry of
Mexico was already enabling it to supply itself with
the cheaper articles of local consumption and at the
same time increasing the demands for food, machinery,
and raw materials. 9
Turning from manufacture to internal trade, we find
that in the country at large during the colonial period
commerce went on in much the same channels as before
the coming of the white man. The Indians manufac-
tured their simple home-industry wares for local con-
sumption and, to a lesser degree, for the trade of the
city, where they were sold for the articles that each com-
munity did not produce for itself. The white popula-
tion in the cities gradually came to act as middlemen for
the local, as well as for the foreign trade. 10 Supple-
menting the regular local markets there were occasional
fairs, notably at Jalapa, held chiefly for the goods com-
ing from Europe and, at various times, at Acapulco,
San Bias, and Mexico for the goods brought back from
the Far East in the irregular trade of the Manila gal-
leons.
Foreign merchants made their way but slowly into
Mexico, even after the winning of the independence of
the republic. By 1850 there were a number of French
retail houses established in the larger towns of Mexico,
especially in the dry goods business. The rest of the
9 Commercial America in 1907, Washington, 1909> p. 43.
10 Karl Sapper, op cit., 1908, p. 30.
182 MEXICO AND ITS RECONSTRUCTION
jobbing and retail business in that line was still con-
trolled by Spaniards and Mexicans. There were three
French banking and commercial houses, and two whole-
sale houses. Eight German, and three English whole-
sale houses also had established themselves. 11
In the interior towns, even after the middle of the
century, there were still few foreign houses. Strangers
were suspected, especially if they had money and the in-
security of the country made even capital that was ven-
turous enough to go to the larger centers unwilling to
take the risks of carrying stocks elsewhere.
It was not until after 1870 that marked increase of
activity in internal trade began to be shown. At that
time the British and Germans had in their hands all the
wholesale trade and the manufacture of wool and cot-
ton in which the French were later to play a prominent
part. A curious development has occurred in this line
in Mexico. After the opening of the country, at the end
of the Spanish regime, the British came to control it, but
were forced to share it with the Germans. The latter
practically replaced the British but were in turn them-
selves displaced by the French. The Germans and
British also controlled the sale of silks, iron and steel,
and jewelry. The Spaniards had the wholesale and re-
tail trade in liquors and groceries, lines in which they
have continued to figure prominently. 12
11 M. P. Arnaud, L' Emigration et le commerce francais au Mex-
ique, Paris, 1Q02, p. 54. This work and Maurice de Perigny, op.
cit., give excellent accounts of the French influence on the economic
development of Mexico.
12 Arnaud, op. cit., p. 65, and House of Representatives, Docu-
INDUSTRY AND COMMERCE 183
Foreigners have continued to be a prominent factor
in the commercial life of the republic and each group
has shown a tendency to control certain lines of business.
At the end of the Diaz regime the French continued to
be prominent in the dry goods and clothing trade and
had "practically monopolized" the sale of notions. Bet-
ter class bakeries, fine jewelry stores, tailoring estab-
lishments and a part of the grocery stores were owned
by them. The employees of these establishments were
also largely French. 13 Americans came to control the
trade in machinery and machinery supplies. Germans
were prominent in the hardware business much more
prominent in disposing of the goods than the proportion
of German manufactured hardware imported indicates.
British commerce showed less tendency to confine itself
to special lines.
It is easy to overemphasize the degree to which indus-
try and modern commercial methods have found their
way into Mexico and this is often done by those who
know only the Mexico of the large towns and of the
strips of territory that are within range of the whistle of
the railway locomotive. Outside of these areas the Mex-
ico of to-day retains, to a degree hard for the American
or European to realize, the conditions of a generation
ago and in many districts almost the conditions of the
time of the conquest. 14
A prominent characteristic of Mexican commerce
ment 145, part 5, 58th Congress, 3d Session, "International Bureau
of American Republics," Mexico, p. 68.
13 M. P. Arnaud, op cit.
14 Karl Sapper, op. cit., p. 37.
184 MEXICO AND ITS RECONSTRUCTION
continues to be the degree to which the capital is its cen-
ter, in spite of the facilities introduced by the railroads
for its decentralization. Mexico City, the metropolis of
the country, by a wide margin is the center of Mexican
commerce to an even greater degree than Paris is the
center of French trade. The railroads that converge at
the capital have helped to continue the habit of the pro-
vincial commercial interests to look upon it as the source
of supply. In it are the chief banks and from it much
of the industrial activity is directed. 15
The harm done to industry in Mexico during the
years of the revolution is much smaller than it would
have been had the country had greater development of
local manufactures. Agriculture, the chief industry of
the republic, suffered severely. In some states, like
Vera Cruz, the farming population flocked into the
towns. As a result the sugar crop of the state fell from
170,000 tons in 1911 to 40,000 tons in 1917-18. The
Cordoba coffee crop dropped off in the same period from
50,000,000 pounds to 20,000,000. In other areas the
people, though they stayed on the land, did not plant
crops which they felt no assurance they would be al-
lowed to harvest and market. The cattle industry of
the northern states steadily declined. That in Chihua-
hua was reported in 1918 to be only about five per cent
as important as before the revolution. In other states
legislation for dividing up the large estates threatened
to make stock raising impossible.
The effect of the revolution on some of the manufac-
16 House of Representatives, op. cit., p.
INDUSTRY AND COMMERCE 185
hiring industries is hard to estimate. Tobacco manu-
facture appears to have flourished. The textile mills,
though they were hampered by the secondary results of
the revolution: sabotage, strikes, high taxes, and im-
practical labor legislation, continued to operate at a sat-
isfactory rate during at least a portion of the revolu-
tionary period.
Mining, taken as a whole, did not prosper. The
northern states were one of the favorite battlegrounds
of the revolutionists and only properties near the rail-
roads or large towns could be operated with any degree
of security. The Chihuahua smelters were closed down
for the two years ending April, 1918, and other mining
operations were at a low ebb.
The worst industrial conditions seem to have been
passed by 1918. From that time on the agricultural
population has been less disturbed by bandits and the
farmers were reported in 1920 to have gone back to
work except in remote districts and certain sections of
Puebla, Chihuahua, and Durango.
The rapid rise in the value of silver in the latter part
of 1919 encouraged extending that branch of mining
and the output of other metal and mineral products was
increased under the stimulus of the business boom fol-
lowing the declaration of peace in Europe. 18
The effect of the revolution on mercantile operations
was to induce the sacrifice of stocks in regions threat-
ened by disturbance. Those supplies that were left
when the roving military forces came were often con-
16 Supplement to Commerce Reports, June 21, 1921.
186 MEXICO AND ITS RECONSTRUCTION
fiscated outright or paid for by warrants issued by the
commanding officers. Once the stocks were gone their
former owners replaced them, if at all, only by buying
for minimum current requirements. The paper money
issues also demoralized mercantile accounts and the
stories of the experiences of some of those who found
themselves forced to accept worthless paper for goods
they had purchased on a gold basis are among the most
extraordinary which the revolution produced.
In mercantile as in industrial activities a gradual im-
provement from 1918 on has occurred with the re-adop-
tion of the gold standard and establishment of com-
parative order by governments whose control is ac-
cepted or acquiesced in by the war-weary population.
CHAPTER XV
THE FOREIGN COMMERCE OF MEXICO:
BEFORE DIAZ
COMMERCE is the lifeblood of governments. With-
out it public revenues and public works are impossible.
Through all of Mexico's history as a colony and through
much of her independent existence this truism was not
appreciated. Through practically the entire colonial
period the mother country sought to stifle the economic
development of the great region to which it had given
its name, or at least to confine it to such narrow, pre-
scribed channels that no commerce could develop pro-
portionate to the great latent possibilities of the ter-
ritory.
The first half-century of independence brought little
improvement, for though the policy of throwing the
country open to world commerce was adopted, its do-
mestic troubles and the disasters of its foreign relations
shut off the development that might have occurred.
Foreign capital was unwilling to trust itself in the midst
of the revolutionary storms, and domestic enterprise
did not have a chance to show its abilities.
A consideration of the unfortunate commercial con-
ditions, which prevailed before the Diaz regime, is nec-
essary for an understanding of the present-day economic
problems that confront the republic. They indicate the
difficulties that faced the new government in its efforts
187
188 MEXICO AND ITS RECONSTRUCTION
to shake itself free from the past, and they show the
origin of many of the limitations under which commerce
continues even to the present day.
Like other colonizing nations of the age of discovery,
Spain sought to keep for herself all the advantages of
her new possessions. To do so, she shut out all but
Spaniards, and even trade with Spain was allowed only
under strict regulation. Seville and Cadiz were made
the only ports of entry in the home country, and only
through Vera Cruz could the commerce pass into Mex-
ico. This system of control lasted, with few exceptions,
for about two and a half centuries. There were viola-
tions by large numbers of smugglers, but in theory there
was but one recognized door through which the regular
trade of Mexico could pass. 1 Boats first went out sin-
gly, but later, for mutual protection against pirates and
to avoid frauds in the revenue, they were required to
sail in fleets. Not until the so-called ordinance of free
commerce issued by Carlos III on October 12, 1778, did
the old system nominally come to an end.
Concerning the character and value of this early trade
there are no satisfactory data. For the first 50 years
little more than an average of one boat a year went to
Mexico, taking a cargo largely made up of supplies and
armament and returning with native products about the
character of which there is little available information.
For the two centuries preceding 1778 the records are
almost equally unsatisfactory. There appears to have
been a steady rise in the tonnage of the fleets sent in the
1 Miguel Lerdo de Tej ada, Comercio esterlor de Mexico desde la
conquista Tiasta hoy, Mexico, 1853, p. 8.
EARLY FOREIGN COMMERCE 189
last 70 years, which probably reflects a rise in the value
of the commerce. Precious metal shipments from Mex-
ico increased. There are lists of the goods carried by
some of the later fleets. The last fleet under the old
monopoly system, which arrived in 1776 and returned
in 1778, carried to Mexico a cargo in which the chief
elements were quicksilver, iron, and iron manufactures.
The exports from Mexico in this year were first of all
silver, to the amount of over 1,680,000 pesos on the
king's account and 9,800,000 pesos for individuals.
There were sent 232 tons of copper and some gold, tin,
sulphur, red ochre, indigo, wood, cotton, wool, and hides.
Two and a half centuries of Spanish rule had developed
in Mexico only one important resource metals among
which silver, which has been even up to our own day
the connotation of Mexican commerce, easily held first
rank. Other raw materials played an unimportant part,
and local manufactures then, as in all the previous his-
tory of the country, were conspicuous by their absence.
The legal position of Mexican commerce in the clos-
ing years of the colonial period was much more favor-
able than before. To be sure, free commerce did not
mean what the words mean to us, but the trade was
opened during these years to more than a dozen cities
of Spain ; Vera Cruz ceased to be the only port of entry ;
and the restrictions on coastwise trade were relaxed.
Trade, however, followed much in the old channels. Lo-
cal society had not been leavened by the conquerors. The
coastwise trade did not develop ; trade with the world at
large was not yet free; and Vera Cruz, that "unwhole-
some town" with its "disagreeable anchorage among
190 MEXICO AND ITS RECONSTRUCTION
shallows" continued to be the port at which all but a
small part of the foreign commerce entered and from
which the exports of chief value were shipped. 2
One other branch of Mexican trade in the colonial era
deserves mention the commerce with Asia, which the
mother country always looked upon with jealousy but
which it felt it necessary to allow in spite of the fact that
it drained off part of the highly valued silver produc-
tion of Mexico and brought back from the East textiles
that competed with her own manufactures. This was
the trade through the galleons, which sailed usually from
/ Acapulco for the assistance of the unprosperous colony
in the Philippines. The Spanish merchants always
looked upon this commerce as an unavoidable evil at
best. In 1593 a royal decree confined the trade to two
ships a year, in which not more than 500,000 duros of
silver could be sent in return for the Chinese goods which
they brought to Mexico. Except as to the number of
ships, the government's regulations of this trade were
always observed in the breach. The officials in Manila
and in Mexico lent themselves to all sorts of evasions.
Shipments of as much as 4,000,000 pesos in a single year
are reported to have gone to the Philippines.
After the middle of the eighteenth century the restric-
2 For discussions of the commerce of this period see: Alexandra
de Humboldt, Political Essay on the Kingdom of New Spain, Lon-
don, 1814, 2d ed., vol. 1, p. cxvii, and vol. 3, p. 492; Chappe D'Au-
teroch, Voyage to California, London, 1778, pp. 20-1 ; Henry Ker,
Travels Through the Western Interior of the United States from
the Year 1803 up to the Year 1816; with a particular description
of a great part of Mexico, or New Spain, Elizabethtown, N. J.,
1816, pp. 222-224; Miguel Lerdo de Tejada, op. cit., passim.
EARLY FOREIGN COMMERCE 191
tions on trade were gradually relaxed but the commerce
between Mexico and the Far East was never prosper-
ous in the colonial era, nor did it cover even as wide a
range of articles as the trade with the home country.
Silver went westward, also some iron, cochineal, cocoa,
wine, oil, and wool. Eastward the cargo was chiefly of
silks. Smaller quantities of spices, china, and other
Oriental wares were imported. 3
Almost a half -century passed between the ordinance
of free commerce of 1778 and the establishment of the
republic, but the actual development of commerce un-
der the new conditions was disappointing. Statistics
are incomplete and the totals were probably greater
than the official returns show, but they were far from
satisfactory. In the latter portion of the period, 1796 to
1820, the average announced value of imports was 10,-
000,000 pesos, that of the exports about 11,000,000. The
continuance of the policy of shutting out foreigners, the
troubles of the government at home, international con-
flicts, and an illiberal policy in Mexico itself prevented
the growth that might have occurred.
The main characteristics of foreign commerce were
unchanged. Trade went by Vera Cruz to Acapulco.
It continued to go in fleets. The exports were silver
plus some raw materials; the imports were manufac-
8 Chester Lloyd Jones, "Spanish Administration of Philippine
Commerce," Proceedings of the American Political Science Associa-
tion, vol. 3, 1906, pp. 180-193. The intercolonial trade from Mex-
ico to South America was negligible. Shipments of cocoa were made
in later years from Caracas to Mexico and some traffic developed
with Cuba.
tured goods. Foreign trade did not touch the Mexican
people in their daily lives. There was nothing to indi-
cate that the trade of Mexico with the more advanced
countries would soon assume the character of their trade
with each other. Even in amount the trade was disap-
pointing and showed no tendency to increase; the true
economic development of Mexico was still unbegun.
The statistical record of Mexican commerce for the
first half-century of independence is highly fragmen-
tary, due partly to a failure to realize the importance of
such a record and partly to the disturbed conditions in
the life of the republic. Plans for publications, bravely
undertaken, were seldom continued for more than a few
years. For the period 1828-53, a quarter of a century,
no publication of a commercial balance of the trade of
the republic occurred.
What the trade developments were is further ob-
scured by the shifting tariff system and by the fact that
the customs house accounts were often neglected com-
pletely when revolutionary forces got control of the
ports. There were, moreover, special rates collected in
certain ports of entry and special remissions of taxes
to persons and places. Within the country also the in-
ternal customs houses collecting the octroi taxes, his-
torically known as cUcabcHas, were a burden on com-
merce, the effect of which it is impossible to estimate.
The new republican government threw open more
ports than the colonial administration and allowed the
general entry of foreign owned ships. On the other
hand, the general tariff policy, if that phrase can be used
in connection with anything so capricious and illogical
EARLY FOREIGN COMMERCE 193
as the early Mexican tariffs, was as distinctly illiberal as
the navigation policy was progressive. Revenue had to
be raised and the import dues were the main reliance.
Protection of industries existing and to be born was
also alleged to be a motive back of the customs charges.
As a result the customs taxes were high, so high in many
cases as to prohibit honest importation, lessen the in-
come to the public treasury and make smuggling a
highly profitable and not disgraceful business. Some
lines of goods, and for a time the list showed a tendency
to grow, could not be imported at all. Of these there
were 245 items in the tariff of August 14, 1843. In
spite of the "protection" thus afforded, local manufac-
ture did not grow. The only industry which did take
root was cotton manufacture, which began in a small
way under the stimulus of a special subvention included
in the tariff laws of April 6 and October 16, 1830.
A careful estimate of the average annual import trade
for the first quarter-century of independence puts the
figure at 20,000,000 pesos. 4 The chief countries con-
tributing were Great Britain, which apparently sent
over half of the total ; the United States, which sent one-
fifth; and France, which sent about one-eighth. Tex-
tiles were the most important item from Europe. The
United States trade was more varied. It suffered a
sharp decline in the latter years of the period due to the
political difficulties which finally resulted in war.
Import trade in the second quarter-century of in-
dependence was still far from prosperous. Revolutions,
* Ibid., p. 52 et seq.
194 MEXICO AND ITS RECONSTRUCTION
frequently changing tariffs, and the uncertainty of the
rates that any shipment might have to pay continued to
make importation into Mexico a gambling business.
The disturbing influence of the Free Zone established on
the northern border was added to the already complex
trade problems after 1858, and the French intervention
made conditions, if possible, still worse. Only with the
coming of the Diaz government were fairly stable rates
of customs established. Then also fairly reliable cus-
toms reports appeared, the first of which was published
in 1878.
Textiles were still the most important item imported.
They made up, at that date, 54 per cent of the total.
Hardware, machinery, and metal goods formed 20 per
cent, and groceries and liquors 16. Great Britain still
led in textiles, which were the great bulk of her exports
to Mexico. Local manufacture, however, under the
high protection and unusual prices obtainable during
the American Civil War, had established itself and, in
certain lines widely used by the common people, was
driving the foreign goods out of the market. Metal
manufactures still came almost exclusively from
abroad. Railway iron and steel came from England,
engines and cars from the United States. The latter,
even at this early time, took the lead in the shipment of
agricultural machinery, and Germany led in hardware.
The groceries trade had already found the channels in
which it has to a large degree remained. Flour, bread-
stuffs, and canned provisions, at the end of the pre-Diaz
period, came chiefly from the United States, wines and
spirits from France, and olives and olive oil from Spain.
EARLY FOREIGN COMMERCE 195
The quarter-century before the Diaz regime saw a
lively international contest for Mexican imports. In
1853 it appears that, of the total value of some 26,000,-
000 pesos, Great Britain furnished almost 50 per cent
and France and the United States about 17 per cent
each. The German states then contributed about 7 per
cent. Thereafter there were various ups and downs
in which the United States definitely forged ahead of
France in the middle '70s and in 1878 passed ahead of
Great Britain, never again to be overtaken. France,
meanwhile, fell to the position of a minor competitor.
For her and for Great Britain the advance of the rail-
ways, then being planned in the north, meant a steadily
growing handicap in competition for Mexican trade.
Turning now to the export trade during the first half-
century of Mexican independence, we find statistics as
unsatisfactory as in the case of imports. They are, in
fact, so unsatisfactory that the best method of arriving
at the character and value of the goods that were sent
abroad is to study the returns of imports from Mexico
as published by her chief customers: Great Britain,
France, and the United States. The shipments in the
first quarter-century of independence were unimportant,
except for precious metals and cochineal. In the sec-
ond a better showing was made. A greater variety of
articles made their appearance earnest of what would
occur once the country was opened up to foreign com-
merce.
Between 1850 and 1878 a sharp international rivalry
went on between Great Britain, the United States, and
France for the control of both of the branches into which
196 MEXICO AND ITS RECONSTRUCTION
Mexican exports naturally fall. In buying merchandise
from Mexico the countries ranked in the order named
at the beginning. Under the stimulus of the high prices
obtainable during the American Civil War the trade of
the first two was greatly increased, and Great Britain
shot far ahead of her competitors. At the end of the
conflict trade values fell again and in 1867 the three
were in the same relative positions as a decade before.
Two years later, however, the United States passed
Great Britain, taking a lead which was to be greatly ac-
centuated by the opening of the railway era. By 1881
the United States held a share almost as great as that
of the other two nations combined.
In the bullion and specie trade the United States
took the lead earlier for reasons largely connected with
the monetary policy of the country. In fact, by 1857
the bullion purchases of Great Britain and France were
almost negligible. During the Civil War period the
American share declined rapidly and the monetary leg-
islation of the various countries in the years following
made the course of silver shipments highly unstable.
Beginning with 1876, shipments to the United States
regularly exceeded those to either France or Great
Britain. 6
Compared to the total import and export trade at the
end of the first quarter-century of Mexican independ-
ence, the showing in the early '70s was satisfactory. Im-
ports were somewhat less than 30,000,000 pesos in
"Exports of metals, like imports, doubtless would have shown
a much better total but for the unfortunate taxing system one that
discouraged honest enterprise and encouraged smuggling.
EARLY FOREIGN COMMERCE 197
1872-3. The exports to the three chief customers aver-
aged about $27,000,000 for the five years ending 1876."
But, though the relative gain was good, the actual in-
creases in both lines were unsatisfactory. Fortunately
fibers, coffee, hides and skins, and valuable woods were
increasing in importance in the export figures foreshad-
owing a time when the products saleable abroad would
have greater variety.
It is hard for us to realize now the handicaps under
which commerce was carried on in Mexico in the pre-
Diaz period. Goods could be transported only at great
expense. Only those that combined high value with
small bulk could stand the cost of carriage for any great
distance and the most important of even these were so
heavily burdened with transportation costs and internal
taxes that production for more than local use was profit-
able only under the most favorable natural circum-
stances.
The commercial situation was like that of the pioneers
who settled beyond the Alleghanies in the early years
of the United States and found that the cheapest way
for them to market their corn was to change it into whis-
key so that transportation charges might be as low as
possible. The conditions were similar except that there
existed in Mexico no navigable rivers that might serve
as natural highways by which to reach the sea and the
outside world. Even after the middle of the century
litters carried by mules or men were used for passenger
travel between Vera Cruz and interior points and re-
6 Calculated from the import returns reported for the United
States, Great Britain, and France.
198 MEXICO AND ITS RECONSTRUCTION
liable diligences were still rare. In 1878, long after the
resources of her northern neighbor had been tapped,
there was still no railway net and the local highways
were seldom worthy of the name. Transportation by
pacls mules, or at best by wagons drawn by mules or
oxen, was slow and costly but the only means available.
Those who had dealings requiring the shipment of
money long distances, and this included, of course, all
engaged in foreign trade, found the transfer of credits
a great handicap. Exchanges by draft were not gen-
erally understood or used. A fair average of the ex-
pense for interior remittances from Mexico City cited
in 1878 was eight to ten per cent to Chihuahua, five or
six to Morelia, and four or five to Oaxaca. If money
went abroad, the charge was still greater. In 1868 the
taxes and cost of transportation of silver sent from
Mexico City to the Bank of England were 25 per cent
of the value of the shipments.
Conditions were rapidly developing to the northward
which were sure to bring great impetus to Mexican
trade, and at least partially remove its disadvantages.
The United States was beginning to come into the mar-
ket for raw products and to sell her manufactures. Reg-
ular steamship communications, discontinued during the
Civil War, were reestablished in 1868 and the railroads
at the close of the pre-Diaz regime were breaking their
way through the southwest toward the northern frontier
of Mexico. To assure a great increase in the import and
export trade of Mexico only the establishment of order
and a better system of communications within the coun-
try were needed.
CHAPTER XVI
THE FOREIGN COMMERCE OF MEXICO: THE
DIAZ REGIME AND AFTER
FROM the '70s until 1892 the statistics of Mexican im-
ports are only less fragmentary than those in the years
before the Diaz regime. Frequent tariff changes dis-
turbed what would have been the course of development
and the tariff classifications are not such as make easy
the analysis of the trade as a reflection of changing na-
tional economic demands. This latter difficulty, in fact,
continues up to the present time.
The textile trade, which was the characteristic feature
of Mexican imports in the preceding periods, continued
to be the most important factor though less important
in comparison with the total imports, and less impor-
tant when compared to the total consumption, for a local
industry was developing, which, through high tariff pro-
tection, was gaining ground steadily.
In 1872-3, 58 per cent of the total invoice value of
imports was made up of textiles, a position maintained
as late as 1884. Then conditions changed rapidly. In
1889-90 the value imported had risen but the percentage
of the total had fallen to 22 per cent. Local competi-
tion was gaining strength and the demands of Mexico
on the world's markets were becoming diversified and
greater. Textile imports, therefore, took a less promi-
nent place. The decline in their relative importance in
199
200 MEXICO AND ITS RECONSTRUCTION
the period from the early '90s to 1912-13 was steady.
The value doubled in this period but the proportion of
the total sank to 13 per cent.
To a very considerable degree the passing of the im-
portance of these goods reflects the decline of the British
leadership in Mexican imports. For generations tex-
tiles have been one of the characteristic features of Brit-
ish trade and at one time they were not only the chief
item of Mexican imports but practically an undisputed
British field. By 1912-13 they were neither. Mexican
and foreign competition was pressing British manufac-
turers hard. The cotton thread and handkerchiefs im-
ported were still practically all British. A large share
of the lace trade and of that in coarse cottons had been
lost. In the better trade in piece-goods British mills
still made about seven-eighths of the imports. Wool
yarn imports came from Germany, light wool goods
chiefly from France; only in the heavier woolens was the
wool trade distinctively British. Serious inroads were
made on a number of less important branches.
It is impossible to analyze satisfactorily the develop-
ments in Mexican imports other than textiles. In the
first part of the Diaz regime the classifications are often
according to the rate of tariff paid and in the later years
on physical characteristics rather than utility. In gen-
eral, the government followed the policy of favoring the
introduction of materials that did not compete with
Mexican industry and which, through encouragement
of industry, would give a stimulus to the development
of the republic. It frequently freed such goods from
tariff charges. The tariff of 1872-3 allowed but 12 per
RECENT FOREIGN COMMERCE 201
cent of the imports to enter free of duty. That of
1884-5 gave similar treatment to 22.9 per cent of the
imports.
On the other hand, Mexico sought to have foodstuffs
produced within the country. Imports were loaded with
increasing tariff rates, with the result that between
1872-3 and 1888-9 the proportion of foodstuff items in
the total, and their actual value fell off sharply. The
economic advance, which was then under way, however,
was so rapid that in the latter part of the Diaz regime
foodstuff demands were so great that imports increased
in spite of the high tariffs and greater local production.
After 1892 the chief tariff classifications are animal
substances, vegetable substances, minerals, textiles, and
their manufactures, and machinery and apparatus. It
is not possible to trace such groups as foodstuffs through
these figures satisfactorily, so comparisons must follow
the Mexican classifications. They show a remarkable
expansion of Mexican imports reflecting the rapid eco-
nomic exploitation of the country. Between 1893-4
and 1912-13 imports of animal substances increased four
fold in value. Leather goods and preserved meats, lard
and wool imports, all indicative of a higher standard of
life than the Mexican had formerly enjoyed and of the
demand created by the presence and example of the
foreigner, constituted more than one-half of the total
in the class.
Imports of vegetable substances increased between
1893-4 and 1912-13 over two and a half fold. The
growth was general in a large number of lines, the most
important of which was cotton. The local cotton pro-
202 MEXICO AND ITS RECONSTRUCTION
duction has not been great enough to supply the de-
mand of the Mexican mills and increasing supplies have
had to be drawn from the United States.
From the Mexican point of view the two tariff classes,
minerals, and machinery and apparatus with the allied
class, chemical products, are the ones that show the most
interesting development in the national import trade.
In the old days quicksliver went into Mexico and metal
products went out. Except for quicksilver, imports of
mining products were negligible. Machinery was con-
spicuous in Mexican trade by its unimportance, so also
were chemical products. But the Diaz regime brought
these unimportant factors to the forefront. They dis-
placed textiles as the outstanding feature of Mexican
imports. They were important for the development of
the country because they represented the goods drawn
from abroad for its economic regeneration. The first
two classes together increased almost fourfold between
1893-4 and 1912-13. Chemical and pharmaceutical im-
, ports increased six fold. These were figures that re-
flected the purchases abroad of the iron and steel, tin,
copper, coal, coke, electrical goods, agricultural and
other machinery, and railway equipment, which were
so important a factor in creating the new Mexico.
One of the most interesting features of a country's
foreign commerce is brought out by the study of the
source of supply of its imports and the destination of
its exports. 1 Since before the beginning of the DiaZ
1 The comparisons that follow are not exact because tranship-
ment trade is not satisfactorily shown in Mexican statistics.
RECENT FOREIGN COMMERCE 203
regime only four nations have figured prominently in
Mexican import trade. Great Britain, the United
States, Germany, and France furnished over 90 per cent
of the total in 1872-3, 92 per cent in 1892-3, 89.5 per cent
in 1902-3, and 87.3 per cent in 1912-13. After the be-
ginning of the World War the United States came to
have a practical monopoly of Mexican foreign trade.
Among these nations there has been a long contest
for control of the commerce. In 1872-3 Great Britain
was in the lead, with about 35 per cent of the total. It
would be hard, of course, to maintain such a share as the
general exports from the nearby United States devel-
oped. This was particularly true with the establishment
of railroad connections across the northern border.
At the beginning of the next 20-year period the ship-
ments to Great Britain had sunk to slightly over 13 per
cent, which continued to be about her share in 1902-3
and 1912-13. British, French, and German competition
for a share in Mexican trade was keen throughout the
Diaz regime. France controlled 16 per cent of the total
in 1872-3. She had the advantage of dealing in lines
that, to a large extent, were composed of distinctively
national products, but her trade in many branches was
not easily expandable because the public that con-
sumed her products in Mexico was not large nor of
rapidly increasing numbers. Germany, on the other
hand, soon began to bid for the trade in iron goods and
textiles and to come into intimate competition with
Great Britain and later with the United States.
By 1892-3 Great Britain had fallen from first place
and was clearly outclassed by the United States. She
204 MEXICO AND ITS RECONSTRUCTION
still led France, though by a narrow margin only. Ger-
many and France together then had a trade 40 per cent
greater than the British. Relatively Great Britain was
losing even in comparison with her European competi-
tors. At the opening of the next 10-year period French
and German trade had again gained ; it was 60 per cent
greater than that of Great Britain. Meanwhile Ger-
many had passed France in 1901, not again to be over-
taken, and a close contest for second place in Mexican
imports was occurring between her and the former
\f leader. In four years in the decade following 1902-3
German trade was greater than British and in many
lines was offering sharp competition to that of the
United States.
The rise of German trade was the most striking
feature of Mexican imports from European countries.
In 1872-3 the total credited to the German states was
only 3,890,496 gold pesos. Twenty years later it had
fallen to 3,322,700. Then began a steady rise. In the
decade ending 1902-3 it almost tripled and in 1902-3 to
1912-13 increased another 30 per cent. Had peace con-
tinued it does not seem unlikely that Germany might
have established herself in firm control of second place
in Mexican imports.
First place, meanwhile, had definitely fallen to the
United States. Before the railway era in 1872-3 one-
fourth of the imports came from the United States, in
spite of the lack of rail routes between the two countries.
Twenty years later over 60 per cent did so. In 1902-3
54 per cent of the imports came from the United States;
in 1907 almost 63 per cent; and in 1912-13, 51 per cent.
RECENT FOREIGN COMMERCE 205
Railroads, propinquity, and the rapidly growing manu-
facturing industries of the northern republic assured it
the greater part of Mexican import trade. These ad-
vantages were temporarily increased by the World
War, which made the United States almost the exclusive
market in which Mexico purchased for import. Parallel
with that of imports there was in process, meanwhile, a
rapid growth in export trade and a contest for its con-
trol. The shipments out of Mexico naturally fall into \s
two great classes the mining products and all others.
Historically the characteristic exports of Mexico are the
precious metals. As late as 1872-3 they were 81 per \s
cent of the total. But though they continued to rise in
yield they fell in relative importance. The total metals
export was valued at 20,294,321 pesos in 1874-5. Twen-
ty years later the precious metals sent abroad were worth
52,535,854 pesos, 30 years later 93,885,526 pesos, and
in 1912-13, 130,885,339 pesos. But in the same period
commodities exports had risen in even greater propor-
tion. In 1874-5 they had been worth 7,024,467 pesos;
20 years later they were worth 38,319,099 pesos; 30
years later in 1904-5, 114,634,924 pesos. At this latter ^
date commodities exports had already passed the
precious metals exports in value, and in 1912-13 they
rose further to 169,520,212 pesos' worth. In other
words, while precious metals exports had increased 650
per cent, those of commodities rose 2,300 per cent. This
meant that Mexico was less distinctively a mining coun-
try than at any time in her history. Her mining, too,
was becoming less characteristically devoted to the
precious metals, especially silver.
206 MEXICO AND ITS RECONSTRUCTION
There is no reason to believe that Mexico will cease
to be one of the world's great sources of silver supply,
but in recent decades other mining products have as-
sumed an increasing importance. The exploitation of
the base metals has had an extraordinary development
and the oil resources have been developed so rapidly that
the total yield of the country is now determined by the
conditions under which the product may be marketed,
not by the amount the wells are capable of producing.
The growth of this export is a twentieth century de-
velopment. There was a small sale of local oil products
for about a decade preceding the beginning of the export
trade. The total production reported was 75,375 barrels
in 1903 and 3,634,080 in 1910. The first cargo of crude
oil left Tampico May 20, 1911, by an American steamer.
Thereafter the growth in production was rapid and all
but a small part went directly into the export trade. In
1911 a total of 12,552,798 barrels was produced. By
1913 an increase of over 100 per cent was recorded, the
total being 25,696,291 barrels. During the war the pro-
duction continued to rise and could have been increased
still further had it been necessary, for the potential yield
of the wells had now outrun the ability to market the
product. The total for 1917 was 55,292,770 ; 2 for 1918,
53,919,863; for 1919, 87,072,955; and for 1920, 156,062,-
77 ''-.'.'. > '....'-*
707 barrels.
*.
2 The statistics of production up to and including 1917 are as
reported by the Petroleum Bureau, Department of Industry and
Labor, Mexico City, as quoted in John D. Northrup, Petroleum in
1917, Washington, 1919, p. 875. The figures for subsequent years
are as reported in, the New York Times July 2, 1921, quoting
RECENT FOREIGN COMMERCE 207
In spite of the importance of this growth it must not
be overlooked that the most significant, and for the re-
public the most important, developments in her export
trade in the last generation have been in other lines. No
nation whose prosperity depends on a few products is
ever on a sound economic basis. Exhaustion of re-
sources, bad growing seasons, and bad market conditions
always have possibilities of national disaster for such a
state. A nation is secure only when by the variety of its
products it can escape the difficulties that may at any
time attend the production of a few of them. Mexico
at the beginning of the Diaz regime was in the condition
first mentioned. At its end she had progressed far to-
ward the second standard.
To be sure manufactures continue to have but a weak
development but agricultural and forest products have
become diversified in the last generation and the
economic foundation upon which the Mexican national
life rests has undoubtedly been broadened thereby.
Moreover, the growth of the list of exports represents
not only a stabilizing element in national commerce but
a development toward a standard that favors a demo-
cratic government.
Though Mexico still has many cases that seem to indi-
cate the contrary, agriculture is the small man's business.
It is the occupation which, in the development of nations,
W. C. Teagle, President of the Standard Oil Company of New
Jersey. Rafael Alcerraca, chief of the Petroleum Department of
the Mexican government, estimates 1920 production at 163,000,000
barrels, New York Times, June 18, 1921.
208 MEXICO AND ITS RECONSTRUCTION
has given the first great impulse toward respect for the
rights of one's fellowman, and toward a desire for order.
It is the occupation in which individual initiative and
industry first received impetus. Mexico will find it of
the highest importance to foster the growth of her
classes who live independently upon the land, if the re-
public is to become what it never has been, a truly demo-
cratic government.
The agricultural exports reflect but imperfectly the
degree to which this development has already taken
place in Mexico, for the reason that many of the lines in
which harvests have been greatly increased enter export
but slightly and because even some of agricultural
products that are exported, such as henequen, are not
typically the yield of small holdings. Nevertheless
there can be no question that the diversification of agri-
cultural products and of the export of them is indica-
tive of a change in the national life of fundamental
importance.
From still another point of view this development is
interesting. It reflects, to a degree, a development of
hot lands heretofore disliked and neglected by both na-
tive and foreigner. Henequen, coffee, rubber, vanilla,
and chicle, among the vegetable exports, are names that
suggest tropical climates.
The growth of the agricultural exports of Mexico can
only be sketched here. Up to the present henequen
fiber, or sisal, has come, almost entirely, from Yucatan.
It is the material from which the greater part of the
binder twine used in the United States is made and it
finds almost its exclusive market in that country. The
RECENT FOREIGN COMMERCE 69
export in 1877-8 was valued at 1,078,076 pesos, that fo
1912-13 was worth 31,133,755 pesos. 3
The value of exported sisal increased remarkably dur-
ing the World War but, like the figures of international
trade in many other lines, this reflected a development of
exceptional character and not one that can be expected
to continue in times of peace. With supplies of Manila
hemp cut to a minimum by the war, Yucatan producers
met an exceptional market for their product. In addi-
tion the local government set up a system of market con-
trol that forced the prices still higher. As a result sisal
fiber, which sold at an average of $.055 United States
gold per pound in the five years before the war, rapidly
rose in nominal value reaching a peak of $.2125 United
States gold per pound at one time during the conflict.
Such returns are now a thing of the past. In 1921
sisal was back to its prewar price level. The market was
depressed by large stocks, and a production more than
sufficient for the decreased peace time demand. How-
ever, the advance that had been made in pre-war times
will be maintained. It is beyond doubt that Mexico's
3 Tables of the exports of henequen are found in Luis Pombo,
Mexico: 1876-1892, Mexico, 1893; Matias Romero, Mexico and the
United States, New York, 1898; Statistical abstract for the prin-
cipal and other foreign countries, etc. . . . London, 1907 and 1912;
Reports from Her Majesty's diplomatic and consular agents abroad
on subjects of commercial and general interest, Commercial No. 36
(1883), Part VII, Report by Mr. Lionel E. G. Garden on the trade
and commerce of Mexico, 1883; Anuario de estadistica fiscal, Mexico,
1913 and 1914; and in the Boletin de estadistica fiscal, ano fiscal
1910-11, Mexico, 1912. The statistics quoted for other agricul-
tural products in the following paragraphs are from these author-
ities.
210 MEXICO AND ITS RECONSTRUCTION
sisal production will contribute increasingly to her
foreign trade. Other vegetable fibers, especially ixtle
and broom root, have also been exported in increasing
quantities.
Coffee culture was introduced into Mexico from the
West Indies. Two areas, one on the Atlantic with the
cities Orizaba and Cordova as centers, and the other on
the Guatemalan border, have proven especially suited to
this crop. The United States has always been the chief
buyer. Before 1870 exports were negligible. By 1878
they had risen to a value of 1,242,041 pesos and in
1912-13 to 11,263,701 pesos. Raw tobacco, of which a
value of 132,971 pesos was exported in 1872-3, was sent
abroad to the amount of 1,002,611 pesos in 1912-13.
Chick peas, garbanzos, were apparently first exported in
1882-3, when a value of 28,855 pesos was shipped. In
1912-13 garbanzos worth 4,930,362 pesos left the coun-
try. Rubber exports began to be important in 1896-7.
They rose rapidly to a value of 21,187,770 pesos in
1910-11, the highest value they ever reached. In the
same year guayule was exported to a value of 11,797,910
pesos Mexican currency. Important increases are also
to be noted in cabinet and dyewoods, vanilla, chicle, cat-
tle, and hides and skins. The diversification of Mexican
exports is illustrated by a comparison of the articles
exported to the amount of 1,000,000 pesos at various
periods. Besides the precious metals, there were in
1877-8 only three such articles, in 1882-3 only four, in
1891-2 only five. Then came the period of rapid devel-
opment. There were 12 articles besides mineral prod-
ucts in this class in 1902-3 and in 1912-13 there were 14.
RECENT FOREIGN COMMERCE 211
The enumeration of the chief items of Mexican ex-
port is evidence of the degree to which the republic con-
tinues to be, so far as its export trade is concerned, a raw
product country. In some lines manufactures have been
developed to satisfy a large part of the local market, but
even in 1912-13 they constituted only 1.1 per cent of
the total exports. The chief factors in exports of manu-
factures were cheap hats and manufactured tobacco.
The changes in the international shares of Mexican
trade already noted in connection with imports were
even more marked in the export trade. Precious metals
shipments in the middle '80s were about evenly taken
by Great Britain and the United States, then the latter
took the lead and held it steadily thereafter. Its share
rose to about three-fourths of the total in the middle
'90s and it stood at a little above that point in 1912-13.
Since the outbreak of the World War exports to coun-
tries otEer than the United States have been only a negli-
gible percentage of the total.
In the commodity market in general Mexico has never
sold to any one on as good terms as to the United States.
That country led even before the Diaz regime, its next
competitor, Great Britain, even then, taking only about
a value one- fourth as great. As early as 1878, 60 per
cent of the commodity exports went to the United
States. By the '90s over three-fourths of the total took
that direction. In 1912-13, 77.2 per cent went to the
northern neighbor of Mexico about the same per cent
of the total as in the case of the precious metals exports.
In spite of Mexican distrust and in the face of the
failure of the average American to understand the Mex-
212 MEXICO AND ITS RECONSTRUCTION
ican point of view, the trade relations between the two
great republics of the North American continent have
grown increasingly intimate and important. The mu-
tual economic interests are so interrelated and funda-
mental that they have proven and will continue to prove
so powerful that no political propaganda can counter-
act them. There is no true geographical boundary be-
tween the two countries, and communications between
them by both land and sea are well developed, better
developed indeed than between many regions within
Mexico itself. The economic development of the two
is highly contrasted but supplemental. The United
States is the best market for what Mexico has to sell and
the easiest source of supply for what she wishes to buy.
In 1912-13 Mexico bought almost four times as much
from the United States as from any other country and
more than from all other countries combined. In
1912-13 Mexico sold to the United States over seven
times as much as to any other country and almost four
times as much as to the five nations next in importance
in Mexican export trade. The percentages have risen
still higher during and since the World War but are
not indicative of a condition that will continue in normal
times. These latter, however, will not fail to demon-
strate the essential commercial unity of interest of the
two republics.
That there should be friendly relations between two
states bound so closely together by their material in-
terests seems axiomatic. That the international ex-
change between the two countries is to their mutual ad-
vantage is not likely to be disputed; nor is it subject to
RECENT FOREIGN COMMERCE 213
question that this trade is of very much greater impor-
tance to Mexico than to the United States. In Mexico's
total trade this commercial interchange with the United
States is not only the dominant factor but the greater
part of its total foreign commerce, a position which the
same trade is far from occupying in the case of the
United States.
Those who wish a resumption of orderly development
in Mexico cannot overlook the part that foreign com-
merce played in the old regime in placing the country on
its feet, giving work to the people, and resources to the
government to carry out the progressive measures it
supported. They should not forget to what degree that
commerce was made possible through the United States
market and the enterprise of Americans who came to the
republic with their capital.
The trade of Mexico in the early '70s presents but a
sorry contrast to that in the opening decade of the twen-
tieth century. Imports were stationary at about 30,000,-
000 pesos. Exports were worth about the same amount.
Railroads were practically unknown. Only the most
valuable products could be imported or exported. Good
crops rotted through inability to take them to market
and bad crops in the less accessible regions meant
famine. Property and life were insecure.
At the end of the period, in 1912-13, imports were re-
ported at 192,292,461 pesos, exports at 300,405,552.
Railways reached the more important producing areas.
Goods formerly unmarketable went to parts of the
country where they were needed and went abroad by
thousands and tens of thousands of tons. Property was
214, MEXICO AND ITS RECONSTRUCTION
protected and, at least comparatively, personal liberty
was assured.
The change, of course, was not due to any one new
element introduced into the national life. It was the
product of a complex of influences, which, whatever its
shortcomings, was bringing about in Mexico a trans-
formation of the old into something better. Among
these influences, on the whole beneficent, that of foreign
commerce was constant and important. It operated
both as cause and effect.
The growing imports gave greater resources through
customs taxes to the government. They stimulated the
people to new wants, and brought in the machinery and
raw materials for new industries and for the expansion
of old ones. They made possible better protection of
life and property and encouraged the investment of
capital, both foreign and national, in lines that would
have been impractical before.
As exports expanded new areas were brought under
exploitation, not only for their mineral resources but for
the vegetable and animal products. The exports, in
turn, made increase of imports possible and gave an
aspiration toward a standard of life that was impossible
before. Few influences, indeed, worked more clearly
for the broadening of the national life of Mexico than
did the development of her foreign commerce. Few
seemed to carry, to a greater degree, the assurance that
the industrial development of the country, which it
helped to make possible, would gradually bring about a
social as well as an economic reconstruction and assure
in the republic the continuance, by less arbitrary means,
RECENT FOREIGN COMMERCE 215
of the orderly development that had been maintained
during the reign of President Diaz.
That commerce would suffer during the widespread
disorders brought by the revolution was to be expected.
The actual effects of the local conflict are obscured in its
later years by the developments of the World War,
which, by giving a great stimulus to certain lines of in-
ternational trade, distorted the trade values and upset
the normal conditions in a number of important lines
of Mexican production, notably silver, sisal, and petro-
leum. As a result, the uncertainty as to the amount of
the totals of the trade brought by the early years of the
war has been succeeded by uncertainty as to what the
figures mean, now that some published by the Mexican
government again become available.
The most contradictory conclusions are arrived at by
different persons. If, for example, the reports of crop
production are considered as an indication of commer-
cial conditions, the picture presented even for 1918, the
last year for which figures are available, is very gloomy.
These returns seem to show a very serious cutting
down of the production of the staples upon which the
people of the country depend. The crop decline has
affected international trade le^s than might be expected,
since those who use imported goods are not the people at
large and the chief cereals do not enter foreign com-
merce in large amounts.
If the returns of international trade and of customs
collections be interpreted as those in control of the gov-
ernment allege they should be, Mexico must be admitted
216 MEXICO AND ITS RECONSTRUCTION
PRODUCTION OF CERTAIN CROPS IN MEXICO 4
Average yearly
production,
1906-1910
(Kilos)
Production
for
1918
(Kilos)
31,033,637
12,520,300
445,396,850
17,924,260
3,219,624,240
1,171,750,893
Wheat
306,782,890
187,892,586
163,397,200
107,465,720
60,535,620
69,303,650
22,936,645
72,000
20,069,642
327,795
56,251,716
Dry Chile
9,809,031
691,454
2,257,144,953
3,077,400
105,887,340
16,600,000
74,546,666
10,308,968
Honey
85,226,502
6,628,980
Cotton
40,506,796
79,292,700
84,840,287
158,066,682
2,906,021
2,500,000
-'Coffee
35,788,007
47,582,540
Vanilla
188,005
'Tobacco
14,395,321
12,608,337
to be about to enter a period of prosperity in its foreign
trade such as she has never known. 5
* Commerce Reports, September 27, 1919.
B The statistics in the following paragraphs are taken from a
summary of the message of President Carranza published in the
Statist, London, November 22, 1919, p. 1121, and Commerce Re-
ports, December 3, 1918; June 18, 1919; and October 17, 1919,
quoting reports of the Mexican government. The Presidential ad-
RECENT FOREIGN COMMERCE 217
The exports for the year 1918 were valued at 367,-
305,451, compared to 300,405,552 pesos, the record for
1912-13. Imports totaled 164,470,035 pesos, still
much less than in 1910-11, when they totaled 206,000,-
000 pesos. Detailed returns for 1918 and subsequent
years have not been published. The war had greatly
emphasized Mexico's dependence on the United States
in her foreign trade. Approximately 95 per cent of all
exports in 1918 went thither and about 90 per cent of
the imports were purchased there.
President Carranza, reviewing the state of the coun-
try in his message to the Congress in the autumn of 1919,
pointed out that the customs receipts for 1918 were the
greatest in history, the total for 1918 being over
37,700,000 pesos, or six million greater than the record
of the best years of the old regime. The striking con-
trasts between the reports as to production in the coun-
try on the one hand and the figures of foreign trade and
the income derived therefrom on the other, are due, in
large degree, to circumstances quite independent of any
action taken by the local government. The fact is that
the apparent prosperity of Mexican foreign trade in
1918 and 1919 was due not to what the revolutionary
government had or had not done but to the abnormal
conditions created by the war in Europe.
The export trade of 1918 was announced as of a
value of 367,305,451 pesos, as compared to 300,405,522
pesos in 1912-13; while that of 1919 reached 424,462,471
dress of C. Adolfo de la Huerta published in Diario Oficial, Sep-
tember 2, 1920, gives the value of Mexican exports in 1919 as
424,462,471 pesos and that of imports as 265,178,706 pesos.
218 MEXICO AND ITS RECONSTRUCTION
pesos. 6 This is a marked gain and might indicate an
encouraging general increase of commodity shipments.
A detailed comparison to determine the degree to which
such a development did or did not occur is not possible
with the statistics at hand. It seems clear from an
analysis of certain items, concerning which information
is available, that the result is to be attributed more to the
general high level of prices in the world's markets and
the unusual circumstances surrounding certain lines of
production than to a general revival of commerce in the
republic. In the case of silver, which is regularly one of
the most important of Mexican exports, the actual pro-
duction was not unusual. The yield of Mexican silver
mining from 1907 to 1914 remained practically stable at
an average of about 70,000,000 troy ounces per year.
The next two years saw a sharp decline, only 22,838,400
ounces being produced in 1916. Thereafter the totals
rose, reaching 62,517,000 ounces in 1918 and about
75,000,000 ounces in 1919. Meanwhile, however, the
value of silver per ounce had very greatly increased.
It averaged $.60835 United States currency in 1912
and $.57791 in 1913 but rose to $.96772 in 1918 and to
$1.11122 in 1919. Had silver remained at near its
average pre-war level, therefore, or had it been at the
levels it has since reached, the value of that portion of
Mexican export trade would have shown a decline as
compared to 1912-13.
In the case of petroleum a remarkable increase of
yield has occurred, but without the cooperation or en-
* Presidential address of C. Adolfo de la Huerta, Diario Oficial,
September 2, 1920, p. 25 et teq.
RECEXT FOREIGN COMMERCE 219
couragement of the revolutionary governments. The
total production in 1912 was 14,051,643 barrels; in 1918
it was 63,828,327 barrels; and in 1919, 87,072,955 bar-
rels. These items alone, due to the increased value per
unit in the one case and to the increased yield in the
other, brought about by conditions over which the Mexi-
can government had no control, explain the greater part
of the nominal increase in the value of Mexican export
trade in 1918 and 1919 as compared with 1912.
The larger customs income also is deceptive since it
reflects not so much an increased volume of general
trade as higher rates on a number of lines of imports.
In fact, as noted above, the actual value of imports was
considerably less in 1918 than in 1910-11. The customs
returns, moreover, include the yield from the new export
taxes on petroleum shipments.
However welcome the greater money values of ex-
ports and of the customs income is, they are not to be
taken, therefore, as a reflection of a reestablished ca-
pacity for production in the country. The degree to
which the latter has come about can be better judged by
the way in which Mexico will be able to weather the de-
flation of the values of all her export commodities, which
has set in after the war boom. For this period no statis-
tics have yet been published.
CHAPTER XVII
COLONIZATION
IT is hard for Americans, who have seen their country
welcome immigration of European stocks and prosper
from so doing, to realize that other states, even Ameri-
can states, have not uniformly followed the same policy.
In Mexico an illiberal exclusive policy was followed
before its existence as an independent state. Spain first
kept foreigners out because she wished to keep all the
benefits of local resources for her own people and to
keep all the people under the unquestioned dominance of
Spanish institutions. Later to these motives was added
the fear that to abandon that policy would mean to open
the way for foreign aggression.
As early as 1602 the attention of the civil and ecclesi-
astical authorities was called to "the evils resulting from
foreigners going to the Indies, to reside in the ports and
other places, it being found that our Catholic faith is not
secure, and it being important to see that no errors may
be sown among the Indians and other ignorant persons.'*
The officers were commanded to "aid in cleansing the
land of these people, and that they cause them to be
expelled from the Indies." 1
Twelve years later even trade with the non-Spanish
world was prohibited to the colonies "under a penalty of
Law 9, Title 27, Book 9, Recopilacion de Indias, Philip III*
220
1
1602.
COLONIZATION 221
death, and confiscation of the property of those who-vio-
late this our law."
The suspicion of foreigners continued a part of Span-
ish policy to the end of the colonial period. Mexican
distrust was studiously turned against the then weak
United States. From time to time the governors "were
admonished to keep a vigilant eye upon the restless sons
of the Northern Republic." When New Spain threw
off the yoke of the mother country it might have been
expected that this policy would be reversed, that the
foreigner would be welcomed and that a rapprochement
between the young republics of North America would
occur. To some degree this did happen. Discrimi-
natory legislation was repealed and the laws above cited
were suspended by decree of October 7, 1823. 3
There can scarcely be said to have been an established
policy on international affairs in Mexico in the years
following the winning of independence, for domestic
problems kept her statesmen so fully occupied. Toward
foreigners there was a clearer policy than on most lines.
Those in power realized more clearly, it appears, than
have some of their successors that the foreigner was
essential to the development of a strong Mexico. Per-
sons of European stocks were to be encouraged to settle
in the republic. It was believed that it would be best for
the central government to deliver over to the states the
encouragement of immigration since each would be anx-
2 Law 7, Title 27, Book 9, Recopilacion de Indias, Philip III,
1614.
3 This reference and the two above are taken from Papers Relat-
ing to Foreign Relations of the United States, 1888, vol. 2, p. 1166.
222 MEXICO AND ITS RECONSTRUCTION
ious to increase its population. A decree to that end
was issued in 1824. The only limitation was that lands
20 leagues from the frontier or 10 leagues from the
coast could not be colonized by foreigners except with
the permission of the central government.
By 1831 at least two colonization projects had been
launched. The legislature of the state of Vera Cruz
gave the valley of the Goazacualco (Coatzacoalcos)
River to a French company which sent out various expe-
ditions. These enterprises met disaster. The colonists
gradually drifted away to regions better developed or
back to the home land.
The other venture was the only one of the early colo-
nization contracts that was successful. It was from the
Mexican point of view also the most disastrous, for it
ultimately brought with it the dismemberment of the
republic. This was the colony of "Texas, in the State of
Coahuila and Texas." Under the colonization contracts
of April 11, 1823, 6,391 families had entered from the
northeast by January 2, 1830. Others "entered without
contract and without the knowledge of the authorities,"
establishing themselves "at their will, especially near the
frontier." Already the northern colony was displaying
some features that were the cause of anxiety, for in some
of the settlements "in view of the lack of adequate
legislation, the customs and laws of the country from
which the colonists have come have been observed." No
advance "worthy of notice" had at this time been made
"in the territories of Mexico and California." 4
* Lucas Alaman, Memorla de relaciones, January 5, 1831, repub-
lished in Vicente E. Manero, Documentos interesantes soibre coloni-
COLONIZATION 223
Later, Mexico attempted to redress the balance by in-
viting "all persons of the Republic to colonize in Texas,
offering to transport them at the expense of the Treas-
ury," to give them tools, and to maintain them for the
first year, but the proposal did not attract popular
support. 5
General colonization schemes continued to hold the
attention of the government in spite of the fear of what
was going on in the north. Extraordinary inducements
were offered to encourage settlement and guarantees of
protection for person and property were freely given.'
The general policy adopted was well outlined in the de-
cree of March 11, 1842, issued by that adventurer-
zacion, Mexico, 1878, pp. 16-18, and Manuel Siliceo, First Memorial
of the Minister of Fomento, February 16, 1857, p. 43 et seq. See
also the Memoria of Jose Maria Lafragua to the Congress, Decem-
ber 14, 1846, in the same volume, p. 22.
6 Manuel Siliceo, op cit., p. 43 et seq., republished in part in
Manero, op cit. This report explains in detail the failure of various
colonization schemes.
6 In Papers Relating to Foreign Relations of the United States,
1888, vol. 2, p. 1167 et seq., are cited the following decrees grant-
ing protection to foreigners quoted from Legislation Mexicana, o
tea coleccion completa de las leyes, decretos y circulares que se han
expedido desde la consignation de la indepeudencia. This volume
contains the laws in force at the time of publication and, therefore,
does not show all the legislation which had been passed on the
subj ect.
Decree of October 7, 1823, suspending discriminations of the laws
of the Indies against foreigners.
Law of Colonization of August 18, 1824.
Decree of September 6, 1833, for protection of persons and prop-
erty of foreigners.
Decree of March 11, 1842, declared still in force January 30,
224 MEXICO AND ITS RECONSTRUCTION
statesman, President Santa Ana. The law declares that
"after mature reflection and a most careful examination
1854, allowing acquisition of land and exemption from military
service.
Decree of October, 1842, absence of a foreign owner does not
cancel title.
Decree of June 16, 1856, vessels bringing immigrants for colonies
in Vera Cruz not subject to tonnage duty.
Decree of May 10, 1856, establishment of certain colonies and
tax exemptions therefor.
Decree of November 15, 1858. Though civil war was going on
the government will not tolerate any act of violence against for-
eigners. They are to be held exempt from all military service and
forced loans. "The honor and good name of the Republic and the
preservation of its harmonious relations with foreign powers" de-
mand that the rights of foreigners be scrupulously observed.
Decree of March 13, 1861. Exempting from taxation for five
years foreigners who purchase lands for agricultural purposes or
for any rural industry. Colonizing companies and members of the
colonies granted tax exemption for ten years. Granting additional
tax exemptions for five years to foreigners who employ Mexicans.
Granting freedom from customs for importations of goods for for-
eign colonists under certain conditions.
Proclamation of the Governor of Sinaloa, January 2, 1862, devot-
ing one-half of the vacant land and waters to encouragement of
national and foreign immigration. Lands to be given freely to
colonists who will survey and develop them. They are also to have
freedom from military service.
Other citations are found in Recopllacwn de las leyes, decretoS
y proclamaciones de la union, quoted in Papers Relating to the For-
eign Relations of the United States, 1888, vol. 2. Among which
is Circular of the Secretary of Improvement, Colonization, Industry
and Commerce, August 25, 1877. It cites failure of former legisla-
tion to attract immigration and predicts that the tide will now turn
toward Mexico. Peace established and the government "is resolved
to make all kinds of sacrifices in order tx> attract honorable and
industrious foreigners to our favored soil. . . ."
COLONIZATION 225
relative to the advantages that will result to the Repub-
lic by permitting foreigners to acquire property therein"
it had been decided that "a frank policy and an interest
well understood demand that no further delay be per-
mitted in making such concessions as may tend to the
prosperity and development of the Republic by the in-
crease of population, by the extension and division of
property . . . taking also into consideration the fact
that by these measures the security of the nation will be
more assured, since the foreigners who are owners of
property . . . will be so many defenders of the national
rights, considering also the encouragement which will be
received by agriculture, commerce, and other industries,
which are the fountains of public wealth ; and lastly, that
the opinion generally manifested is in favor of the con-
cession," it was decreed that foreigners could acquire
real estate freely but not more than two country proper-
ties in the same department. Foreigners employed in
operation of such properties were not subject to mili-
tary service except of a police character. Though this
decree issued from the central government, it did not
overthrow the rule that colonization projects were still in
the hands of the states.
The war with the United States brought to those in-
terested in colonization a conflict of feeling. They felt
that colonization was responsible for the national disas-
ter, which ended with the loss of about half of Mexico's
territory, yet they continued to believe that only by colo-
nization could the republic which "found itself spread
abroad in an immense territory divided by high moun-
tains, by great rivers, and deserts, which could not be
226 MEXICO AND ITS RECONSTRUCTION
crossed," hold itself together. Its misfortune had been
the result of its impotence and of the fact that its more
remote districts "found themselves almost foreign . . .
to the civilization of the center of the country." For a
time efforts seem to have been confined to internal colo-
nization. Military colonies were set up, especially on the
northern frontier where "invasions by adventurers from
Upper California" were feared. Thirty of these out-
posts were established, seven in Sonora, seven in Chi-
huahua, four in Nuevo Leon, six in Coahuila, four in
Durango, and two in Lower California. But the
enemies of order were not alone in the north and similar
establishments had to be set up in Tehuantepec, Quere-
taro, San Luis Potosi, and even in the State of Mexico
itself. These colonies were of 100 mounted men and
their families, to whom, in return for a promise to stay
in the colony six years, the government gave a monthly
salary, land, construction materials, laboring tools, and
seeds for the first crop. 7 The settlements were, of
course, of exceptional character; they did not promise
to satisfy the country's need for greater population nor
the desire for European population. Further, the set-
tlements once established could not be given the prom-
ised support, because of the poverty of the treasury. 8
How real was the Mexican need of immigration is
shown by comparing her population and her area. The
states of the northern frontier were possessed but in no
T Manuel Robles, op cit., republished in Manero, op. cit., p. 28
et teg.
* Memoria of the Secretary of War, Ignacio Mejia, 1873, pub-
lished in Manero, op. cit., p. 64.
COLONIZATION 227
true sense occupied. Lower California, over which
neither Spain nor Mexico had ever had effective control,
was practically without inhabitants it had about one
inhabitant to every seven square miles. The character
of the country there, it is true, assured that it would
never support any large population. The frontier units
to the eastward made a somewhat better showing. So-
nora had 1.69 inhabitants per square mile, Tamaulipas
on the Gulf of Mexico had 3.07. The frontier divisions,
with an area of about 400,000 square miles, or over half
of that of the republic, had a population of less than a
million, and that population lived under such conditions
that its rapid increase and material progress were
unlikely."
Practically a. generation after state promotion of
colonization was authorized it was confessedly a failure.
Colonists were unwilling to come to a country torn by
disorder. The state governments were not strong
enough to carry out the subsidies they promised. The
modifications adopted after 1824 were not acted upon
any more than the original measure. On June 1, 1839, a
great quantity of lands was marked out, which was to be
sold for payment of the public debt. Seventeen years
later not a single conversion had been made. On De-
cember 4, 1846, a junta of distinguished persons was
created to foster colonization but nothing was done. In
32 years following 1824 not a single colony had been
formed, by a state, of individuals who had come from
9 The statistics for 1861, on which this estimate is made are, at
best, only approximately correct. They are taken from Carlos But-
terfield, The United State* and Mexico, Washington, 1861, pp. 9-1 1.
228 MEXICO AND ITS RECONSTRUCTION
outside the republic. Lands had been disposed of by the
states, it is true; they sold "concessions" and when they
could not do so, they gave them away. They even dis-
regarded the rule against alienation to foreigners of the
lands near the border and the coast, but nothing was
done "which merits the name of colonization." 10
State colonization had proven such a fiasco that, after
examining many grants, it was decided to annul all
acts taken under the legislation that established the sys-
tem. On November 25, 1853, all alienations of land
since 1821 were declared void. The central government
now tried its hand. On the 16th of February of the
following year a decree was issued inviting European
immigration and offering to settlers land and pecuniary
aid. President Santa Ana then appointed a Spaniard,
General Agent of Colonization, to whom he gave nearly
50,000 pesos with which the appointee promptly disap-
peared. Other contracts were made in 1856 for coloniz-
ing Germans in Nuevo Leon, Jalapa, and Vera Cruz
and the consul of Genoa contracted to bring over a
colony of Sardinians. Colonies in Sonora and Durango
were to be of persons from Upper California. Others
were planned in Yucatan, Chihuahua, and the Federal
District. All these ventures met the same fate. What
the states had not been able to do, the central govern-
ment did no better. Ministers of Fomento, or the In-
terior, had to report failure after failure. Immigrants
turned aside from Mexico to the northward. 11
10 Manuel Siliceo, op. cit., in Vicente E. Manero, op. cit., pp.
47-50.
11 Lists of colonization enterprises and statements of their troubles
COLONIZATION 229
The next serious attempt to deal with the colonization
problem was made in the '70s by the eminent Secretary
of Fomento, Vicente Riva Palacio. By this time it was
realized that the government owed it to the public treas-
ury to see that the public lands were not carelessly dis-
posed of to companies that had no serious purpose to
develop them or to promote immigration. It was recog-
nized that lands that had been alienated could not be
taken again without payment, but the government
should ascertain what land it held and in the future dis-
pose of it only in ways that would fully protect the
rights of the nation. On August 25, 1877, the Secretary
addressed to the governors of the states a circular that
indicated both the problem confronting the administra-
tion and how ill fitted the government was to cope with
it. Colonization legislation, it was shown, still proved a
failure; colonization, however, was one of the greatest
needs of the country, 12 but the government, unlike that
of the republic to the north, had no way of telling where
public land lay nor what was its extent.
The state governors were asked to outline the system
adopted locally to handle immigrants on their arrival.
They were asked to inform the central government what,
in later years are found in Memorla of D. Luis Robles, Minister of
Fomento, 1865, and Memorial of D. Bias Balcaral, Minister of
Fomento, 1868, published in Manero, op. cit. f pp. 53-9.
12 President Diaz in his address to Congress declared immigra-
tion to be one of the "imperious necessities of the republic," Paper*
Relating to the Foreign Relations of the United States, 1878, p.
526, quoting the address of President Diaz to Congress as printed
in The Two Republics, September 29, 1877.
if any, lands belonged to it within their respective com-
monwealths, what the fertility of such lands might be,
and what would be a fair price. In short the govern-
ment confessed a complete "lack of knowledge of the
whereabouts of the national lands, due to the fact that
they are not explored nor surveyed." Obviously it was
"impossible that the central government should divide
what it does not know of among settlers."
The answers received were disappointing. There was
in no state any system of taking care of immigrants
worthy the name and the state governments were as ig-
norant of where the national lands were as was the cen-
tral government itself. 14 All agreed that immigration of
foreigners and foreign capital were needed to rouse
Mexico from its inactivity but none had succeeded in
attracting either. A series of letters to the agents of
Mexico in foreign countries brought answers not more
encouraging. Their general tenor was that Mexico
could not hope to attract immigration so long as the
United States offered lands on better terms. If the
country put its house in order and could point out defi-
nite lands that would be given to foreigners, some might
come. Even so, many would not come to Mexico be-
cause it was largely a tropical country and in the opin-
ion of many immigrants wholly so.
18 Circular of Riva Palacio published in Manero, op. tit., pp.
89-91.
l *TEg answers are published in detail in Anexo Num. 3 a la
Memorla 'de "hacienda del ano economico, de 1877 a 1878, Estadls-
tica de la republica Mexicana . . . Emiliano Busto, Mexico, 1880.
COLONIZATION 231
The discouragement then felt has proved to be justi-
fied. The government has continued its efforts, but
with little success. Those who headed the numerous
colonization enterprises of the period often received a
fixed sum plus a bonus of as much as $35 or $60 for each
immigrant above seven years of age. Additional bo-
nuses were normally forthcoming for the establishment
of families. One contract bound the government to pay
$700 for each European agriculturist and $350 for each
member of his family over seven years of age. One
stipulated a payment of $315,000 annually for 30 years.
The colonization contracts granted in the three years
1881-3 would have taken from the treasury $800,000 per
annum had the enterprises been successful. 15 On De-
cember 15, 1883, another liberal and comprehensive col-
onization law was passed. It did not, however, bring
settlers.
In 1892, roughly at the middle of the Diaz regime, the
Ministry of Hacienda was still hopeful that conditions
would change. It was declared that every immigrant
was worth 10,000 pesos to the country and that soon the
long looked-for stream of colonists was sure to come.
The United States would soon fill up, "this at least
within the period of a few years" "and then the current
of emigration, until now directed toward them will have
to seek a new field." 16 To hasten that end a new colo-
nization law was adopted on March 26, 1894, removing
u Papers Relating to the Foreign Relations of the United States,
1883-4, p. 637.
18 Memoria de hacienda y credito publico . . . de Julio de 1891,
ft 30 de Junio de Mexico, 1892 f p. 21 et seq.
232 MEXICO AND ITS RECONSTRUCTION
the limit of 2,500 hectares, which former legislation had
allowed to be granted to one person. 17
As time went on free land could no longer be secured
in the United States, order was established in Mexico,
and commerce was freed from its former limitations.
These circumstances, which, it was thought, explained
failure of immigrants to come to the republic, disap-
peared but settlers did not turn their steps southward.
. Foreign capital went to Mexico and with it the man-
agers who would supervise the industrial undertakings,
which order within the republic made possible. But
the laborer who, by performance and the example he
would give the native, was to transform its entire eco-
nomic structure did not come in great numbers.
A few scattered colonies have come into existence
that have had some prosperity. The Mormon colonies
in the northwest are the most important. Two Italian
colonies of specially chosen, vigorous men are reported
to be prospering 18 and there are groups of foreign na-
tionality in other parts of the republic, which are, how-
ever, not as a rule "colonies" in the sense in which that
word has been used in Mexico. In fact real agricultural
colonization in the extensive way in which the republic
had hoped to secure it has never had a single example. 19
17 A general description of the land legislation is found in Charles
H. Stephan, Le Mexique economique, Paris, 1903, pp. 221-242.
18 Alberto Robles Gil, Memorla de la secretaria de fomento pres-
entada al congreso de la union, Mexico, 1913, p. 94.
19 The hope that European colonists may come is still voiced. It
was declared fundamental at the sessions of the National Chamber
of Commerce of Aguascalientes. See Circular No. 98 in Alberto
Robles Gil, op cit. t p. 501 et seq.
COLONIZATION 233
It remains true to-day, as it always has been true, that
Mexico is a land in which Western European peoples
can succeed as colonists only under the most exceptional
conditions. As a French writer of the beginning of the
century declares, "If you have no money, only strong
arms and good habits, do not come to Mexico for you
will find in competition several millions of Indian la-
borers who have arms and sufficiently good habits for
farm work and who are satisfied with salaries which
would make your condition more miserable here than at
home." 20
After the early '80s there was a small but increas-
ing immigration of foreigners into Mexico, not as
members of organized colonies, but as individuals or
members of groups who came to develop some of the
latent industries. The most numerous of these immi-
grants were Spaniards and later Americans. Of the
latter, the immigration before the railway era was neg-
ligible. Many of those who went to Mexico failed and
had to ask the aid of charity to enable them to return.
The people who went to Mexico from the southern states
after the Civil War failed. Those who did not die, with
few exceptions, came back. The attempts to colonize
Lower California from the United States failed also.
Nevertheless, with the development of better eco-
nomic conditions in Mexico, the number of individual
Americans who suceeded in making homes in the coun-
try increased. Some were those whose presence was no
longer welcomed in their home countries, but the great
20 Charles H. Stephen, op cit., p. 240.
234 MEXICO AND ITS RECONSTRUCTION
majority left the communities they abandoned poorer
by their absence. They were a forceful and adventur-
ous contribution. They did not expect and they did not
find the routine sort of life that they left in the better
settled north. They did not go to Mexico without hope
of great gains, larger gains, at least, than had been pos-
sible in the countries from which they came. For this
they are not to be blamed who risks fortune, health,
and life in a rough and ill-ordered frontier community
unless there be some lodestone of opportunity to draw
him from the surroundings among which he was born?
They were promised protection, rights such as were
guaranteed them at home, in a new land where oppor-
tunities were alluring. They accepted the new life, will-
ing to endure its privations, as a return for its oppor-
tunities. That they received the sort of protection they
were promised and expected can not be maintained.
Buffeted by the natural disadvantages of the frontier,
their enterprises limited by the ignorance of the laborers
upon whom they had to rely, and too often harassed by
the local governments whose promises had been their
illusion, their lot was not an enviable one. That they
made a success of their ventures is evidence of their in-
dividual capacity. As the Diaz regime progressed they
were given better protection of their rights. They could
look forward to a day when life and property could be
enjoyed under conditions of safety approaching those
of the land they had left. They conferred a great and
too often unappreciated boon upon the republic which
was their host. The pioneers, by their success, won in
spite of repeated disappointments and misfortune, drew
COLONIZATION 235
other foreigners after them. The stagnant Mexican
life of the middle century was stimulated by their en-
terprise. Foreign capital entered new fields, into which
the insufficient and timid local capital would not ven-
ture. The foreigner created new national wealth, which
laid the foundation for greater national income and for
a government that might in time have approached true
republican standards.
Shrewd was the discernment of the Mexican states-
men who saw in those who came from beyond the na-
tional boundaries the salvation of their backward coun-
try. What they failed to secure by means of "colonies"
they received in large degree by the coming of the fear-
less and enterprising individuals who entered the local
life to transform it. Without the foreigner, it is safe to
say, Mexico would not have reached for generations the
condition of which she was justly proud in the beginning
of the century. In some cases Mexico has paid heavily
for his aid, but to the great mass of foreigners who made
her lot their own Mexico owes a debt of gratitude that
she cannot repay.
Nevertheless neither American nor any other foreign
immigration has as yet helped solve the greater number
of the fundamental problems that Mexico had hoped
would be settled by her colonization and immigration
legislation. The economic basis of the country was re-
made but the native population was not leavened.
If foreign laborers will not come to give impetus by
their manual skill and industry to the national life, the
onty recourse is to try by other means to attain the same
end. Of late years attention has been turning gradually
236 MEXICO AND ITS RECONSTRUCTION
to the necessity of educating the Indian in industrial
pursuits. A few realized this necessity a generation
ago. In 1892 one of the far-seeing declared : "The duty
of the government is to civilize these co-citizens of ours
... to place them in contact with the rest of the coun-
try and with the civilized world. . . . When the In-
dians, up to the present time disinherited, are subject to
the advantages and comforts of civilization, there will
have been accomplished, so to speak, the transporting to
our country of millions of colonists." 21 But this task
the men of the old regime overlooked, as a rule, or, if
they appreciated it, neglected. It was the greatest fail-
ure of the brilliant exploit which Diaz and his lieuten-
ants accomplished. They brought an economic trans-
formation to Mexico but they left its social structure
very much as they found it.
This is the most important task of the government
that will rise out of the Mexican revolution to drive
the Indian from his self-contented, unprogressive state
of few desires and waken him to new economic, political,
and social opportunities and responsibilities. If Mex-
ico is to be for the Mexicans in any real way, some means
of bringing this change must be found. If it is not
found and the Indian proves unable to respond to the
new conditions now rapidly rising around him, he will
become the hewer of wood and drawer of water for the
white man who comes to develop the natural resources
of his country, or he will be crowded gradually into the
less desirable regions of his native land where his ex-
21 Memoria de hacienda y credito publico de 1 de Julio de 1891.
a 30 de Junlo de 1892, Mexico, 18Q2.
COLONIZATION 237
perience will parallel that of the native tribes in the
United States. Because of the varied climate of the
country it is not unlikely that both these processes may
occur in different portions of the republic at the same
time.
One of the means advocated for dealing with the prob-
lem of awakening the ambitions of the lower class Mex-
ican is so-called internal colonization. Unlike other col-
onization projects this movement is not to depend on
foreigners nor to have a military basis. It is not even
necessarily to involve transfer of persons from thickly
settled to sparsely settled areas.
Under supervision of the federal government it is
argued there should be maintained a comprehensive sys-
tem of agricultural education. There should be estab-
lished in various parts of the country native agricultural
colonies in which agricultural experiment work would
be carried on by the younger men. To each would be
given a plot, the produce of which would be his own.
The government would stimulate competition by grant-
ing prizes. Instruction in agricultural methods would
be given. Allied with such enterprises could go legis-
lation that would encourage the use of natives in the
higher positions in the various industrial establishments,
thus making the economic development of the country
contribute directly and in the most practical way to the
schooling of the rising generation. 22 These projects aim
to assure that if the foreigner himself will not come in
the way the governments had once thought possible,
22 E. Maqueo Castellanos, Algunos problemas nacionales, Mexico,
1909 (1910), pp. 110-116 et seq.
238 MEXICO AND ITS RECONSTRUCTION
there shall at least be brought to the native population
the benefit of the enterprise and scientific progress of
foreign lands. Of such "foreign influence" there need
be no fear and of it no nation can have too much. For
the prosperity of the Mexican and for that of the inter-
ests of foreigners in the republic it is to be hoped that in-
ternal colonization may have the fullest success.
CHAPTER XVIII
THE FOREIGNER IN MEXICO: HIS PROPERTY
IN all the long drawn out discussion of the role of for-
eign capital in Mexico there has been much invective on
both sides and on both sides there is the greatest need
of clear thinking. Foreign capital is pictured as was
railway development a generation ago. It is looked
upon as carrying a possibility of the overthrow of Mex-
ican independence. It does so. Foreign capital at the
same time is the greatest hope for the salvation of the
republic.
It is doubtful whether Mexico has suffered from the
so-called "curse of concessions" to a greater degree than
the average undeveloped country, and she has profited
tremendously by the cooperation of foreign capital se-
cured by favors granted in order to induce the assump-
tion of her unusual business risks.
Mexico, a generation ago, was in a condition through
which many a country has passed. She had a great ex-
tent of territory and a sparse population. She had great
natural resources, which her people knew not how to
develop and which they could not have developed rap-
idly even if they had known how, without the help of
capital from outside the country. Under these condi-
tions Mexico did what other countries have done in simi-
lar circumstances. Like the United States, like Argen-
tina, she recognized the need of outside help and she
239
240 MEXICO AND ITS RECONSTRUCTION
granted special favors to those who could give it. That
the foreigner was disposed to drive a hard bargain, in
some cases, is true. It is not surprising if, in some cases,
too much was granted. It is too much to expect that
corruption in such dealings should always have been ab-
sent. Certainly the experience of other countries does
not show that they have been able to escape such pitfalls.
The last quarter of the nineteenth century was one in
which there was a world-wide demand for great amounts
of capital to develop, among other regions, the western
United States, South America, Siberia, and South
Africa, as well as to carry through a remarkable indus-
trial advance in both Europe and America. It was not
to be expected that Mexico, under such circumstances,
could secure capital upon as favorable terms as might
have been the case otherwise. Taken all in all there
seems to be little reason to believe that the country fared
any worse in this matter or any better than it de-
served or than other countries under similar circum-
stances have fared.
What the "concessions" involved is often less clear in
the minds of critics than is the conviction that abuse has
occurred. As a rule the pre-Diaz concessions have little
importance, because any money that the promoters put
into them they lost and the "concession" lapsed without
benefit to the grantee nor harm to Mexico. There were
all sorts of schemes proposed in that period. Coloniza-
tion enterprises of fantastic nature often were conces-
sions and some of the grants of doubtful character in
later days have been colonization schemes.
The great majority of the concessions were simple
FOREIGNERS' PROPERTY 241
grants of exemptions from taxes, made under a policy
of public improvement. The central government and
the states in the Diaz regime openly declared for this
method of development and there was then no local or
foreign opinion condemning it. 1 In spite of the wide-
spread prejudice, which has been aroused in later years
against any such contracts, the successors of Diaz have
indicated a belief in its wisdom by holding out the same
sort of inducements.
The freedom from taxation, which was the sum and
substance of the typical concession, was an encourage-
ment given to industry and commerce, a favor granted
to persons who would establish new industries in the
communities or open up a new national resource. The
terms of many of the contracts in the states were long,
running up to 25, 30, and even 50 years. In many cases,
doubtless, these did represent too liberal a standard.
Practically any sort of new enterprise could secure a
grant. The list of the concessions in the various states
at the end of the Diaz regime included widely contrasted
enterprises such as theaters, fishing companies, ice fac-
tories, colonization enterprises, refining plants, flour
mills, banks, liquor shops, and clothes factories. 2
What amount of foreign capital has actually been in-
vested in Mexico it is impossible to determine. Capital
1 An example of the propagandist literature that has since arisen
criticizing the granting of concessions is C. Fornaro (and others),
Carranza and Mexico, New York, 1915.
2 A list of the more recent concessions granted in the various
states giving their terms is published in Memoria de hacienda y
credito publico, correspondiente al ano economico de 1 de Julio de
1910 a 30 de Junio de 1911, Mexico, 1912, p. 594.
242 MEXICO AND ITS RECONSTRUCTION
is never prone to declare its existence for the making
of public records, especially in countries where such rec-
ords may be made the basis of tax collection or forced
loans during periods of revolution. That the valuations
in tax assessments are in most countries far below the
actual worth of property is notorious and Mexico is no
exception. On the other hand, whenever interests claim
damages from their own or from foreign governments,
they have a tendency to exaggerate the importance of
their violated property rights and the degree of per-
secution endured. To a less extent the same tendency
to overstatement is found in the estimates made by those
who describe the importance of their co-citizens' inter-
ests in foreign lands.
American investments in Mexico are greater than
those from any other foreign country. The estimates of
their total amount are many. Two coming from con-
sular officers of the United States have a semi-official
character. Neither claims to be complete and there are
points in which each is subject to criticism for under-
estimate and overestimate of certain items. That there
is less probability of error than in other approximations
is indicated by the detailed information they contain.
Consul General Barlow's estimate published by the
Bureau of American Republics in 1904-5 indicated that
the American money invested in Mexico at the begin-
ning of the century by 1,117 American companies and
individuals was about $500,000,000 gold. Practically
all of it had been introduced in the previous 25 years
and about half of it in the five years preceding the re-
port. The greatest single American interest was the
FOREIGNERS' PROPERTY 243
railroads, in which about 70 per cent of the investment
was American. Of the railroads, the Mexican Central
had the most American capital, followed by the Mexican
National. In mining, Americans had invested $80,-
000,000, in agriculture, $28,000,000. In manufacture,
American enterprise had already begun to make invest-
ment in sugar refineries in Sinaloa, in various enter-
prises in the Federal District and in Nuevo Leon, espe-
cially at Monterey. All the large smelters were Amer-
ican.
The announced location of American capital in Mex-
ico at this time is unsatisfactory, because the railroad
investments are all credited to the city in which their
chief offices were located. In Mexico City, thus, there
were announced to be American investments valued at
$320,800,000 and in Coahuila American properties
worth $48,700,000, the greater part in each case repre-
senting railroads. Sonora had $37,500,000 worth of
American capital invested, of which $27,800,000 was at-
tributed to mining ventures. Of the $31,900,000 in
Chihuahua, $21,300,000 was in mining. American cap-
ital in Oaxaca totaled $13,600,000 and in Nuevo Leon,
$11,400,000. 3
Investments continued to be made in Mexico at a
very rapid rate during the years following this report.
Consul General Marion Letcher reported statistics in
1912, compiled by a mining engineer of long residence
in Mexico, that indicated $1,057,770,000 American cap-
8 House Document 145, Part V, 58th Congress, 3rd Session
(1904-5), International Bureau of the American Republics, Mex-
ico, pp. 257-259, quoting a report by Consul General Barlow.
244 MEXICO AND ITS RECONSTRUCTION
ital invested in the country. The greatest single Amer-
ican interest continued to be in the railroads, stocks and
bonds of which were held to a value of $644,390,000.
The estimate of money invested in mines had now risen
to $223,000,000, and $15,000,000 or more was credited
to each of the following: national bonds, smelters, bank
deposits, rubber production, and the oil industry. Ob-
viously, a development of investments on so large a
scale was helping with the other changes in local condi-
tions to bind the economic interests of the two countries
together very rapidly and was giving an unprecedented
stimulus to Mexican life. 4
Next in value after American investments this com-
pilation ranked those of British citizens. The total
value of these properties was $321,302,800. The chief
items were railways, national bonds, and mines. British
citizens were stated to be the largest foreign holders of
national bonds, timber lands, and tramways. Invest-
ments by them, like those by Americans, appear to have
been rapidly increasing. It is to be noted that in these
estimates the oil properties were still of small value com-
pared to that which they have subsequently reached.
A detailed list of British holdings in Mexico, pub-
lished in 1919, put the total at more than $500,000,000
American gold. The amounts, in various lines, were ap-
* Statistics from Daily Consular and Trade Reports, July 18,
1912, p. 316. The estimates are reported to be based on govern-
ment and state reports, directories of business houses, factories,
mines, and smelters, La Mexique, the Mexican year-book, and nu-
merous reviews, encyclopedias, and company reports. The Statist
(London), November 29, 1919, gave "a little over 300 millions
Sterling" as the value of American holdings.
245
proximately as follows: petroleum companies, $120,-
000,000; mining companies, $85,000,000; light, power,
and street railway companies, $145,000,000; divers in-
dustries, $40,000,000; and banks, $70,000,000. 5 In the
same year another writer put the total as high as $800,-
000,000 gold. 6
The American authority above cited reported French
investments in 1912 as totaling $143,446,000, of which
national bonds and bank stocks formed almost two-
thirds. Frenchmen were far the most important foreign
investors in cotton mills, wholesale stores, and tobacco
factories.
In 1914 French residents in Mexico claimed that
there were French holdings there amounting to several
thousand million francs invested in government obliga-
tions, banks, railways, electric transportation, mills, fac-
tories, and businesses of every kind. Among the more
important French interests were mentioned mines such
as Dos Estrellas and El Boleo, industrial establishments
such as the Buen Tono, tobacco factory, the chief Ori-
zaba textile mills, and the large French stores in vari-
ous cities. 7
German interest in Mexico began early. In the Maxi-
milian regime a colony of 500 was brought from Schles-
5 Quoted in New York Times, October 26, 1919? from an article
originally appearing in El Universal, of Mexico City.
6 South American Journal, September 13, 1919. The Statist
(London), November 29, 1919, gives "between 200 and 250 millions
sterling" as the amount of British interests.
7 Unnamed Paris correspondent in the Nation, vol. 98, p. 290,
March 19,
246 MEXICO AND ITS RECONSTRUCTION
wig-Holstein to Yucatan but the venture proved a fail-
ure. The few who remained in the country were soon
absorbed into the local population. The unfortunate re-
sults discouraged further colonization en masse but in
later years Germans have come individually and have
adjusted themselves to Mexican conditions with suc-
cess. German writers proclaim Mexico as a land well
suited for a large immigration. There the colonist lives
the national life without losing his love for the father-
land, his principles, and his upbringing. "Wherever in
the world there are a hundred Germans, there is also a
German school with the task of teaching within its walls
the holy love of the fatherland and the fruitful high Ger-
man kultur." "In traveling through these wide unpopu-
lated districts of Mexico, there unconsciously comes to
one the thought of the great density of population at
home in Germany, where people are packed like her-
rings in a cask, and one cannot avoid the desire to take
... a couple of millions of poor beings to whom light
and air are denied over there and . . . put them down
in the boundless, fruitful open spaces of Mexico." 8
No detailed analysis of German investments in Mex-
ico is available. A writer at the end of the Diaz regime
estimated the total working capital invested at the equiv-
alent of $75,000,000. 9 Germans did not enter largely
into the industrial development of Mexico, except in
later years in certain mining developments. Mercan-
tile development showed their influence to a greater ex-
8 Erich Gunther, Handbuch von Mexico, Leipzig, 1912.
9 See Karl Sapper, Wirtschaftsgeographie von Mexico, 1908,
for a discussion of German interests in Mexico.
FOREIGNERS' PROPERTY 247
tent. 10 German enterprise was represented by a large
number of wholesale and retail dealers in hardware,
chemicals, and small commodities. The transactions in
these lines brought them into closer contact with the
Mexican public than any other class of foreigners except
the Spaniards. They, like the Spaniards, were not con-
spicuous as developers of the great natural resources
of the country and prejudice against them seems to
have been less than against any other foreign element,
especially after it became evident that the United States
would be drawn into the World War on the side of the
Allies. To the Germans, too, the revolution brought
less percentage of loss than to the Americans and Brit-
ish. Mercantile stocks can be adjusted to changing po-
litical conditions more easily than can public services,
mines, and similar enterprises.
What the total amount of foreign capital in Mexico
is and what is its relation to the total national wealth
must, like the individual items, be matters of estimate.
The American consular report of 1912 put the total
value of all the enumerated properties at $2,432,000,000
and those of Mexican ownership at $793,187,242. It
appears that the comparison must understate the value
of Mexican holdings. An article published by a former
member of the United States consular service at the
close of the revolution makes an estimate of $1,875,000,-
000 as the total foreign investment divided as follows:
American, $665,000,000; British, $670,000,000; French,
10 Anonymous article, "German Efforts in Mexico," World's Work,
vol. 35, p. 208, December, 1917.
248 MEXICO AND ITS RECONSTRUCTION
$285,000,000; German, $75,000,000; and various, $190,-
000,000."
Whatever the total, it is natural that foreign coun-
tries should be anxious that the rights of their citizens
should be given proper protection. It is also natural
that Mexico should seek, by all proper means, to create
conditions by which she can gradually make herself less
dependent on capital from beyond her frontiers. Un-
fortunately, this desire has not at all times been accom-
panied by a determination to respect property rights
already acquired.
Envy of the position into which the enterprise of the
foreigner had carried him was by no means absent, even
before the revolution. Mexico has welcomed the for-
eigner as the means of her salvation but she has been
jealous of him also. She has wished to have the coun-
try profit by his individual initiative and example but,
at the same time, she has wished to minimize his influ-
ence in the republic, and, if possible, make him drop his
privileges as a foreigner and become subject to Mexican
law exclusively. Mexico has welcomed foreign capital
also, but she has sought to make it drop its nationality
at the border. She has wished to secure its cooperation
as capital, not as foreign capital. Toward both capital
and the immigrant, in short, she has stood in an equivocal
position. She has sought the benefits they could bring
without being willing to assume the responsibilities that
accompany those benefits.
11 Quoted in the Guaranty News, August 19, 1919, Guaranty
Trust Company of New York, from an announcement of July 15,
j by the Mexican International Corporation.
FOREIGNERS' PROPERTY 249
But in the period before the revolution, Mexico real-
ized that to secure foreign cooperation she must forego
her prejudices. She failed to denationalize her immi-
grants. The foreign capital, which entered her great de-
velopment enterprises, would not give up its right to
look to the home country when justice was denied.
Later, when capital had undertaken certain important
developments and was receiving unusual returns for
the unusual risk assumed, there was frequently a feel-
ing that the special privilege granted was too generous
or that it was secured from a government under duress
or by corrupt means. But in the Diaz regime, though
there were protests, the government stood firm for the
fulfillment of the engagements made.
With the outbreak of the revolution it is not surpris-
ing to find that the new political leaders took advantage
of popular discontent with the results of the policy fol-
lowed by their predecessors, nor is it surprising to find
them embarrassed as the revolution comes to a close,
when they are now brought to realize that the promises
made to their followers may be difficult to fulfill. To
declare against the "curse of concessions" and to secure
supporters at home and abroad for a campaign to free
the country from alleged oppression is easy, but it is
difficult to justify the nation in trying to escape from
the responsibility of paying for the benefits it secured
through the grants against which complaint is made.
In individual cases it is often difficult to determine
whether abuses were involved in the original conces-
sions. There are few who would defend them if they
are shown to exist. The only regret is that even such
250 MEXICO AND ITS RECONSTRUCTION
cases have become so much a matter of history that ef-
fective correction is, as a rule, beyond the powers of the
government, whatever its good intent may be. In the
great majority of cases, too, the record of the foreign in-
terest is one that shows property rights acquired under
the conditions laid down by Mexican law and involving
privileges, if at all special, only of a kind that the grant-
ing government was not only willing, but anxious, to
give. An attack upon property rights of this nature by
Mexico can not leave the foreign powers, whose citizens'
rights are involved, without concern.
At best foreigners have endured heavy losses during
the revolution. No country can suffer from a far-reach-
ing revolutionary activity for a decade without great
damage to property rights of all sorts. The govern-
ment that finally establishes itself assumes, as a matter
of course, the duty to pay all proper claims arising out
of the hostilities. It is not only this responsibility which
is under discussion in connection with the property rights
of foreigners in Mexico but the obligation on the part
of the republic to adopt toward undestroyed foreign
property rights a policy that shall not amount to con-
fiscation, and that shall not be directed against foreign
capital merely because it is foreign, irrespective of the
conditions under which the interests in question may
have joined their lot to that of the republic.
It is the declarations of Mexican leaders and the leg-
islation adopted that seems to offend in this particular
that have caused the greatest doubt in the mind of for-
eigners and their governments as to whether they can
count upon justice and the maintenance of standards of
FOREIGNERS' PROPERTY 251
international friendship by the governments that claim
the fruits of the revolution. President Carranza was
quoted as saying: "We wish foreign capital but we will
not give one special privilege, not one." What such
declarations mean is not clear, either from the use of
such words in the past in the republic nor from the prac-
tice of those who now use them. What that character-
istic of a privilege is that makes it special, so as to be ob-
jectionable, is by no means always easy to determine.
It has long been a matter of dispute in the interpretation
of constitutions and laws in the United States and else-
where.
Is a special privilege, as that word is used in discus-
sions of Mexican affairs, one which refers to an exclu-
sive right to certain property? That can hardly be, for
upon the basis of individual and corporate ownership
of property all modern governments rest. If a privilege
as to place is not in essence special and objectionable,
is one giving rights not enjoyed by all, over a certain
time or in regard to certain property, a special and ob-
jectionable privilege? Is exemption from taxation for
a certain period, or the grant of public land, as reward
for establishing a colony, introducing a new industry,
or undertaking a public improvement a special privilege
not to be endured ? Is freedom to import the materials
for constructing a manufacturing plant or a railroad
never to be given because it is a special privilege? In
the popular sense of the word such grants are undoubt-
edly special, but that such privileges may operate for
12 World's Work, vol. 31, p. 124, 1915.
252 MEXICO AND ITS RECONSTRUCTION
the public good has been accepted generally both in and
out of Mexico and in Mexico such grants have been en-
joyed by both Mexicans and foreigners alike. If such
be the privileges, which the government is to bring to
an end, and if the policy is to apply only to future de-
velopments, foreign capital may be disappointed, but
there can be no valid cause of complaint.
But, if Mexico is free to encourage or discourage for-
eign capital that might enter the country to develop
property within it by granting or withholding the spe-
cial privileges above mentioned, she is not free to adopt
any attitude she may wish toward foreign interests al-
ready established within her borders. Mexico is not free
to denationalize at will the foreign capital which, at her
invitation, has crossed her boundaries. She can not cap-
tiously modify the contracts which she has herself per-
mitted and encouraged and she can not arbitrarily de-
nationalize her resident foreigners. 13
13 For former attempts, see Papers Relating to the Foreign Rela-
tions of the United States, 1883-4, pp. 651-4.
CHAPTER XIX
THE FOREIGNER IN MEXICO: HIS LEGAL POSITION
IT has been said already that it does not seem profit-
able to discuss the general organization of the govern-
ment of Mexico under the constitution of 1917 as com-
pared to that under the constitution of 1857. Constitu-
tions have never been a set rule of action in Mexico and
a consideration of the actual conditions within the re-
public gives little hope that it will be possible to make
the political provisions of the Constitution of 1917 func-
tion as was intended, until fundamental changes have
been accomplished in the social, educational, and eco-
nomic equipment of the people. The reconstruction of
Mexico involves problems deeper than those that can
be settled by constitution makers.
It is important, however, to consider the terms of the
new Constitution applying to foreigners and their
rights, because the manner of the enforcement of these
has an immediate bearing on Mexico's relations to other
powers and the interpretation, which the governments
of the reconstruction period may adopt upon these mat-
ters, will determine Mexico's international credit and
possibly the continuance of her peaceful relations with
other nations. In short, the conditions under which
Mexico may work out its own reconstruction and
whether it will be allowed to work out its own recon-
struction may depend upon its willingness to assume
253
the responsibilities of dealing justly with those of other
nationalities, who have acquired rights within its bor-
ders.
This is not wholly or chiefly a question of constitu-
tions; it is more a question of the attitude of the gov-
ernment in the interpretation of doubtful clauses of
the constitutions. The fundamental law of 1857 had in
it objectionable clauses but the government of General
Diaz, as time went on, showed itself indisposed to in-
terpret them in a way that would discriminate against
foreigners. The Constitution of 1917 has additional in-
definite provisions and the governments in power since
its adoption have acted in a way to arouse apprehension
on the part of foreigners owning property in the coun-
try.
The preamble of the new Constitution, like that of the
old, contains a clause, which, broadly interpreted, would
protect all vested rights. It declares: "No law shall
be given retroactive effect to the prejudice of any per-
son whatsoever." * The other clauses that are of special
interest to foreign holders of property, though some of
them do carry discriminations, are not ones to which in-
ternational objection may be raised if this general guar-
antee is in law and practice one which limits all other
clauses. If it does not do so, if the rule that a more
specific provision of law controls a more general one ap-
plies, then certain of the clauses of the new Constitution
give good reason for alarm.
1 Article 14. The citations of the Mexican Constitutions in this
chapter are based on H. N. Branch, The Mexican Constitution of
1917 Compared with the Constitution of 1857, Philadelphia, 1917.
FOREIGNERS' LEGAL STATUS 255
Only the more important of the doubtful clauses can
be discussed here. As to landholding, the Constitution
declares that :
Only Mexicans by birth or naturalization and Mexican com-
panies have the right to acquire ownership in lands, waters,
and their appurtenances or to obtain concessions to develop
mines, waters, or mineral fuels in the Republic of Mexico. The
nation may grant the same right to foreigners, provided they
agree before the Department of Foreign Affairs to be consid-
ered Mexicans in respect to such property, and accordingly not
to invoke the protection of their Governments in respect to the
same, under penalty, in case of breach, of forfeiture to the
nation of property so acquired. 2
Mexico doubtless has the right to apply the rule
stated in the first sentence to all future grants, if she
wishes. It may be that the rule would be considered un-
friendly by other nations and it appears beyond doubt
that such a rule would check the development of the re-
public. Nevertheless, there is no obligation on nations
to be either friendly or progressive. The second sen-
tence is more objectionable. It would be more straight-
forward to rely on the unmodified enforcement of the
standard expressed in the first sentence. The modifica-
tion demands that an individual surrender a part of the
rights he enjoys under international law as the condi-
tion of becoming a Mexican landholder. He is to sur-
render part of the rights regularly attaching to his status
as a foreigner though he does not consent to become a
Mexican. There is good reason to believe that many
governments would consider the enforcement of such a
2 Article 27.
256 MEXICO AND ITS RECONSTRUCTION
constitutional provision unquestionably objectionable.
Some might well refuse to be bound by such surrender
of rights by their citizens. 3
Legislation restricting the ownership by foreigners or
certain classes of foreigners, of land within border and
coast zones, has long standing in Mexico as is shown
elsewhere. Such restrictions are still thought advisable.
They are found in the Mining Law, which went into ef-
fect on January 1, 1910, 4 and in the Constitution of
1917. Generally such rules have been ones to which
the executive might make exceptions. In the new Con-
stitution the prohibition is absolute. "Within a zone of
100 kilometers from the frontiers, and of 50 kilometers
from the sea coast, no foreigner shall under any condi-
tions acquire direct ownership of lands and waters."
There seems no doubt that Mexico may, if it wishes,
adopt such a rule for her future guidance.
There are a number of other clauses that may affect
the property rights of foreigners, the interpretation of
which is doubtful, such as those providing for the taking
of certain properties for the benefit of "rural communi-
ties," the power of the executive to declare null certain
8 It may again be pointed out that the importance of this and
similar provisions depends on the action that the government takes
under it. Article 33 of the Constitution of 1857 declared that for-
eigners must subject "themselves to the decisions and sentences of
the tribunals, and shall not be entitled to seek other redress than
that which the laws concede to Mexicans." On its face this seems
to prohibit appeal to the home country but, if it was meant to do
so, the government did not enforce the provision.
4 See comment in Branch, op cit., p. 114.
5 Article 27.
FOREIGNERS' LEGAL STATUS 257
contracts and concessions granted by former govern-
ments, the provisions concerning church property, 6 and
those concerning exemptions from taxation. 7
The equivocal provisions most discussed up to the
present time have been those referring to the oil re-
sources of the republic. This has been true for a num-
ber of reasons. Oil production has rapidly increased
and, on that account, has attracted attention. The Mex-
ican oil supply was important in the World War and
for that reason was watched with peculiar interest by
partisans of both the allies and the central powers. Fur-
ther, the leaders of the government in Mexico felt they
had an opportunity to secure for the nation a great
source of income from petroleum. They wanted to as-
sure that the oil resources as yet undeveloped should be
national property, they wanted to tax heavily the yield
of the producing areas, and they showed a desire to
manipulate the legislation affecting these areas in such
a way that the government would have freedom from
foreign interference in any measures it might adopt con-
cerning the properties.
The provisions of the Constitution, under which the
controversy has arisen, are those affecting general land-
holding and a special paragraph which reads :
In the nation is vested direct ownership of all minerals or
substances which in veins, layers, masses, or beds constitute
deposits whose nature is different from the components of the
land, such as minerals from which metals and metaloids used
6 Article 27, II.
7 Article 28.
258 MEXICO AND ITS RECONSTRUCTION
for industrial purposes are extracted ; beds of precious stones,
rock salt, and salt lakes formed directly by marine waters,
products derived from the decomposition of rocks, when their
exploitation requires underground work ; phosphates, which
may be used for fertilizers ; solid mineral fuels ; petroleum and
all hydrocarbons solid, liquid, or gaseous.
It is later provided that as to such property "the own-
ership of the Nation is inalienable" and that concessions
to develop these resources can be granted "under the
laws of Mexico only on condition that said resources be
regularly developed, and on the further condition that
the legal provisions be observed." There are a num-
ber of reasons why this new constitutional provision is
disturbing to owners of the lands affected and particu-
larly to foreign owners. The nation is declared the
owner of the property described and this ownership is
declared inalienable. Does this overthrow any previous
ownership? It is insisted by the owners of oil proper-
ties that the rule applying to petroleum has not been the
same as that applying, for example, to gold and silver.
The laws of 1884, 1892, and 1909 recognized that petro-,
leum in the subsoil was the property of the owner of the
soil. Relying on these assurances the investments in
oil properties have been made. To enforce a claim of
national ownership of petroleum fields now would be to
confiscate the property purchased or at least its most
8 Article 27. See also Frederic R. Kellogg, "The Mexican Oil
Problem," Nation, October 5, 1918, and the following collec-
tions of documents and translations: "The Mexican Oil Question,"
n. p. n. d. (1919); "The Mexican Oil Controversy," n. p., Octo-
ber, 1920.
FOREIGNERS' LEGAL STATUS 259
valuable part. Such an act, of course, would be con-
trary to the letter and spirit of Article 14 on retroactive
legislation already quoted.
Because of anxiety as to the meaning'of this provision
Ambassador Fletcher, when presenting his credentials
to the Mexican government, made inquiry on the point.
He was assured that no confiscation was contemplated.
The Mexican Review, a semi-official paper published in
Washington in the interest of the Carranza government,
declared that the constitutional provision in regard to
retroactive legislation protected all private holdings of
lands.
About a year later the first appearing, February
19, 1919 a series of decrees were issued, which seemed
again to show a conflict between profession and intent.
Certain new taxes were placed on the petroleum indus-
try but in the form of rentals and royalties. Titles to
lands were to be registered and if not registered under
the new law, the lands were to be declared open to entry.
Ownership could be perfected only under the condi-
tions outlined in the Constitution.
But, if ownership was already complete, why should
any payments be made to the government as rental or
royalty? Such an act would admit that the real owner-
ship was in some one else in this case the Mexican gov-
ernment. If registry under the new law was more than
a formality for the completion of the public records, it
also might cloud the title to lands in full possession.
The new registry, it was maintained, would in itself pass
the actual title to the government or at least put the
companies within the terms of the clause of the Con-
stitution that made their properties Mexican in the sense
that they could not appeal to their home governments
for protection. If the owners refused to comply with
the law, their properties were forfeited. If they did
comply with the law, the result was the same.
Against these actions by the Mexican government, the
United States, Great Britain, Holland, and France pro-
tested. The American note, dated April 2, 1918, de-
clared that the Government of the United States would
not object to fair taxation nor to taking of the property
of its citizens for true public use if proper compensa-
tion were made, but it could not "acquiesce in any pro-
cedure ostensibly or nominally in the form of taxation or
the exercise of eminent domain, but really resulting in
the confiscation of private property and arbitrary de-
privation of vested rights." The proposed taxes, in
themselves, were so heavy as to indicate a trend in the
direction of confiscation, but the more serious question
was the apparent attempt of the decree to separate own-
ership of the surface from ownership of the petroleum
resources under the surface of the land. It was pointed
out that the taking of the rights in question would be ac-
complished by executive action, without judicial proc-
ess and apparently without any proof that the "separa-
tion of mineral rights from surface rights is a matter of
public utility upon which the right of expropriation de-
pends." The note concluded :
In the absence of the establishment of any procedure looking
to the prevention of spoliation of American citizens and in the
absence of any assurance, were such procedure established, that
it would not uphold in defiance of international law and justice
FOREIGNERS' LEGAL STATUS 261
the arbitrary confiscations of Mexican authorities, it becomes
the function of the Government of the United States most
earnestly and respectfully to call the attention of the Mexican
Government to the necessity which may arise to impel it to
protect the property of its citizens in Mexico divested or in-
juriously affected by the decree above cited.
To this protest no answer was sent. On May 18, how-
ever, it was announced that the decree of February 19
would not take effect until July 31, 1918. On July 8
another decree postponed action until August 15. The
United States again protested, and on August 14 Car-
ranza issued another decree eliminating the necessity
of title regulation. The "rentals and royalties" provi-
sion, however, was not recalled in principle, and right to
possession was conditional on recognition of government
ownership.
What the position of the property owners was still
remained uncertain when the attack was renewed from
another direction. A drilling license for working oil
properties has frequently been required as a police meas-
ure. This requirement was now combined with other
Mexican legislation for use for a broader purpose. The
Constitution declared that concessions for oil develop-
ment could be made "only on condition that said re-
sources be regularly developed, and on the further con-
dition that the legal provisions be observed." The sit-
uation threatened was: Develop your lands or forfeit
them. You cannot develop your lands without a drilling
license. The license will be granted you only on condi-
tion that you recognize the standard the government
imposes as a condition for holding and operating your
262 MEXICO AND ITS RECONSTRUCTION
lands. Obviously this might be used as a means to dis-
possess the present owners.
Carranza, meanwhile, had given a reply to the protests
of foreign powers against his decrees, denying the right
of complaint and declaring that if foreigners had griev-
ances, the Mexican courts were open to them. The oil
interests joined in taking action for legal protection
under Mexican law. The Mexican Congress was called
to consider what should be done. Though the attitude
of the government was officially unchanged, assurances
were received in May, 1919, that no law enacted by the
Congress in the proposed petroleum code would have
retroactive effect. The American Department of State
was advised that the new oil law would not nationalize
oil properties acquired before May 1, 1917. 9
This assurance seemed to indicate that the road was
now open toward an amicable adjustment of the petro-
leum difficulties, but subsequent developments did not
show that to be the case. The various notes exchanged
indicated that the Mexican government still sought rec-
ognition of national ownership of the petroleum re-
sources. Direct steps to this end having been declared
unacceptable by the United States, the same result was
sought through further provisions concerning denounce-
ments of property, taking out of drilling permits, and
decrees concerning the so-called Federal Zone. 10
9 The decrees referred to above were discussed in various issues
of the Commercial and Financial Chronicle, New York, during
1917-19.
10 See detail of this correspondence in "The Mexican Oil Con-
troversy," n. p., October, 1920.
FOREIGNERS' LEGAL STATUS 263
Later, under the Obregon government, moves against
the petroleum interests were made through the taxing
power, under a decree to become effective July 1, 1921.
The alleged purposes of the new regulation were to
stabilize the world's oil market, to conserve the national
resources, and to furnish funds with which the govern-
ment could again begin payment of interest on the na-
tional debt. The rates of taxation were so high that
they were alleged to be confiscatory.
As the negotiations for recognition of the Obregon
government proceeded this question became bound up
with the older controversy. The oil producing interests
protested to the United States government that recog-
nition should not be granted unless the alleged confis-
catory program of the Mexican government, under
whatever guise presented, should be abandoned.
On June 7, 1921, Secretary of State Hughes issued
a statement outlining the fundamental position of the
United States. It pointed out that the matter at issue
was much more important than the question of the rec-
ognition of any particular government in Mexico and
declared : "
The fundamental question which confronts the Government
of the United States in considering its relations with Mexico is
the safeguarding of property rights against confiscation.
Mexico is free to adopt any policy which she pleases with re-
spect to her public lands, but she is not free to destroy without
compensation valid titles which have been obtained by American
citizens under Mexican laws. A confiscatory policy strikes not
only at the interests of particular individuals, but at the founda-
11 New York Times, June 8, 1921.
264 MEXICO AND ITS RECONSTRUCTION
tions of international intercourse, for it is only on the basis of
the security of property, validly possessed under the laws
existing at the time of its acquisition, that commercial transac-
tions between the peoples of two countries and the conduct of
activities in helpful cooperation are possible. . .
This question is vital because of the provisions inserted in
the Mexican Constitution promulgated in 1917. If these pro-
visions are to be put into effect retroactively, the properties
of American citizens will be confiscated on a great scale. This
would constitute an international wrong of the gravest char-
acter and this Government could not submit to its accomplish-
ment. If it be said that this wrong is not intended, and that
the Constitution of Mexico of 1917 will not be construed to
permit, or enforced so as to effect, confiscation, then it is im-
portant that this should be made clear by guarantees in proper
form. The provisions of the Constitution and the Executive
decrees which have been formulated with confiscatory purposes
make it obviously necessary that the purposes of Mexico should
be definitely set forth.
The oil dispute is not only important in itself, but be-
cause it reveals the general attitude the governments
that have followed the revolution have shown toward
foreigners and foreign capital. The provisions concern-
ing general land ownership might be given retroactive
effect, it appears, if the government were allowed to
establish that standard as to any other sort of property.
The holding of land might he made conditional on the
payment of taxes in the forms of "rents" and "royal-
ties." A new registry law might be framed in a way
to cut off the right of the foreign owner to appeal to his
home government or the same end might be reached by
the requirement of a license to operate the land. Manu-
facturing enterprises and public utilities might be in-
FOREIGNERS' LEGAL STATUS 265
eluded within the scope of similar regulations, all form-
ing a part of a comprehensive "nationalization pro-
gram."
In fact, if the Mexican government were allowed to
enforce retroactive laws affecting certain property rights
of foreigners, there seems to be no reason why the ap-
plication could not be logically extended to the entire
field of their privileges. If foreigners could be required,
as an arbitrary condition of continuing to operate their
properties, to divorce themselves from the privilege of
appealing to their own governments for the protection
of their property rights, they might be required to sur-
render all right of appeal on any ground in return for
a grant of the same privilege.
The Constitution contains still another clause that
seems to carry the possibility of abuse in relation to the
personal and property rights of foreigners, though it
has not appeared prominently in the discussions thus
far raised. The right to live in Mexico is subordinated
to the powers of the executive "in so far as relates to the
limitations imposed by law in regard to emigration, im-
migration, and the public health of the country, or in re-
gard to undesirable foreigners resident in the coun-
try," 12 and "the Executive shall have the exclusive right
to expel from the Republic forthwith, and without judi-
cial process, any foreigner whose presence he may deem
inexpedient."
Similar clauses are not unknown in the legislation of
other countries and the exercise, within reasonable
12 Article 11. l3 Article 33.
266 MEXICO AND ITS RECONSTRUCTION
limits, of such a right is not properly questioned. If,
however, the executive should undertake in pursuance of
an anti-foreign program, to make continued residence
conditional on the surrender of the rights, which the for-
eigner enjoys under international law, such action could
not fail to arouse protest on the part of the states whose
nationals were involved. The exercise of the "exclu-
sive" right of the executive to expel "without judicial
process" any resident foreigner whose presence in the
country "he may deem inexpedient" or "undesirable" is
one, the exercise of which can not be arbitrary. If it
were so, the property and personal rights of those whom
Mexico has "virtually invited to spend their wealth and
energy within its borders" l * would practically be beyond
the effective protection of the law. No self-respecting
country could permit itself to accept such a standard.
The home governments of all foreigners living in
Mexico can not escape the responsibility of doing all
that is allowed under international law to assure that
their rights in the republic shall be recognized and pre-
served. The law under which they live must be one that
establishes equitable standards, not one which, while
having regularity of form, denies them the substance of
their rights. Broadly considered the firm insistence on
such a standard is not a policy lacking in friendliness
for Mexico. To fail to insist on such treatment for for-
eigners would be to encourage the creation of conditions
in Mexico that would bring with them a serious menace
to its independence.
14 The words quoted are in the American note of April 2, IQIS.
FOREIGNERS' LEGAL STATUS 267
At bottom, of course, the protection of the lives of its
citizens is one of the first duties of every state, a duty
that does not cease at the boundary. Abroad protec-
tion should be given not only in normal times, when, in
fact, it will seldom be necessary to call for it, but, so far
as circumstances permit, during periods when the coun-
tries to which the citizens have gone to live are suffer-
ing invasion or are torn by civil war. The outrages prac-
ticed on the local population may arouse active sym-
pathy abroad, resulting in extreme cases in intervention
by the foreign government in defense of the interests of
general humanity, but long before that point is reached
a country must feel the call to protect its own citizens
resident in foreign lands, when their rights are violated.
It can not be claimed, of course, that as soon as public
order is disturbed in a country foreign governments
have a right at once to resort to armed intervention to
protect their citizens, but in every case it is a national
duty to make all governments and all parties to conflicts
within them understand that prompt and full reparation
for wrongful damages will be expected. Up to what
point protest and redress can properly be relied upon,
and when more forceful measures must be resorted to
can be determined by no definite rule. The character
of the disturbed populations, the nature of the viola-
tions, their long continuance, the prospect of early ad-
justment of public order, and an indefinite number of
political considerations all influence the decisions that
will be taken. No country is under the obligation to
allow the abuses to continue indefinitely. At some point
the duty to respect technical foreign sovereignty be-
268 MEXICO AND ITS RECONSTRUCTION
comes less insistent than the duty to defend the rights of
the home government and its citizens.
In the opinion of large numbers of people who have
watched developments in Mexico during the revolution
the time has long passed when foreign countries should
content themselves with protests. The stronger foreign
governments, during much of the period of the revolu-
tion, have had their attentions and energies occupied
elsewhere. On other occasions they have frequently
shown themselves unwilling to act when the steps they
might take against a weak state could be attributed to
selfish interests. It can not fail to be clear, however,
that with the cessation of the larger hostilities in Europe
and the continuance of chaotic conditions in Mexico the
demand for the respect of human rights in Mexico will
become more insistent.
What the actual situation of the foreigner is in Mex-
ico, it is hard to state in a comprehensive way. Reports
are contradictory and incomplete. The majority of
those foreigners who lived in the republic ten years ago
have probably left the country. There is no doubt, how-
ever, that the experiences they have endured during the
past decade have been harrowing in many cases, and
ones which in other times and circumstances would have
brought foreign intervention.
The sufferings of American residents have been
greater than those of other foreign colonies because
Americans have been present in larger numbers; they
have been residents, to a large degree, of the more dis-
turbed regions and, at least in some instances, they have
been the subject of a particular dislike. Nevertheless,
FOREIGNERS' LEGAL STATUS 269
what has happened in their cases may be cited as an illus-
tration of the sorts of wrongs that many foreigners have
had to endure.
The list is too long to be recounted at length. Its
details are often of too refined a brutality to allow pub-
lic discussion. They are eloquent testimony that a gov-
ernment that was unable to stop the mounting total of
crimes within its territory for practically a decade, let
a large part of its people get out of hand and was appar-
ently unable to reduce them to control. The details
of what happened in the country are portrayed in let-
ters, telegrams, memorials, and records of personal expe-
rience, speeches presented in Congress and testimony
before Congressional committees. The record is revolt-
ing. As reported to the Congress of the United States,
it includes robbery, extortion, holding for ransom,
plunder, burning of property without cause, murder by
various means, including throat-cutting, disemboweling,
beheading, and mutilation. It includes forcing severely
wounded women to cook for soldiers, and outrage of
wives and children in the presence of wounded or bound
husbands and parents. 15
Nor is it to be supposed that the wrongs against for-
15 See, for speeches detailing wrongs of the sorts cited, Congres-
sional Record, vol. 51, part 4, p. 3743, February 21, 1914, and
part 5, p. 4512, March 9, 1914. Detailed testimony concerning con-
ditions in Mexico as they affect the rights of foreigners is published
in Investigation of Mexican Affairs, Hearing before a Sub-commit-
tee of the Committee on Foreign Relations, United States Senate,
66th Congress, 1st Session, pursuant to S. Res. 106, parts 1-3, pp.
1-677. The violation of personal rights is discussed, especially at
pages 370-402.
270 MEXICO AND ITS RECONSTRUCTION
eigners have been confined to the earlier period of the
revolution and were a result only of the first flush of
passion which the conflict aroused. On the contrary,
the list of American citizens killed in Mexico between
1911 and the middle of 1919, published by the Depart-
ment of State in response to an inquiry by the United
States Senate, shows a series of rising totals. 18 Henry
Fletcher, American Ambassador to Mexico, testified in
August, 1919, that during 1918 and 1919, 51 Americans
had been killed in Mexico. During that time he had
not been informed of one prosecution by the Mexican
government for these crimes."
No fair-minded person believes that such acts are
attributable to the better class of Mexican citizens or
that they condone such abuses. They deplore them as
much as do any civilized people. But no government
can escape the responsibility for allowing conditions to
continue indefinitely under which such crimes can occur,
and upon the best citizens of Mexico falls the duty to
join hands to bring their fatherland again into the con-
trol of those who can maintain public order within its
territory. Upon their rising to that high opportunity
may depend the future of independent Mexico.
16 "Claims Against Mexico," Senate Document 67, 66th Congress,
1st Session, July 31, 1919.
17
The Independent, August 9, 1919, p. 172.
CHAPTER XX
THE TROUBLESOME BORDER
*VHEN one American speaks to another of "the bor-
der," there is no doubt what border is meant. When
the frontier problem is under discussion, it is always the
Mexican frontier. There is no Canadian border in the
sense in which there is a Mexican border; on that side
there is a boundary line, but it has no problems. As
an artificial barrier to free passage of trade it is trouble-
some to individuals on both sides of the line and looked
upon as a necessary nuisance. It is not an imaginary
wall separating two clashing sets of national interests,
a protection against the aggressions of a suspected
neighbor before whose courts a man from beyond the
boundary is not de facto equal before the law.
Why is it that our southern boundary has been and
is a problem, a "frontier" with all the sinister connota-
tions of the word, while our northern boundary is not?
The answer touches many of the reasons for the lack of
good understanding between America and its southern
neighbor.
The ill-feeling along the frontier is partly explained
by history; it is the survival of the hate aroused by the
Mexican War, but this is, at most, only the capstone of
a group of elements, the one that claims first attention
and lives longest in the memory, without being the most
fundamental. Educated Mexicans still avoid reference
271
272 MEXICO AND ITS RECONSTRUCTION
to " '49" or discuss it as a year, the events of which are
a source of national grief and a warning of what may
again be expected. The agents of Germany in the
World War thought the feeling still of sufficient potency
to justify holding out before Mexico the possibility of
a revanche. It may be doubted whether this sentiment
runs as deeply as some would have us believe. Mexico
does remember that the United States was her enemy
in the middle of the nineteenth century, more keenly
than she remembers the service rendered her by the same
nation some two decades later, but she would not do so
if there were not other elements contributing to her
regret for losing the little-settled and less-governed wil-
derness that she lost in her war with the United States.
The underlying causes of Mexican- American distrust
fall into three overlapping groups human, physical,
and governmental. Of the first the most important is
the contrast of race. The attitude of the people of the
United States toward the less-developed races has never
been a friendly one. It has lacked the tolerance which
the British have developed for the peoples with whom
they have come into contact.
The problem has been more difficult in America, be-
cause it has been a closer one. Except in the Philip-
pines, the less-developed peoples with whom the United
States has had to deal have been within its body politic
or upon its edges. There has not been any clear-cut
class distinction, recognized by both sides, such as has
established the relation of "superior" and "inferior" in
most of the cases where Anglo-Saxon populations have
come into contact with non-Europeans outside of Amer-
ica. Those who have come into contact with Mexican
civilization along the border, too, have been, to a large
extent, that portion of the American people who have
had closest contact with the negro population of the
republic and regard them, and to hardly a less degree
any colored or mixed blood people, as unquestionably
inferior. To the Mexican this attitude is a constant
irritation.
Contrast in language and civilization accentuates
frontier problems. On our northern boundary there
is neither. Immigrants pass in both directions hardly
conscious that the boundary exists. The flowing into
Canada of an agricultural population from the United
States occurred without clash. A similar movement
could not take place from the United States to Mexico.
To be sure, there is a border belt in which there is a
population to some degree bi-lingual and large numbers
of Mexicans, especially since the revolution, have sought
an opportunity for a more secure livelihood across the
border. But the average Mexican in the United States
remains a foreigner in habits of life. For him, on ac-
count of a combination of elements including race, lack
of education, and lack of resources, it is hard to become
a part of the life of the new community in which he
finds himself. In many cases he does not wish to do so.
Americans of the border states of Mexico also seldom
identify themselves with the local life. They keep their
American citizenship; they may be engaged in the ex-
ploitation of mines, lumber, or other natural resources,
but they are representative of a "foreign interest."
Even though they become landowners, they continue to
274s MEXICO AND ITS RECONSTRUCTION
look upon themselves as foreigners and to be looked
upon as foreigners by the native population.
It is common to hear Americans speak of the United
States as the melting pot. They are proud of the adapt-
ability of the American. They take a certain pride in
the easy way in which the European populations have
been blended into the body politic. They have not
shown the same willingness or ability to absorb non-
European stocks or to be absorbed by them.
The American people have declared by law that they
will not allow an opportunity to arise under which
Chinese may be absorbed, and the Japanese are ex-
cluded by law plus administrative regulation. They
have refused to absorb the aboriginal Americans and
alliance with the imported non-European stocks brings
social ostracism. Mexicans in the United States hardly
fare better. If they are of Spanish ancestry, that fact
is emphasized and any prejudice against them disap-
pears they are then Europeans. If they are not, they
suffer the same discrimination as other mixed blood or
non-European peoples. The same unyielding preju-
dice follows the American settler in Mexico. He is
proud to remain a foreigner, and he looks with disfavor
on any alliance of his sons or daughters with any Mex-
ican not of pure European ancestry.
The physical features of the border have contributed
to the lack of good understanding between Mexico and
the United States. They, of course, largely determined
the settlement or the lack of settlement of the region.
The broad dry strip of territory stretching northward
from the Gulf of Mexico toward the mouth of the Colo-
THE TROUBLESOME BORDER 275
rado River seemed, until the coming of the railroads,
to be the perfect boundary, which theorists have imag-
ined for separating nations. It was almost a desert. It
was not valuable land. A sparse population was all it
could support where it could support any at all. Small
land-ownership was unthinkable.
Mexican efforts to control this region had always been
futile. They never had effective control over the region
north of the Rio Grande before the war with the United
States, and it was long after the middle of the last cen-
tury before any true policing of the district south of it
was attempted. Even up to the time of the present
revolution the native tribes of her northwest disputed
her authority with fair success.
Effective American control extended southwestward
more rapidly than Mexican governmental authority
came to meet it, but it would be easy to overemphasize
the fact. At all times it is difficult to police a sparsely
settled, arid country, such as the lands along the Mex-
ican border were a generation ago. They continued up
to our own day to be a region wherein things were done
with impunity on both sides that neither government
would approve, a territory in which each man was, to
a large degree, a law unto himself. It was a place where
individualism thrived, where self-help was at a premium,
and where the strong one was too often the judge of the
rights of the weak.
A region like the Mexican border produced and drew
to itself from other regions a not too gentle population.
The only life that could be lived there was one on which
adventurous spirits thrived. Those who had ventured
276 MEXICO AND ITS RECONSTRUCTION
too much in the communities of their birth came to add
their bit to keep life on the border from becoming dull.
If they were "wanted back home," they had a tendency
to step across the border, whence they might make them-
selves even more a subject of anxiety for their home gov-
ernments.
Such a community, as it grew, developed a rough and
ready character not inconsistent with respect for its
own, but having little conscience about the rights of
those across the border. The records of the foreign rela-
tions of the United States and Mexico for the '70s, '80s
and '90s of the past century are interesting, if not al-
ways pleasant reading. They are by no means records
of a civilization of which either Mexicans or Americans
can be uniformly proud. Raids, violations of sover-
eignty, contraband trade, corruption of officials, mur-
ders, miscarriage of justice, stimulation of national an-
tipathy by newspapers, which baited each other across
the border the record is full of evidence that the fric-
tion in Mexican- American relations was so great that a
bursting forth into flame was a possibility for years
and doubtless would have occurred frequently but for
the efforts of the governments to calm the local dis-
content.
In the period before the Diaz regime a stream of com-
plaints of lawlessness went from the border to Wash-
ington and Mexico. While the revolution was in prog-
ress the partisans of Lerdo de Tejada operated along
the border and were popular in certain districts of
Texas. At times they allowed United States troops
freedom to operate on both sides of the river to put
THE TROUBLESOME BORDER 277
down raiders. 1 At others the local authorities were com-
pletely out of hand and no attempt was made by the
Mexicans to control them nor was a willingness evi-
denced to let the United States exercise effective meas-
ures to check wrongdoing. On the north side of the
river the state authorities showed a disposition to act
independently when the central government refused to
give life and property protection from Mexican aggres-
sions. In 1874, Governor Coke of Texas took affairs
into his own hands and ordered the forces under his
control to pursue cattle thieves "both on this side of the
river and on the other," and when called to account by
Secretary Fish, refused to modify his orders. 2 There
were several invasions by Texas troops in the following
year.
During this period the offenses against order were
doubtless more frequent from the Mexican than from
the American side. Indeed, on May 20, 1875, Secre-
tary of State Fish made the statement that during the
four years previous there had been none from the United
States and challenged proof to the contrary. The state-
ment was handed to the Mexican minister of foreign
affairs, who promised to examine the evidence in his
office, but made no reply. 3
General Diaz came into power November 29, 1876.
The United States refused to recognize his government,
1 Shafter to the Assistant Attorney General, May 10, 1877,
House Document 13, 45th Congress, 1st Session, p. 147.
2 In a memorandum left by Mariscal with Evarts June 7, 1877*
published in ibid., p. 61.
3 Foster to Evarts, June 28, 1877, in ibid., p. 80.
278 MEXICO AND ITS RECONSTRUCTION
one reason being that there was "some doubt" whether
his government "possessed the ability and the disposi-
tion to check the raids and depredations upon Amer-
ican property in the vicinity of the Rio Grande." In
the first years of the Diaz regime the clashes continued
frequent. Settlement was spreading into the southwest
and the plunderable property was increasing in value,
making the temptation to the lawless greater and the
demand for redress more insistent. For several years
conditions seemed to be growing steadily worse.*
The border was a "free for all" region in these years.
It is impossible to make distinction between American
and Mexican outrages. They were frequent on both
sides of the line, and it was often difficult to tell whether
the guilty were Mexicans or Americans. The popula-
tion of Texas exaggerated Mexican faults to emphasize
their claims for damages and to induce the government
to place more troops on the border, from the provision-
ing of which the local population might prosper. That
this was true was admitted by the American Secretary
of State. 5 State and national control of the border later
stiffened and wrongs committed against Mexicans north
of the border decreased in number.
The Diaz administration, then striving to establish
itself within the country and among the family of
4 A gloomy review by Minister J. W. Foster of the condition of
Americans in Mexico and of border relations covering a period of
more than five years is found in Papers Relating to the Foreign
Relations of the United States, 1879, p. 755 et seq.
5 House Document 13, 45th Congress, 1st Session, Foster to
Evarts, July 24, 1877, in a Memorandum of the Mexican Minister
of Foreign Affairs, p. 38.
THE TROUBLESOME BORDER 279
nations, did not consider of slight importance the cross-
ing of the border by American troops and, while anxious
to secure the friendship of the United States, was un-
willing to do anything that seemed to cloud what was
declared to be a principle of national sovereignty. In
taking this position the government received the hearty
support of the press. 6 The administration insisted that
in the later '70s raids were becoming less frequent/
When an instance of violation of American territory
by Mexicans was brought to his attention, President
Diaz gave complete disavowal and promised prompt
investigation, reparation, and punishment. 8 He with-
drew to the interior generals toward whom the United
States had expressed distrust and whom it appears Diaz
himself could not fully control. 9 He sought a similar
standard of action from the United States.
But, for the United States, evidences of the Mexican
desire to relieve the tense situation on the border were
not enough. The Mexican generals who were sent to
replace those who had shown themselves in sympathy
with border lawlessness were given a cool reception by
the Mexican state and local officials and their authority
was not recognized. Between October, 1876, and March,
1877, it was reported Indian marauders from Mexico
killed 17 men and the arms and horses taken from the
8 See collection of newspaper comments in ibid., p. 21 et seq.
7 Memorandum by Mexican Minister of Foreign Affairs for-
warded to Secretary Evarts by Minister Foster, July 24, 1877, in
ibid., p. 40.
8 Foster to Evarts, July 9, 1877, ibid., p. 34.
9 Foster to Fish, March 3, 1877, ibid., p. 3.
280 MEXICO AND ITS RECONSTRUCTION
murdered men were openly offered for sale in Mexico.
Large numbers of horses and cattle were driven from
Texas into Mexico. In one instance a raiding party
was followed over 150 miles into the country to their
camp "where nearly 100 of the cattle had been slaught-
ered and beef was found drying." The marauders found
a refuge in the Mexican towns when pursued and sold
their plunder there. In some cases American troops
crossed the border and punished the offenders. The
United States military authorities declared "that the
only way to check these atrocities is to follow the delin-
quents into Mexico and there attack them in their lairs. 10
The Government of the United States was coming to
feel that if the outrages were persisted in, it would
adopt this policy with or without the consent or acquies-
cence of Mexico.
Matters came to a head on June 1, 1877, when the
Secretary of War wrote General Sherman instructing
him to notify General Ord, commanding the border
forces, to ask the cooperation of the Mexicans in bring-
ing an end to disorder and to inform them that while
the President was anxious to avoid giving offense, "the
invasion of our territory by armed and organized bodies
of thieves and robbers" could "not be longer endured."
General Ord was informed that if Mexico continued to
neglect to suppress such bands, the duty to do so would
rest upon the United States, and the duty would be
performed "even if its performance should render neces-
10 Evarts to Foster, ibid., p. 4, citing a report of P. H. Sheridan
which refers to an opinion of Colonel Shafter.
THE TROUBLESOME BORDER 281
sary the occasional crossing of the border by our troops."
General Ord was informed that he was "at liberty, in
the use of his own discretion, when in pursuit of a band
of marauders, and when his troops are either in sight of
them or upon a fresh trail, to follow them across the
Rio Grande, and to overtake and punish them, as well
as retake stolen property. . . ."
This was the famous Ord order. It was hardly issued
before the United States Government had to complain
that Diaz troops had driven a band of Lerdists across
the river into Texas, where they were attacked and dis-
persed. American officers asked whether they should
cross to punish the offending forces. They were in-
structed not to cross, but a prompt disavowal was de-
manded.
The Ord order meanwhile created a widespread pro-
test in Mexico, and under date of June 18, 1877, the
Mexican government ordered its forces to resist any
crossing and to "repel force by force, should the invasion
take place." In August a band of Mexicans raided
the county seat of Starr County, Texas. American
forces followed them to the river and the Governor of
Texas demanded the extradition of the criminals, a
demand supported by the United States Government.
Mexico now made a serious effort at reparation, but the
border officials had little respect for the demand made
upon them. Some of the raiders were arrested and sur-
rendered, although the extradition treaty did not de-
11 Secretary of War to General Sherman, June 1, 1877, ibid.,
p. 14.
12
Ibid., p. 18 et seq.
282 MEXICO AND ITS RECONSTRUCTION
mand it. The local authorities refused to surrender the
rest. An American force crossed the border in October
in pursuit of marauding Indians, but, on the approach
of Mexican troops, retired.
By this time the Ord order had been modified on as-
surance that Diaz recognized the gravity of the situa-
tion and would send to the border a prudent general
with an adequate force. 13 General Ord was instructed
to cooperate with the Mexican general and to cross the
border only in an aggravated case. The instruction did
not stop the crossings. A proposal to allow reciprocal
privilege met a non-committal answer from the Mex-
ican commander. The officers had received commands
not to attack the United States troops, but to "see" them
cross the border. 14 Later the objectionable Ord order
was revoked to the great satisfaction of Mexico. 15
In the meantime Minister Foster, on April 24, 1877,
recommended that recognition be given Diaz by the
United States, in the belief that this might strengthen
the hands of the government. 16 On March 23, 1878,
though conditions in Mexico were still unsatisfactory,
the President instructed the American Minister that
the Diaz government was formally recognized. 17 Later
in the year Mexico was still unable to repress raids and
the United States again declared it would not stand
"Under date of June 9, 1877, ibid., p. 101.
14 Ibid., pp. 45-240, passim.
15 Papers Relating to the Foreign Relations of the United States,
1880-1, p. 735.
18 Foster to Evarts, April 24, 1877, op. cit., p. 6.
17 Papers Relating to the Foreign Relations of the United Statei,
1878, pp. 543 and 573.
THE TROUBLESOME BORDER 283
i
quietly by while the criminals were allowed to flee int6
Mexico, there to have refuge from just punishment.
"When Mexico will pursue the marauders, the United
States will be glad to stop doing so at its own bound-
ary," but cases in which Mexican troops were fed with
the cattle yielded by border raids, the commanding
officer knowing of the theft, protecting the raiders, and
furnishing them with arms, were unbearable. If Mex-
ico could not, or would not, punish such acts, the United
States, it was intimated, would have to, whatever hap-
pened to the theory of sovereignty in the meantime. 18
While these events were taking place, the govern-
ments were in negotiation to try to secure some basis for
an agreement by which the threatening clash could be
avoided. Finally, in 1881, a limited reciprocal right of
crossing was arranged, but one, unfortunately, that it
proved impossible to make permanent. Though the
agreement did not satisfy either side, it helped to bridge
over what proved to be the period of greatest danger.
Both sides continued to report atrocious happenings,
but there developed a greater willingness to admit that
the problem was a mutual one in which the elimination
of the cause was at least as important as the mainte-
nance of the theoretic rights of sovereignty.
General Polk, commanding the Department of the
Missouri in the early '80s, declared it beyond question
"that bands of thieves infest the whole southwest and
plunder citizens in both countries." "They . . . are
sometimes occupied in smuggling, at others in steal-
18 Ibid., p. 612.
284. MEXICO AND ITS RECONSTRUCTION
ing." 19 A few years later a similar complaint was made
by Mexico. Her minister of foreign affairs complained
that American Indians crossed the border, committed
depredations, and then fled across the protecting bound-
ary. It was claimed by the Governor of Chihuahua that
in less than one month more than 60 persons had been
killed by savages in that state alone. "It is high time,"
concludes the Minister of Foreign Affairs, "for the
honor of the age in which we live, for the honor of two
powerful neighboring Republics, for the sake of the
friendship that happily exists between them, . . . that
a stop be put to [these] frightful scenes, . . ." 20 As
the Diaz government succeeded in establishing itself and
as the settlement and better policing of the American
side of the river progressed, the danger of a breach be-
tween the two governments lessened.
The source of complaint gradually shifted to the west-
ward and, as exploitation of the resources of the border
states progressed, especially after the railroads crossed
the boundary, southward. The border problem broad-
ened and became one involving the general protection
of the life and property of foreigners. The violation of
sovereignty by crossing the frontier in one direction or
the other was less common and the rights of resident
aliens came more frequently under discussion. Since
the economic development of the country was spread-
ing from north to south, it was natural that the disputes
should more frequently involve the rights of United
States citizens in Mexico than the reverse.
19 Ibid., 1881, p. 756. ao lbid., 1883-4, p. 680 et seq.
THE TROUBLESOME BORDER 285
The border itself was still a source of irritation, but
a less insistent one. At times each government showed
a disposition to blame the other or to explain its own
shortcomings by reference to peculiar disadvantages
under which its military forces worked. By 1892,
though the military measures taken had "sufficed to
make . . . lawless attempts very dangerous and un-
profitable to the criminal," who might or might not
operate under a political disguise, there was still enough
marauding to keep the discussion warm. The Mexican
Minister of Foreign Affairs and the American Secre-
tary of State continued to complain to each other against
raids by groups of bandits from across the border. The
Mexican statesman asserted that when the bands crossed
into Mexico they were beaten back toward the border
across which they fled, taking refuge in the United
States, whence they could again issue as soon as the
vigilance of the Mexican troops relaxed or other favor-
able circumstances developed. Local sentiment along
the border was still declared not to be against the ban-
dits, as was shown by "culpable connivance or tolerance
on the part of certain functionaries in Texas." More
federal troops should be provided for keeping the peace.
The American government replied that "the efforts of
the United States Government to prevent these raids
from its territory into Mexico seem to receive little co-
operation . . . from the Mexican side. . . ." If Mex-
ico would only keep a force on the south, such as the
United States had on the north, all would be well.
Mexico apparently found it inadvisable to attempt to
maintain a force of such size as was suggested by her
286 MEXICO AND ITS RECONSTRUCTION
northern neighbor and the United States was indisposed
to increase the number of its troops. It felt that the
running down and punishment of the guilty was a better
method of stamping out banditry than the adoption of
extensive preventive measures.
On both sides the control of the marauders was ren-
dered difficult by their methods of operation. A band
might be collected in the United States, for example,
with the intent of raiding Mexico, but it would cross
the border casually at different points as individuals.
Meeting at a rendezvous, the depredations would be
committed, and the guilty would again disperse. The
only time when the band could be met as a band, there-
fore, was when the wrongful acts were actually being
committed.
The same circumstances surrounded raids from Mex-
ico against the United States. In the latter country,
at least, there was the added difficulty that the pursuit of
the wrongdoers was a duty of the civil authorities of
the government or of Texas and the troops could only
aid the United States marshals as a part of their posse.
Cooperation by allowing a reciprocal crossing of the
boundary in pursuit of wrongdoers seemed an obviously
desirable privilege and one that Mexico now seemed dis-
posed to grant, while the United States held back. For
both countries this was a curious reversal of position
compared to the early '80s. The United States felt
that the increase of settlement made the problems, which
would arise under such conditions, more serious than
formerly. The military authorities in charge of border
affairs did not favor a renewal of the arrangement. It
THE TROUBLESOME BORDER 287
did prove possible, however, to arrange for cooperation
in notifying the forces of each country of possible raids
and to station the troops in such a way that the fords
could be more effectively policed. 21 In at least one case
a reciprocal right of crossing was arranged. 22
Impartially considered, it is plain that in the border
incidents the shortcomings did not lie wholly on one
side. At times each country found itself drawn into
defending persons because of their nationality who de-
served no protection from any one. Sometimes the rules
of international law, which were intended to promote
good relations among nations, seemed to be the chief
cause of entanglements. For example, it was not always
easy to differentiate border raids from "revolutions"
or either of these from the Indian depredations, which
even down to our own day have continued to be a source
of disturbance along the boundary. In the discussions
of pursuit of wrongdoers across the border there has
been a conspicuous lack of willingness to recognize the
fact that under the conditions that have existed it would
be better for both parties to place considerations of pub-
lic order and justice above insistence upon scrupulous
observance of the "rights of sovereignty."
Where settlement is sparse, policing on account of
great distances is difficult, and the boundary itself often
hard to locate, opportunities for the lawless flourish and
shuttling back and forth across an imaginary line is
an easy way to defy the law. The local population on
both sides of the border frequently looks upon the bandit
21 These facts are summarized from ibid., 1893, vol. 1, pp. 429-55.
22 Ibid., 1896, p. 438.
288 MEXICO AND ITS RECONSTRUCTION
as a semi-hero, if he confines his operations to the other
side of the boundary. Evidence of guilt is hard to secure
partly because of this sympathy and partly because of
fear of retaliation by friends of the accused. Dissatis-
faction is sure to result, especially when one country
does not or cannot maintain as efficient a police patrol
as does its neighbor. Add to these elements a roving
population, one that gives only nominal respect to either
soverefgnty, such as the border Indian tribes were, and
trouble is very likely to rise. If either side yields to the
temptation to enlist these aborigines in its own military
forces, either as guides or as soldiers, as both Mexico
and the United States formerly did, clash is almost un-
avoidable. Looked at long after the event, it is not re-
markable that there were such acrid interchanges be-
tween the two governments. It is to the credit of botli
that wiser counsels prevailed and that the many technical
causes of war were kept in their proper perspective.
The meticulous insistence on respect for technical
rights under international law, which some border inci-
dents involved, makes the history of some of them amus-
ing as well as illustrative of frontier conditions and
psychology. One of these was the much-discussed case
of Jesus Garcia arising in 1896.
The incident arose in Nogales, a town located on both
sides of the border, with a street running diagonally
through it which crosses the boundary line. Garcia was
a powerful man described as "a low-down desperado,"
who was at the time of the incident "on a general drunk,"
"bulldozing the saloons." He and another Mexican
came out of a saloon on the American side of the line
THE TROUBLESOME BORDER 280
and began to fight. An American officer ran toward
them and arrested them on the American side of the
boundary. Garcia resisted. The officer called for as-
sistance and another American ran from the Mexican
side of the line and collided with Garcia, who fell with his
head and a small part of his body on Mexican territory.
No blow was struck. Garcia was then marched toward
tjie jail and on again resisting was struck with a leather
walking cane to quiet him. No blood was drawn.
As reported to the Mexican government and made
the basis of diplomatic protest, this case had a decidedly
different character. Two Americans, one an officer,
crossed into Mexican territory to arrest Garcia. The
civilian knocked him down and the officer beat him
while prostrate. They then dragged him across the line
into Arizona, assisted by another American civilian. On
the way to the prison the Mexican was again subjected
to a cruel beating.
That such an affair should be raised to the dignity of
an international incident would seem ridiculous and im-
possible if the high state of feeling and the willingness
to twist evidence resulting therefrom were not real-
ized. 23 The affair was finally patched up through ac-
ceptance by the Mexican authorities of the statement
that no invasion of Mexican territory was contemplated
and the declaration that in the opinion of the United
States none had occurred. 24
23 Ibid., 1893, vol. 1, p. 457, also ibid., 1896, pp. 439, 448,
449, 454.
24 A review of the various incidents which kept feeling aroused
along the border is obtainable in Papers Relating to the Foreign
290 MEXICO AND ITS RECONSTRUCTION
The opening years of the nineteenth century, during
which the Diaz regime was reaping the reward of its
efforts to establish order and induce the economic de-
velopment of the country, brought the period of most
cordial relations between Mexico and the United States.
The border problem was not at an end, but it was active
only in Arizona and New Mexico and even there in-
volved not so much raids across the boundary as the
prevention of the purchase in the border towns of arms
and ammunition, which were later used by the Indians
against American citizens living south of the border.
The attitude of the local authorities in the Mexican
northwest toward American settlers also continued to
be a matter of complaint. 25 Both governments were
anxious to do all in their power to remove the reasons
for friction.
The Yaqui Indians, against whose acts the most nu-
merous protests were made, are a Sonora tribe, about
Relations of the United States. Some of the more important dis-
putes illustrating phases of the border problem are found at the
following points: 1878, p. 679, illustrating "revolutionary" activ-
ity; 1888, vol. 2, p. 1176, illustrating border kidnapping; 1893,
vol. 1, p. 468, illustrating difficulty of securing evidence as to raid-
ers; 1895, pp. 997-1013, illustrating position of refugees guilty of
embezzlement; 1897, pp. 372 and 405, illustrating claims for dam-
ages caused by disturbance of public order. What is a political
act?, also ibid., 1898, pp. 491-510; 1899, p. 499, illustrating unwill-
ingness to surrender citizens to justice of another country; 1904,
pp. 462-72, illustrating the prejudices of lower Mexican courts, and
ibid., pp. 473-81, illustrating attitude of Texas authorities toward
Mexican delinquents.
25 Correspondence illustrating both phases of the problem is found
in ibid., 1905, p. 639 et seq.
THE TROUBLESOME BORDER 291
whose wrongs and wrongdoings much discussion has oc-
curred in both Mexico and the United States. Part of
the tribe were peaceful, but others were chronic trouble-
makers, who, as President Diaz once reminded the
American Ambassador, were comparable to the Apaches
with whom the United States had had so much diffi-
culty. 26 They were especially active against Americans.
These, the most prominent foreigners engaged in ex-
ploitation of the country, they looked upon as disturbers
of what they considered the immemorial privileges of the
tribe. The Mexican government, at least the central
government, did its best to punish the guilty, but it
could not always rely upon the soldiers it sent to punish
the Indian bands. It adopted the policy i of taking arms
and ammunition away from the Indians, thinking that
would bring an end to the trouble. After 1903 the gov-
ernment deported to Yucatan and Quintana Roo many
Indians who had taken part in marauding." Others
were sent to colonization enterprises in Sinaloa and still
others set to work in convict gangs in Sonora. To those
who were disposed to settle down to a peaceful life the
government supplied farming implements, farm animals,
and poultry in Sinaloa. 28 The Indians, however, con-
tinued to cross into Arizona towns "to work," where
they replenished their ammunition supplies and then re-
turned to Mexico to start trouble again. The local au-
Ibid., 1906, p. 1142.
27 Accounts of transfer of parties of such Indians are found in
ibid., p. 1134 et seq. The policy of the government toward the
Yaquis, as described by Diaz, is outlined at p. 1141.
28 Ibid., 1905, p. 648.
292 MEXICO AND ITS RECONSTRUCTION
thorities were instructed to furnish escorts to Ameri-
cans when they went outside the settled districts. It
does not appear that such protection was always given,
and in some cases when proffered it was declined by
Americans, especially by mining prospectors, who did
not want to have their movements observed. 29
In 1906 President Diaz asked whether the United
States would not give its active cooperation to stop the
Yaquis from getting supplies of arms in the way in-
dicated. 80 To do so would make it possible to assure
order in the northwest states, promote their develop-
ment, protect the lives of American citizens, and help
to eliminate the claims for damages against the govern-
ment of Mexico. The President, of the United States
promised to do what he could to help. In the follow-
ing year the Secretary of the Interior asked the Gov-
ernor of Arizona to put into effect again precautionary
measures to prevent smuggling of arms. This he did.
Similar orders were issued by the Secretary of the Treas-
ury to the Customs Collector at Nogales. In 1908 the
United States government concentrated forces along
the border to stop fleeing marauders from seeking ref-
uge in American territory, 81 thus assisting the Mexican
troops to stamp out disorder.
In short, in the closing years of the Diaz regime there
was cordial cooperation between the government of
29 A number of incidents illustrating these conditions are described
in ibid., p. 639 et seq.
Ibid., 1906, p. 1149; see also ibid., 1907, p. 846 et seq.
81 Ibid., 1908, p. 604, quoting the Mexican Herald of September
17, 1908.
THE TROUBLESOME BORDER 293
Mexico and the United States for the elimination of the
border problem. Possibility of friction still existed for
reasons of a nature that it will be difficult to remove,
but the old suspicion and animosity shared by large num-
bers of both peoples, which made the border a source
of constant irritation for both, was rapidly passing. The
border problem was less a problem than it had ever
been. American economic interests had spread south-
ward far beyond the boundary, and Mexico realized
and admitted her duty, under international law and
the rules of comity, to give them full protection. Mex-
ican interests had grown in the United States, not in
the development of the economic resources of that
country, for Mexico was still a non-industrial debtor
nation and had no large amounts of capital seeking in-
vestment abroad, but through the realization that the
two countries, which had such close geographical rela-
tions, had, in their foreign trade, an economic common
interest that closely bound the fortunes of the one to
the fortunes of the other.
The good feeling that existed between the two re-
publics was illustrated by the expressions of apprecia-
tion that passed between them just before the close
of tne Diaz regime.
The American Ambassador, speaking at a luncheon
of the American Colony in 1907, contrasted the Mexico
of that day with the one he had first known. He de-
clared: 82
32 Papers Relating to the Foreign Relations of the United States,
1907, p. 859.
294 MEXICO AND ITS RECONSTRUCTION
Thirty-one years ago conditions in Mexico were such that
in few places could a man be reasonably sure of his life, if there
was the slightest cause for it to be taken. At that time the
country was filled with banditti . . . and little thought was
given by the masses to anything other than unfriendly strife.
. . . The national finances, in 1876, were at the lowest possible
ebb and even at the late date of 1902 the total revenue of the
Republic was only $66,147,048, while the revenue for the fiscal
year just closed was $113,000,000, leaving a surplus of near
$20,000,000 beyond all national requirements. . . . The more
than 30 years since 1876 have brought revolution after revo-
lution in Mexico, but not revolutions of the old kind. The
revolutions of the past 30 years have been those of mind and
of commercial industry. . . . Thirty years ago there were
practically no Americans in Mexico, and the few that were
here, with now and then an exception, were here because they
could not stay at home, and there was no American capital in-
vested in the Republic. To-day what a different condition we
find. . . . There are in the Republic of Mexico something like
40,000 Americans, and the majority of them are honest and
industrious people who would be a credit to any country. Their
sphere of action covers practically every known occupation.
Secretary Elihu Root, the guest of honor at a ban-
quet given by the Minister of Foreign Affairs, carried
the statement further. He said : sa
I suppose that the true object which should be held before
every statesman is to deal with the questions of the present so
that the spirit in which they are solved will commend itself to
the generations of the future. . . . The Government of Mexico
has attained that high standard of statesmanship to an extraor-
dinary degree. It certainly has done so in its relations with
the Government of the United States, and, as a result of the
ibid:, p. 867.
THE TROUBLESOME BORDER 295
reasonable and kindly way in which we have been treating each
other for these past years, . . . there has grown up and is
continually developing between the people of the two countries
a knowledge of each other, an appreciation of each other, a
kindly feeling toward each other which makes for the perpetuity
of good government in both countries and for the development
of all the finer and better parts of citizenship in both countries.
Among the friendly declarations from the Mexican
side that which touches best the old distrust and the new
confidence between the two countries was perhaps that
of Manuel Calero, President of the Chamber of Depu-
ties, who said : 3 *
That you once wronged, that, when burning political, eco-
nomical, and humane problems beset you, the course of justice
was momentarily hampered, we have not forgotten; we have
not. But as the years rolled on you have won back, inch by
inch your place in our affection; the intercourse every day
closer and closer between your people and ours, stepping over
the bounds set by race and tongue, has infused new life into this
feeling of mutual good will and friendship, which tend to estab-
lish harmony of ideals and close similarity of destiny.
Two years later there occurred the first exchange of
visits between the Presidents of the two republics and
the first visit of an American President to Mexico. At
that meeting, after President Diaz had spoken of the
cultivation and maintenance of the cordial relations
existing, President Taft in his reply took "occasion to
pronounce the hearty sentiments of friendship and ac-
cord with which the American public regard the Mex-
ican people." He declared, "The aims and ideals of
**Ibid., p. 855.
296 MEXICO AND ITS RECONSTRUCTION
our two nations are identical, their sympathy mutual
and lasting, and the world has become assured of a vast
neutral zone of peace, in which the controlling aspira-
tion of either nation is individual human happiness."
Few were they who realized upon what an insecure
foundation the Diaz regime rested. Order had been so
long established that even the majority of those well
acquainted with local conditions had come to consider
it as a matter of course and, in her foreign affairs,
Mexico had come to enjoy a position of greater prestige
than any other Latin- American state. Capital was flow-
ing from abroad to develop her industries, interest on
public obligations was being promptly met, there was
a surplus in the public treasury that could be devoted
to the improvement of the conditions of the country.
There was no cloud on the international horizon. Re-
lations with all foreign nations were friendly and with
the United States, the country with which the republic
is of necessity most closely associated in foreign affairs,
relations were cordial. The two countries had greater
confidence in each other than ever before. The wounds
of the conflict of two generations before were healing,
the irritations of border conflicts were at a minimum.
Everything seemed to justify the hope that there had
been created in North America an area within which
peace internal and external was secure.
**Ibid., 1909, pp. 425-8.
CHAPTER XXI
MEXICAN-AMERICAN RELATIONS
THE foreign relations of Mexico begin with the offi-
cial recognition of her independence by the United
States. The first representative of Mexico was sent
to Washington. 1 With the exception of the period of
the Mexican War, the two countries have been at peace
officially though differences of opinion have been fre-
quent, acrid, and, at times, threatening. The list of
subjects on which amicable adjustments have been
arrived at is a long one and a credit to both. They
have had frequent recourse to arbitration. In this
way they have set the example to other nations, both
before and after the foundation of the Hague Tribunal.
They have settled the complaints of their citizens by
Claims Commissions. After decisions have been defi-
nitely made by such Commissions there have been equi-
table adjustments, when they were called for by the
discovery of new evidence. 2 Boundary claims have been
amicably adjusted. Jurisdiction over the shifting
1 See discussion in Exposicwn de la secretaria de hacienda de los
estados unidos mexicanos de 15 de enero . . . Mexico, 1879, p. 46.
2 See the discussion of the return to Mexico of money paid to the
United States under decisions by the United States and Mexico
Claims Commission after production of evidence showing the claims
to be fraudulent, in Senate Report, 50th Congress, 2d Session,
1888-9, vol. 4, No. 2705, and in Papers Relating to the Foreign
Relations of the United States, 1900-1, p. 781 et seq. (the Abra
Silver Mine Company case), and in ibid., p. 483 (the Weil case^.
297
bancos., or shoals, of the Rio Grande has been arranged
by friendly compromise. The Pious Funds dispute was
taken to the Hague for settlement and the Chamizal
controversy was turned over to arbitrators. Other in-
stances might be cited. The old disputes have passed.
They have all gone the same way. The new ones must
follow them.
There are few in either country who realize the im-
portance of Mexican- American relations to both coun-
tries. American relations will always be the chief ele-
ment in Mexican foreign policy. That is a fundamental
fact, no matter how unwelcome to certain classes in
Mexico. Circumstances beyond the control of any gov-
ernment, the geographical position of the country, and
the character of its natural resources make it so.
The necessary interrelations of the two countries have
made the more timid among the Mexican population
feel that geographical unity and unity of economic in-
terest carried with them the danger that political unity
might be forced upon the weaker state. They are ob-
sessed by the belief that the United States wants to
annex Mexico. They are confident that only the favor-
able opportunity is lacking. It would astonish them to
know how small a part of the people of the United
States have any but the vaguest of ideas about the re-
public and its people and how few of even these would
consider annexation a thing to be desired. Those Mex-
icans who believe that an advance southward will be
made as soon as an excuse can be found cannot know
the history of their own country. Occasions for action
there have been in great number.
MEXICAN-AMERICAN RELATIONS 299
The United States does not "want" Mexico. To
proceed to its annexation would be to act against its
political impulses. In fact, as has been repeatedly
shown, the United States will endure great provoca-
tion rather than come to conflict with the Mexican gov-
ernment. That under no circumstances will forcible
action ever be taken nor any Mexican territory annexed
is unfortunately a corollary, which some in Mexico have
recently come to believe logically follows. Their opin-
ion has unfortunately been given no little support by
declarations made by prominent persons in the United
States itself. The sooner reliance on any such state-
ments is abandoned the better for the peaceful relations
of the two countries. Neither Mexico nor any other
state can count on the freedom from responsibility that
such a policy would involve. The economic advantage
that would result to the United States from annexation
as contrasted to that which may follow independence
and friendship is doubtful. Mexican trade, both im-
port and export, is already almost inevitably American
and investments will be increasingly so.
The United States does want order in Mexico, and
for a number of reasons. Order would increase its
profitable trade exchange, it would make secure the
lives and properties of the many Americans whose in-
terests are bound up with those of the republic and
finally it would simplify maintenance of the funda-
mental principle of American foreign policy that
American states be not interfered with in their develop-
ment by non- American political influences. Fair treat-
ment for American and other foreign interests in Mex-
300 MEXICO AND ITS RECONSTRUCTION
ico and friendly adjustment of the questions that must
affect the two governments because of their relative posi-
tion, this is all that the United States wishes from its
southern neighbor.
Mexican relations are not the most important fac-
tor in American foreign policy. At times they may rise
to that prominence, but they can not be so permanently.
They are important in themselves always and they are
important because they do touch the larger international
policy above referred to. In fact, the United States has
often held the balance in Mexican foreign affairs, as
must be familiar to all acquainted with Mexican his-
tory. Far from being a power wishing to overthrow
Mexican independence, the United States has been its
bulwark. It is certainly open to doubt whether there
would exist to-day an independent Mexico if it had
not been for the influence of the United States. The
policy of America for Americans has meant something
because the United States has stood ready to defend the
principle.
Frankly speaking, this policy has not been a purely
idealistic one. The United States has been moved by
altruistic motives, but its own political and economic
interests also have influenced its actions. Mexico can
count on the continuance of this service in the future
whether it recognizes and welcomes the protection or
not. Similarly, the desire that Mexico shall remain in-
dependent and shall become a strong state able to pro-
tect itself, or at least contribute powerfully to its own
protection is not only an altruistic desire on the part of
the United States.
MEXICAN-AMERICAN RELATIONS 301
There are many ways, of course, in which no other
country can assist in this development. If Mexico is
to find the way out of her travail to a worth-while inde-
pendence, she must do so primarily by her own efforts.
There are some ways in which she can be assisted. The
granting of such assistance should be a part of the
policy of the United States, not only because of its
obligations to its neighbor, but also because of its obliga-
tion to itself.
Most of the means by which Mexican- American rela-
tions can be improved are, contrary to popular opinion,
those in which the two governments are involved not at
all or in a secondary manner. Greatly to be desired and
fundamental, is the establishment of a better apprecia-
tion by the people of each republic of the people of the
other and of their problems. To this end the govern-
ment can contribute but little. Americans have known
foreign lands so superficially that they have little pa-'
tience with a foreign point of view. Their increasing
touch with world affairs will help to banish their provin-
cialism and make them see things through other men's
eyes as they have not in the past. They will learn by
contact to assimilate the good in other civilizations and
develop a spirit of tolerance not now a striking charac-
teristic. As this change occurs Americans will reach a
new estimate of Mexicans.
The vision of Mexicans has not been wider. They
also have felt the influence of the foreigner, but they
have not come to appreciate him. One of the indirect
beneficent results of the revolution will be the broad-
ening of the national point of view, brought about by
302 MEXICO AND ITS RECONSTRUCTION
the return of the many thousands who, during the
revolution, have been forced out of their own country
into foreign lands, especially the United States. The
new perspective, which these people will take back to
their home communities, will not fail to have its influ-
ence upon the thought of others. They will have lost
their short-range vision and will help their countrymen
to a new appreciation of the position of Mexico in the
world. From such changes of viewpoint the United
States will profit.
The American people must hear a call to help Mexico
through philanthropic activities. These depend upon
the Government of the United States only for such
friendly moral support as it may be able to extend. Bad
sanitary conditions, poor educational facilities, and other
conditions socially disadvantageous the need for the
elimination of these in Mexico should awaken a lively
interest on the part of the people of the United States.
It has not done so heretofore. In spite of the excellent
efforts made, chiefly with church support, all that has
been done is only a beginning. The well equipped and
efficient philanthropic institutions, which under Amer-
ican management and support are doing such splendid
work in the Far East and the Near East, have no coun-
terpart in the nearer south. American philanthropy
has not always heeded the injunction "Do the duty that
lies nearest thee." It has not given its attention, as it
should, to Mexico.
In spite of the evident present unwillingness of Mex-
ico to admit it, there is little doubt that the United
States must give financial assistance to the government.
MEXICAN-AMERICAN RELATIONS 303
[This is needed not only to meet the obligations of debts
already incurred but to provide money to defray the
expenses of the educational and social reforms that the
government may very properly undertake for the bene 3
fit of the common people. How far this financing can
be accomplished through loans made on purely private
initiative can not be stated. Even if it could be wholly
done thus, it is doubtful whether that standard should
be accepted. The United States may very properly do
what it can to assure that Mexico be given assistance
under conditions that will be easy for her to carry. It
may also seek to assure that its own citizens shall not
enter speculative governmental contracts, the attempted
enforcement of which would be likely to lead to inter-
national complications. The alternative which will be
offered in Mexican loans will be high rates with poor
guarantees for payment or low rates and good guaran-
tees. The recent state of public opinion in Mexico in-
dicates that her governments would prefer the former
standard.
It is open to question whether considerations of good
friendship permit the only country whose citizens are
in a position to refinance Mexico to enter contracts such
as Mexico would be glad to accept. Whether the spe-
cial guarantee, which might be given, should be an hy-
pothecation of certain sources of public income, or the
establishment of a special customs service, or some other
means that would protect the right of the lender, must
be determined by circumstances not yet developed. It
seems Mexico will very probably show unwillingness
to give any special guarantee in return for financial aid.
304 MEXICO AND ITS RECONSTRUCTION
It may be the part of friendship to wait until such un-
willingness disappears, rather than to help her borrow
money on conditions which, if fulfilled, may prove a
drag upon her economic recovery and, if not fulfilled, a
threat to international peace.
But the financing of the obligations of the government
is not the only financial assistance Mexico will need.
The industries already developed, especially her public
services, will need large amounts of capital for their
rehabilitation and their further expansion. Natural re-
sources, until now almost untouched, can be brought to
contribute to solving the problems of the republic only
by assistance from beyond the national boundaries.
These funds can be obtained on advantageous terms
only if the foreigner is assured by Mexico and by his
home government that the cooperation sought is not
one back of which lies a narrow, anti-foreign, illiberal
policy. If there is shown a genuine desire on the part
of the Mexican government and Mexican people to have
the help of foreigners in the development of the republic
and if other states make clear to their investing citizens
that conditions will not be allowed to arise in which they
will find themselves harassed by legislation that will
practically confiscate rights worthy of protection, this
help, like that to the government itself, will be forth-
coming on favorable terms. Mexico will again have
the possibility of becoming a strong American state.
If, on the other hand, the "nationalization movement"
continues to show the characteristics that have marked
it heretofore, there is no doubt that the reconstruction
of Mexico will be at least greatly retarded.
MEXICAN-AMERICAN RELATIONS 305
It is at this point, when the financial arrangements
to be adopted and the rights of foreigners come under
discussion, that the attitude of the Mexican govern-
ment toward national reconstruction becomes most im-
portant. However great the mistakes of the Diaz re-
gime may have been, there can be little doubt that the
effort to improve the condition of the country by bring.-
ing about its economic development was wise. The as-
sistance of the foreigner contributed powerfully to the
creation of a new Mexico and the assistance of the for-
eigner may be made equally effective in raising Mex-
ico from the low estate to which she has been brought by
the revolution.
Those who now have in charge the destinies of the
republic have the high responsibility of bringing that
adjustment of material and non-material interests in
which they believe their predecessors failed. They must
find some means by which they can secure the financial
assistance of the foreigner, without falling into the
errors for which they criticize those formerly in power.
The economic foundations, upon which may rest the
reforms Mexico may adopt, involve no other foreign
country as they do the United States. Trade and in-
vestments make the interests of the two countries in-
separable. These influences will accentuate their eco-
nomic interdependence and should draw them into
closer and more friendly political relations.
For the present there seems to be little prospect for
such an entente cordial. The revolution in Mexico and
the efforts of certain classes of foreigners during the
World War have reawakened the spirit of distrust,
306 MEXICO AND ITS RECONSTRUCTION
which has so long made difficult a political understand-
ing in spite of unity of economic interests. The in-
tense nationalism of the local leaders has misled them.
They have been drawn into an anti-foreign campaign,
which can not be for the best interests of their country.
They have set up the theory that the republic shall keep
for itself entire freedom of action in matters political
and economic. They seek to put the foreign resident
and his property outside the protection of his home
government. Those, whether Mexicans or not, who
helped to foster this anti-foreign policy were no friends
of Mexico.
Financially, whether we consider government obliga-
tions or private development enterprises, Mexico can-
not be independent in the way some of her recent lead-
ers have desired. The country she has called upon the
most heavily for capital in the past has been the United
States. The revolution has increased the necessity of
that dependence. Mexico must borrow to repair the
destruction of the revolution ; she must seek an intensive
development of her national resources in order to secure
means for paying off her increased obligations and for
improving the social and industrial life of her people.
The World War has made it impossible for her to se-
cure capital on the other side of the Atlantic under any
conditions. However much she may desire to spread
her borrowings, public and private, among a number
of nations, she will find that standard impossible.
Little need be said to show that politically as well as
economically Mexico should seek the friendship of the
United States. If the principle that non-American
MEXICAN-AMERICAN RELATIONS 307
states shall not be allowed to extend their control to
the American republics be overthrown or abandoned,
Mexico would not improbably be one of the first of the
new world countries to suffer. The United States is
the chief defender of the policy from which Mexico has
already, in one instance, profited in a striking manner
and by which her independence has now for a century
been rendered more secure. Finally, a policy of enmity
toward the United States would of itself endanger Mex-
ican independence.
In considering the importance of Mexican- American
relations from the point of view of the United States
the economic motives are less important in themselves
than the consequences that might follow the lack of good
understanding. The Mexican import and export trade
is of great and growing importance to the United States,
as has already been shown. Mexico is a schooling
ground for American importers and exporters. The
experience acquired in the foreign market near at hand
is valuable in the approach to others more distant. Mex-
ico is the most important of the Latin countries as a
place for the investment of American capital and it may
continue to be so. Nevertheless the interruption of the
economic connections between the two countries would
bring no such consequences to the United States as it
would to Mexico.
Friendship with Mexico is more important to the
United States politically than economically. An enemy
or an unfriendly power on the southern boundary would
be a constant threat to the national safety. So also a
country that cannot keep order within its own bound-
308 MEXICO AND ITS RECONSTRUCTION
aries and give protection to the lives and property of
foreigners is a menace to the United States only slightly
less dangerous, because conditions may arise in such a
country which, through the steps taken by other powers
to defend the interests of their nationals, may draw the
United States into international conflicts.
The United States, therefore, is in a position that de-
mands that it shall do all that is within its power to help
Mexico establish and maintain the public order upon
which her economic salvation depends. Order is essen-
tial for the rehabilitation of Mexico and for the protec-
tion of the broader foreign policy of the United States;
it is the starting point for all the other developments
in Mexico that will help to strengthen the position of
both countries and assure their good understanding.
The steps it may be necessary to take to assure order,
and to impress upon the local government its duty to
maintain it, may offend the susceptibilities of those in
control in Mexico. In the past America has been fright-
ened too often by such possibilities. There has de-
veloped a pallid Pan- Americanism, which has led the
United States too often to refuse to do anything for fear
of offending a Latin American country, even though
by inaction its own just interests were caused to suffer.
If that is the price that must be paid for Latin Amer-
ican friendship, it is not worth the price. In fact, no
such condition exists. The Latin is moved by the same
motives that prompt other peoples. A nation whose
foreign policy is characterized by a firm insistence on
respect for its citizens' rights never sacrifices the re-
spect of other nations even the respect of those against
MEXICAN-AMERICAN RELATIONS 309
whom the action is taken. A national policy that insists
upon the prompt and generous fulfillment of inter-
national duty in the protection of foreigners and in pay-
ment for damages done them is one that will do more
to make America respected among the other nations of
the New World than will one whose chief feature is the
exchange of courtesies in which hard facts are glossed.
Its influence will extend beyond our narrower national
interests, because it will make those upon whom de-
mands are made conscious of the responsibilities that
accompany their international "equality" and spur them
on to make it less a fiction.
There is no one element which, in the relations of the
two more important republics of North America, is suf-
ficient, if emphasized, to bring the good understanding
that should exist between them. Nor can the good un-
derstanding be brought through official action only.
The people of both countries must forget certain of their
prejudices. The stronger nation must feel the call to
help the weaker through both private and public initia-
tive. It must help raise Mexico to a condition, social
and economic, in which it can help itself. This, Mexico
can not do alone. The weaker nation, on its side, must
recognize the responsibilities, as well as the privileges, of
independence. Toward those who have helped and
those who will be called upon in the future to help in
the development of the country, the government must
show its good will by assuring them effective protection
and by respecting the engagements they have entered.
Given a policy with these characteristics, there is no
reason to believe that the relations between Mexico and
310 MEXICO AND ITS RECONSTRUCTION
the United States may not become increasingly inti-
mate and friendly. Economic and political cooperation
will then be possible in a positive way. It has been pos-
sible heretofore only in spite of lack of understanding
on the part of both peoples and in spite of failure to
realize their unity of interests. Cooperation and
interdependence must succeed the distrust and "in-
dependence," so prominent, often, in the past. If Mex-
ico is strong and "independent," in the broader sense
of that word, she will be a friend of the United States,
an ally in the defense of the principles in foreign policy
for which the United States stands, and a bulwark
against possible attack from the south. These she will
be from principle and because her own best interests
demand it. For the best interests of the United States
no other standard of action is necessary. A friendly,
strong, and independent Mexico will bring greater eco-
nomic advantages than the annexation that certain
classes of Mexicans fear and some citizens of the United
States desire. It would contribute more to American
political security. A friendly neighbor is a better bul-
wark than a disaffected province.
The arguments for a cordial understanding between
Mexico and the United States are so compelling that
it is hard to believe that they will be disregarded by those
who guide the fortunes of the two republics. Without
a strong and safe United States, Mexico can not be
strong nor can its independence be assured. If Mexico
is a weak and hostile nation, the United States is not
safe, and an essential of the foreign policy of all Amer-
ican states is rendered less secure.
A SELECT LIST OF MATERIALS RELATING
TO MEXICO
BOOKS
ANASAGASTI, Victorio de, Mexico reconquista sus libertades, Madrid,
1918. A eulogy of Carranza and the revolution.
ANDRADE, Luis, Mexico en Espana, Madrid, 1919- A series of eulo-
gies of certain revolutionary leaders.
ARNAUD, M. P., L'emigracion et le commerce franc, ais au MexiquG
Paris, 1902.
BANCROFT, H. H., History of Mexico, New York, 1914.
BELL, Edward I., The Political Shame of Mexico, New York, 191#.
BRINSMADE, R. B., El latifundismo Mexicano, Mexico, 1916. An
uncritical discussion of the Mexican land problem.
BULNES, Francisco, The Whole Truth About Mexico, New York,
1916. A somewhat pessimistic view of Mexican affairs by one
of the ablest of Mexican scholars.
BUTMAN, Arthur B., Report on Trade Conditions in Mexico. Trans-
mitted to Congress in compliance with the Act of May 22, 1908,
authorizing investigations of trade conditions abroad, Wash-
ington, 1908.
BUTTERFIELD, Carlos, United States and Mexico, Commerce, Trade
and Postal Facilities Between the Two Countries, Washing-
ton, 1861.
CALDERON DE LA BARCA, Madame, Life in Mexico, 3rd ed., New
York, 1910. Though originally appearing a generation ago
this is still one of the most charming discussions of Mexican
life.
CALERO, Manuel, The Mexican Policy of President Woodrow Wil-
son as it appears to a Mexican, New York, 1916. A trenchant
criticism of the policy of the American Government.
and others, Ensayo sobre la reconstruccion de Mexico, New
York, 1920. An excellent analysis of Mexican conditions.
CARSON, W. E., Mexico, the Wonderland of the South, New York,
1914.
311
312 BIBLIOGRAPHY
CASTRO, Lorenzo, The Republic of Mexico in 1882, New York,
1882.
CREELMAN, James, Diaz, Master of Mexico, New York, 1912.
CUBAS, Antonio Garcia, Mexico, Its Trade, Industries, and Re-
sources, Mexico, 1893. A good review of conditions in the
middle Diaz regime.
and HENDERSON, Geo. F., The Republic of Mexico in 1876.
ENOCH, C. R., Mexico, London, 1909.
FORNARO, C. de, and others, Carranza and Mexico, New York,
1915. An ultra-radical anti- American discussion.
FORNARO, C. de, Diaz, Czar of Mexico, New York, 1909-
FLANDRAU, Charles Macomb, Viva Mexico, New York, 1908.
GUNTHER, Erich, Handbuch von Mexico, Leipzig, 1912. A careful
study of Mexican conditions at the end of the Diaz regime.
HAGAR, George J., Plain Facts About Mexico, New York, 1916.
HUMBOLDT, Alexander de, Political Essay on the Kingdom of New
Spain, 4 vols., London, 1811. The most comprehensive review
of Mexican conditions at the close of the colonial regime.
HUTCHINSON, Lincoln, The Panama Canal and International Trade,
New York, 1915.
LUMMIS, C. F., The Awakening of a Nation; Mexico of To-day,
New York, 1898.
MACHUGH, R. J., Modern Mexico, London, 1914.
McCALEB, W. F., The Public Finances of Mexico, New York, 1920.
The most comprehensive review of this subject in English.
Present and Past Banking in Mexico, New York, 1920. A
well written historical analysis of Mexican banking with a dis-
cussion of the treatment of the banks by the revolutionary
leaders.
MANERO, Antonio, El antiguo regimen y la revolucion, Mexico, 1911.
MANERO, Vicente E., Documentos interesantes sobre colonizacion,
Mexico, 1878. A collection of various official memorias on
this subject.
Noticias historicas sobre el comercio exterior de Mexico, desde
la conquista hasta el ano de 1878, Mexico, 1879-
MAQUEO CASTELLANOS, E., Algunos problemas nacionales, Mexico,
1909.
MARTIN, P. F., Mexico of the Twentieth Century, New York.
Mexico's Treasure House, New York, 1906.
BIBLIOGRAPHY
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314 BIBLIOGRAPHY
THOMPSON, Wallace, The People of Mexico, New York, 1921. An
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316 BIBLIOGRAPHY
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318 BIBLIOGRAPHY
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BIBLIOGRAPHY 319
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-"The Mexican Oil Question/' with documents and transla-
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INDEX
Acapulco, and foreign commerce,
191
Aguascalientes, population of,
12
Agricultural machinery, import-
ed from United States,
194, 202
Agriculture in Mexico, develop-
ment of, 184, 185, 207,
237
during revolution, 184
since year 1918, 185
Alcabala, 96, 97, 99, 192
Americans in Mexico, 25, 26,
233-236, 239-270
American-Mexican relations,
263, 271-310
See also United States.
American policy toward Mexico,
4-9
See also United States.
Antunano, Esteban, and cotton
weaving, 177
Asia, Mexican trade relations
with, 190
Bandelier, Adolph F., estima-
tion of wages of farm
laborer in year 1884, by,
135
Banking system of Mexico, 83-
93
present status of, 92
Bilimbiques, 86
Brandy, production of, in Mex-
ico, 179
321
Breadstuffs exported from
United States to Mexico,
194
Breweries, in Mexico, 179
Cabrera, Luis, 75
Cabrera (Minister), 89
Calero, Manuel, 295
Camarilla stage of government
in Mexico, 36
Campeche, population of, 16
Candy and chocolate factories
in Mexico, 178
Canned provisions exported
from United States to
Mexico, 194
Carranza, 39, 51, 52, 74
"bilimbiques" issued by, 86
coinage system under, 85-87,
89, 90
customs receipts under, 217
death of, 53
foreign capital and, 251-261
loans contracted by, 72, 75, 76
labor problem under, 142
Catholics in Mexico, 21
Cattle, hides and skins exported
from Mexico, 210
Cattle industry in Mexico, 184
Chamizal controversy, 298
Chemical products, importation
of, by Mexico, 202
Chiapas, population of, 11, 16
Chicle exported from Mexico, 210
Chihuahua, population of, 26
Chinese in Mexico, 26
322
INDEX
Church as political factor in
Mexico, 21
Coahuila, population of, 13, 26
Coal:
effect of lack of supply on
industry in Mexico, 180
importation of, into Mexico,
202
Cochineal, exportation of, from
Mexico, 191, 195
Cochineal industry during nine-
teenth century in Mexico,
176
Coffee:
crop of, in Mexico, 184, 208,
210
exportation of, from Mexico,
197
Cocoa exported from Mexico,
191
Coinage system, Mexican, 83-
93
during Diaz regime, 84
effect of World War on, 90
relation of, to taxing system,
84
Coke, Governor of Texas, and
Mexican relations, 277
Colonization enterprises of Mex-
ico, 220-238
"concessions" and, 240
Germans and, 245
Commerce, Mexican, foreign, be-
fore Diaz regime, 187-
198
exports of metals, 189
effect of, on economic devel-
opment, 192
exports, 189-198
imports, 189-191, 193-198
smuggling, 193
Spanish trade regulations
for Mexico, 187, 190
statistics regarding, 192
steamship communications,
198
Commerce, Mexican, foreign:
tariff system, 192-194
Vera Cruz as shipping
center, 189
with Asia, 190
with Philippines, 190
during and after Diaz re-
gime, 199-219
effect of World War on, 217
exports, 202-217
imports, 199-206, 217
tariff system, 199-202
Commerce, Mexican, internal,
175-186
See also Industry and Inter-
nal Commerce of Mexico.
Constitution of year 1857, 30-
32, 253
Constitution of year 1917, 144,
253-256, 264, 265
Copper :
importation of, into Mexico,
68, 202
exportation of, from Mexico,
189
Corral, 49
Cotton :
exportation of, 189
importation of, 201
manufacture of, 193
Cotton weaving in Mexico, 176,
177
and Esteban Antunano, 177
Crops, production of, in Mexico,
216
Cubans in Mexico, 26
Diaz Madero election, 49
Diaz regime, 32, 33, 35, 36, 38,
43, 44, 46, 47, 48, 49,
50, 53, 60
and colonization concessions,
241, 249
attitude of, toward United
States, 279-296
INDEX
323
Diaz regime:
beginning of, 277
coinage system during, 84
colonization during, 231
commerce, foreign, before,
187-198
commerce, foreign, during
and after, 199-219
Congress during, 39
courts during, 40
division of Mexico into zones
during, 13
financial condition during, 5,
66, 67, 97, 100, 101
financial standing at close of,
74
foreigners as factor in trade
during, 183
labor conditions during, 11 6,
124-126, 129, 130, 131,
134, 138
large estate system during,
155
lawlessness during, 276
military problems during, 33-
35
position of jefes politicos dur-
ing, 63
railroad project during, 163-
166 168-171, 174
effect of, on economic con-
ditions, 169, 174
tariff rates during, 194, 200
taxing system during, 100
Education in Mexico, 22-24, 27
Elections, Mexican, 42-57
Electrical goods, importation of,
into Mexico, 202
Electrical power development in
Mexico, 179
English settlers in Mexico, 25
European powers:
attitude of, toward Haiti, pre-
ceding the World War, 8
European powers:
financial interests of, in
Mexico, 8
External Consolidated Gold
Loan, 69
Finance, Mexican, 66-103
at close of Diaz regime, 74
at outburst of World War, 72,
79
banking system, 83-93
present status of, 92
domestic obligations, 83
domestic readjustment in the
early '90's, 88
foreign claims, 66-82
foreign commerce, 98
foreign loans, 66-68
present condition of, 73-83,
93
public income and expendi-
ture, 94-103
during Diaz regime, 101
railroad building for further-
ing of, 98
See also Taxing System in
Mexico
Fish, Secretary of State, and
Mexican relations, 277
Fletcher, Henry, American Am-
bassador to Mexico, 270
Foreign population of Mexico,
25
lack of accurate census re-
garding, 25
Foster, Minister, 282
Flour exported from United
States to Mexico, 194
Foodstuffs:
importation of, into Mexico,
201
production of, in Mexico, 201
Foreigners in Mexico:
capital invested by, 239-252
total amount of, 247
324
INDEX
Foreigners in Mexico:
immigration of, 233-236
legal status of, 252-270
property of, 230-252, 256-
258
confiscation of, 260
Foreign investments in Mexico:
by Americans, 242-244, 247
by British, 244-247
by French, 245-247
by Germans, 245-248
France:
capital of, invested in Mexico,
245-247
Mexican trade relations with,
193, 194-195, 196, 200,
203
property of, in Mexico, 245
confiscation of, 260
French population in Mexico,
25, 26
Garbanzos, exported from Mex-
ico, 210
Garcia, Jesus, 288
German population in Mexico,
25, 26
Germany:
capital of, invested in Mex-
ico, 245-248
colonization interprises and,
245
trade relations of, with Mex-
ico, 194, 195, 200, 203
Glass and faience factories in
Mexico, 176
Gold exported from Mexico, 189
Gonzalez, 50, 52
Government of Mexico, 28-85
camarilla stage, 36
conservative party in, 42-44
constitution of year 1857, 30-
32, 253
constitution of year 1917, 144,
253-256, 264, 265
Government of Mexico:
during Diaz regime. See
under Diaz regime,
elections, 42-57
executive, 28-41
judicial, 30, 40
legislative, 29
Liberal party in, 43, 44
local, 58-65
town council (ayuntami-
ento*), 62
military problems, 33-35
State governments, 58-65
taxing system. See Taxing
System of Mexico.
Great Britain:
capital of, invested in Mexico,
244, 247
Mexican trade relations with,
193, 194, 195, 196, 200,
203, 211
property of, Mexican confis-
cation of, 260
Greek Orthodox in Mexico, 22
Groceries, trade in, in Mexico,
182, 194
Guatemalans in Mexico, 26
Guayule, exported from Mexico,
210
Guerero, population of, 16
Hacendados, 139
Haiti, attitude of European
powers toward, preceding
the World War, 8
Hardware trade in Mexico, 183,
194
Hats, exported from Mexico,
211
Henequen, exported by Mexico,
208
Hides exported from Mexico,
189, 197
Holland, property of, Mexican
confiscation of, 260
INDEX
325
Huerta, 50, 51, 53, 74,
labor legislation and, 142
Hughes, Secretary of State, and
Mexican relations, 264
Humboldt, Alexander von:
estimation of Mexican popu-
lation by, 12
estimation of wages of agri-
cultural laborer in year
1804 by, 135
Indian tribes in Mexico, 16
Indigo exported from Mexico,
189
Indigo industry during nine-
teenth century in Mexico,
176
Industry and internal commerce
of Mexico, 175-186
agriculture, 184, 185
brandy, 179
breweries, 179
candy and chocolate factories,
178
cattle industry, 184
cochineal, during nineteenth
century, 176
coffee crop, 184
coining of silver, 175
cotton goods, 176, 177, 178
effect of development of oil
regions on, 180
effect of lack of coal on,
180
effect of re-adoption of gold
standard on, 186
effect of revolution on, 185
electrical power development,
179
foreigners as a factor in, 181-
183
glass and faience factories,
176
groceries, 182
hardware, 183
Industry and internal commerce :
indigo, during nineteenth cen-
tury, 176
inducements offered by the
government in nineteenth
century, 176
influence of foreign trade on,
180-182
iron and steel, 182
jewelry, 182
jute, 178
liquor trade, 182
machinery and machinery sup-
plies, 183
Mexico City as center of, 184
mining, 185, 195
present status of, 183
printing establishments, 176
rum, 178
silks, 176, 182
silver, 175, 185
stock-raising, 184
sugar, 178, 184
textile manufacturing, 175-
178
centers of, 176
tobacco manufacture, 179* 185
woolen goods, 176, 178
Infalsificable notes, 86, 89
Iron, exportation of, from Mex-
ico, 202
Iron and steel, importation of,
into Mexico, 194, 202
Iron and steel industries in
Mexico, 182
Iron goods, importation of, into
Mexico, 203
Israelites in Mexico, 22
Jalisco, population of, 14
Jefes politico*, 63
during Diaz regime, 63
Juarez, 43
second election of, 50
Jute manufacturing, 178
326
INDEX
Labor contract in Mexico, 112-
134
Labor problem in Mexico, 104-
160
aboriginal races and, 112
and the revolution, 144-147
baldios and, 120
by tarea system, 128
during Diaz regime, 11 6, 124-
126, 129, 130, 131, 134,
138
faena and, 122
foreigners and, 110
government statistics on, 11 6,
130
rate of wages, 135
hacendados and, 125, 134, 143
Indians and, 106-109, 111,
112, 121, 126-128
labor union movement, 140-
142, 146
legislation in connection with,
123, 127, 143
mestizo class, 109, HI, 112
peonage system, 115, 117,
121, 129, 130, 133
pulque trade and, 143
punteros and, 121
ray a and, 122
socorro and, 122
tarea and, 122
task laborers, 122
term contracts, 117-120, 122
wage rates, 118-120, 122, 126,
128, 131, 135-147
effect of World War on,
140
for children, 137, 143
for females, 137, 143
for males, 137, 143
working hours, 118, 143
Laborer, Mexican, 104-160
contract of, 112-134
demands of, 112-134
See also Labor Problem in
Mexico.
Land problem in Mexico, 148-
160
Languages of Mexico, 18, 19
Maya, 19
Mexicanos, 19
Nahuatl, 19
Otomi, 19
Spanish, 19
Zapotecano, 19
La Novia, revolution of, 43
Lard, importation of, into Mex-
ico, 201
Latin-American countries, atti-
tude of United States to-
ward, 6
Leather goods, importation of,
into Mexico, 201
Lerdo, 43, 50
Leyes de Deslindes, 152
Lill, Thomas R., 74
Liquors, trade in, in Mexico,
182, 194
Literacy of Mexicans, 22-24, 27
census statistics, 22-24
Machinery :
exported from Mexico, 194
imported by Mexico, 202
Machinery trade, control of, by
Americans, in Mexico,
183
Madero regime:
financial condition during,
74
labor problem and, 142
Maximilian, regime of:
colonization during, 245
floating of loan in year 1864
by, 68
Maya, language of, 19
Mayas, 11
Meats, preserved, importation of,
into Mexico, 201
Mestizo population in Mexico,
INDEX
327
Metal goods exported from Mex-
ico, 194, 195
Metals :
exported from Mexico, 202,
205, 210
importance of, as resource in
Mexico, 189
Mexican-American relations, 49,
72, 263, 271-310
See also Mexico.
Mexican "Border," 271-296
Mexican finance, 66-103
See also Finance, Mexican.
Mexican laborer, 104-160
See also Labor, Mexican.
Mexicano, 19
Mexicans in United States, 273
Mexico :
attitude of United States to-
ward, 4-9,72, 279-310
colonization enterprises of,
220-238
commerce, foreign, before
Diaz regime, 187-198; see
also Commerce, Mexican
during and after Diaz re-
gime, 199-219; see also
Commerce, Mexican,
with United States, impor-
tance of, 6
commerce, internal, and indus-
try, 175-186; see also In-
dustry and Internal Com-
merce of Mexico
economic development of, 5, 7,
10, 11, 40
effect of agricultural ex-
perimental work on, 237
effect of agricultural ex-
ports on, 208-210
effect of American invest-
ments on, 242-244
effect of exportation on,
207-214
effect of importation on,
214
Mexico, economic development:
effect of labor problem on,
104-185
effect of manufacturing on,
175-186
effect of political problem
on, 112, 170
effect of railroads on, 169
effect of tariff on, 199
foreigners in, 239-270; see
also Foreigners in Mex-
ico.
government of, 28-85
industry and internal com-
merce of, 175-186; see
also Industry and In-
ternal Commerce of Mex-
ico.
languages of, 18, 19
municipal government of, 58-
65
natural wealth of, 5
population of, 10-27
present status of civilization
in, 5
racial development of, 14-16
among Indian tribes, 16
resident international interests
within, 5, 10
social status of, 11, 17
transportation facilities in,
161-174
Mexico City, as center of com-
merce 184
Michoacan oooulation of, 14, 16
Mining in Mexico, 185, 195
Mineral products exported from
Mexico, 205
Minerals, importation of, into
Mexico, 202
Miztecs, 16
Mohammedans in Mexico, 22
Monterey and Mexican Gulf
Railway, 69
Municipal government of Mex-
ico, 58-65
328
INDEX
Nahuatl, 19
National Railways of Mexico,
General Mortgage four
per cent gold bonds, 11,
72
Native population of Mexico, 26
Neuvo Leon, population of, 26
Oaxaca, population of, 14, 16
Obregon, 52, 53, 75, 174, 263
Occupations of Mexicans, 24
lack of accurate census of, 24
Ochre exported from Mexico, 189
OU:
exported from Mexico, 191,
206
status of, during and after
Diaz regime, 206, 257,
261-264
Oil regions of Mexico, effect of
development of, on indus-
try, 180
Otomi, 19
Ord, General, 280-282
Ord Order, 281
Palacio, Vincente Riva, 229
Petroleum, status of, in Mexico,
218, 258-260, 262
Peonage system in Mexico, 115,
117, 121, 129, 130, 133
Philippines, Mexican trade rela-
tions with, 190
Pious Funds dispute, 298
Polk, General, 283
Population of Mexico, 10-27
Americans, 25
Chinese, 26
Cubans, 26
English, 25
foreigners, 25
French, 25, 26
Germans, 25, 26
Guatemalans, 26
Population of Mexico:
in Aguascalientes*, 12
in Carupeche, 16
in Chiapas, 13, 16
in Chihuahua, 26
in Coahuila, 13, 26
in Guerero, 16
in Jalisco, 14
in Michoacan, 14, 16
in Nuevo Leon, 26
in Oaxaca, 14, 16
in Puebla, 13
in Sonora, 13, 26
in Tarahumaras, 16
in Tarascas, 16
in Tepehuanas, 16
in year 1890, 13
in year 1910, 13
in Yucatan, 13, 16
Indian tribes, 16
lack of accurate census of, 11
literacy of, 22-24, 27
Mayas, 11
mestizo, 17
Miztecs, 16
native, 26
occupations of, 24
religion of, 19-22
Spanish, 25, 26
white, 14, 16-18, 26
Yaquis, 11, 16
Zapotecs, 11, 16
Printing, in Mexico, 176
Protestants in Mexico, 22
Public income and expenditure,
Mexican, 94-103
See also Taxing System of
Mexico.
Puebla, population of, 12
Quicksilver, importation of, into
Mexico, 202
Racial development of Mexico,
14, 16
INDEX
329
Railroads in Mexico, 162-174
demoralization of, 171-173,
174
establishment of, 162
advantages as a result of,
169
attitude of United States to-
ward, 163
effect of, on economic con-
dition, 169, 171-173
effect of, on international
relations, 169
Mexican Central Railroad,
168, 243
Mexican National Railroad,
168, 243
public policy, before Diaz re-
gime, 163-168
during Diaz regime, 163-
166, 168-171, 174
reestablishment of, 173
Railway equipment, importation
of, into Mexico, 202
Religion, of Mexicans, 19-22
Reyes, Bernardo, 38
Romero, Matias, estimation of
wages of day laborers in
1896 by, 136
Root, Elihu, 294
Rubber exported from Mexico,
210
Rum, manufacture of, in Mexico,
178
Santa Ana, 223, 228
Silk industry in Mexico, 176,
182
Silver, Mexican:
coining of, 175
exports of, 189, 191, 218
supply of, 206, 218
value of, 85, 218
Sisal, production and exporta-
tion of, 209
Sonora, population of, 13, 26
Spain, trade regulations of, for
Mexico, 187, 190
Spaniards in Mexico, 25, 26
Spanish conquest of Mexico:
economic development under,
104, 187, 220
taxes during, 95
Spanish land policy, 149
Spanish language in Mexico, 19
Stockraising in Mexico, 184
Sugar in Mexico, 178, 184
Sulphur exported from Mexico,
189
Taft, William Howard, 295
Tarahumaras, 16
Tarascas, 16
Tariff system:
before Diaz regime, 192
during Diaz regime, 199, 202
Taxation system in Mexico, 59-
62, 94-100
and concessions, 241
and foreign property, 259-264
bullion tax, 97
consumption taxes, 59
during Diaz regime, 100
during period following Span-
ish rule, 96-98
during period of Spanish rule,
94-97
federal, 100
for land, 102
license, 100
lottery tax, 96, 100
for commerce, 59, 96, 198
internal (alcabala), 96, 97/
99
for industry, 59
for precious metals, 84
for professions (patente}, 59
for property, 59
paper tax, 96
poll taxes, 60
predial, 100
330
INDEX
Taxation system:
professional tax, 100
pulque tax, 97
rate of levy, 59
relation of, to coinage system,
84
stamp taxes, 96, 97, 100
tobacco tax, 97
Tehuantepec Railway Loan, 69,
75
Tepehuanas, 16
Textile manufacturing in Mexico :
in sixteenth century, 175-176
centers of, 176
cotton goods, 176, 177, 178
cotton factories, 178
silk weaving, 176
woolen goods, 176, 178
Textiles, importation of, into
Mexico, 199, 203
Tin, exportation of, 189
importation of, 202
Tobacco :
manufactured in Mexico, 179,
185
exportation of, 211
raw, exported from Mexico,
210
Town government of Mexico,
58-65
Transportation facilities in Mex-
ico, 161-174
cost of, before building of
railroads, 162
Indian carriers, 162
railroads, 162-174, 198
Tuxtepec, revolution of, 43
United States:
attitude of, recent, toward
Mexico, 263, 271-310
toward Diaz regime, 279-
296
toward Latin American
countries, 6
United States :
toward Mexican railway
projects, 163, 169, 174
attitude of Mexicans toward,
in railway project, 163-
169, 174
in seventeenth century, 221
capital of, invested in Mexico,
242-244, 247
commercial relations of, with
Mexico, 6, 193-195
foreign policy of, toward
Mexico, 4-9, 72, 279-310
Mexican trade relations with,
193, 195, 196, 198, 202,
203-205, 210-213, 217
property of, Mexican confis-
cation of, 260-264
"Unoccupied" land, in Mexico,
149-152
Vanilla, exported, 210
Vegetable fibers, exported, 210
Vegetable substances, importa-
tion of, into Mexico, 201
Vera Cruz, 189-191
Villa, 86
Wine, imports of, from France,
to Mexico, 195
export of, from Mexico, 191
Wood exported from Mexico,
189, 197, 210
Wool, exportation of, 189, 191
importation of, 200, 201
Woolen manufacturing in Mex-
ico, 176, 178
Yaquis, 11, 1 6
Yucatan, population of, 13, 16
3 1970 01953 7031
