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Foreign Investment in Mexico, 1876-1910: A Case Study of the Role of Regional Elites

Published online by Cambridge University Press:  11 December 2015

Mark Wasserman
Mark Wasserman*
Affiliation:
Douglass College, Rutgers University, New Brunswick, New Jersey
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Extract

FOREIGN investment, mostly from the United States, fueled the rapid growth of the Mexican economy under the regime of Porfirio Díaz. By 1910, foreigners had invested well over a billion dollars in Mexico's railroads, mines, and a variety of other undertakings. At the core of the expansion and development of foreign investment was the connection between foreign entrepreneurs and the native elite. This association, worked out over three decades, greatly affected the economic, political, and social development of the nation.

The relationship between native elite and foreign entrepreneurs was based on three sets of factors. First, the native elite controlled both the government which in Mexico, on all levels, played an important role in the success or failure of any enterprise and, through their ownership of much of the nation's land and mines, the rich natural resources which foreign enterpreneurs sought to develop. Second, the native elite was willing to permit foreigners to develop the nation's resources, to participate in a wide range of economic activities, and to dominate certain sectors of the economy, such as mining. The native elite allowed this, because on one hand, one group within the elite, the cientificos, was ideologically committed to the modernization of the country and saw foreign investment as the quickest and most efficient method to modernize and, on the other hand, the traditional groups within the elite saw foreign investment as a means to increase their own incomes (through bribes, commissions, and the sale of their property) and to preserve their traditional privileges. The only conceivable alternative to the development of the nation's economy through foreign investment would have been through the expansion of direct government participation in the economy, but this would have required (apart from an implausible ideological reorientation towards the discredited conservatism of an earlier era or the exotic doctrines of European socialism) a considerable redistribution of the nation's wealth (through taxation and other means of “forced” savings) to the disadvantage of the elite. The development of Mexico's economy through foreign investment did not disturb the political status quo. Third and finally, foreign entrepreneurs had both the capital and technological know-how to develop the nation's resources, neither of which was present in Mexico.

Type
Research Article
Information
The Americas , Volume 36 , Issue 1 , July 1979 , pp. 3 - 21
Copyright
Copyright © Academy of American Franciscan History 1979

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References

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13 Creel had owned the concession for a smelter in Chihuahua City since as early as 1896. Chihuahua, Mexico, Gobernador, , Memoria de la Administración Pública del Estado de Chihuahua, 1892–1896, presentada a la legislatura por el Governador Miguel Ahumada (Chihuahua: Imprenta del Govierno, 1896),p. 337 Google Scholar; Mexican Financier, June 27, 1896,p. 326; Hoyt, , Guggenheim, p. 159 Google Scholar; Almada, Francisco R., La Revolución en el Estado de Chihuahua, 2 vols. (Chihuahua: Biblioteca del Instituto Nacional de Estudios Históricos de la Revolución Mexicana, 1964), 1:73 Google Scholar; Lister, and Lister, , Storehouse, p. 181 Google Scholar; Mexican Investor, July 1, 1905, p. 16. The land was the Haciendas de Tabaloapa and Avalos. EMJ 80 (November 11, 1905): 900; Mexican Investor, November 18, 1905, p. 3.

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17 W. W. Mills, U.S. Consul, Chihuahua City, to Robert Bacon, Assistant Secretary of State, January 1, 1906; W. W. Mills to Francis B. Loomis, Assistant Secretary of State, April 7, 1905; James I. Long to W. W. Mills, April 15, 1905, NARG 59.

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20 El Correo de Chihuahua, May 13, 1903, p. 4; Mexican Herald, December 16, 1906, p. 6.

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43 Bankers’ Magazine 80 (1910): 309. This was for 1909. The Terrazas did not seem to have any trouble raising capital for their banks among the local elite and resident foreigners, which indicates some of the elite reinvested their funds.

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51 Ibid., July 31, 1902, p. 3; Chihuahua Mail, December 3, 1883, p. 4.

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53 Southworth, Directory, p. 68. The superintendent of the Corralitos Ranch was the jefe político (municipal?) of the district's local government. Mexican Financier, December 5, 1888, p. 157.

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