Pesos and Politics
Business, Elites, Foreigners, and Government in Mexico, 1854-1940
Mark Wasserman

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Elites, Foreigners, and Government in Mexico, 1877–1940

The relationship between business and politics is crucial to understanding Mexican history, particularly the eras of Porfirio Díaz (1877–1911), the Revolution (1910–20), and the revolutionary reconstruction (1920–40).1 The ability of the Díaz regime to construct a network of intricate arrangements that tied together the many conflicting interests of the Mexican elite and foreign investors was, with the personal force of the dictator, the very heart of its thirty-five-year rule. The Revolution in considerable part resulted from the breakdown of these Porfirian deals. During the ten years of civil strife that followed the fall of Díaz, businesspeople, politicians, and military struggled to make new arrangements. The Constitution of 1917 restructured government relations with landholders and mineral producers and introduced a whole new array of rules for the treatment of employees. The transformation of business relations that reflected the interests of new elites and newly influential groups, such as workers and peasants, comprised the core of the struggles of the 1920s and was a crucial reason for the ultimate creation of the revolutionary party, the Partido Nacional Revolucionario (PNR), in 1929. The widespread expropriations of land and the government takeover of the oil industry during the presidency of Lázaro Cárdenas necessitated the construction of yet another set of understandings.

Pesos and Politics will combine the most important approaches to the field, such as the study of the composition and behavior of oligarchies, the exploration of the development of the modern state, the examination of the impact of external economic factors, and the emphasis on regional and local politics and consider the relations between businesses, elite, foreign investors, and government from the municipal to the international levels. The extension of the analysis to the regional and local levels will present a better picture of how the interactions between these entities worked on an everyday basis and improve our overall understanding of how Mexican business functioned and how its operations changed over time.

I will argue that throughout the era from 1876 to 1940—begun by Porfirio Díaz and his henchmen Manuel Romero Rubio and José Yves Limantour, continued through the nearly decade of civil war and the postwar state under Alvaro Obregón and Plutarco Elías Calles, and further sustained during the emergence of the one-party state and the readjustment during the presidency of Lázaro Cárdenas—there was an evolving elite-foreign enterprise system. This constantly changing set of arrangements required intricate checks and balances.2 For the sixty years under study, no one entity—neither the national government/regime, nor any national or regional elite faction, nor the military, nor foreign investors, collectively or individually—was so powerful as to dominate the relationships. For the most part, beginning with the mid-1880s, the state, with its varied strength over time, was the primary entity that maintained the equilibrium between contestants, for its own benefit and theirs. The negotiations and resulting agreements took place within important constraints. Because both the pre- and postwar regimes were committed successively to development, led first by raw material and agricultural exports and then by import substitution industrialization, each of which depended on foreign capital for its success, Mexican governments had to reach a balance that simultaneously attracted foreign entrepreneurs, but did not allow them to become too powerful. Díaz’s purchase of the foreign-owned railroads and Cárdenas’s expropriation of the foreign-owned petroleum companies were only the most notorious efforts to maintain the equilibrium. In addition, various regimes had to struggle to balance local, state, and national governments. Regional and local elite factions and the political bosses who sometimes represented them were powerful entities that often limited the actual power of national governments. The issue of local autonomy sustained through the entire period. The famous cry of “obedezco pero no cumplo” (I obey but do not comply) during the Spanish colonial period was no less the description of the relationship between the national government and the localities from the 1850s through 1940. Moreover, through almost all of the era, it was a more evenly balanced struggle than historians have assessed. Neither the Porfirian state nor the revolutionary state were even close to omnipotent. To a large extent the course of the Revolution owed to local and regional prerogatives overpowering the national regime.

Local, regional, and national elite and the governments at these levels that they influenced or ran were deeply involved in the struggle to maintain checks and balances with foreign investors. Here, too, the process was more on equal terms than historians have generally asserted. Foreigners did not control the Mexican economy at any point, though they owned a considerable part of it. It is not clear that foreigners received better treatment than native Mexicans, as some have claimed. For example, while some foreign enterprises might obtain favorable consideration at one level of government, they might likely find a less hospitable environment at another. The elite-foreign enterprise system functioned in spite of the sometimes nationalistic rhetoric of various regimes, which served to camouflage the never-ending process of negotiations.

Because Mexican business over the course of six decades is an enormous topic, far too extensive for a book of modest length, this study will concentrate on the three most important sectors of the Mexican economy: mining, agriculture, and railroads.3 Within these, it will investigate, for the most part, the operations of foreign enterprises and their interactions with elites and governments at various levels. It is my supposition, however, that the histories of foreign companies and individuals do not differ substantially from that of Mexican-owned and -operated enterprises.4

At the core of the relationships between Mexican business and politics were the five overlapping sectors that competed and cooperated from the Reform (1854) to the Revolution (1910–40): (1) the Mexican national elite; (2) regional (state) elite; (3) local (municipal) elite; (4) large foreign corporations; and (5) individual foreign entrepreneurs. During and after the Revolution, organized labor and organized peasants joined these five.

MEXICAN ELITES

Mexican elites were in constant conflict. From the Liberal reforms until 1940, three sets of simultaneous, interconnected struggles occurred: local elite fought the efforts of state-level oligarchies to encroach on their autonomy; rival elite factions at the state level clashed to establish their domination; and state elite battled with successive national regimes to maintain regional autonomy.5 The Mexican national elite, based in Mexico City, controlled the central government and unceasingly sought to extend its influence. For much of the nineteenth century, the national elite divided into two irreconcilable warring groups. After thirteen years of civil war from 1854 to 1867, the centralist Conservatives lost out to federalist Liberals, who in their efforts to modernize the nation soon became centralists. Dictator Porfirio Díaz, who seized power in 1876 and held it for thirty-five years, forged a national elite comprised of military officers, allied with civilian technocrats, the latter known popularly as científicos. This coalition encouraged and facilitated enormous foreign investment in order to modernize the nation’s economy and maintain its position of power. Díaz and his cronies struggled to push their influence into the regions, but fiercely resistant regional elite forced compromise. A mosaic of deals and alliances formed the basis of the regime. The Revolution of 1910 tore apart the system. For a decade no national group or leader constructed a replacement, foundering on the rocks of regional opposition. In the regions and localities the various revolutionary and counterrevolutionary factions competed and alternated in power, mixing ambitious new freebooters and, at times, remnants of the old guard. During the presidency of Alvaro Obregón (1920–24) a new national elite took shape. Predominantly made up of military officers, it reconstructed a system of compromises similar to those of the Díaz era. In the 1930s, under the auspices of the PNR, government use of military force and patronage restarted the process of centralization. The new regime diminished (but did not destroy) the power of regional elites, employing peasant and worker organizations as political counterweights. Throughout the enduring conflicts between national regimes and regional elite, local elites fought to maintain their autonomy, as well.6

The Revolution pushed the prerevolutionary elite from its political place and, in many respects, that elite never recovered.7 Economically, members of the Porfirian upper class survived in inverse relation to their dependence on land for their fortunes. Some of the old elite flourished in the new order.8 The new ruling elite derived mainly from the upwardly mobile middle classes and ambitious military officers. Overall, the biggest winners in the Revolution were members of the middle class, who gained access to government, education, and economic opportunity. The Sonoran dynasty—Adolfo de la Huerta, Alvaro Obregón, and Plutarco Elías Calles—epitomized this middle-class triumph.9

The current historiography maintains that there was little or no separation between economic and political elite until the Revolution of 1910. Thereafter, the revolutionary regime supposedly split the national power structure into economic and political groups.10 The revolutionary party pointedly excluded the business sector from its ranks. But my research indicates that these separations did not apply at the state and municipal levels.11 And, if the careers of presidents Alvaro Obregón, Plutarco Elías Calles, and Abelardo Rodríguez were any indication, the overlap of economic and political interests existed on the national level as well.12 It is not evident that there was any clear difference between the single political and economic elite of the Díaz dictatorship and the supposedly dual elite that existed during the immediate postrevolutionary war years, 1920 to 1940. There arose from the Revolution a group of military and civilian entrepreneur-politicians whose activities blurred the lines between economic and political elite. As Dudley Ankerson observed of the generals, the difference between them and their predecessors was that “the methods of their plunder became more sophisticated.”13 One observer noted, “The Generals and other officials devote more time to mercantile pursuits than to combating banditry; they . . . attend to their own business first.”14

These demarcations were also not so clear at the state and municipal levels. Revolutionary leaders behaved much like their predecessors, employing public position for private gain. The revolutionary military, also like the Díaz elite, made money the “old fashioned way,” through payoffs, bribes, and padding payrolls. If anything, the “freebooters” of the Revolution may have been better entrepreneurs, more adept at intermingling economics and politics, and more willing to innovate by entering new fields such as industry and gambling. Through 1940 the bifurcation of the elite into economic and political segments did not seem to have taken place at the state and local levels. The lessons learned in the nineteenth century regarding the need to control local politics in order to protect economic holdings was probably more important in the 1920s and 1930s than ever before.15

Old and new elite depended on their families for the base of their influence and enterprise. The greatest fortunes of the Porfiriato, such as the Terrazas-Creel, the Madero, and the Molina-Montes fortunes, were founded on extended family ties. Before and after the Revolution the major fortunes of the Monterrey group were perpetuated by family.16 The revolutionaries were similarly inclined. Thus, the Quevedos and Almeidas used their extended families to solidify their economic holdings and political influence in Chihuahua during the 1920s and 1930s, and the Avila Camachos did the same in Puebla in the 1930s and 1940s.17 The revolutionaries also relied heavily on their camarillas, groups of loyalists with links from the university or local politics.18

Notes

1. There is considerable disagreement among historians as to when the Revolution ended, with some claiming 1920, 1929, 1940, or 1946. For my purposes, 1920 is a useful date because it marks the end of the most intensive warfare and the beginning of economic reconstruction under Alvaro Obregón, which continued through to the end of the presidency of Lázaro Cárdenas. I label the period from 1920 to 1940 “revolutionary reconstruction” because the phrase underlines the delicate balance between rebuilding the economy and instituting the sometimes radical reforms mandated by the Constitution of 1917 and victorious agrarians and workers.

2. Peter Evans, in his Dependent Development: The Alliance of Multinational, State, and Local Capital in Brazil (Princeton, NJ: Princeton University Press, 1979), found a similar phenomenon, which he called the “triple alliance” in Brazil. See also Mark Wasserman, “Foreign Investment in Mexico, 1876–1911: A Case Study of the Role of Regional Elites,” The Americas 36 (July 1979): 2–21.

3. There are excellent studies of other parts of the Mexican economy. See, for example, Jeffrey L. Bortz and Stephen Haber, eds., The Mexican Economy, 1870–1930: Essays on the Economic History of Institutions, Revolution, and Growth (Stanford, CA: Stanford University Press, 2002); Stephen H. Haber, Industry and Development: The Industrialization of Mexico, 1890–1940 (Stanford, CA: Stanford University Press, 1989); Noel Maurer, The Power and the Money: The Mexican Financial System, 1876–1932 (Stanford, CA: Stanford University Press, 2002); Mario Cerutti and Carlos Marichal, eds., La banca regional en México (1870–1910) (Mexico City: El Colegio de México and El Fondo de Cultura Económica, 2003); Mario Cerutti, Burguesía y capitalismo en Monterrey, 1850–1910 (Mexico City: Claves Latinoamericanas, 1983.) See also Sandra Kuntz Ficker, “La historiografía económica reciente sobre el México decimonómico,” Mexican Studies/Estudios Mexicanos 21:2 (summer 2005): 461–92; and María Eugenía Romero Ibarra, “Panorama general del desarrollo de la historia empresarial en México,” Historia Mexicana 3:207 (Jan.–Mar. 2003): 831–72.

4. Carlos Marichal and Mario Cerutti, eds., Historia de las grandes empresas en México, 1850–1930 (Mexico City: Universidad Autónoma de Monterrey/Fondo de Cultura Económica, 1997); María del Carmen Collado, La burguesía mexicana: El emporio Braniff y su participación política, 1865–1920 (Mexico City: Siglo Veintiuno Editores, 1987).

5. For an overview of the period 1821 to 1911, see Mark Wasserman, Everyday Life and Politics in Nineteenth-Century Mexico: Men, Women, and War (Albuquerque: University of New Mexico Press, 2000); and Daniel Cosió Villegas, ed., Historia moderna de México, 10 vols. (Mexico City: Editorial Hermes, 1964–71).

6. For the history of the twenty years after 1920, see Jean Meyer, Historia de la revolución mexicana, periodo 1924–28: Estado y sociedad con Calles (Mexico City: El Colegio de México, 1977); Enrique Krauze, Historia de la revolución mexicana, periodo 1924–1928: La reconstrucción económica (Mexico City: El Colegio de México, 1977); Lorenzo Meyer, Historia de la revolución mexicana, periodo 1928–1934: Los inicios de la institucionalización. La política del maximato (Mexico City: El Colegio de México, 1978); Lorenzo Meyer, Historia de la revolución mexicana, 1928–1934: El conflict social y los gobiernos del maximato (Mexico City: El Colegio de México, 1978); Luis González, Historia de la revolución mexicana, 1934–1940: Los días del presidente Cárdenas (Mexico City: El Colegio de México, 1981); Alicia Hernández Chávez, Historia de la revolución mexicana, 1934–1940: La mecánica cardenista (Mexico City: El Colegio de México, 1979); Luis González, Historia de la revolución mexicana, 1934–1940: Los artifices del cardenismo (Mexico City: El Colegio de México, 1979).

7. Peter H. Smith, Labyrinths of Power: Political Recruitment in Twentieth-Century Mexico (Princeton, NJ: Princeton University Press, 1979); Roderic A. Camp, Entrepreneurs and Politics in Twentieth-Century Mexico (New York: Oxford University Press, 1989); Roderic A. Camp, Mexico’s Leaders: Their Education and Recruitment (Tucson: University of Arizona Press, 1980).

8. Mark Wasserman, “Strategies for Survival of the Porfirian Elite in Revolutionary Mexico: Chihuahua During the 1920s,” Hispanic American Historical Review 67:1 (Feb. 1987): 87–107.

9. Jurgen Buchenau, The Last Caudillo: Alvaro Obregón and the Mexican Revolution (New York: Wiley-Blackwell, 2011); Jurgen Buchenau, Plutarco Elías Calles and the Mexican Revolution (Lanham, MD: Rowman and Littlefield, 2007); Roger D. Hansen, The Politics of Mexican Development (Baltimore, MD: Johns Hopkins University Press, 1971).

10. Smith, Labyrinths.

11. Mark Wasserman, Persistent Oligarchs: Elites and Politics in Chihuahua, Mexico, 1910–1940 (Durham, NC: Duke University Press, 1993).

12. Ramón Eduardo Ruíz, The Great Rebellion, Mexico 1905–1924 (New York: W. W. Norton, 1980), pp. 377–81; Dudley Ankerson, Agrarian Warlord: Saturnino Cedillo and the Mexican Revolution in San Luis Potosí (DeKalb: Northern Illinois University Press, 1984), pp. 85–86.

13. Ankerson, Agrarian Warlord, p. 85. Obregón from the time he resigned as war minister in 1917 until he took over as president in 1920 acquired a virtual monopoly on the sale of Sonora-grown chickpeas to the United States, as well as several other businesses. See also Nora Hamilton, The Limits of State Autonomy: Post-Revolutionary Mexico (Princeton, NJ: Princeton University Press, 1982), pp. 84–90.

14. A letter from an unnamed “prominent English businessman” to Consul General Philip Hanna, Dec. 1917. Hanna to Secretary of State, Dec. 24, 1917, USNARG 59, 812.00/21636. Cited in Dudley Ankerson, p. 86.

15. See Stephen Haber, Armando Razo, and Noel Maurer, The Politics of Property Rights: Political Instability, Credible Commitments, and Economic Growth in Mexico, 1876–1929 (Cambridge: Cambridge University Press, 2003), for a somewhat different interpretation that excludes politics from the analysis.

16. Wasserman, Persistent Oligarchs; Allen Wells, Yucatán’s Gilded Age: Haciendas, Henequen, and International Harvester, 1860–1915 (Albuquerque: University of New Mexico Press, 1985); Mario Cerutti, Burguesía y capitalismo en Monterrey, 1850–1910 (Mexico City: Claves Latinoamericanas, 1983); Alex M. Saragoza, The Monterrey Elite and the Mexican State, 1880–1940 (Austin: University of Texas Press, 1988); William Schell Jr., Integral Outsiders: The American Colony in Mexico City, 1876–1911 (Wilmington, DE: Scholarly Resources, 2001); David M. Pletcher, Rails, Mines, and Progress: Seven American Promoters in Mexico, 1867–1911 (Ithaca, NY: Cornell University Press, 1958).

17. Wasserman, Persistent Oligarchs; Wil Pansters, Politics and Power in Puebla: The Political History of a Mexican State, 1937–1987 (Amsterdam: CEDLA, 1990).

18. Roderic A. Camp, Political Recruitment Across Two Centuries: Mexico 1884–1991 (Austin: University of Texas Press, 1995); Roderic A. Camp, Mexico’s Mandarins: Crafting a Power Elite for the Twenty-First Century (Berkeley: University of California Press, 2002).