San José State University
Department of Economics
Thayer Watkins
Silicon Valley
& Tornado Alley

The Economic History of Mexico

Some History of Mexico

Historical Background

It has been pointed out that many of the problems of Mexico, particularly problems of government, stem from the fact that for the first three centuries of its existence the major function of government in Mexico was to squeeze as much wealth from the country as possible and send it to Spain. Although Mexico achieved independence from Spain in the early nineteenth century there was not an abrupt change in the way the society functioned.

Until 1700 the Viceroyalty of New Spain included not only what is now Mexico and its northern territories which became the states of California, Arizona, New Mexico and Texas but also Central America to Panama and the Spanish Caribbean possessions of Cuba, Hispanola, Puerto Rico and what is now the state of Florida and also the Philippine Islands. The Viceroy of New Spain resided in Mexico City.

One factor that created tensions between Spain and its Empire was the replacement of the Habsburg dynasty in Spain by the Bourbon dynasty from France. This change occured as a result of the War of Spanish Sucession. Once the Bourbon king Charles III gained the Spanish throne he set about to reform the administration of the Empire based upon practices developed in France.

The sentiment for independence from Spain was stimulated by the example set by the British North American colonies which became the United States. The sentiment became much stronger in 1808 when Napoleon Bonaparte deposed King Fernando VII and put his brother, Joseph Bonaparte, on the throne. The elites of the Empire were used to the institutions and traditions created by those most Catholic of monarchs Charles V and his son Philip II. The elites were uncomfortable with the new institutions and administrators appointed by the Bourbon kings. For example, before the 1780's local government took the form of small districts governed by mayors, called alcaldes or corregidors. Charles III abolished the alcaldes and created 18 large intendancias for New Spain which were partitioned into partidos.

The troop requirements in Spain left insufficient manpower for security in New Spain and forced offcials in New Spain to raise local militias from among the Creoles, the Spanish born in New Spain. The cost of maintaining these militias was reduced by granting participants a special status, called fuero, which gave them exemption from taxes.

At the same time the Creoles were getting arms and military training they and the intellectuals of New Spain were getting indoctrination with the ideas of the American and French Revolutions. And there was the ongoing problem of the elites not feeling entirely comfortable with the new Bourbon dynasty.

In 1808 Napoleon Bonaparte's troops captured Spain and put the Bourbon King Ferdinand VII in prison. Napoleon's brother Joseph Bonaparte was made King of Spain. This did not set well with the subjects of the Empire. The representative assembly of Spain, the Cortes, which had not functioned for a very long time was revived to govern Spain. This Cortes even included representatives from the colonial areas.

In New Spain there was opposition to what was going on in Spain by people who felt loyalty to the king Napoleon had deposed, Ferdinand VII. But there was also opposition in New Spain to to the status quo.

Open rebellion broke out the little town of Dolores in September of 1810 under the leadership of the Catholic priest, Father Miguel Higalgo y Costilla. Father Hidalgo called for:

The revolutionaries captured Guadalajara and Guanajuato, a mining center. In Guanajuato the followers of Father Hidalgo massacred the Creoles. This massacre lost Father Hidalgo the support of Creoles elsewhere in Mexico. Father Hidalgo marched on Mexico City with a large but disorganized army of 80,000. The Spanish army defeated the rebel mob in November of 1810 so this first Mexican revolution lasted less than two months. Father Hidalgo was shot in 1811 along with his major supporters.

Another priest, Father José María Morelos, tried to continue the revolution in southern Mexico.

In 1812 the Cortes in Madrid adopted a constitution for Spain and its Empire which had notably liberal features such as the stipulation that Spain was a constitutional monarchy and the monarch would have to heed the sentiments of an elected representative assembly.

Father Morelos' rebellion was still alive in 1813 and in 1814 he and his followers made a formal declaration of independence of New Spain from Spain. But Father Morelos was of mixed European and native ancestry, a mestizo, and his leadership threatened the privileged position of the Creole elite. The Creoles might support a transfer of power from Spain to themselves but not one in which the mestizos gained power.

In 1814 Napoleon's troops left Spain and Ferdinand VII returned to the throne of Spain. He abrogated the Constitution of 1812 which the Cortes had promulgated in his absence. Spanish troops were sent to New Spain to destroy the rebellion being led by Father Morelos. Father Morelos was captured by the Spanish authorities in 1815 and shot.

In 1820 an uprising against King Fernando VII occurred in Spain and wealthy Creoles in Mexico feared that political changes in Spain could threaten their status in Mexico. This prompted a conservative movement for independence. The leader of these conservative revolutionaries turned out to be Augustín Iturbide, a military officer put in charge of suppressing a rebellion in southern Mexico led by Vincente Guerro. Instead of crushing Guerro's rebellion General Iturbide joined forces with him. In 1821 they issued a declaration of independence and the plan for a Mexican monarchy as the Plan de Iguala. The term of the Plan of Iguala included:

The monarch of Mexico was to be a prince of Spain. In the event that no Spanish prince or other suitable European prince could be found who would accept the throne a Mexican congress would choose the monarch. There general acceptance of this plan among the ruling elite and in the army. The armies of Itrubide and Guerro combined to form the Army of the Three Guarantees (of independence, unity and Roman Catholicism).

When a new Spanish captain general, Juan O'Donoju, arrived in Veracruz the Mexican authorities informed him that he could not go to Mexico City because Mexico was now independent of Spain. The Spanish viceroy was forced to sign the Treaty of Córdoba recognizing Mexican independence. Spanish authorities denied the validity of the Treaty of Córdoba but in fact it stood although there was a subsequent invasion years later by Spanish troops.

Augustín Iturbide convoked a Congress of representatives of the parts of New Spain in 1822. The representatives of the Central American portion of New Spain, with the exception of Chiapas, announced that they did not want to be part of the Empire of Mexico and withdrew from the Congress.

At the time of the Congress a military group announced the selection of Augustín Iturbide as emperor of the Empire of Mexico. The next day the Congress ratified his selection as Emperor Augustín I.

Augustín Iturbide was made Emperor of Mexico in 1822 but deposed in 1823 and executed in 1824 when he tried to regain control of the government.

After Augustín Iturbide's execution a new constitution was adopted declaring Mexico a republic. The man elected president was named Manuel félix Fernández but who called himself Guadalupe Victoria after the battle cry of Father Hidalgo's revolution.

Guadalupe Victoria governed until 1829. The election in 1828 for a new president to succede Guadalupe Victoria resulted in two candidates claiming victory. Manuel Gómez Pedraza apparently won but Vicente Guerrero had himself inaugurated as president in 1829. Meanwhile Spain was not accepting the independence of Mexico and in August of 1829 sent an invasion force from Cuba. The force landed in Tampico and took control of the town. A military officer named Antonio López de Santa Anna Pérez de Lebrón (hereafter Santa Anna) led the Mexican force sent to Tampico to stop the Spanish. Santa Anna's army was victorious and he became a national hero. Santa Anna had political ambitions.

After the defeat of the Spanish invasion the Mexican government headed by Vincente Guerrero abolished slavery in Mexico in 1829. The only significant group of slave holders in Mexico was the Americans who had settled in the norther part of the state of Coahuila-Tejas. Clearly the Mexican government was becoming concerned about the growing strength of this settlement.

Meanwhile General Santa Anna was manuevering himself into a position of power in the Mexican government. He first helped the Vice President Anastasio Bustamente stage a coup in 1830 deposing President Guerrero. In 1832 Santa Anna staged a coup against President Bustamente and replaced him with Manuel Gómez Pedraza, the true winner of the presidental election of 1828. Pedraza served only a few months in office. In the 1833 elections Santa Anna ran and was elected.

After his decisive electoral victory as a liberal federationist in 1833, Santa Anna declined to take office and gave the presidency to the man who had been elected vice president, Valentín Gómez Farías. Gómez Farías was a reformist and proceded to strip the Church and military of some of their traditional rights, such as

Such rights as the above were known as fueros

It must be noted at this point that the term liberal meant in the nineteenth century and still means outside of the United States the political position which is called conservative within the United States. The term conservative in the context of nineteenth century Mexico meant a position which is outside of the political spectrum in the United States; i.e., support for special privileges and powers for the Catholic Church and the military.

Gómez Farías' liberal reforms brought about an organized opposition that prompted Santa Anna in 1834 to depose Gómez Farías and assume the presidency. Santa Anna not only assumed the presidency, he dismissed the congress that had abetted Gómez Farías in his reforms. Santa Anna then ruled as a dictator, which is perhaps what he had had in mind when he delegated the presidency to Gómez Farías in the first place. The first act of Santa Anna was, of course, to abolish the reforms but he went far beyond that to abrogate the Constitution of Mexico of 1824. He created an extreme for of Centralism with The Seven Laws, which he subsequently incorporated into the Constitution of 1836. These laws among other things, removed the right of the Mexican states to elect their own leadership. The states became military districts with governors appointed by the president; i.e., Santa Anna. There was protest in some states, but the most important for the future of Mexico was the protest of Santa Anna's removal of any vestige of self-government in the territory of Tejas (Texas).

After President Santa Anna dissolved the Congress in 1834 , he ruled Mexico as a dictator and dominated Mexican politics for the next twenty years.

In 1834 President Santa Anna sent his brother-in-law, General Martín Cos, to Texas to deal with the American immigrants there.

Santa Anna continued to amass power. At the end of 1836 he promulgated a new constitution, called The Seven Laws, which took power away from the states of Mexico and enhanced the power of the central government. Instead of states electing their own governors and other state officials these officials would be appointed by the national central government in Mexico City.

This was part of an ongoing struggle, not only in Mexico but throughout the world, of advocates of centralized unitary power versus the advocates of regional state autonomy. In the literature these two groups are called the Centrists and the Federalists. Federalist is the wrong term because usually the central government calls itself the federal government and hence Federalist has the conotation of centralized power. The proper term for those who want a federation of autonomous regional states is Federationists.

In Mexico sometimes the Centrists were in control and sometimes the Federationists were in control and sometimes people who appreared to be Federationist once they got control of the central government became Centrists. Antonio Lopez de Santa Anna was one of the latter.

The Rebellions Against Santa Anna's
Abrogation of the Constitution of 1824

When Santa Anna promulgated his Seven Laws which took away the right of Mexican states to choose their own governors and administrative officials, several states rebelled, notably Zacatecas and the Tejas part of the state of Coahuila-Tejas. The Zacatecas rebellion was put down easily but Tejas was a different matter. The rebels had captured the city which is now San Antonio. President-General Santa Anna marched on Tejas with a force that has been variously estimated to have been three thousand to six thousand soldiers.

Most of the rebel forces in San Antonio evacuated the city. Some four hundred under the command of Colonel James Fannin went to the town of Goliad about 85 miles to the southeast of San Antonio. About 150 of the rebels decided to defend the abandoned fortress called the Alamo. Later they were joined by 32 others. The story of the Battle of the Alamo, the Massacre at Goliad and the Battle of San Jacinto is told elsewhere. All three involved massive blunders on the part of Santa Anna, whose military career after his initial victory over the Spanish invasion force in 1829 was one long string of blunders.

After the rout of Santa Anna's army at San Jacinto, Santa Anna tried to flee. He changed from his general's uniform to an ordinary soldier's uniform. But he did not change his shirt and when his captors noticed that the buttons on their captive's shirt were diamond-studded they knew he was no ordinary soldier. Once recognized Santa Anna was induced to sign, as the President of Mexico, two treaties with the rebels. One treaty required the withdrawal of all Mexican military forces to south of the river known now as the Rio Grande (del Norte). The second treaty recognized the independence of Texas. It was to be a secret treaty.

The Annexation of Texas and
the Outbreak of Hostilities

Texas operated as an independent nation, The Republic of Texas, from 1836 to 1845. Texas claimed far more territory than was occupied by the Texans. In particular Texas claimed all land south to the Rio Grande whereas Mexico, while not accepting Texas' independence, treated tne Nueces River as the southern border of the anomalous state of Texas. The Republic of Texas claimed territory up into what are now the states of New Mexico, Colorado, Kansas, Oklahoma and Wyoming.

In 1845 Texas applied for admission into the United States and Congress passed legislation annexing Texas. While the government of Mexico had been willing to legitimize its recognition of the independence of the territory occupied by the Texans, it rejected the expanded territorial claims of the Republic of Texas. And the government of Mexico had long asserted that the annexation of Texas by the United States would be treated as an act of war. This was bombastic rhetoric and Mexico, in fact, never declared war upon the United States even after the U.S. did declare and wage war upon Mexico.

President James K. Polk sent an envoy, John Slidell, to settle the Texas border dispute and to attempt to purchase the territory of California. It should be noted that the Mexican settlements of California and the rest of what became the American Southwest were more closely tied through trade with the U.S. than they were to Mexico City and the rest of Mexico. When President José Joaquín Herrera became aware of Slidell's assignment he refused to meet with him.

In the absence of negotiation Mexico began sending troops to the Rio Grande and beyond. American troops occupied positions along the northern bank of the Rio Grande. There had been a previous international confrontation of the United States over Texas. When the U.S. purchased Louisiana from Napoleon it believed that Texas was included. Both France and Spain claimed the Texas area. When the U.S. moved to send troops into Texas, Spain countered with troops. In that case the commanders agreed not to occupy the disputed territory while the issue was settled by negotiation. No such rational resolution prevailed after the annexation of Texas. Troops of both sides were in the disputed territory and a squad of American soldiers was annihilated by a Mexican cavalry unit. Congress treated this as the killing of American citizens on American soil and just cause for the declaration of war.

The War Between the U.S. and Mexico
(The War of the U.S. Against Mexico)

The United States had several times the population of Mexico and was vastly superior in terms of industrial production. Nevertheless the balance of forces between the two countries was not initially so one-sided. Mexico had a larger army at that time than the U.S. and the Mexican cavalry was superior to that of the U.s. But the U.S. had developed the cannister charges which could effectively destroy the Mexican cavalry before they had an opportunity to fight.

The U.S. launched a three pronged attack against Mexico. U.S. troops under the command of Zachary Taylor crossed the Rio Grande and attacked the towns in that area. U.S. troops under the command of Stephen Kearney entered the area which is now New Mexico and captured the cities without much resistance. The troops then headed across what is now Arizona for California. Again the was little effective resistance to their advance. The third prong of the attack was the blockading of the Mexican coast in the vicinity of Veracruz.

At this time former president, Antonio López de Santa Anna, was in exilel in Cuba. Santa Anna communicated to President Polk that if he, Santa Anna, were allowed to pass through the blockade he would go to Mexico City and organize negotiation and avoid any further bloodshed. Polk agreed to Santa Anna's plan and Santa Anna was allowed to land at Veracruz and pass onto Mexico City.

Santa Anna, true to his nature, had been lying all along. When he arrived in Mexico City he was able to convince the political leaders that he should be made president and he would organize the defense. Polk was probably annoyed at being duped by Santa Anna but he should not have been for there was no more effective way of sabotaging the Mexican war effort than letting the ego-maniacal incompetent Santa Anna command it.

When no negotiations materialized the U.S. launched an expediationary force from Veracruz under the command of Winfield Scott. To staff this force in the south a substantial share of Zachary Taylor's troops in the north were diverted. This left Taylor's forces weakened. When Santa Anna heard of this he marched an army north through an arduous route. The march took three weeks. When Santa Anna's confronted Taylor's weakened forces the battle was a draw. Taylor's troops were fearful that they would not be able to withstand another attack. To their surprise a second attack did not come. Santa Anna lost his nerve and marched the army back to Mexico City declaring that he had been victorious.

In the south the expeditionary force was experiencing some difficulties. Mexican army units were harassing the supply lines from Veracruz. It was crucial that the army pass out of the low-lying coastal areas into the highlands before the yellow fever season came in the lowlands. Santa Anna found a point where the route was narrow and stationed his troops there. The place was called Cerro Gordo (fat hill).

One of Santa Anna's commanders advised him that he should put soldiers on top of the hill to prevent the Americans from capturing it and placing a cannon there to bombard the Mexican Army. Santa Anna dismissed the advice. Scott's forces did get a cannon up to the top of the hill and used it to destroy the defensive position of the Mexican troops. Santa Anna's forces were wiped out and Santa Anna himself had to flee. Some years before Santa Anna had lost a leg and wore an artificial leg. Santa Anna had to flee in such a hurry that he left behind his artifical limb.

General Winfield Scott made the decision to abandon the supply of the force from Veracruz. The army of about 10,000 would have to find provisions along the way. This strategy proved to be effective and soon the American troops were drawn up south of Mexico City. Santa Anna's forces were arrayed to defend the various entrances to the city. To the front and left of the American troops was a lava field that was thought to be impassable.

One of Santa Anna's commanders decided without the permission of Santa Anna to attack the Americans by surprise by passing around the lava field. But Colonel Robert E. Lee, in a feat of incredible personal bravery, found a route through the lava field and led a substantial troop of American soldiers through it. The Mexican general who thought he would launch a surprise attack on the American found that his forces were having to confront from the back as well as in front. When this general sent a message to Santa Anna informing him of predicament his soldiers faced, Santa Anna in a fit of pique refused to come to the aid of the soldiers and they were defeated. Santa Anna's spitefulness cost him a significant fraction of his army.

When the American troops did attack they very quickly defeated the defense of the city. Santa Anna and the remnants of his army fled the city. With Mexico City in the hands of Scott's forces Mexico was effectively defeated. An interim government accepted the terms imposed by the Americans. This was formalized in the Treaty of Guadalupe Hidalgo which was signed on February 2, 1848. The treaty called for the acceptance of the boundary at the Rio Grande and the relinquishing of claims to California and the Southwest for a payment of $15 million and the assumption by the U.S. government of $3 million in claims against the Mexican government.

In 1854 when Santa Anna was back in power he accepted a $10 million payment for the territory on the southern border of New Mexico and Arizona known as the Gadsen Purchase. This territory was required for train route. Santa Anna's sale of Mexican territory so angered other political leaders that they ousted Santa Anna. He ended up spending his last years in exile in Jamaica.

The Period of Reform, 1855 to 1861

While Santa Anna was still in power a group of Mexican political intellectuals left Mexico to plan for ending Santa Anna's rule. They located in the U.S., in New orleans, Louisiana. The most prominent member of this group was Benito Juarez from Zapoteca. Zapoteca was one of the Mexican states which rebelled against the assumption of dictatorial powers by Santa Anna in 1834. The group formalized their goal of ending the rule of Santa Anna in the Plan of Ayutla (1854). The group returned to Mexico to implement the plan and in August of 1855 Santa Anna resigned.

The provisional government which replaced Santa Anna's rule was led by the members of the Ayutla group. This government enacted legislation which, among other things,

The Ayutla government went on to create a new constitution to replace the 1836 constitution that Santa Anna had created. The 1857 constitution went back to the constitution of 1824 which Santa Anna had abrogated in 1834, but the new constitution contained the additional elements of

The Plan of Ayutla and the Constitution of 1857 were a direct challenge to the power of the Church, military and the elements of society that supported them. The years 1858 to 1861 were the years of the War of Reform. The organized resistance to the Reform dismissed Congress and tried to arrest Juarez. The Reformers set up a government in exile, first in Querétaro and later in Veracruz. The Reformers with control of the major port of Veracruz had better access to supplies and ultimately defeated the forces of the opposition at the end of 1860.

Benito Juarez won the presidential election of March 1861. Due to the War of Reform the government of Mexico was broke and heavily in debt. Juarez declared a moritorium the payment of the debt. In October of 1861, Britain, France and Spain sent forces to force Mexico to make payments on is debt. The joint foreign forces took control of the eastern coastal region of Mexico, including Veracruz. Spain and Britain decided to withdraw from this venture, but France decided to conqueror and rule Mexico.

The French Imperial Adventure
in Mexico of 1861 to 1867

The French troops encountered relatively little effective resistance to their occupation. One notable exception was the defeat they suffered on May 5, 1862 (Cinco de Mayo) at the city of Puebla. This was however only a temporary set back. They subsequently captured Puebla. When the French troops captured Mexico City they set up a government of conservative elements of Mexican society. This government then chose to make Mexico an empire and to invite an Austrian Habsburg, Ferdinand Maximilian Joseph, to be the emperor. In June of 1864 Maximilian and his wife Carlotta arrived in Mexico City to rule the French-imposed empire. Maximilian had, before he left Europe, agreed that his empire would assume the cost of the French occupying troops.

Although chosen by conservative elements in Mexico City, Maximilian was something of a liberal. So his support for liberal measures soon alienated the conservative elements of Mexico while not endearing him to the liberals under Juarez who were operating a government-exile in the south of Mexico.

Juarez' forces were not successful in overthrowing Maximilian until political necessities in France forced the withdrawal of French troops and the end of the Civil War in the U.S. brought American supplies and support. In May of 1867 Maximilian surrendered and was executed in June of that year.

The Restoration Period, 1867-1876

Benito Juarez

Juarez returned to Mexico City in June of 1867 and later that year was elected president. Because the conservatives had ultimately opposed Maximilian there was a spirit of commonality between the liberals and conservatives. Juarez promoted improvements in transportation and communication. He strengthened the Rural Defense Force (rurales) to suppress banditry and make the roads safe for commerce. More generally Juarez supported the development of Mexico through reliance on private markets and worked to breakdown the system of monopoly privilege that was inherited the colonial past. Juarez also promoted improvements in the educational system and elementary education was made mandatory. The railroad between Veracruz and Mexico City was completed in 1873.

President Juarez' four-term ended in 1871. Despite the principle of no reelection he decided to run for a second term. His opponents were Sebastián Lerdo de Tejada and José de la Cruz Porfirio Díaz. No candidate received a majority of the votes in the election so Congress had the power to select the president from the three candidates. Congress selected Juarez as president. Díaz invoked the principle that no candidate can be reelected and staged a revolt. During the rebellion Juarez died of a heart attack at age 66. His death was a great loss to Mexico and to the cause of a constitutional federationist society based upon market principles.

The Porfiriato

The new election in 1872 was won by Sebastián Lerdo. Lerdo basically continued the policies of Juarez. When his term was up in 1876 Lerdo wanted to run for a second term. Díaz rebelled again on the basis of the no reelection principle. Initially Díaz' revolt was unsuccessful and Díaz had to flee to the U.S., but later he returned and led an army which defeated the government forces. Lerdo went into exile and Díaz took control of Mexico City. He was elected president in 1877. When the first four-year term of Díaz was up in 1881 he, in keeping with the no reelection principle, declined to run for a second term. He chose Manuel Gonzalez to serve in his place, but Díaz was not satisfied with this rule by proxy. When Gonzalez' term was up in 1884 Díaz ran for the presidency again and won. Altogether Díaz ruled Mexico for 34 years, although not always as the official holder of office.

Some additional information on Díaz' background is in order here. He was born in Oaxaca in 1830 to a poor mestizo family. He initially intended to go into the priesthood and began training for this career when he was 15 years old. But that was the time of the U.S.-Mexican War. Díaz enlisted in the army. After the war with U.S., Díaz, with the encouragement of Juarez, studied law for a while, but he decided to make the military his career. He continued serving in armies during the War of Reform (1857-1860) and the rebellion against the French-imposed Empire of Maximilian.

After the overthrow of Maximilian Díaz decided to retire from the military. He went back to Oaxaca. Soon he had political disagreements with President Juarez and decided to enter politics.

When Díaz became president of Mexico in 1877 there were virtually no funds for public projects. Díaz concentrated on building up a political machine and putting down rebellions. He gave government jobs to mestizos. He secured the support of the Creole class by leaving their land holdings alone and giving some positions of honor in his administration. Likewise he gained the support of the Church by leaving Church properties untouched.

Since Díaz had no significant amount of funds for the economic development of Mexico he left this field to private industry. He encouraged foreign investment. Writers of a Marxist persuasion decry the profits which foreigners made in Mexico under Porfirio Díaz, but his strategy got railroads built and the minerals mined. Labor benefited from the jobs created. The gains of the foreign investors were more than matched by the gains to Mexico. The notion that because the foreign investors gained Mexico did not gain is sophmoric if not moronic.

While Díaz' economic policy may have been reasonable with respect to foreign investment, in trade policy it was highly protectionist. In the political sphere Díaz was a tyrant. He was a centrist and he virtually destroyed the political structures at the state level. In 1910 he told a foreign magazine journalist that he would not run in the next election. But when the time came he did run. However he allowed Francisco I. Madero, a liberal reformist from Coahuila, to run against him. Díaz won the election and imprisoned Madero before releasing him to leave Mexico. Madero went to St. Louis in the U.S. and from there he planned a revolt which was joined by others. Madero created in St. Louis the Plan of San Luis de Potosí. The Plan was distributed in dissident areas of Mexico. Local leaders, particularly Francisco "Pancho" Villa in the state of Chihuahua, decided to join Madero's revolution. Other local leaders joining Madeo were Pascual Orozco of Chihuahua and Emiliano Zapata of Morelos. Rebels captured Cuidad Juarez and other state capitals. Díaz' forces collapsed and Díaz, then eighty years of age, resigned the presidency on May 25, 1911 and went into exile in France, ultimately dying in Paris years later.

The States of Mexico

The Madero Era

Francisco Madero was a well-meaning member of the upper class. For him, the revolution was a political matter; a matter of restoring the constitution of 1857 and so forth. For Emiliano Zapata the revolution was a matter of land reform and a social revolution. Madero was not prepared to deal with the realities of Mexican politics. Madero ordered Zapata to disband his army and Zapata complied. Others in the Madero administration did not think Zapata had disarmed his forces and sent Federal troops to carry out the disarming and disbanding of Zapata's forces. Zapata withdrew with his army into the countryside and no longer supported Madero. He launched another revolution in the southern states.

In the north, Pascual Orozco also broke with Madero and launched a revolt. The Mexican army under the command of Victoriano Huerta put down Orozco's revolt.

The son of Porfirio Díaz, Félix Díaz, tried to launch a revolt from Veracruz but was arrested and brought to Mexico City. From prison Fé Díaz was able to organize to protests in the streets of Mexico City. General Huerta was called in by Madero to suppress the protests in Mexico City. Huerta realized that he had the power to takeover the government of Mexico and he did so. Huerta had President Madero and Vice President José María Pino Suárez arrested. He forced their resignations which made him president. Later Madero and Pino Suárez were killed in 1913 while being transferred to prison. As commented earlier, Madero was a well-meaning member of the upper class who was not capable of dealing with the realities of power politics in Mexico.

The Huerta Dictatorship

Revolutionaries such as Emiliano Zapata who were in revolt against Madero remained in revolt against Huerta. In the north, three rebel groups formed a coalition: Pancho Villa in Chihuahua, Venustiano Carranza in Coahuila and Álvaro Obregón in Sonora. (Obregón is pronounced Oh bray Yon; it is an Hispanization of O'Brien.)

Huerta sent troops into the north and carried out assassinations but was unable to suppress the rebels. The government of Woodrow Wilson in the U.S. did not recognize the usurpation of power by Huerta and provided aid to the northern coalition of rebels. In 1914 after an incident in Veracruz, Wilso order the American occupation of the city. The subsequent protests led to the resignation of Huerta on July 8, 1914.

The Civil War, the Constitution of 1917
and the Carranza Presidency, 1917-1920

Although Huerta was driven from power more by his inability to counter the American occupation of Veracruz than the military operations of the rebels, once Huera left the effective power was in the hand of the organized resistance. But the resistances were not unified. Once their common enemy of Huerta was gone, their differences became all important.

In an attempt to achieve some unification Carranza called a convention of rebel leaders in Aguascalientes (hot springs). Carranza of Coahuila and Obregón of Sonora represented political revolutionaries whereas Villa of Chihuahua and Zapata of Morelos were more radically social revolutionaries. Carranza's convention did not have the intended effect. The convention fell under the sway of the social revolutionaries who chose Eulalia Gutiérrez for provisional president of Mexico. Gutiérrez went to Mexico City to take power. Carranza and Obregón opted to establish an alternate government in Veracruz. Gutiérrez did not last long in Mexico City. He relocated to Neuvo Léon, whereupon Obregón took his place in Mexico City. There were two more governments for Mexico; that of the Zapatistas in the south and Villa in Guanjuato. But it was Carranza who made the shrewder choice of location. In Veracruz Carranza fell heir to the munitions of the American occupying force. These munitions gave him a advantage over the other contenders and he emerged victorious and was recognized as the legitimate president of Mexico by the United States.

Pancho Villa expressed his rage at the U.S. recognition of Carranza by carrying out raids on border towns in New Mexico. President Woodrow Wilson reacted by sending an expeditionary force into Mexico to hunt down Villa. The force failed to capture Villa.

Carranza presented a proposed constitution based upon the constitution of 1857 but going farther in the direction of radical social institutions. After the formal acceptance of this constitution of 1917 Carranza ran for the office of the president and won.

In office Venustiano Carranza was much more conservative than would be expected from his support of the constitution of 1917 and its radical provisions. In particular, President Carranza not only did not choose to carry out the land redistribution provisions of the constitution but even returned land that had been confiscated during the civil war period. This back pedaling on the issue of land reform and redistribution put him at odds with Emiliano Zapata and his supporters.

The Death of Emiliano Zapata

Emiliano Zapata

Zapata issued an open letter to Carranza on the matter of land redistribution, hoping by this means to bring irresistable public pressure on Carranza to carry forward land reform. Carranza reacted viciously. He sent a representative who supposedly going to negotiate with Zapata but who had been given the express assignment of assassinating Zapata. Zapata came to the supposed negotiation site in good faith. When Zapata appeared at the site a squad of soldiers who were thought to be there to give Zapata a military salute instead fired their rifles into Zapata's chest. In that moment on April 10, 1919 Mexico and the world lost one of its authentic heroes.

The Presidency of Álvaro Obregón, 1920-1924

Carranza did not long survive after his assassination of Zapata. In 1920 Carranza tried to pass on the presidency to someone who would serve as his puppet. Adolfo de la Huerta and Plutarco Elías Calles raised an army in northern Mexico and marched on Mexico City under the banner of constitutionalism. Carranza fled from Mexico City, heading for exile, but was assassinated in his flight. De la Huerta served for a short while as a provisional president but was replaced by Álvaro Obregón who was elected as president.

As was the case of Carranza, Álvaro Obregón in office was more conservative than might have been expected. He chose to go slow on the land reform because he believed that land reform would impair agricultural production. He also chose not to implement articles of the 1917 constitution which restricted ownership of land by foreigners, again because he feared that to do so would interfer with production.

The one area of public policy in which Obregón made some rather radical departures from the past was in public education. Under Obregón's appointee to head the ministry of eduation, José Vasconcelos, an extensive program of the building of schools and libraries was carried out. School teachers were sent to remote villages to bring literacy to the rural population. And Obregón's most radical action was to choose Plutarco Elías Calles as his successor.

The Presidency of Plutarco Elías Calles,

Plutarco Elías Calles was a real radical. He was most notably radical in his treatment of the Catholic Church. Many of the Mexican leaders of that time were anticlerical but Calles anticlericalism was virulent. In 1926 the archbishop of Mexico City asserted that Roman Catholics could not comply with the religious provisions of the 1917 constitution. Calles reacted by implementing some of the most drastic of those provisions; i.e.,

The Church then countered by prohibiting priests from performing the religious services that a devout Catholic population considers essential for life. This prohibition continued for three years. Priests were persecuted by the government and had to lead an undercover life. This era was the basis for Graham Greene's novel, The Power and the Glory.

The persecution of the Church by Calles eventually led to armed revolts in some of the southern states. The rebels were known as Cristeros. Calles used the army to suppress these revolts and encouraged anticlerical militias, called Red Shirts, to attack the Cristeros. By 1929 the Cristeros were subdued.

Calles vigorously pursued land reform, redistributing about eight million acres. He continued Obregón's program of school building. He supported organized labor which had become a major force in Mexican politics and had supported him.

Political Turmoil and the Maximato,

During Calles' presidency the term of office for the president was changed from four years to six years (Sexenio) starting with the 1928 election. After being out of office for four years Álvaro Obregón again wanted to be president. Calles supported Obregón's reelection bid in violation of the no reelection principle. Álvaro Obregón did win reelection but was assassinated by a religious extremist before he could take office. Obregón's assassination took place in a quite dramatic manner. A party was given in Obregón's honor. At the party an artist was drawing cartoons of the guests. He drew an excellent cartoon of Obregón and when he came close to Obregón to give him the drawing he pulled a pistol and placed it against Obregón's body and fired.

For many this assassination must have seemed like divine punishment for violating the no reelecation principle. In any case Calles decided not to violate that principle and appointed Emilio Portes Gil to serve as an interim president until another election could be held. However it was Calles who was running the government. Calles institutionalized the political machine he had built up into a real political party in 1929. He called it the Partido Nacional Revolucionario PNR (the National Revolutionary Party). It went through several name changes but it was the political party that ruled Mexico for 70 years. Calles, as the supreme leader, of the PNR was all powerful politically. Calles chose Pascual Ortiz Rubio to be the PNR candidate in the 1929 election to serve the rest of Obregón's term. Ortiz Rubio won the election with 99.9 percent of the vote thanks to PNR election fraud. In office Ortiz Rubio proved to be less of a puppet than Calles intended so in 1932 Calles had him removed from office and replaced with Abelardo Rodríguez. Calles had over the years become less radical. The land distributions were halted because Calles feared agricultural production would suffer. Labor unions also lost favor with Calles. But Calles did placate the radical left of his party by nominating Lázaro Cárdenas to be the PNR candidate for the 1934-1940 term for president.

The Sexenio of Lázaro Cárdenas,

Lázaro Cárdenas

Lázaro Cárdenas' background had been as a brigadier general in the constitutionalist army. From the military he had gone into state pollitics and had been the governor of the state of Michoacán. As governor he had supported the expansion of public education. He also pursued land reform. He was supported by labor unions and peasant organizations.

As president Cárdenas proved to be far more radical than anyone anticipated. Cárdenas began implementing land reform on a much larger scale that any had expected. Some of his measures involved stepping on Cárdenas' toes such as when he closed a chain of gambling casinos owned by Calles supporters. He began firing Calles supporters working in government jobs. When in 1936 Calles openly opposed his policies, Cárdenas forced Calles to leave Mexico.

With Calles out of the picture Cárdenas could reorganize the political party. He renamed it the PRM, the Partido de la Revolucion Mexicana (Party of the Mexican Revolution). He expanded the membership and organized it into four corporate sectors:

He also reorganized the labor union movement. He created the Confederación de Trabajadores Mexicanos, CTM (Confederation of Mexican Workers) to be the more or less official organization to represent Mexican workers. It replaced the old CROM which had been created shortly after the end of the civil wars.

Cárdenas is most remembered for his expropriation of foreign oil companies. This was the result of an escalation of actions and reactions between the government and the petroleum companies. The employees of the foreign petroleum companies were agitating for higher wages through training in more technical jobs. The employees went out on strike. Cárdenas intervened and demanded that the companies train the workers in more technical jobs. The companies, seeing this as merely a preliminary to expropriation of their operations declined to do so. Cárdenas responded to this refusal by nationalization with compensation based upon the value of facilities as reported for tax purposes. The companies had recorded low values to reduce their tax burden. Cárdenas may have gained the properties but it cost more than the compensation paid. Other companies declined to invest in Mexico and those already invested in Mexico began to liquidate their holding and drain their capital out of Mexico. Thus for two decades Mexico suffered a lack of capital as a direct result of the expropriation of the foreign petroleum companies' assets.

The Sexenio of Ávila Camacho,

After the extreme anticlericalism and radicalism of Calles and Cárdenas it was a real political surprise for the Mexican public that Cárdenas chose Ávila Camacho, a moderate and devout Catholic, to succeed him. In contrast to the previous administrations Camacho promoted private ownership of land rather than the collective farms known as ejidos. He also promoted private education rather than public education. His administration was famous for a literacy campaign which called for each literate person to teach one other person to read.

The close mutual support between the government and organized labor was moderated. All in all Camacho was a moderate.

World War II was raging during Camacho's term as president. He kept Mexico out of the conflict until German submarines sank two Mexican tankers. Mexico then declared war.

During Camacho term the braceros program commensced which brought Mexican farmworkers into the United States to replace the Americans taken from the farm areas to fight the war.

Another feature of Camacho's political moderation was that business and industry were encouraged to participate in the ruling party. The party was renamed in 1946 to the Partido Revolucionario Instituticional PRI (Institutional Revolutionary Party), the name that it known by to this day.

The Sexenio of Miguel Alemán Valdés,

Miguel Alemán Valdés continued the trend of moderation set by Camacho. Alemán focused his administration's attention on public works; flood control, hydropower development, irrigation projects, road building and improving and the creation of a national university.

Alemán unfortunately fell into the trap of trying to promote economic development through import substitution. The promotion of domestic industry to replace imports necessitates either import restrictions or subsidization of domestic industry. The first, import restrictions, clearly leads to price increases. The second, subsidization, requires either tax increases on viable industries to support the subsidies or the creation of money. Both of these lead to price increases. Alemán tried to cope with the inflation by using government control of the labor unions to suppress real wages. The government intervention gave rise to opportunities for government officials to extract bribes and the Alemán administration was noted for its political corruption.

The Sexenio of Adolfo Ruiz Cortines, 1952-1958

After the public outcry at the corruption of public officials Mexico needed someone of noted incorruptibilty to deal with the problem and Alemán chose Adolfo Ruiz Cortines for that very reason. Ruiz Cortines continued the generally moderate policies of his immediate predecessors, but he continued the misguided import substitution policy. The interventionist role of the government made business location in the vicinity of the capital, Mexico City, a necessity. If businesses had to fequently seek government approval they had to be located near the seat of power. With businesses concentrated in the Mexico City area then jobs were located there as well so job seekers had to settle in the vicinity of Mexico city as well. This led to troublesome urban problems for Mexico City, one of which was the slum areas which surrounded the city.

Playing upon the economic troubles of the masses, former president Cárdenas was able to persuade the PRI to run someone from its leftist faction for president in 1958.

The Sexenio of Adolfo López Mateos,

Adolfo López Mateos was a candidate promoted by Lázaro Cárdenas to bring back an agenda of land reform, social welfare programs and nationalism in foreign policy. López Mateos did that but with a more moderate style than that of Cárdenas. He bought up foreign utility operations rather than expropriating them. For examples see the table below:

Mexican CompanyOwner
Impulsora de Empresas EléctricasAmerican and Foreign Power
Company of the U.S.
Mexican Light
and Power Co.
Industria Eléctrica MexicanaCalifornia Power Co.

López Mateos distributed over 30 million acres to the ejidos. On left wing radicalism López Mateos had a split approach. He supported or a least accepted communist movements outside of Mexico but persecuted communists within Mexico. In international politics López Mateos supported Fidel Castro in Cuba. There seemed to be a tacit agreement with Castro that if Mexico supported him in international politics he would not support leftist guerilla movements within Mexico.

The Sexenio of Gustavo Diáz Ordaz,

Gustavo Diáz Ordaz had been a prominent member of the government of López Mateos and so he more or less continued the policies of López Mateos, which is probably why López Mateos selected him. But political unrest escalated during Diáz Ordaz' Sexenio. The persecution of leftists within Mexico while supporting leftist movements internationally was bound to create dissent. Students at the Autonomous National University of Mexico in Mexico City began organizing large scale demonstrations in 1968. Mexico was the host of the 1968 Olympic Games and the protestors thought they would have special leverage in forcing the Mexican government to adcede to their demands. They thought wrong. A major demonstration brought about a half million demonstrators to the main plaza of Mexico City. Diáz Ordaz and his minister of the interior Luis Echeverría Álvarez ordered the Mexican army to take control of the university and arrest the student leaders of the demonstration.

On October 2, 1968 the hardcore demonstrators gathered in the Plaza of the Three Cultures in defiance of the government prohibitions against public demonstrations. There were only five thousand of them raher than the half million of the previous demonstration. At the Plaza it was the most radical of the demonstrators confronting an adamant government force. For reasons not entirely clear the crowd and the soldiers panicked. The soldiers had lethal weapons and they used them. The number of demonstrators killed was in the hundreds and the massacre left a scar on Mexican politics.

The Sexenio of Luis Echeverría Álvarez,

Luis Echeverría Álvarez was deeply involved in the events that led to the massacre in the Plaza of the Three Cultures, nevertheless he was elected president without any difficulty. From Echeverría Álvarez' past history it was widely expected that he would continue the previous regimes emphasis on order and stability. But contrary to those expectations he courted the left by emmphasizing leftist programs. Perhaps this was as a sense of guilt about the Mexican government's persecution of leftists. Perhaps it was because he feared that the left would create an ongoing insurgency in Mexico that would trouble the government for decades.

Echeverría Álvarez distributed more land to the ejidos despite the fact that production decreases substanially under a communal farming arrangement. The rule of thumb is that collective farming has about fifty percent of the yield of private farming. So converting land from private ownership to collective ownership is like destroying half of the land involved.

Echeverría tried to regain the loyalty of middle class leftists by enacting a variety of social welfare programs. He co-opted the leftist intelligentsia by providing jobs for them in the government. He also initiated diverse government development programs such as a steel complex in the state of Michoacán. He promoted extensive subsidies for public and private enterprises. These programs could not all be funded out of existing tax funds so he had the central bank create money. One effect then of Echeverría's policies was the creation of substantial inflation. By the end of Echeverría's sexenio Mexico was experiencing serious inflation and economic crisis.

The Sexenio of José López Portillo y Pacheco, 1976-1982

By the time of the sexenio of José López Portillo y Pacheco Mexico's chronic economic problems had been escalated by Echeverría's deficit financing of his social welfare and government intervention programs into a serious crisis. Even the discovery of new oil fields in the south (the states of Tabasco and Chiapas and in the Bay of Campeche) did not alleviate the problem of inflation.

Because of the discovery of the new petroleum reserves and the rising international price of petroleum, foreign bankers were willing to lend Mexico vast amounts of money. But the capacity to borrow was based upon the proven oil reserves not the level of current production. This means that the interest payment on the foreign debt could exceed the funds earned from current production of petroleum. Therefore the petroleum discoveries did not necessarily mean the end of the economic crisis. By 1982 almost half of the petroleum exports earning were going to pay the interest and other scheduled payments for the foreign debt.

The ready availability of funds led to unwise funding of various projects of dubious value. The annual rate of inflation hit 100 percent percent. The continuing inflation in Mexico in excess of the inflation in other countries eventually forced a devaluation of the Mexican peso. This devaluation of 55 percent panicked the holders of Mexican pesos and they began to convert their pesos into other currencies. This is called capital flight. In an attempt to hault the capital flight López Portillo nationalized the banks of Mexico in September of 1982.

Just when the domestic economic problems of Mexico were becoming severe international developments exacerbated the problems. The price of petroleum began to fall in rsponse to the increased quantity of petroleum being supplied as a result of the higher price of petroleum. When the value of Mexico's exports dropped as a result of the decrease in the price of petroleum and the value of imports continued at a high level Mexico suddenly had an balance of trade problem, a current account deficit.

These international trade problems of Mexico translated into a higher cost of living and a lower standard of living for the general public of Mexico.

The Sexenio of Miguel de la Madrid Hurtado,

When Miguel de la Madrid Hurtado came into office Mexico's economic house was in a great state of disarray. There was excessive foreign debt requiring excessive amounts of foreign currency credit to service. The rate of inflation was at a record high level. The value of the Mexican peso in foreign exchange had to be devalued. On the very day of his inauguration Miguel de la Madrid promulgated a program of economic austerity which included:

Miguel de la Madrid was accused of complying with the dictates of the International Monetary Fund (IMF). FOr more on the financial and economic crisis of 1982 click here. De la Madrid made financial corruption by government officials a target of his policy, at least in term of publicity. The program was called moral renewal. But the reality was that only a few high profile cases were prosecuted and the only legislation enacted effectively targeted corruption of union officials. There was a lessening of electoral corruption and during his term non-PRI candidates began to win and hold political office. But the gains in electoral reforms in 1983 were offset to some extent by a relapse in 1984. Under his predessors elections in which opposition candidates won were nullified.

The de la Madrid sexenio had a moderately troubled relationship with the United States over the anti-drug policy and illegal immigration to the U.S.

It is notable that the moves toward privatization started in the de la Madrid administration. Financial necessity forced the selling off of about two hundred government enterprises.

The Sexenio of Carlos Salinas de Gotari, 1988-1994

Carlos Salinas

When Carlos Salinas was campaigning for the office of president the financial, economic and political crises of Mexico had reached catastrophic levels. There was effectively a devaluation of the pesos in November of 1987. The government had allowed the peso exchange rate to be determined by the market and immediately its value fell almost 20 percent. This made foreign goods cost more for Mexicans so the devaluation itself produced inflation. Along with the other sources this drove the annual inflation rate up to nearly 150 percent. The general public suffered a substantial loss in the buying power of their incomes. With the decline in what they could afford to buy the general population of Mexico suffered a substantial decline in their standard of living. For people living at a minimal standard any drop meant real hardship. Even for those whose standard of living was significantly above poverty levels the decline in their standard of living was painful and frightening. Over the 1982-1988 sexenio of Miguel de la Madrid the real income of Mexicans had fallen 40 percent. This was a greater drop than occured for Americans with the onset of the Great Depression from 1929 to 1932.

The political scene of Mexico before the campaign for the 1988-1994 sexenio was in turmoil. The major factor in this turmoil was, Cauhtémoc Cárdenas, the son of the radical president of the 1930's. Cauhtémoc Cárdenas had become governor of the state of Michoacácan and had aspirations to follow in his father's footsteps and become president of Mexico. He knew he could command popular support but the nomination to the candidacy of the PRI was in the hand of the president. He doubted that he would be the choice of de la Madrid. Cauhtémoc Cárdenas and others then tied to force a change in the system. They formed, within the PRI, a caucus known as the Corriente Democrático (CD). The members of the CD felt that the austerity measures of the de la Madrid administration were not dictated by necessity but were the result of the concentration of political power in the hands of the inner circle of the PRI. The inner circle of the PRI did not react sympathetically to the CD. It in fact expelled them from the party.

De la Madrid nominated Carlos Salinas de Gotari as the PRI candidate for president of Mexico. Carlos Salinas was a young técnico (technocrat) with a Ph.D. in economics from Harvard University. His selection was somewhat of a surprise but not if the criterion was in expertise for dealing with Mexico's financial and economic problems.

Cauhtémoc Cárdenas decided not to accept the decision of the inner circle of the PRI as to whom should be the next president of Mexico. Cauhtémoc Cárdenas chose to create his own political party and with the backing of other leftist parties campaign for the presidency. The political party which was more business-oriented, the Partido Acción Nacional (PAN) also fielded a candidate.

The campaign for the 1988-1994 sexenio was hard fought, both in the public campaign and the vote tabulation. Salinas and the PRI emerged victorious from the two battle grounds. The official but disputed vote tally gave Carlos Salinas 50.36% to 31.1 for Cauhtémoc Cárdenas. Cauhtémoc Cárdenas and the PAN candidate tried to force a recount but to no avail. Carlos Salinas became the president of Mexico. In his augural address he made a rhetorical allusion to renegotiation of the Mexico's foreign debt which could have been interpreted as a possible threat to stop payment on that debt, but in reality it was just a bit of political rhetoric. Salinas was probably under a bit of pressure to make some rhetorical flourish in as much as at that inaugural address the supporters of Cauhtémoc Cárdenas made a public display of walking out of his speech and the supporters of PAN, while staying, made a point of not expressing any signs of approval.

Cauhtémoc Cárdenas created a party organization called Partido Revolucionario Democrático (PRD). PRD is a strange amalgamation of former PRI members and former socialist and communist party members.

About this time in the nineties there was a story that circulated. Supposedly in the mid-1980's Mikhail Gorbachev, Ronald Reagan and the Mexican president Miguel de la Madrid were on an airplane together and God appeared to the trio. God told them that He would answer any questions any one of them had about the future. Gorbacheve asked how long communism would last in the Soviet Union. God replied that it would only last a few more years and Gorbachev cried. Reagan asked how long capitalism would last in the U.S. and God replied that it would only last a few more decades and Reagan cried. Then de la Madrid asked how long corruption would last in Mexico and God cried.

It was also about this time that Carlos Salinas in a speech said, "Pity poor Mexico, so far from God and so close to the United States."

As an economist-president Carlos Salinas immediately removed the price controls that had been enacted under de la Madrid. Salinas continued de la Madrid's efforts to have Mexico join what is now known as the World Trade Organization (WTO). Salinas initially had some notion of diversifying Mexico's trade relations such as with Europe and Japan, but a tour of Europe convinced him that Mexico's economic futures was inevitably linked to closer trade relations with the United States. Carlos Salinas deserves credit for initiating the dialogue that eventually matured into the North American Free Trade Agreement (NAFTA). Salinas was successful in securing loans for Mexico to deal with economic crises. The Brady Plan allowed Mexico to rearrange the payments associated with its foreign debt.

As an economist Carlos Salinas gave attention to breaking the abusive power and corruption of labor unions. Unions had forced government enterprises to hire unneeded employees and the burden that unnecessary cost was burden the government which had to subsidize those enterprises or face the collapse of the enterprises. With privatization enterprises layed off workers, which resulted in protests, but the laying off of excess workers avoided the more traumatic closing of enterprises in which all of the jobs are lost.

One particularly strong and corrupt union was that of the employees of the state petroleum company Pemex. This union was controlled by Joaquín Hernandez Galicia, known by the nickname La Quina (The Queen). Salinas sent police to arrest La Quina at union headquarters on charges which included murder. The arrest turned into a fullfledged gun battle, but La Quina was arrested, tried and sentenced to thirty five years in prison. Pemex is a crucial sector for the government of Mexico because its profits are a major sorce of revenue for the government.

Pemex's problems were not just those associated with the labor union and La Quina, but those were important. Salinas forced a restructuring of Pemex which resulted in a layoff of 94 thousand employees and reduced its payroll by 40 percent. Salinas made some modifications in the organizational structure of Pemex which would promote efficiency and could allow the spin-off and privatization of parts of Pemex such as petrochemicals.

Leftist political activists from Mexico City relocated to Chiapas tried to use the political vulnerability of the government in an election year. They were able to convince Chiapans, who had real and serious grievances with the Mexico City government, to act a pawn army for the political activists to act out their guerilla-leader fantasies. For more on the situation in Chiapas click here.

The Sexenio of Ernesto Zedillo Ponce de León,

Ernesto Zedillo

When the history of the late twentieth century in Mexico is written in the future Ernesto Zedillo Ponce de León will probably judged as one of the great heroes of Mexico, heroic not for what he did but for what he didn't do. He didn't use the power of the state to perpetuate the rule of the PRI. He was a modest man whose simple honesty was noble. Mexico can be very proud of him.

Ernesto Zedillo Ponce de León was not the original choice of Salinas and the inner circle of PRI. That selection was Luis Donaldo Colosio Murrieta, but he was assassinated while campaigning in Tijuana in March of 1994. Ernesto Zedillo had been the Secretary of Programming and the Budget (1988-1992) and the Secretary of Public Education (1992-1993) in the Salinas government. He was the campaign manager for Luis Donaldo Colosio so his candidacy made political and organizational sense. Ernesto Zedillo was perceived to be an honest, hard-working technocrat. He had spent his early life in Mexico City but later raised in the northwest (Mexicali) so he had ties to those two major power centers. He studied economics at the National Polytechnic Institute in Mexico City and then went on to earn a master's degree and doctorate in economics at Yale University.

The election which zedillo won was deemed the most honest one in Mexican history. Zedillo got 49 percent of the vote, the PAN candiate 29 percent and the PRD candidate 16 percent.

After the election the peso was again devalued. The devaluation spurred a flight of capital which put more pressure on for further devaluations. For more on this 1994 crisis click here.

Ernesto Zedillo tried hard to cope with the economic depression that followed the devaluation, but problems were too severe to remedied by simple measures in a short period of time.

The Sexenio of Vicente Fox Quesada,

Mexico has not seen before a politician with the machismo and charisma of Vicente Fox Quesada. His father was Mexican of Irish-American ancestry and his mother was directly from Spain. His father was a successful rancher in Guanajuato state where Vicente grew up, although he was born in Mexico City. Vicente Fox is six feet, five inches tall and cultivates a cowboy image.

He took courses at the Iberian-American University in Mexico City where some of the lecturers were from the Harvard Business School. He chose to pursue a career in business rather than go on with a university education. He started working for the Coca Cola Company in Mexico. He started at an entry-level position as a route truck-driver and worked his way to the level of president for the Coca Cola Company in Mexico and then the president of company that served not only Mexico but all of Latin America. Before he became president of the company Pepsi Cola was more popular in Mexico than Coca Cola. Vicente Fox changed that. He is a successful business man.

In the 1980's Vicente Fox became active in PAN, Partido Accion Nacional. In 1988 he ran for Congress for the city of León in his state of Guanajuato and won. In 1991 he ran for governor of Guanajuato and the election was disputed and Carlos Salinas gave the election to another man on an interim basis. Vicente Fox again ran for governor of Guanajuato and won by a landslide. He is a natural campaigner.

It wasn't until 1994 that Vicente Fox was elegible to run for the presidency of Mexico. The Constitution of Mexico required that a president of Mexico must be the child of two Mexican citizens. Because Vicente Fox's mother was a citizen of Spain he could not run for president until that restriction was eliminated in 1994.

Vicente Fox announced in 1997 his intention of seeking the candidacy of the PAN for the 2000 election. He was not a favorite of the leaders of PAN but he campaigned so well that there was no denying the candidacy. Vicente Fox fought a hard campaign against his major opponent, PRI candidate Francisco Labastida, and his lesser opponent, PRD candidate Cauhtémoc Cárdenas. Although Vicente Fox is the candidate of the party that is characterized as right-of-center and as conservative he is not ideologically oriented. He is a pragmatist. He is mainly concerned with whether a policy works.

His opponent Francisco Labastida said,

Fox is ninety percent image and ten percent ideas.

Fox said that Labastida is a sissy and a transvestite.

Vicente Fox

During the campaign Vicente Fox emphasized his Catholicism. PAN is the party that is more closely associated with the Catholic Church.

Vicente Fox's machismo image, reputation as a successful entrepreneur, devout Catholicism and tireless campaign translated into an upset victory over the PRI candidate. In his inauguration speech Vicente Fox projected an image of a unifier. He included members of the opposition parties in his cabinet. He went so far in this direction that his initial selection did not include any members of his own party.

In his first four years he continued the policies and programs of Ernesto Zedillo. He has been criticized for not implementing enough of his own programs. However he is faced with a legislature dominated by the opposition PRI.

The Geographic Setting of Mexico

Mexico is a political entity defined not by regional coherence but by conquests. The Spanish conquistadores conquerered as far north as they could and claimed territory far beyond what they could control. What is now the political entity of Mexico was a portion of the viceroyalty of New Spain. It is an artifact of historical events rather than a coherent unit dictated by geography or the culture of the indigenous population. There are, in effect, three Mexicos: The Mexico of the north, dry and mountainous, the Mexico of the south, wetter and mixed in terrain, and Yucatan, wetter lowland forest.

The terrain of the north is dominated by two mountain chains. The western chain, the Sierra Madre Occidental, can be consider an interrupted extention of the Coastal Range of California. The California Coastal Range also extends into the peninsula of Baja California. The eastern chain, the Sierra Madre Oriental, is an uninterrupted extention of the Rocky Mountains of New Mexico. Between the two ranges is a high plain, the Altoplano. There is a lesser range that cuts across the Altoplano connecting the western and eastern ranges.

In the south where the two ranges of the north merge the range is oriented west to east and is designated as the Sierra Madre del Sur along the southern coast and the Cordillera Neovolcánica in the interior.

The plains of the Yucatan Peninsula are geographically distinct from the rest of Mexico.

The Climates of Mexico

Northern Mexico is dry and southern Mexico is relatively wet. In the north the annual rainfall averages aout 30 to 60 cm, whereas in the southern state of Tabasco the annual rainfall is 200 cm per year. The other southern states have comparably high rainfall levels. Mexico City is near the dividing line between the dry climates of the north and the wet climates of the south. It has average rainfall in the range of 60 to 100 cm per year.

Almost all of Mexico has pronounced dry and wet seasons. The dry season starts around the end of October and runs to the end of May. July is generally the wettest month and February the driest. Mexico is often in the path of hurricanes having their origin in the western Caribbean Sea.

The average temperatures are determined largely by altitudes. In the altoplano the altitudes are about 1000 to 2000 meters and average temperatures range from 16° C (60° F) to 20° C (68° F). Mexico City, at an altitude of 2300 meters has an average temperature of about 16° C (60° F).

The Techtonics of Mexico

The mainland mass of Mexico is on the North American plate. Baja California in on the Pacific plate which is moving north with respect to the North American plate. These plates grind and catch creating the same potential for earthquakes in Baja California as on the San Andras fault in California. But the most serious earthquake threat comes from the Cocos plate being subducted under the North American plate along Mexico's southern Pacific coast. In 1985 there was an 8.1 magnitude (Richter scale) earthquake in the region off the coast from Acapulco. The most severe damage from this earthquake was in Mexico City where about four thousand people were killed.

The seismic activity due to the subduction of the Cocos plate is not limited to earthquakes. The enormous forces involved in the subduction melt the stone and some of this lava comes to the surface in a band called the Cordillera Neovolcánica. There have been volcanic eruptions in this region. One volcano, Paricutín, began as a vent in an open corn field and grew to be a 2700 meter peak. There were major eruptions in 1983 (El Chichón) and in 1994 (Colima).

Land Tenure and the Communal Farming
Movement in Mexico

Background on the Problems of Collective Farming

In farming the ideal situation for economic efficiency is that when an individual makes a productive effort then that individual should get the full benefit of that productive effort. Anything less than the full benefit discourages the individual from making the justified effort. The collection of taxes or an individual being in a collective may result in discouragement of effort.

The distortion can be visualized by considering what would happen in a university class if all students scores on examinations and assignments were added together and each student given the average score. One can imagine how academic performance would suffer. Or, suppose in a restaurant five individuals who do not care for each other decide to share the bill equally. One can imagine how the nature of what is ordered under that arrangement would differ from what is ordered when each individual pays his or her own bill.

If individuals are put into a group decision-making unit with people for whom the individuals do not care then there may be a distortion leading to economic inefficiency. For the sake of explanation suppose ten individuals who do not care about one another are put together into a collective farm in which the gains are divided equally. Suppose each individual can produce $10 worth of output in an hour. Under individual farming if an individual works an addition hour that individual gets $10. But in a collective of ten that individual gets only one tenth of $10; i.e., $1. It is essential to note that the cost of the labor effort of the individual in the collective is fully borne by the individual.

In a collective, costs may also get distorted. Suppose a tool costs $20 and this is deemed too high for for its benefit. Under individual farming the tool is not purchased. But in a collective of ten the tool may get purchased because the cost is shared among the ten. Thus collectivization greatly distorts the effective prices thereby decreasing productive effort and hence output. On the other hand collectivization results in the excessive spending because the price of inputs is similarly distorted.

But people care not only for themselves. They may care for specific other people such as family and friends. In collective farming if the benefit on an individual's effort goes to others who the individual cares about then the discrepancy between benefit and effort is reduced.

If among the ten collective members each member is part of a couple then the benefit of an hour's effort is $1+$1=$2. Thus the distortion of the benefit is in a ratio of five to one rather than ten to one. This is less of a distortion but still a distortion.

There may be potential economies of scale that the collective could benefit from but the production of the collective is hampered by the discouragement of individual effort. And the nonlabor costs tend to be excessive if individuals have any say in their determination. It is therefore an empirical question as to whether or not the economies of scale offset the discouragement of production and the encouragement of excessive costs. The rule of thumb for collective farming is that the yields are only 50 percent of the yields of private farming. Private farming may not be farming by one individual. Most likely private farming is family farming.

Individuals do belong to groups such that the well-being of the other group members is as important as the well-being of the individuals themselves. In modern times in developed economies the nuclear family constitutes such a group. In traditional societies it is the extended family. In ancient times the tribe constituted such a group. It is very natural for such groups to be the very basis of production.

Land Tenure in Mexico

Agriculture was independently discovered in the New World in among other places in what is now Mexico. This agriculture revolution in Mexico was based upon the corn plant. Social life at the time was tribal; it was very natural that corn cultivation should be tribal. The land was farmed tribally and the control of land was tribal.

With the Conquest the land was apportioned feudalistically among the conquistadores. The indigenous population was apportioned with the land to serve as labor on the conquistadores' haciendas. The original meaning of hacienda was not remote estate but production unit for hacer, to make. Under such a system it was obvious that the indigenous population would not have tenure of land.

During the nineteenth century, after independence, the distribution of land tenure was one of the two most important political issues. The other major political issue was the role of the Catholic church in Mexican society. The two issues were tied together in as much as the Church was one of the major land holders in Mexico.

The Mexican Revolution of 1910-1915 seemingly resolved both of these issues. The Agrarian Reform Act of 1915 and the Constitution o 1917 asserted that all agricultural land is under the control of the government and that private agricultural land in excess of specific sizes should be redistributed.

The Ejido Movement

Two institutions were created for land redistribution. Ejidos were communally farmed parcels. Villagers acting as a collective could petition the government to be granted parcels of land. The government retained title to the land and so the had only the use of the land, not its ownership. In southern Mexico villagers could petition to establish that their ancestors had farmed a plot of land communal before it was taken to be part of an hacienda. If the government agreed with the petitioners it established a communidad agraria, agrarian community. The communidad agraria is essentially the same as an ejido and the government statistics do not differentiate between the two. Hereafter ejido refers to both ejido and communidad agraria.

The ejidos had the option of allowing its members to farm individually parcelas (parcels) and/or farm collectively. The parcelas often were often too small for a family to survive. In 1982 about 30 percent of the ejido members had parcelas. But frequently members had to work for hacienda owners.

There were widely different attitudes among the presidents of Mexico toward land redistribution and the .

Mexican Presidents and Their Redistributions of Land
Other Measures
Álvaro Obregón1920-19241.2 million
Lázaro Cárdenas1936-4018 million
Ávila Camacho1940-46
Luis Echeverría1970-7617 million
José López Portillo1976-821.8 million
Adolfo López Mateos 1958-6412 million

Some presidents avoided land redistribution because of concern for what it would do to agricultural production. Although by the early 1990's there were thirty thousand ejidos and communidades agrarias utilizing about half of the agricultural land of Mexico, the three to four million members of these organizations were some of the poorest farmers in Mexico. The communal farming program of Mexico thus managed to take half the agricultural land of Mexico, devote it supposedly to the welfare of a small fraction of the population and still leave them in poverty. For most their income from their ejidos is a suplemental income. Their main source of income comes from working as laborers for large land owners or as seasonal migrants to the cities of Mexico or the United States.

Over the years some ejidos began renting land to other farmers. This very reasonable practice was illegal until 1992. In 1992 the government gave the ejidos greater freedom on how to use their land, coming closer to giving them effective title to their land. It was the title to the land that the poor should have received instead of only the use of the land. They could have then decided whether their farming of the land was the use of it that was in their best interest.

(To be continued.)

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