THE HISPANIC EXPERIENCE
Houston Institute for Culture
Mexican Independence in Context
An except from University of Houston history professor John Hart's speech on Mexico's intertwined economic history with the United States.
(John Mason Hart is the author of "Empire and Revolution: The Americans in Mexico since the Civil War" and "Revolutionary Mexico: The Coming and Process of the Mexican Revolution.")In a remarkable demonstration of continuity, the banking and industrial forces that spearheaded the relationship of the United States with Mexico, are spearheading the creation of free trade in the Americas, and the American position in Asia and the Middle East. And that takes us back into the early Nineteenth Century. The episodes of anti-American violence that we've witnessed recently in Asia and Africa and the Middle East are also found much earlier, and in a very intense form, equally intense for its time, in Mexico.
It all started, and I'm going to focus on the period after 1865, but it really started earlier than that in the long continued war against Native Americans in this country, on the frontiers in which four million people were eliminated through outright killing or displacement. From which, a rudimentary military industrial complex emerged, financed at the beginning with British capital. So you had small dispirit workshops making guns and war materials and, whenever they wanted to get bigger than that, they would seek out alliances with senior British partnerships and international banks, largely in London. And so, an alliance slowly emerged well before the Civil War between British capital and American militarism.
The first major step in the way of what we would call the collosal scale American capitalization that we see today came with Commodor Vanderbilt, at least as far as I can find so far, and I don't know how to even approach the Revolutionary War. But in the War of 1812, Commodor Vanderbilt received a contract from the United States government to construct a navy. And with that, he made a gigantic quantity of money, becoming one of the world's first mega-financiers. Again, associated with American war efforts. And the second (step), in this preliminary phase of what I want to say today, came with the Mexican-U.S. War. When Zachary Taylor invaded Texas and marched south from Corpus Cristi to Brownsville/Matamoros, they set up a contract with an American financier to supply, Halliburton-style, the American forces with their supplies. And that individual, Charles Stillman, walked away with millions of dollars in profits, which he promptly put into the National City Bank of New York. Affiliating then, this growing complex of financial power you find in Philadelphia, in those days, New York and Boston, with the militarism. The British were still a part of that. They were major players in the National City Bank at that time. Stillman, alongside of the bank's general manager and president, Moses Taylor, were essentially managing the John Jacob Astor empire in America.
But the really big theater, the large scale of things, was the coming together that occurred in 1861. In that year, the Battle of Bull Run, witnessed a Union army of about 35,000 men at the initiation of the war, which, when defeated, required a major reorganization of the U.S. government. The budget that year for war was $60 million. Four years later it was $1.3 billion. Lincoln appointed a man named Thomas Scott as his assistant secretary of war. (Scott was) the chairman of the Pennsylvania Railroad, which was the largest industrial corporation in the world at that time. So American capital in 1861 was already highly organized and there was an industrial infrastructure growing up around transportation and communications infrastructure in a very rapid fashion. Lincoln astutely picked the head of that railroad to run the war procurement effort. And (Scott) immediately turned to a group of American financiers who were already well versed in raising moneys, and making money, from warfare -- Junius Morgan, Anthony Drexel, Moses Taylor. They came together with new conglomerations of capitalists. One of the major new banks on the scene at that time was the First National Bank of New York, headed by George Baker. And so, by the middle of the war, by late 1862, America's greatest financial institutions were in place and they were backing the Union. To give you a sense of what that meant, Drexel, who had special ties to Paris, was recruiting hundreds of millions of dollars in Parisian investments for the Union war machine, while Baker and Morgan were going to London for their funds. The result was a coming together, primarily of Anglo capitol with American capitol, to create this war machine. And within two years at Gettysburg the Union army that could produce 35,000 men for Bull Run, produced 75,000 men with the latest military technology to confront the Confederates at Gettysburg, with 75,000 more troops in immediate reserve, and 75,000 more troops surrounding Washington, and over 1,400,000 under arms. I tell you that to give you a sense of how well organized and capable they were that long (ago) to carry out these kinds of missions. And instead of it being just Vanderbilt, or just Stillman, we are now looking at a consortium of finance capitalists coming together in cooperation with the government to create, (what) I would call, the first world-class war machine.
When that war ended, the remarkable consolidation between finance capital, capital technology, and warfare continued as the railroads spread across the American West, continuing their combat with the Native Americans. Almost every railroad president was a Union general. They specifically, by the way, excluded southerners from industrial leadership. And so, given their Civil Engineering degrees from West Point, which at that time was a leading engineering institution, our infrastructure builders were heavily (involved with the military). The military (experience) amongst them was very prominent.
The first country they encountered in that westward expansion, (with a) duly constituted government of the Third World, not counting Native Americans, was Mexico. And they began to pour into Mexico in the 1860s, first with loans and mercantile arrangements, and then later with infrastructure development, industrial investments, resource extraction, and finally, American settlements. But the entry into Mexico began almost as a direct corollary to what was going on during the Civil War, because the Mexicans were fighting their own war with the French. They lacked resources, but they had the spirit to fight. In fact, back in the Mexican-American War, it turns out that they had mounted a gigantic civilian resistance against the American war machine that occupied Mexico City under the command of Winfred Scott. So badly did they punish the Americans for their presence in Mexico City that Scott had to deploy his entire forces to protect supplies between Veracruz and Mexico City. The Congress found out that President Polk had lied about Mexicans shooting Americans on American soil, so they cut the budget on the war effort and the American government basically was forced to sign a treaty that ceded back to Mexico about a third of the land they were seeking. That is, the boundary would have been from Mazatlan to Tampico, but instead they accepted the Rio Grande River across the Mesilla Valley to Southern California. And so, we see here the basic contours of what we are going to find in the rest of the Third World.
Having supported the Mexicans against the French to the tune of about $250,000,000, the American investors -- the same people I might add, Taylor, Morgan, Baker, the heads of the three major banks that were emerging at this time in the middle of the Nineteenth Century -- were demanding payment from a bankrupt Mexico. President Benito Juarez was unable to make those payments, and so they negotiated for a period of ten years, during which the Mexicans began to concede infrastructure control to the Americans in lieu of cash payments. In other words, we'll give you a concession for railroads because we can't give you the money you want. And so they set up contracts that arranged for transfers of real estate and yielding trade and railroad/telegraph concessions to these leading American capitalists. The trouble was that in 1876 the new Mexican president, Sebastian Lerdo de Tejada, cancelled all of the concessions saying, "betterest a desert between strength and weakness." That decision by Lerdo led to the American financial elite support of a Mexican general for the overthrow of the democratically elected president of Mexico. The general that carried that action out, General Porfirio Diaz, having lost the election in Mexico to President Lerdo, went to New York, where he met with the Stillmans and Taylors and, I'm not sure who else, but I located him in the bank, and then he returned from City Bank to New Orleans, where he met with leaders of the Whitney Bank and the Morgan shipping lines, and then to Brownsville where he stayed in Charles Stillman's house for six months, during the duration of a guerilla war which overthrew the Mexican government. He then returned to Mexico as the incoming president, where he would rule the country from 1876 - 1910 directly as president, and four years indirectly through a subaltern.
During that time, Americans took over 100 percent of Mexico's infrastructure. They acquired 70 percent of the country's coastlines and frontiers. 28 percent of the nation's surface. That's 28 percent of 465,000,000 acres. 70 percent of all incorporated businesses. All of the copper. And with their Anglo allies, all of the oil. Internally, Mexico was characterized, politically, with a military dictatorship. When you look at the incorporated entities that I just mentioned, and the copper and oil companies, they were characterized by segregated housing and labor, and even forced labor and slavery. Some of the companies involved are familiar names, Phelps Dodge, International Harvester, Pennsylvania Railroad, and so on.
Between 1898 and 1910, Third World peoples became extremely restless, and this ties in directly with our issues for today. China, Iran, Mexico and Russia all experienced upheavals of one sort or another that were directed internally, in part, but also toward foreign dominance. And, in the case of Mexico, a massive upheaval (occurred), the first one of the Twentieth Century. Local elites, that would have been otherwise somewhat conservative, wanted protection from foreign corporations in their businesses. Labor wanted workers' control of production, because Mexico was coming just into the industrial revolution. Workers had a tradition of artisan production, where a shop was run by a master with journeymen and apprentices, and they had their own localized self-rule within the shops. So they wanted to perpetuate that into larger modes of production, including factories, and they wanted to do that through syndicates, or large unions run by the workers. They would in turn run the factories and coordinate production with a congress at the national level. And peasants wanted their land back, including the 28 percent of the nation's surface that had been taken by big American capital. I broke this down statistically and found that 161 American entities owned 93,000,000 acres of Mexico, to give you a sense of just how powerful they were. But overall (Americans) owned 130,000,000 (acres) [of Mexico's 465,000,000 acres]. And the British (owned) another 20,000,000 (acres). The peasants wanted their land back. This land had been privatized by Diaz, and then sold off to highest bidders. These American corporations and the Mexican oligarchy came together to take possession of those properties and that productivity. The result was a revolution (The Mexican Revolution of 1910), which was won by what we might call a continuation of the country's old elites, enviewed with a modern sense of nationalism.
If you look at the results of the revolution, you see that the program they carried out actually exemplifies that kind of a leadership. They seized back all of the foreign-owned land and the lands of the oligarchy, and they distributed them on a rational basis. They took the American and British owned properties, and the oligarchy's properties, and gave 25 percent of the arable land in the country back to the peasants. Then they privatized the other 75 percent and sold it to local elites and provincial elites throughout Mexico. They nationalized the great industrial holdings of the country, including the oil companies. The last such step being taken on January 2, 1940, when they seized the (oil) fields in the lower gulf extending across northern Guatemala into the Pacific and the Gulf of Mexico. At that time, it was judged to be the second largest source of oil in the world. And then they created government-controlled unions and carried out violent repressive actions against the more radical workers' control syndicates that had participated in the revolution with their red and black flags -- red and black flags of anarchism. And then they nationalized transportation and communications. So all the higher ends of American control in Mexico were taken back in effect by the Mexicans in one of the most collosal transformations the world has ever seen, short of the Soviet Union or China. How did they do this? Cuba can't even get away with the paltry amount of things that they nationalized. First they promulgated and legalized it all in the middle of the First World War in 1917 with their constitution. They established the legal precedence for the actions they took while the Americans were distracted with war in Europe. And then they waited until the '30s, when Franklin Roosevelt was interested in developing good relations and foreign trade to come out of the depression. And they began to buy back assets. They started by buying the railroads and offering to pay for the land. And as the German-American confrontation deepened, then they took the big steps. They seized the copper and oil resources in the late '30s and 1940. So timing, ladies and gentlemen, is everything. Of course, to placate Roosevelt and Winston Churchill, who wanted to go to war over his paltry interest in Mexico, they offered to join with them as allies in World War II, and all is forgotten, or at least forgiven.
Briefly, I want to say what has gone wrong in Mexico that leads us to NAFTA and the desperate efforts that the Mexican government has taken in the last ten to fifteen years to right their sinking economy. The first one was that the revolution essentially failed to destroy the oligarchy. It survived in variant forms and was able to eventually dominate the single political party that emerged out of the revolution, the Party of Revolutionary Institutions (PRI). That over-riding political structure repressed alternative visions of what Mexico could be -- a Mexico for peasants, a Mexico for the populist, a Mexico for workers.
The second major problem that has overcome them and forced them to free trade and American investment once again is overpopulation. The population went from 15 million to 20 million between 1910 and 1940. That's a 33 percent increase in 30 years. Between 1940, when the reforms ended, and 2000, the population went from 20 million to 100 million, with no corresponding increase in per capita income, I might add. So the industrial base, being undercapitalized, was unable to provide employment. And that then led to the singular release valve they have short of revolution, which is emigration to the United States. So, a lack of capital and a lack of growth in per capita productivity would be our third major failure. And the fourth one was the capital investment export problem. That is to say rational Mexican investors from the oligarchy, looking at returns from a limited internal market and depleting natural resources in their country, turned to foreign capital. You find the major Mexican capitalists of the second half of the Twentieth Century turning to American oil companies and industries for their investments.
Today we find Mexico once again relying on foreign capital to survive economically. This time, it's not natural resources that they are selling, but rather industrial exports, that is the export of labor through maquilas, and through NAFTA, and labor migrations. Most resources inside Mexico are still owned by their elites, but they work in cooperation with American maquila companies. Most of those companies are linked directly to American corporations and the finance capital that resides in New York. The conditions that we find in Mexico today are characterized not by slavery, as they were before, but rather by what I would call extremely repressed labor conditions involving 70 percent women workers. We find them concentrated on the border, but dispersed throughout the country. Wherever we find vulnerable concentrations of workers, we will find American capital seeking them out and making deals with local Mexican authorities and capital. That system exists south of Mexico, extends into Guatemala, Salvador, and Honduras. The industrial plants are characterized by armed guards at the doors, high rates of personnel turnover, and absolutely high rates of personnel turnover whenever worker organizing efforts are encountered.
A transcript of the full speech is available at: http://www.houstonculture.org/forums/hart.html
John Hart's speech on Mexico's intertwined economic history with the United States was given as the luncheon address during the Houston Peace and Justice Center's conference, "Winners and Losers: the Impact of Globalization," April 24, 2004. Houston Institute for Culture was a sponsor of the important forum on economic globalization issues, as the issues have serious ramifications for diverse cultures.
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