Chapter 6
“The Crisis of the Porfirian Political Economy”

 In Morelos
• Sugar production dropped drastically from 52,230,155 kilo (1908-1909) to 48,531,600 kilos
• Mexican producers were facing an American tariff and new growers in Cuba
• Tried to compensate the loss by selling to Mexico city and “domestic consumptions”
• Event in Morelos reflected the Mexican agriculture at the time period

• There was famine going on in the center and northern parts of the country. Corn shipments were being delivered from other countries cause of the shortage. Some 200,000 tons was imported between 1907-1910

• 1908-1909 there was a drought and that is why there was a shortage of corn. It was mostly due to lack of proper irrigation

• The governments wasn’t willing to fund enough money for proper irrigation and also because of not having the sufficient farming tools. This lead to the inevitable down fall of Mexican agriculture

• Diaz government had a plan for irrigation but because of the peasant displacement in favor of cash crop, which they farmed on their land, lead to a shortage of crops. Irrigation and the favor cash crop with the drought and crops that were infested in the south and center lead to the famine.

• Because of this drought of crops domestic companies started coming into Mexico. This didn’t make Mexican society happy

• In Veracruz, foreigners held 95 percent of the city’s private property. Cost of living doubles between 1901-1911

• There was a major crisis with unemployment as well. Miners, railroad workers and factory workers were all out of jobs during the famine

Monetary and fiscal crisis

• Started imposing commercial agriculture, a factory system of industrial products, and monetary money exchange

• Silver started to become less of value because of the economic crises. Couldn’t keep up with other western Europe countries and America pertaining to growing economically

• The currency act of 1900 established that gold was the national unit of value. This lead Mexico to go into panic because silver was there main source of income

• 1903 Mexico and China went into a deal of fixed gold to silver ratio with America. Limantour’s committee proposed these four points:
 Establish a more stable system of international exchange
 Create a new money system based on a fixed ratio between silver and gold
 Encourage the Mexican government to purchase gold abroad to guarantee the value of its silver notes
 The immediate cessation of free coinage by Mexican private banks and mints
Limantour gets everything in the proposal to American accept the currency of silver to gold was much less than hoped for

• This plan had three negative effects:
 Cost of imported consumer goods increased from 10-25 percent. Imports declined more than 50 percent in 1908-1909
 Mexican silver fled to foreign markets where it had more value
 It doubled the size of Mexico’s debt

• 1910 the French held 33 millions pounds or about 66 percent of the Mexico’s debt. 16.5 for Britain and 12 percent for America.

• “The crisis of the Porfirians economy was central to Madero’s motivation and public acceptance” (Page: 175)

The Dictatorial State

• Diaz started putting ends to labor unions and suppressing rural villages autonomy. This temporary profited foreign and domestic economy. Both benefited from cheap industrial labor

• Force of police was used at certain points to keep the rebels and industrial workers from uproar

• By twentieth century Porfirian government consisted of age “clique”

• Middle class but not really categorized as middle class were called “pequena burguesia’

• Pequena burguesia started to rebel and asked for social reforms from the government. Started to make alliances with other labor workers

• Porfirian neglected to incorporate the new “pequena burguesia” class and there for this lead to political economic crisis

American and other foreigners

• One key phase in this process was the Porfirian government’s abolition of the state and local tariffs known collectively as alcabalas. The removal of alcabalas encouraged the increase of extractive enclave industries such as mining, exporting agriculture, and the textile factories, which transformed the Mexican economy.

• Foreign capital reinforced the imbalance of power between plantation owners and agrarian labors, exacerbating the coercion association with industrial export agriculture.

• Madero’s had to compete with Guggenheim, Stillman, Balfour, the Brown Brothers Bank, and the Rockefeller trust

• Economic crisis between 1899-1910 in the industrialized countries caused the international companies located in Mexican to reduce the rate of growth in their new investments and loans while demanding higher prices for there manufactured goods

• Porfirian’s regime had two economic phases. 1870’s to 1900 were rapid growth and political stability. 1900-1910 economic crisis

• Mexico’s revolution was caused by economic system dependent on foreign capital imports