Popular Science Monthly/Volume 29/August 1886/An Economic Study of Mexico V

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AN ECONOMIC STUDY OF MEXICO.

By Hon. DAVID A. WELLS.

V.

Present and Future Relations of the United States to Mexico.—The relations of the United States to Mexico naturally group themselves under two heads—political and commercial.

The political relations of the United States with Mexico, whether the people or the Government of the former wish it or not, are going to be intimate and complex in the future. The United States is geographically married to Mexico, and there can be no divorce between the parties. Intercommunication between the two countries, which a few years ago was very difficult, is now comparatively easy, and facilities for the same are rapidly increasing. And with the rapid increase of population in the United States, and with increased facilities for travel, the number of people—restless, adventurous, speculative, or otherwise minded—who are certain to cross the borders into Mexico for all purposes, good and bad, is likely to rapidly increase in the future. An extensive strip of territory within the Mexican frontier is already dominated, to a great extent, for the purposes of contraband trade, by a class of men who acknowledge no allegiance to any government, and whom the Mexican authorities tacitly admit they can not restrain. Out of such a condition of things political complications between the two countries, at no distant day, are almost certain to arise.

AN ECONOMIC STUDY OF MEXICO. 445

Again, in asserting the " Monroe doctrine," the United States vir- tually assumes a protectorate over Mexico. For, whatever else the Monroe doctrine may embody, it unmistakably says to Mexico : " You shall not change your form of government " ; " You shall not enter into any European alliances " ; " You shall not make cessions of ter- ritory, except as we (the United States) shall approve" ; and in return " We will not allow any foreign power, ourselves excepted, to bully, invade, or subjugate you." It may be, and is, replied that the neces- sity of repelling from the outset any attempt at further aggrandize- ment of any European power on the North American Continent, with its contingent menace to the maintenance of democratic institutions, sufficiently justifies the assertion of the Monroe doctrine, and is for the good of Mexico as well as of the United States. But, at the same time, if there was any other power on the American Continent which should arrogate to itself the right to dictate to or control the United States, as the United States arrogates to itself the right to dictate to or control Mexico, and had sufficiency of power to make its assump- tions respectable, could there be any doubt that the people of the Federal Union would regard such pretensions as a justifiable occasion for hostile protest and defiance ?

Every right, however, carries with it and involves a duty ; and the assertion of the Monroe doctrine by the United States carries with ,it an obligation of duty in respect to Mexico. What is that duty ? Manifestly the duty which the strong owes to the weak. Not an offensive protectorate or meddlesome interference, but a kindly feel- ing and policy ; manifesting itself in acts that will tend to promote the prosperity of our neighbor, and bring her willingly in accord with our own interests and wishes. Has that kindly feeling ever been mani- fested ? To answer this question intelligently, one needs but to get a position outside of ourselves more especially anywhere among the other people and states of the American Continent, north or south of our boundaries when a little inquiry will satisfy, that the United States is regarded very much in the light of a great, overgrown, im- mensely powerful " bully," from whom no favor and scant justice are to be expected under any circumstances ; and who would never hesitate, if interest or selfish indifference prompted, to remorselessly trample down in the old Anglo-Saxon spirit (and as it always has) any weaker or inferior race, Mexicans, Indians, or Chinese, the poor fisher- men of Newfoundland, or again the negro, if political sentiment in respect to the latter was not running for the time being in another direction. And it is safe to say that to-day there is not a nation or people on the face of the globe, which is brought in intimate contact with us, but fears and hates us ; and that, apart from a conservation of the principle of free government, which the United States is believed to typify, would not be glad if the power of the Federal Government were by some contingency to be impaired or destroyed. Is it not

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time, therefore, that some steps should be taken to induce a different and a better state of feeling ?

But, apart from any moral or ethical view of the situation, an ex- ceptional, kindly treatment of Mexico ought to be a permanent na- tional policy on the part of the United States, for reasons purely of self-interest, apart from any other motives. What Mexico most needs and what she has never had, unless the present Administration be an exception, is a stable, good government. Without such a gov- ernment the large interests which citizens of the United States are acquiring in Mexico are sure to be imperiled. Some eighty million dollars of American capital are understood to be already represented in Mexican railway constructions ; and other large investments have undoubtedly been made in mining and "ranching" in the country. Now, if history is to repeat itself, and there are to be further domestic revolutions and intestine strife in Mexico, and these American prop- erty interests or their owners are, as a consequence, to be arbitrarily or unjustly treated i. e., in the way of confiscations, or forced con- tributions resistance will follow ; claims for damages will be created and pressed ; national intervention will be sought for, and, in the pres- ent temper of the American people, will probably be granted with a possible sequence of war and annexation. Certainly the last thing which the United States would be likely to tolerate, would be politi- cal chaos, with involved American interests, across its southern bor- der. If it be said that there is no danger of this, it should be remem- bered that the present President of Mexico came to his office for the first time in 1876, through successful rebellion against the regularly elected authorities ; during which period the Vera Cruz Railroad was destroyed at different points by the revolutionists, and all travel throughout the country greatly interrupted and made dangerous ; and also that during the last twelve months there have been incipient rebellions against the central authorities.

But good government in Mexico is a matter not easy of attainment. There can be no good government in any country without good finance, and the finances of Mexico are always in an embarrassed con- dition ; and this almost necessarily for a variety of reasons. In the first place, as already pointed out, the extreme poverty of the masses, the absence of accumulated wealth, the sluggishness of all societary movements, the practical exemption of land from taxation, and the adoption of a method of taxation that blights the harvest that it is desired to gather, all render the collection of an adequate annual reve- nue very difficult. Owing to the semi-civilized condition of its people, Mexico is necessarily obliged to support an army nearly double that of the United States (45,323 rank and file in 1883), to maintain any- thing like a permanent government ; and the expenditure which this military establishment entails absorbs about one third part of the total revenue of the state, as compared with a present direct military ex-

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penditure on the part of the United States, of not more than one tenth of its annual receipts.*

In a certain sense this large expenditure on the part of Mexico is for the direct benefit of the United States ; for, if Mexico did not maintain reasonable peace and order throughout its great territory, the United States, having regard simply to its own peace and interests, would have to do it through military rule, on certainly so much of Mexico as is contiguous to the Federal dominions.

There can be no doubt, further, that there is a powerful party in Mexico the old social leaders, and what considers itself the best so- ciety of the country embracing the Church, the notables, and persons of wealth and ancient lineage allied with Spain which is not at all in sympathy with the younger and progressive element of the nation, and sullenly opposes the introduction of railroads, and dislikes the United States. And this party would, if it could, dominate the policy of the country in all political and commercial questions. In proof and illus- tration of this, note the following extract from a recent article in the " Voz de Mejico " (" Voice of Mexico "), an able Catholic daily pub- lished in the city of Mexico, against the policy of admitting American capitalists into the republic :

"We combat," it says, "the policy of liberalism, which, greedy of material prosperity, and dazzled by the brilliancy of North American progress, opens free- ly the doors of our frontier to the capital of our neighbors. We do not oppose material progress, but we rather desire that it should come by natural steps, in proportion as the peace and public guarantees re-establish confidence and en- courage the development of the country's own resources. Without foreign capi- tal and without foreign labor, nothing or very little shall we be able to do, but we ought to refrain from calling in our neighbors, whose tendencies toward ab- sorption are well known, in order that they shall decorate luxuriously our house and then install themselves in it definitely, relegating to us the departments of servitude. Prudent patriotism and good sense advise, therefore, that the co- operation of the Americans be dispensed with, although it be at the cost of ma- terial progress."

On the other hand, the present Government of Mexico seems to be cultivating and encouraging every effort, that may serve to strengthen society against the possibility of any conservative reaction.

Thus, the attitude of the Government toward the various Protes- tant sects, which are earnestly striving to gain a foothold in Mexico and extend their special theological views among its people, is well illus- trated by the following answer which was returned some time since by the Governor of one of the important States of Mexico to a Prot- estant clergyman, who had made application for military protection for his church, against a threatened mob :

  • The maximum military force of the United States allowed under existing laws is

2,155 commissioned officers and 25,000 enlisted men. The estimated cost of the military establishment of the United States for the current fiscal year, 1886-'87, exclusive of ex- penditures for public works, is $25,680,495.

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" Sir, I willingly give you the desired protection, as it is my duty to see that the laws are respected ; and, while I feel no interest what- ever in your religious forms or opinions, we are all interested in en- couraging the organization of a body of clergy strong enough to keep the old Church in check."

Whether the Catholic Church will accommodate itself to the new order of things, and be content to live peaceably side by side with civil liberty and full religious toleration, is yet to be determined. Ex- Consul Strother, who has already been often quoted as an authority, thus graphically exhibits the respective attitudes of the former and still great ecclesiastical power and its acknowledged antagonist, the Govern- ment : " They may be illustrated," he says, " by a glance at the Grand Plaza of the city, across an angle of which the palace of the liberal Government and the old cathedral stand looking askance at each other. On the one hand, at the guard-mounting, the serried lines of bayonets and the rolling drums appear as a daily reiterated menace and warn- ing. On the other, we might naturally expect to hear from the ca- thedral towers a responsive peal of indignant protest and sullen defi- ance. Yet we remember that it is not the clergy, but the Government, which holds the bell-ropes."

Now, why should not the United States, which heretofore has been so prompt to sympathize with and even give material aid to the people of every Old World nationality struggling for freedom and against oppression to Poland, Greece, Hungary, and Ireland be equally ready to sympathize with and help the progressive party of Mexico, in the efforts they are unquestionably making to put their country in accord with the demands of a larger civilization ?

But, assuming the general concurrence, on the part of the people of the United States, in the proposition that an exceptionally kindly treatment of Mexico ought to be a permanent policy of their Govern- ment, such a proposition, even if proclaimed in a joint resolution of both Houses of Congress, would be little other than an expression of sentiment, unless accompanied by practical action. But, through what measures, having this definite end in view, it may be asked, can prac- tical action, not repugnant to the spirit of the Constitution or the pre- cedents and traditions of the Government of the United States, be in- stituted ? And, in answer, the following points are submitted for con- sideration :

First. That the Government and people of the United States should do all that can be reasonably asked of them to dispel the idea or sus- picion, that now prevails throughout Mexico and all Central America, that the North Americans desire and intend, at no distant day, to take possession of all these countries, and destroy their present nationality. So long as this suspicion exists, the influence of the United States in Mexico and Central America, will be based to a great degree on ap- prehension, rather than liking. A return of the cannon and flags capt-

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ured by the armies of the United States in the War of 1847, as hereto- fore proposed, would undoubtedly greatly contribute to dispel this feeling ; but, apart from this, would it not be well for those who are especially anxious to send the gospel to the heathen, to consider whether it conduces to a higher life and civilization, for two neighbor- ing nations to live on a basis, which, if made applicable to individual members of the same community, would be regarded as akin to bar- barism ? *

Second. The public debt of Mexico, which is recognized as valid,

is estimated at about $90,000,000, and the obligations which it en- tails constitute a serious embarrassment to the Government, and a heavy burden upon the resources of the country. Numerous attempts have been made to fund it, with adequate provision for the payment of interest the payment of the principal being regarded as hope- less ; but all efforts thus far have practically amounted to nothing a scheme by President Gonzales in 1884 for a new conversion, by the issue of bonds to the amount of $86,000,000, having well-nigh occa- sioned a revolution ; not that Mexico wanted to repudiate, but be- cause the whole measure was believed to be tainted with fraud. And yet it stands to reason that, so long as this debt remains unset- tled, unsecured, and its interest regularly in default, Mexico, as a nation, can expect but little credit, no sound finance, and no sound government. And, imperative as is the problem, there seems but little present chance for Mexico to solve it. The United States could, how- ever, easily accomplish it. With its interest guaranteed, the Mexican debt could undoubtedly be funded at from two to two and a half per cent interest, involving an annual charge, say, from $1,800,000 to $2,- 225,000 less than what is almost annually wasted on river and harbor improvements that subserve only private interests ; and not much more than the four leading railroads of the Northwest have this year (1886) decided to add to their annual interest charges, for the purpose of extended constructions over territory that can at present return but little remunerative business. Is it a sum too great for the American people to pay, if it will help to give good government to a contiguous territory nearly as large as all of the United States east of the Missis- sippi ?

That such a proposition is likely to be scouted, in the first in- stance, by the American public is to be anticipated. " Have we not debts enough of our own to pay," it may be asked, " without looking

  • In 1878, Hon. John T. Morgan, United States Senator from Alabama, recognizing

the importance of this matter, and after thus expressing himself in a speech " Mexico is not destitute of a cause to look with jealous eye upon the people of the United States, while we on our part have the greatest reasons for treating her with a generous and magnanimous spirit " proposed " that the United States should solemnly covenant, not to change the present limits of Mexico, nor to consent to their being changed by any other nation." The proposition, however, did not attract any attention, or lead to any official action.

vol. xxix. 29

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after those of other people ? " But let us reason a little. Can it be doubted that, after the termination of our late civil war, the United States would have practically enforced against the Maximilian gov- ernment, had it been necessary, that phase of the Monroe doctrine, which affirms that European political jurisdiction shall not be en- larged on this continent ? Fortunately, Mexico was able, out of its patriotism and sacrifice, to protect itself against the encroachment of foreign powers ; and thus saved the United States from a conflict, that would have permanently increased the burden of its debt, by many times two million dollars.

Again, the demands of the world's commerce, for the establishment of speedy and cheap methods of transit across the narrow belt of Southern Mexico and Central America which separates the two oceans, are being recognized ; and new routes supplying such conditions, at no distant day, are certain to be established. European sovereignty over them is, however, repugnant to the sentiment of the United States, and, if attempted, will probably be contested ; and this, in turn, if anything more than words of protest are to be used, means formidable military and naval demonstrations and large expenditures. The people of the United States might, however, well hesitate before embarking in such an enterprise, in view of the fact that the foe which their forces would have to especially encounter and most dread, would be one against which neither courage nor skill would avail ; for over all the low, tropical regions of Central America, where the routes for interoceanic transit have got to be constructed, the climate for un- acclimated persons is most deadly in proof of which the current mortality of Vera Cruz, San Bias, and the line of the Panama Canal may be cited ; as well as the horrible historical experience of the forces, which the North American colonies sent in 1741 to co-operate with Admiral Vernon's expedition to Carthagena and the coasts of " Darien " (Panama). But Mexico is a nation of soldiers ; and, if proper kindly relations were to be established between the two coun- tries, the United States could confidently rely on, or employ the well-ac- climated troops of the former, to guard any transit routes from foreign appropriation and control ; even if a desire on the part of the people of Mexico and Central America to preserve the integrity of their own territories, was not sufficient to prompt them to defensive action. But kindly relations, between nations, are not to be established in a day and under the pressure of a one-sided necessity ; and nations, as well as men, "gain doubly when they make foes friends."

Third. The commercial relations of the United States with Mexico are, to all intents and purposes, comprised in and identical with the system of railroads which American capital and enterprise have intro- duced into the latter country. Their introduction has constituted the last and the greatest revolution that Mexico has experienced since the achievement of her independence ; for, with the means which they

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have for the first time afforded the central Government for quick and ready communication between the remote portions of the republic, a stable government and a discontinuance of internal revolts and dis- turbances have for the first time become possible. Thus, to illustrate: Chihuahua, an important center of population, is distant a thousand miles or more from the city of Mexico; and between the two places, in addition, a somewhat formidable desert intervenes, of about a hun- dred miles in width, and over which the Mexican Central Railroad trains are obliged to carry a water-supply for their locomotives. Pre- vious to 1883, if a revolution broke out in Chihuahua, the most ready method of communicating intelligence of the same to the central Gov- ernment would have been to send a man on foot, probably an Indian runner. If the messenger averaged fifty miles a day, twenty days would have been consumed in reaching the city of Mexico, and from three to six weeks more at the very least, would have been required to dispatch a corps of trained soldiers from the capital, or some interme- diate point, to the scene of the disturbance. But before this the revo- lutionists would have had all the opportunity for levying forced loans or direct plunder, or the gratification of private animosities, that their hearts could desire. And it is altogether probable that, in a majority of such cases, political grievances were merely alleged as a pretext for and a defense of plunder ; and it is a wonder how, under such circum- stances, there could be any desire for or expectation of accumulation through production, and that universal barbarism did not prevail. But now, under the railroad and its accompanying telegraph system, if any- body makes a pronunciamiento at Chihuahua, the Executive at the city of Mexico knows all the particulars immediately ; within a few days a trained regiment or battalion is on the spot, and all concerned are so summarily treated, that it is safe to say that another similar lesson will not soon be required in that locality. The new railroad constructions were, therefore, absolutely essential to Mexico as a con- dition for a healthy national life, and the country could well afford to make great sacrifices to obtain and extend them, apart from any considerations affecting trade development.

But the American railroads in Mexico have, in addition, already done much to arouse the most stubbornly conservative people on the face of the globe from their lethargy, and in a manner that no other instrumentality probably could have effected. When the locomotive first appeared, it is said that the people of whole villages fled affrighted from their habitations, or organized processions with religious emblems and holy water, to exorcise and repel the monster. During the first year of the experience of the Mexican Central, armed guards also were considered an essential accompaniment of every train, as had been the case on the Vera Cruz Railroad since its opening in 1873. But all this is now a matter of the past ; and so impressed is the Government with the importance of keeping its railroad system safe and intact, that the Mexi-

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can Congress recently decreed instant execution, without any formal trial, to any one caught in the act of wrecking or robbing a train. That any improved methods of intercommunication between different people or countries common roads, vessels, railroads, or vehicles, or the like increase the production and exchange of commodities, is ac- cepted as an economic axiom. But there could be no more striking and practical illustration of this law, than a little recent experience on the line of the Mexican National Railroad. The corn-crop, which is the main reliance of the people living along the present southern ex- tension of this road for food, had for several years prior to 1885 failed by reason of drought ; and, under ordinary circumstances, great suf- fering through starvation would inevitably have ensued. The na- tives, however, soon learned that with the railroad had come a ready market, at from two and a half to three cents per pound, for the fiber known as " ixtle " ; the product of a species cf agave, which grows in great abundance in the mountainous regions of their section of coun- try, and which has recently come into extensive use in Europe and the United States for the manufacture of brushes, ladies' corsets, mats, cordage, etc. And so well have they improved their knowledge and opportunities, that the quantity of ixtle transported by the Mexican National Railroad has risen from 224,788 pounds in 1882 to 700,341 in 1883; to 3,498,407 in 1884; and 3,531,195 in the first seven months of 1885 ; while with the money proceeds, the producers have been able to buy more corn from Texas than they would have obtained had their crops been successful, and have had, in addition, and probably for the first time in their lives, some surplus cash to expend for other purposes. "What sort of things these poor Mexican people would buy if they could, was indicated to the writer by seeing in the hut of a laborer, on the line of the Mexican Central Railroad a place destitute of almost every comfort, or article of furniture or convenience a bright, new, small kerosene-lamp, than which nothing that fell under his obser- vation in Mexico, was more remarkable and interesting. Remarkable and interesting, because neither this man nor his father, possibly since the world to them began, had ever before known anything better than a blazing brand as a method for illumination at night ; and had never had either the knowledge, the desire, or the means of obtaining any- thing superior. But at last, through contact with and employment on the American railroad, the desire, the opportunity, the means to pur- chase, and the knowledge of the simple mechanism of the lamp, had come to this humble, isolated Mexican peasant ; and, out of the germ of progress thus spontaneously, as it were, developed by the wayside, may come influences more potent for civilization and the elevation of humanity in Mexico, than all that church and state have been able to effect within the last three centuries.

The projection and extension of the American system of railroads into Mexico commanded the almost universal approval of the people

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of the United States. It was regarded as a measure in the interest of civilization, and as likely to be mutually and largely beneficial to the people of both nations. But for the United States and Mexico to maintain their present tariff restrictions on the international trade of the two countries, is to simply neutralize in a great degree the effect of the railways ; and create conditions so antagonistic to the idea which a railway represents, that the investment of a large amount of money in their construction by citizens of the United States under ex- isting circumstances, would seem almost akin to dementia. For it must be obvious that these restrictions produce exactly the same re- sult as if, after the railways had been completed, an earthquake had thrown up a ridge directly across the lines, so steep and precipitous on the northern side as to add from thirty to forty per cent to the cost of all merchandise passing from the United States into Mexico, and so much more difficult of ascent on the southern' side as to add some ninety per cent to the cost of all goods passing from Mexico into the United States. And, if such a physical calamity had actually occurred, the stockholders might reasonably doubt whether the lines were worth operating. But, at the same time, if there are any who expect that trade would immediately and largely increase between the two countries if all tariff restrictions were mutually abolished, they are certain to be disappointed. A large proportion of the people of Mexico possibly nine tenths will, for the present, buy nothing imported, whether there is a high tariff or no tariff not because they do not want to, but because they are so poor that they can not buy under any circumstances ; while the limited wealthy class will buy what they want of foreign products, irrespective of high duties. Again, the internal trade or dis- tribution of merchandise in Mexico is, furthermore, largely in the hands of the Germans and English, who learn the language and conform to the customs and prejudices of the country much more readily than the Americans. They naturally prefer the products of their own coun- tries; and German manufactures have been especially popular, " because they are as cheap as they are poor " ; and the advantage of paying more for what will last longer is something very difficult to impress upon the ordinary Mexican. Another matter which practically works against the extension of trade with the United States is, that American houses will not sell their goods on the long credits demanded by Mexican pur- chasers. A gentleman conversant, through long residence in Mexico, thus writes in respect to this matter : " It is a serious mistake to look upon Mexican credit as something to be let alone. I can say with con- fidence, after diligent investigation, that mercantile credit in Mexico will average up as satisfactory as in the United States. Among the large mercantile houses in the interior of Mexico, as well as the im- porters, and the large sugar, grain, cotton, and cattle raisers, the moral sense in a square business dealing is as keen and as just and responsible as among the general run of customers in the United

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States.* They are slow, but pay their bills, make few business comprom- ises, and still fewer failures. From actual inspection of books of large houses in Mexico, exhibiting accounts of a series of years, I found that eighty-five to ninety per cent of long credit sales were paid in* full. Not one American business man in five hundred will succeed in Mexi- co, for the sole reason that he attempts to force his own ways and methods upon a people whose habits and ways are the antipodes of his own. Our manners are not in accord with the extreme politeness and consideration to be found in Mexico. Business is largely done on the basis of feeling and sentiment, and established acquaintance. Neither has time nor money the transcendent value that it has with us." It is also interesting to note here, that for these, or some other reasons, there are comparatively few Jews in Mexico, and that as a race they do not seem to fancy the country, either as a place of residence or for the transaction of business.

But, notwithstanding all these obstacles to the extension of trade, the advantages from commercial intercourse with Mexico are all on the side of the United States. Commerce, in establishing a course between any two points, always follows the lines of least resistance. And to- day, through the establishment of railway lines, which furnish ample, rapid, and comparatively cheap facilities for transportation between the interior of Mexico and such great commercial and manufacturing cen- ters as Chicago, Cincinnati, St. Louis, and Kansas City, the easiest movement for the commerce of Mexico is by and through the United States. One demonstration of this is to be found in the fact that the Mexican Central Railroad now carries considerable freight that comes to New York by European steamers, and is thence transported, in bond, by rail directly through to Mexico; to which it may be added that some 8300,000 of this freight, during the past year, is understood to have been English agricultural machinery, which has been bought in pref- erence to the world-wide famous American farm machinery and imple- ments, and carried past, as it were, the very doors cf the American competing factories ! For such a singular result there are two ex- planations. One is, that not only in Mexico, but in all the Central and

  • Consul-General Sutton, of Matamoras, tells the following story illustrative of the

good faith in a mercantile transaction of the rancheros of Northern Mexico, the particu- lars of which were detailed to him by the parties concerned : "A German house in interior Mexico contracted for the purchase of two hundred mule-colts, to be delivered a year fol- lowing ; and payment, at the rate of twenty dollars a pair, was made in advance. A year elapsed, and the mules were not delivered. The head of the house would not, however, allow any message of inquiry or reminder to be sent, but remained quiet. A year after the stipulated time, the rancheros came in with the mules. There had been a disease and a drought, which had killed the colts the first year, and this was the reason assigned for not coming according to agreement. They sent no word, because it was so far, and they did not remember the name." When the firm counted the mules, they found that three had been brought for each pair stipulated and paid for ; which was the way the rancheros quietly settled for their unavoidable breach of contract.

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South American countries, the English and the German merchants take special pains, not only to adapt their merchandise to the peculiar tastes of the people with whom they wish to deal, but also to cultivate their good- will. The representatives of the United States, as a general rule, do neither. Another explanation is that our European competitors in foreign trade recognize at the outset, and at all times, that trade, es- pecially when involving radical innovations on old-time precedents and usages, is not of spontaneous growth, but has got to be cultivated ; that it is a system in which product is to be given for product, and service for service, and therefore, from its very nature, can not be a "one-sided business." Accordingly, the German and English merchants in Mexico take in exchange for such wares as they desire to sell, and at a certain price, whatever the Mexicans have to offer of their prod- ucts. The American merchant, on the other hand, finding that the commercial policy of his country is based on the assumption that such a system of exchanges is not desirable, and that its existing laws make reciprocal trade difficult, does not seem even to attempt it. And in connection with this subject it may be stated, that during recent years German merchants have bought merchandise in New York, which American manufacturers have acquired particular advantages in pro- ducing, shipped the same to Hamburg, and after re-exporting to Mexico, sold them at cheaper rates than any American engaged in direct trade could afford to offer ! How such a result, which on its face seems so mysterious and paradoxical, is accomplished, may be best explained by example. Thus, the German, who has become thor- oughly conversant with Mexican methods of doing business, could sell say $3,000 worth of American cottons, furniture, sewing-machines, and the like, at cost, or possibly even less than cost, because his system of selling is to exchange them for $3,000 worth of Mexican products, which he can afterward sell, it may be, at $5,000, or a sum which would give him a fair return for all his risks and for long credits, and also reimburse him for all the expenses of extended transportation. And the Mexicans are contented with their share of the transaction, because nothing better is offered to them.

The annual value of the total import trade of Mexico is probably not in excess of $35,000,000 ; of which the United States already con- trols a large proportion. Thus, for the year 1883, the returned value of all merchandise exported from the United States to Mexico was $16,587,630; of which $14,370,992 was "domestic," and $2,216,638 " foreign " merchandise. This was, however, a year of very active railroad construction, with an abnormal employment of Mexican labor, and large disbursements of American capital in the country. Since then, there has been a marked falling off in exports from the United States (less than $13,000,000 in 1884), which has been attributed partly to the withholding of orders in anticipation of the ratification of a commercial treaty between the two countries, and partly to the

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great depression of business consequent on the large decline in the price of silver.*

That the ratification of the contemplated treaty for commercial re- ciprocity between the United States and Mexico would have increased to some extent, and perhaps considerably, the volume of American exports, can not be doubted. Thus, for example, there are no articles of which Mexico stands in greater need than wagons and carts, barbed fence- wire, and petroleum and its derivatives for warming and lighting. In respect to the two first named, the existing Mexican tariff is almost prohibitory, and, as a consequence, it is asserted that there is not a respectable vehicle in any of the frontier towns of Mexico ; and no means, in the absence of wood, of supplying a pressing and increasing need for fencing on the great haciendas y while the cost of all petro- leum products is so much enhanced, as to greatly restrict their con- sumption for illumination and almost entirely preclude their use for warming, and this in a country destitute in great part of any cheap natural supply of either wood or coal. The removal of all duties on the import of merely these few articles into Mexico, as was provided in the proposed treaty, and their consequent very great cheapening, would therefore have been a boon to the people of Mexico, which they would not have failed to take advantage of to the utmost extent of their ability ; and, for meeting any demand thus created, the manu- facturers of the United States would have nothing to fear from any foreign competitors.

On the other hand, the arguments that have thus far proved most potent in preventing the ratification of such a treaty, on the part of the United States, have been based on the assumption that the free importation of Mexican raw sugars and unmanufactured tobacco, would prove injurious to the American sugar and tobacco interests. But the entire fallacy, or rather utter absurdity, of such assumptions would seem to be demonstrated : First, in respect to sugar, by the fact that, with unrefined sugar selling in Mexico for a much higher price (from twelve to twenty-four cents retail) than the same article in the United States, there have not yet been sufficient inducements held out to Mexican capital and labor, in the way of profit, to tempt

  • How greatly the depreciation of silver affects the business interests of a country

like Mexico, which not only uses a silver currency almost exclusively, but also relies on silver, as one of its chief exports (i. e., for the payment of imports), is shown by the cir- cumstance that the Directors of the Vera Cruz and City of Mexico Railroad reported at their annual meeting in London, on the 25th of May, 1886, that the loss of the company in exchange for the half-year ending December 31, 1885, was 29,641 ; on the gross earnings for the same period, of 302,134. They further add: "The average rate of ex- change fell during the half-year from 41-466?. per dollar, at which it stood at the end of June 1865, to 40-45<f. and since the beginning of the current half-year (18S6) the rate has further fallen, and at the present time is 38-76*/. On equal remittances made a year previously, when the average rate was 42-39, the loss would have been only 21,669, and thus an additional burden of 7,972 has been imposed on the shareholders."

�� � them to fully supply to the domestic demand of the country for sugar from its undoubtedly great natural resources -five and a half dollars' worth of sugar having been exported from the United States into Mexico in 1883, for every one dollar's worth imported during the same year from Mexico into the United States ; and, secondly, in respect to tobacco, by the testimony, based on careful investigation, of some of the best manufacturing authorities in the- United States, that, while the best grades of tobacco for cigar purposes can now be raised in the United States at from ten to fifteen cents per pound, the cost of Mexi- can tobacco of a corresponding quality ranges from twenty-five to fifty cents per pound. It is difficult to see, therefore, what valid objections from merely trade considerations can be offered to the consummation of such a measure on the part of the United States, or to affirm which of the two countries would be the greatest gainer from the adoption of such a policy. Nay, more, it would be difficult for any one to show, wherein anything of commercial or industrial disadvantage could accrue to the United States, even if it were to allow every domestic product of Mexico to be imported into her territory free of all import taxes or restrictions articles subject to internal reve- nue taxes in the United States being manifestly excepted with- out asking any like concessions from Mexico in return. Such a proposition may at first seem preposterous, but let us reason a little about it. In the first place, it is exactly the policy which Great Britain now offers to Mexico. Can the United States afford to bid less for the trade of the American Continent than her great commer- cial rival? Again, Mexico wants, or is likely to want, everything which the United States especially desires to sell, and the only draw- back to a great extension of trade between the two countries is the lack of ability on the part of Mexico to pay for what she wants. And this inability at the present time is very great. Apart from the precious metals, the quantity and value of domestic merchandise which Mexico can export to pay for such foreign products as she may de- sire, as already pointed out, are comparatively small, and consist almost exclusively of the most crude natural products. For the year 1883 nearly eleven twelfths of all her exports consisted of the ixtle and heniquen fibers ; woods, mainly dye and ornamental ; coffee, hides and skins, vanilla, horse-hair, catechu, and sarsaparilla. Not- withstanding, also, that Mexico is an agricultural country, she does not produce sufficient material (cotton and wool) to keep her small number of textile factories in operation ; but imports about three fifths of her raw cotton from the United States (5,877,000 pounds in 1885), and a considerable portion of her wool from Australia. What Mexico would sell to the United States, if all tariff restric- tions were removed from her exports, would be such crude materials as have been specified all articles of prime necessity to the American manufacturer. Reduced to terms of labor, the exchanges would substantially be the product of twelve hours' hand-labor in Mexico for one hour's labor with machinery in the United States. A Committee of Ways and Means of the United States House of Representatives of the Forty-ninth Congress have reported adversely to the ratification of a commercial treaty with Mexico, mainly for three reasons: First, because Mexico is so poor; second, because "the American citizen living in Mexico, and pursuing the peaceful avocations of industry and commerce, is without adequate protection to life and property"; third, because "to speak of permanent and desirable commercial relations with a government and people so estranged from us in sentiment is without promise of substantial and successful results." The first of the reasons is economic, the second political, while the third, having due regard to its meaning, may be well termed "Mongolian"; and all are unsound. The poor countries are the very ones with which it is especially desirable that the United States should cultivate trade, for, if the volume of trade be small, the profit of such trade is large—as is always the case where the results of rude or hand labor are exchanged for machinery product. If the facts constituting the basis for the second reason are as alleged, commercial isolation and restriction are no remedy for them. Commercial intimacy between nations is always productive of political good-fellowship, as isolation and restriction are of enmity; and for promoting amity with Mexico the modern drummer is likely to prove, for the present, a far better missionary than either the diplomatist or the soldier; and, as for the third, one might think that a precedent had been borrowed by the committee from China, where commercial intercourse with the United States itself, in common with Europe, was, until very recently, combated on the ground that the inhabitants of these countries were "foreign devils," with whom the enlightened Chinese ought not to be brought in contact.

Such, then, in conclusion, are the views of the writer respecting the present and future relations of the United States to Mexico. If he has offered anything, in the way of fact or argument, which may induce a belief, by people of the former, that the subject is worthy of a larger and more kindly consideration on their part than it has hitherto received, he will feel that his "Economic Study" has not been wholly unsatisfactory.


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