Porfiriato

Was the Economic plan during the ‘Porfiriato’ successful?

Teacher: Oscar Mejia

Student: Bryan Starost Figueroa

Subject: History

2015

The ‘Porfiriato’ was a period of time in which Mexico would start developing thanks to Porfirio Diaz’s economic policies. His government was in much a capitalist project of development, which involved the country’s modernization. He imposed the development of capitalism, by privileging foreign investment and supporting big capitalist “haciendas”. Besides this, there were other reforms that were inside of Diaz’s economic project, however most of these were not “all-friendly”, in other words, this economic model was designed for a reduced group, and as a result most of the Mexicans were excluded and led to a less symmetrical development. For this reason, the purpose of the following essay is to analyze the success of the economic plan during the Porfiriato in Mexico.

As it has been mentioned, during the ‘Porfiriato’ (1876-1911), the economy started growing because of the foreign investment in Mexico. In addition, the most noticeable aspect in the Mexican economy was the tendency to grow in its different productive branches: primary, manufacturing and services.^[1] However, before Mexico caught the attention of foreign investors, not a single country wanted to invest in it because its economy was low and did not guarantee the required security for their capital, so for this reason, different laws were passed to pave the way for foreign investment. The historian and writer Ciro Cardoso^[2] states: “There is an endogenous process that touches economic and political aspects which, when combined, pave and precede the arrival of foreign capital”. This meant that, just as we said earlier, Mexico had to pass on laws to show foreign countries, that they had a sturdy and well-founded economy. For instance, important legal changes linked to mining happened, one of them being the issuing of mining laws which encouraged mining, and as a consequence attracted foreign capital in terms of mining. In addition, in May 6 of 1887, the “Ley de Zona” was issued, which exempted the Executive from all road tax of paste or wedged materials and any other mining product in general, and allowed the extension of concessions.^[3] This meant an upset in the right of property, because Mexico stopped considering the mines as his when the concession extension was stablished because it gave a “perpetual” or extended time for foreign investors to exploit resources. Now, leaving besides the mining, there were different changes in the ‘hacendario’ system (1880-1896), which from all of them outstands the abolition of the alcabalas, which was and old tribute that the seller paid to the Treasury in a sale and both contracting in an exchange^[4].

To sum up, during the period of the Porfiriato, Porfirio Diaz had to do different things such as stablishing new laws that encouraged foreign investment in Mexican mining (Mining laws) and abolishing and modifying laws, with the only purpose of letting foreign investment inside the country and as a result, revive the Mexican economy.

As it has been discussed, European capitalists were doubting on whether or not should they invest their capital, however It was through legal modifications like the “Ley de 6 de mayo” that showed a favorable attitude towards foreign capital. With this new modifications foreign investment reached an unexpected level. According to the economical historian Fernando Rosenzweig, in the early stages of the Porfiriato, around 1844, the foreign investment in Mexico amounted to at least 110 million of pesos, and by 1911 this sum was over 3,400 million pesos. This shows that the law modifications during the Porfiriato were totally successful because of the exacerbated number of foreign investment by the end of the ‘Porfiriato’. In addition, the foreign investment was concentrated in certain aspects like railroads, mining and public debt, which was 74.9% of total invested capital. Now, in terms of American investment in Mexico, in the case of railroads, it stays in a constant growth during the ‘Porfiriato’, because from 335 million in 1880, it goes to 644 million in 1911. By the other hand, mining would be the other sector that would attract USA, and in spite of the turbulence of the revolution, it doesn’t decrease.^[5] Mining did not just help the country to gain money, but it also helped to modernize cities with railroads and as a result, increase the investment on railroads, because investors usually the investors had low production and high costs because of the lack of ease in transportation. For this reason 18,206 kilometer of railroads were created to benefit the investment in mines. Also, by 1911 the mining investment was still high and was completely dominated by the United States with an investment of 223,000.^[6]  This showed that one of the biggest investors in Mexico was actually USA.

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