Mexico of the Mexicans/Chapter XI
CHAPTER XI
MINING AND COMMERCIAL MEXICO
Mining is by far the most important industry in the Mexican Republic, and vast sums have been expended upon the opening up of territories which seemed to offer the probability of a rich harvest in precious metals. It is estimated that nearly £13,000,000 has been sunk in capital in gold-, silver-, and copper-bearing property.
The Spanish conquistadores, eager for gold, merely followed the primitive methods of the Aztecs in their mining operations. But, later, mining was undertaken more intelligently. It was found that the Northern territories of "New Spain" were richer in gold and silver than the Southern. But only the richest ores could as yet be treated, so backward was mining science. In 1548 the famous silver lodes of Zacatecas and San Luis Potosi were discovered, and, later, those of Pachuca and Guanajuato. In 1557 a miner of Pachuca, one Bartolome de Medina, discovered the amalgamation process of extracting gold and silver with the aid of quicksilver, an invention of vast importance to the industry of mining. Bodies of ore which before had been regarded as not worth the trouble of working were speedily developed, and within five years Zacatecas alone had thirty-five reduction works. The most remarkable progress in gold and silver mining occurred during the latter half of the eighteenth century, under the auspices of a board formed by representative miners for mutual aid and protection, and authorised to maintain its own bank, college, and tribunal, the last with privileges almost as exclusive as those of the Army and clergy. The consequence was a large increase of production, reaching at the beginning of the present century an average of £5,000,000 a year. To this a certain percentage must be added for bullion wrought into jewellery, and for that which was not included in the official returns. These results were due, not only to the influence of the Mining Board, but to a reduction in the price of quicksilver, and to a more liberal colonial policy on the part of the home governments. The mining region of New Spain covered, in 1800, an area of about 12,225 sq. leagues, and was divided into thirty-seven departments, with about 500 sub-divisions, containing approximately 3,000 mines.
The most prominent districts were those of Guanajuato, Catorce (in San Luis Potosi), and Zacatecas, all of them situated between latitudes 21° and 24°. The first was discovered in the middle of the sixteenth century by muleteers employed on the route between Zacatecas and Mexico. Official returns give the aggregate product from 1701 to 1809 at 37,290,617 marks of silver and 88,184 marks of gold, valued at £6,380,110. A single vein named the Valenciana yielded in less than five years about £3,000,000, and in 1791 as much silver as all the mines of Peru.
Even these results were eclipsed by the veins in the Catorce district, discovered in 1773, and worked with success since 1778. One mine alone, belonging to a priest named Flores, yielded during the first year £300,000. The product of a whole district from 1778 to 1810 was estimated at £1,000,000 a year; and the total output of the entire intendencia of San Luis Potosi, from 1556 to 1789, at 92,736,294 marks of silver, representing £158,000,000. Other mines in this region also yielded enormously, giving rise to the belief that they were practically inexhaustible.
A similar impression prevailed concerning the district of Zacatecas, which, since its discovery in the middle of the sixteenth century, had always offered a vast field for enterprise. That it was not unfounded is evident from the fact that for the 180 years ending with 1732 the total product was estimated at £160,000,000. The principal vein, the Veta Grande, produced in eighteen years from 1790 to 1808, £2,250,000. Even more successful for a time were operations in the district of Sombrerete, where the celebrated Veta Negra mine produced within six months more than 700,000 marks of silver, the ore yielding a net profit of about £1,000,000. To this period belongs the story of the rich miner of Zacatecas, who, on the occasion of his daughter's wedding, ordered the streets from his house to the church to be paved with bricks of silver.
At the time when prospects seemed brightest, the Republican Revolution broke out, and within a few years was swept away the work of centuries. Machinery was destroyed, and the mines filled with water and debris; operations ceased in many localities; elsewhere work was carried out in a random and wasteful manner, and the output was decreased by one-half. Independence achieved, the Government attempted to revive this industry by inviting foreign capital and skill, reducing taxes, and issuing certain regulations. The result was a rush of foreign adventurers, who, under heedless and unskilful management for the most part, retired with loss. The discouragement which followed, together with the disturbing influence of incessant revolutions, fitful changes of administration, and forced contributions, counteracted the effects of introducing superior methods and machinery, so that during the first three decades of Republican rule there was little increase in the yield of precious metals. The total returns for the period 1823—52 have been estimated from the Mint statistics at £80,000,000, or an average of less than £3,000,000 a year. Later, the yield increased considerably, the eleven mints in operation in various parts of the Republic reporting a total coinage for the fiscal year ending 30th June, 1885, of about £5,000,000, the amount varying but slightly during several preceding years.
It may be stated approximately that during the nineteenth century and a portion of the eighteenth, Mexico furnished one-half of the world's supply of silver, in addition to a vast amount of gold, though the latter is by comparison almost insignificant. The total yield of the precious metals between 1537 and 1880 has been valued, according to a very low estimate, at about £600,000,000. The weight of this huge mass of bullion, if the bars were piled together, would reach nearly 90,000 tons, and would require a hundred large vessels for its transportation to Europe. Thus we may gain some idea of the enormous wealth which has been gathered in Mexico, and which, stated merely as so much coin, is almost beyond the grasp of comprehension. Modern Mexico produces more than 5 per cent, of the world's gold, 30 per cent, of its silver, 7 per cent, of its copper, and 12 per cent, of its lead. In 1912-13 the output of gold was valued at about £8,000,000, and that of silver about £16,000,000, and this when work at many of the mines and smelting furnaces had been suspended owing to the Revolution. In the Central and Southern provinces, however, labour was for the most part undisturbed; and the three great mining camps of Pachuca, El Oro, and Guanajuato had a normal output.
In the Northern provinces, the storm-centre of the Revolution, operations were practically abandoned for a time. Fuel gave out, and smelting became impossible. Shipping, too, was out of the question, and ore had to be stocked. The destruction of mining property was considerable. The rebels raided camps in Jalisco during 1913, and discoveries of high-grade ore in that State were followed by fresh incursions and had to be temporarily abandoned. Labour, too, was scarce and machinery could not be imported.
Prior to the Revolution, Mexico was rapidly gaining a place among the manufacturing countries of the world. Indeed, it was prophesied by Manufacturing
Mexico. competent observers that the time was not far distant when she would be able to manufacture almost every-thing she required within her own borders. To some extent, this condition of things was due to native enterprise; but the majority of manufacturing concerns were in the hands of American and German firms, and were practically branches of larger businesses in the United States and the Fatherland.
Many of these businesses have suffered severely from the condition of unrest which has prevailed of late years in the country, manufacturing works having been raided by one or other of the contending parties and practically sacked, or at least gutted, of all saleable material, which has been "requisitioned" by the several governments which have flitted across the stormy arena of Mexican politics since the nominally peaceful days of Diaz came to a close.
Many of these industries were protected by tariffs more or less substantial—in some cases, perhaps, exorbitant, having regard to the cheapness of native labour and the slenderness of the native supply of the taxed article.
The position of the United States trading interests in Mexico is a dominating one, a resultant, of course, of its contiguity to the Republic. Indeed, almost one-third U.S.A. Trade
with Mexico. of the imports which leave the United States for Latin-American countries come to Mexico, and one-sixth of all that the United States purchases from its Southern neighbours hails from Mexico. Of course, during the last two years (concerning which we have no figures) commercial relations between Mexico and the United States must have sunk to a very low ebb. In 1913, the last year for which figures are available, imports from the United States had fallen only $16,000,000, and were even larger than in 1909. Indeed, they were still 49-69 per cent, of the total imports of the country, Germany showing a percentage of 12-89 and Great Britain 13-22.
American superiority in Mexican markets springs in a great measure from the ease with which freightage is effected between the two countries. There is also an excellent service of steamship lines between American and Mexican ports, and, above all, Mexico is much more frequented by Americans than by people of any other nationality; and even if these visit the country on pleasure bent, they cannot so far lay aside their national idiosyncrasies as to neglect entirely the opportunities which may occur to them. American trade in Mexico has prospered more by good luck than good guidance. The idea seemed to gain currency in the United States, after some experience of Mexican trading, that "any old thing" delivered in "any old way" would do for the people of the sister Republic. How trade stood this sort of thing it is difficult to say. This was, of course, before the days of German competition; and as British methods were even more slovenly, the Mexican had perforce to remain contented with what his Northern neighbour dispatched to him. Then the silly legend arose in British commercial circles that America had "captured" the Mexican markets, and that to fight against American trade in Mexico was to combat hopeless odds. As a matter of fact, the American consular service, until recently, was never tired of holding up British commercial methods to the admiration of American traders. The truth is that the traders of both countries cooked their samples and scamped the goods sent in bulk in the most unblushing manner over a long period of years, and grossly neglected the consular regulations. But the factor of contiguity told at last and secured the rich satrapy of Mexico for American commerce.
To write of British opportunities in Mexican trade may, perhaps, strike the keen commercial man as absurd. America, he will tell you, has swallowed up Mexican business. But the scene has changed during
British
Chances in
Mexican Trade. the past few years, and where once the "Gringo" had not a rival, he is now execrated. Assuredly his chances of retaining Mexican trade are on the decrease. Germany, through a host of skilful agents, has laid hands on Mexican commerce such as it is at present, and is patiently waiting to nurse it back to health after its fitful revolutionary fever. The German officer who is also a commercial representative of his country is a strong force in Northern Mexico to-day, some advices estimating him as numbering about 2,000 in this region alone. Ready to wield the rifle or the yard-stick, he is a very real menace to both British and American trade in the Republic, and in the present condition of popular irritation there is every likelihood that his propensities for mischief will be afforded every opportunity.
Strange as it may seem, the present appears to the writer as an unrivalled opportunity for the rehabilitation of British trade in Mexico.
The United States and Germany are the sole rivals of this country in Mexican commerce, and at present the American star is by no means in the ascendant. Our position as regards Teutonic competition is even more fortunate, for, at the time of writing, Germany is completely cut off from Mexico so far as the deliverance of orders is concerned, her emissaries are isolated, and in any case she would be unable to extend the necessary long credit to Mexican buyers. The present time is undoubtedly ours.
How, then, shall we approach this commercial opportunity, this unrivalled chance to regain what we have so inadvertently lost? The primary advances must certainly The Method
of Approach. be made on diplomatic lines. The United States has made the mistake of treating the present Mexican régime as a makeshift Government, addressing it as "the Mexican Government de facto" and otherwise arousing irritation in the bosom of its best American customer by its supreme tactlessness. This attitude we should be the last to imitate. Let us send to Mexico a special commercial mission headed by a suitable envoy with commercial as well as diplomatic experience. To offer merely reciprocal opportunities would, of course, be bootless, as, although Mexican imports to this country are considerable, a ready market for them can always be found elsewhere. What is proposed is the flotation of a considerable Mexican loan, should the British representatives see cause to tender such assistance. Such a procedure would undoubtedly pave the way not only for better commercial relations between the countries, but probably for the preferential treatment of Great Britain. It is clear that Mexico has got over the worst of her internal confusion, and that under the wise régime of those who now have her fortunes in their hands, and because of the common sense of her people, who are absolutely weary of revolt and unrest, conditions will, within a reasonable time, return to a pre-revolutionary standard. Then will the fruits of such a sowing as is here proposed be reaped by the British manufacturers and the British workman. The attempted exploitation of Mexico by certain American and British firms has been the cause of much heartburning, simply because of the manner in which these ventures have been carried out. The American "drummer" quickly found his methods of little avail among Mexican tradespeople and business men; and British representatives discovered that catalogues in English, which give the weight of goods and their bulk according to British standards and their prices in British currency, are not the best mediums for capturing trade among a Spanish-speaking people. These pioneers, too, found that before they could do business with Mexican customers that they must know something of the Mexican's psychology. They concluded, after gaining this experience, that prospective Latin-American clients must be treated in a manner totally distinct from that in which people of the Anglo-Saxon race are usually dealt with. The Mexican cannot be "bounced," and he will not be hurried. He is in every way a shrewd business man; but, as a rule, if he be of the better class, he has a keen dislike for haggling or bargaining of any sort, and a polite coolness on his part in the midst of a commercial negotiation should be an index to the foreign trader that he is in danger of over-stepping the limits of prudence and thus of losing his order. The Mexican merchant may talk upon every description of topic, save that of business, for hours together; and if the Anglo-Saxon will only tactfully bear with him (as does the German), the season for business will undoubtedly arrive.
There are many other reasons for the failure of British business in Mexico, besides the presentation of catalogues in English and the lack of patience on the part of the British representatives; and one of the most common is the refusal to comply with native specifications or to fall in with native ideas concerning the manner in which goods should be delivered. Mexican taste by no means resembles British, and frequently the Mexican buyer desires that certain alterations shall be made in the exterior of a motor-car or other article to suit his taste. Strange as it may seem, there are numerous examples of refusal to comply with the prospective buyer's wishes and of consequent loss of business. The "take-it-or-leave-it" attitude is of all the most foolish to adopt with the Latin-American peoples, and the firms which practise it will discover that they will lose not only a single commission, but that the knowledge of their deficiencies in the way of complying with a reasonable request will gain wide currency.
There is a widespread idea to the effect that, in the Mexican and Latin-American markets generally, cheap and gaudy goods are more likely to meet with acceptance than a solid and utilitarian class of article, and that German success in these quarters is to be judged because of the Teutonic ability to supply this want. However this may be the case with the cheaper markets of Mexico—and there are cheap markets in all countries—one has but to glance at the shop-windows in the principal thoroughfares of Mexico city to see at once that the class of goods displayed therein is not inferior to that on view in the shops of any European capital. Indeed, the first question put by the Mexican purchaser is usually directed towards the quality of the article he is examining, and Mexicans of good class are as particular in the choice of their purchases as Europeans in the same station of life—indeed, if anything, they are more exacting, as a desire to be up to date, and to possess goods which display the latest ideas in European manufacture is typical of the wealthy Mexican.
In 1912 no less than 148 cotton mills were in operation in Mexico, the larger mills being situated at Puebla, Orizaba, and Mexico city. Thirty thousand persons were engaged in Cotton
Manufacture. this industry, and 33,154 tons of raw material were consumed. La Compania Industrial of Guadalajara and La Compania Industrial Manufacturera, and the companies at Escoba and Rio Blanco, are the most important manufacturing corporations. But a lot of Mexican money is spent in imported manufactured cotton goods, British cotton articles having by far the largest sale.
One of the most thoroughly alive of Mexican manufactures is that of paper-making, introduced into the country by the late Mr. Thomas Braniff, whose foresight and ability did so much for commerce in Mexico, Paper-making
and Timber. He, along with a Mexican partner, instituted a paper factory at the foot of Ixtaccihuatl, which, later, amalgamated with the Progress Paper Factory, a native venture. This was in 1893. In 1910, the San Rafael works were producing about 70 tons of paper daily, supplying the Mexican market very largely and employing the best foreign paper-makers as heads of departments. Paper and paper stock are, however, largely imported to meet the growing demand of the printing and allied trades, and this although vast forests of timber and fibrous plants suitable for pulp and paper manufacture are available within the boundaries of the Republic. A thoroughgoing and scientific exploitation of the timber resources of the country is urgently called for. The forests of the Tierras Calientes contain mahogany, and a great variety of other cabinet and other dyewoods, quite as good in quality as those of British Honduras or Brazil, and the uplands are rich in pine and oak. A Central Board of Forestry and Arboriculture has been appointed to secure adequate afforestation.
When peace is once more restored within her borders, it is probable that Mexico will become one of the greatest oil-producing countries in the world. The The Oil
Industry. ancient Aztecs may have used petroleum in religious rites, and on the Gulf of Mexico oil-wells have certainly been used by the natives from time immemorial. Strangely enough, however, their financial value was unguessed until quite recently, when a very extensive well was tapped near Tampico, 1,800 ft. down. Most unfortunately, it caught fire shortly after it was tapped, and millions of gallons were destroyed.
This first misfortune, however, only served to show what exceedingly rich deposits of this mineral lay beneath the soil of Mexico; and very soon prospectors "struck" valuable reservoirs in San Luis Potosi, Tabasco, and Vera Cruz. British capital luckily took a hand in the new enterprise, and, if the whole venture is naturally somewhat under a cloud at the present time, there is no reason to doubt that with better internal government that cloud will pass away and that the investors will duly reap their reward. The principal company in the new industry is the Mexican Eagle Oil Company, which has large holdings in the Northern part of the State of Vera Cruz, where it has erected a large refinery. Even as far south as the Isthmus of Tehuantepec, this same British company has ranged in search of petroleum, and has succeeded in discovering such a gratifying supply, that it has had to build a second refinery with a large daily capacity for turning out petroleum both as an illuminant and a lubricant.
Oil is frequently discovered in the most out-of-the-way parts of the country, and the prospecting geologist frequently encounters it when he is not looking for it. It is often found in connection with extensive saline deposits; indeed, some salt-beds in Mexico have been estimated after experimental borings at over 1,000ft. in thickness, which would seem as if the districts where they are found had once formed deep ocean beds which, later, evaporated in the fierce sun of the tropics. These, besides being so deep, often cover hundreds of square miles. At present, of course, considerations of capital and freightage render it impossible to exploit these vast beds even were the country dwelling in a golden age of peace; and here it may be fitting to remark that just as Brazil is the world's great storehouse of medicinal chemicals, so Mexico is one of the world's great natural storehouses of industrial chemicals: for not only is petroleum discovered there, but the elements which compose many other lubricants. Asphalt and naphtha are largely worked, chiefly by Chinese coolies, and the by-products of the lubricant industry are numerous and valuable. The most ingenious methods of loading tank steamers with oil have been invented, for at Tuxpam, to which port large vessels cannot approach, very close pipes for conveying the oil to the reservoirs of the ship which is to carry it are actually laid along the bottom of the sea for a couple of miles, where the ends are raised above the surface and secured to large floats.
The leather trade flourishes in Mexico, notwithstanding that the native wears guarachas, or sandals, or else goes barefoot. The chief centres of this industry The Leather
Trade. are Mexico city and the Northern States of Léon, where, in the towns of Saltillo, Monterey, and elsewhere, there are a number of shoe factories, some of which have an output of 2,000 pairs a day. Saddlery is a fine art in Mexico, a truly native industry; but the gorgeous saddles once in vogue, encrusted with gold and silver, are for the most part confined in their use to the Rurales and the haciendados in the country districts, and the English saddle is coming into general use.
PALM TREES AND OFFICES, TUXPAM
the present Government. In May, 1916, paper money fell to 1½ cents American gold to the peso in the rate of exchange, whereas Government desired to compel a value of 10 cents gold to the peso. This caused almost inextricable confusion in business circles, which it is doubtful if decrees or any such measures will correct. It has caused the food question to again become the paramount one, and everywhere the people are unsuccessfully trying to find sufficient staple food-stuffs to supply their needs. Not a sack of flour or a pound of sugar could be purchased on the streets of the city, and bread of any and every kind was almost lacking; meat is far too expensive for the poor to use; and the same is true of potatoes, with the exception of those which are so small as to be practically worthless. Maize, the principal food of the lower classes, has almost entirely disappeared from the market. The commission for regulating prices, on which so much hope has been placed, is heard from each day through the papers, but with a constantly weaker and more uncertain sound. Like most of the reforms, it was of mushroom growth, and will soon be only a memory.
This state of things caused the Government to enter the market to buy, for Mexican gold and silver, the bills of the old issue of paper money at the exchange price; they advertised half-a-dozen points, at which they had established offices for this purpose: buying their own notes, for which they received from the people full value in labour, goods, or other real value, at a price which was practically equal to repudiation. It is not clear what motive was behind this action, whether thus cheaply to get rid of as much as possible of the floating indebtedness, or with the idea that such a course would cause confidence in the money and increase its market rate. Probably neither of these results will be realised, as there is no evidence that any appreciable amount of it was exchanged, the reason being that no one wished to sell at such a ruinous rate, especially to the Government which had so recently, repeatedly, and strenuously proclaimed against repudiating an obligation which it looked upon as sacred. Another reason is that when they have become possessed of the silver and gold, they must then buy the new money, which is in reality no more valuable, and pay five times as much that they may buy food or do business.
This is the situation as it appears to the public, but from the Government point of view it is somewhat different as to cause and remedy. The recent pronouncement of Señor Don Luis Cabrera on the condition of Mexican finance is so important in this respect, that we briefly discuss it: Don Luis Cabrera appears to possess Liberal sentiments, for he commences his review of the financial situation by saying that the old régime, after having been conquered in the military and the political spheres defends itself in that of economics; but the people at large are being ground between the upper and nether millstones of commercialism and the revolution. They listen to merchants and bankers who attempt to make them believe that the Government is responsible for the situation. The revolutionary Government, it is claimed, have paid all their expenses with paper money and have eschewed borrowing, as they feared that it might impede the realisation of their ideals: 700,000,000 pesos of the old paper-money still exists, and this was issued by the revolutionary Government, and represents what the Revolution has cost the country down to the present time. This paper-money has been constantly dropping in value for lack of guarantees and because of the widespread manufacture of counterfeit currency, so it was proposed to substitute for it a new paper currency with a guarantee: 500,000,000 pesos worth of this paper was printed to be issued as occasion required; and, in order to guarantee the value of this, the Government created a fund in gold which it intends to augment from time to time, and it guarantees the new paper with a value of 20 cents national gold for each peso. It will issue no more paper than it is able to guarantee. Senor Cabrera exclaims against the public 
TUXPAM : GENERAL OFFICES
impatience as the result of ignorance. "The public," he says, "have the idea that the old paper has no value because merchants refuse to receive it in payment for goods. Men of business" he goes on to say, "use the Government's old money, but they do not wish that they should be paid in it. The merchants," he says, "are giving the people a false impression of the value of the old currency." It is a pretty financial muddle, and would tax the abilities of a Law or a McKenna to unravel.