The Private Business of Porfirio Díaz and the Early Modernization of Mexico, 1876-1911
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University of Texas at El Paso DigitalCommons@UTEP Open Access Theses & Dissertations 2012-01-01 The rP ivate Business of Porfirio Díaz and the Early Modernization of Mexico, 1876-1911 Jorge H. Jimenez University of Texas at El Paso, [email protected] Follow this and additional works at: https://digitalcommons.utep.edu/open_etd Part of the Economic History Commons, and the Latin American History Commons Recommended Citation Jimenez, Jorge H., "The rP ivate Business of Porfirio Díaz and the Early Modernization of Mexico, 1876-1911" (2012). Open Access Theses & Dissertations. 2110. https://digitalcommons.utep.edu/open_etd/2110 This is brought to you for free and open access by DigitalCommons@UTEP. It has been accepted for inclusion in Open Access Theses & Dissertations by an authorized administrator of DigitalCommons@UTEP. For more information, please contact [email protected]. THE PRIVATE BUSINESS OF PORFIRIO DÍAZ AND THE EARLY MODERNIZATION OF MEXICO, 1876-1911 JORGE HUMBERTO JIMÉNEZ-MUÑOZ Department of History APPROVED: Samuel Brunk, Ph.D., Chair Charles Ambler, Ph.D. Irasema Coronado, Ph.D. Sandra McGee Deutsch, Ph.D. Benjamin C. Flores, Ph.D. Interim Dean of Graduate School Copyright© By Jorge Humberto Jiménez-Muñoz 2012 THE PRIVATE BUSINESS OF PORFIRIO DÍAZ AND THE EARLY MODERNIZATION OF MEXICO, 1876-1911 By JORGE HUMBERTO JIMÉNEZ-MUÑOZ DISSERTATION Presented to the Faculty of the Graduate School The University of Texas at El Paso In Partial Fulfillment of the requirements for the Degree of DOCTOR OF PHILOSOPHY Department of History THE UNIVERSITY OF TEXAS AT EL PASO August 2012 ABSTRACT Porfirio Díaz came to power in 1876 and ruled Mexico for over three decades. This period has been known as the Porfiriato. Mexico’s economy became part of the modern global market and the country experienced a process of industrialization, the rise of foreign trade, the expansion of communications, and the emergence of new social classes. These series of economic and social transformations have been linked with the country’s early modernization. My dissertation contributes new insights into Mexico’s process of modernization and shows how this transformation brought the rise of an entrepreneurial class under Porfirio Díaz guidance and leadership. My dissertation lends transparency to the role of Porfirio Díaz as an entrepreneur, and examines the diversified enterprises that Díaz promoted, founded and developed while in power. My work details the incorporation of Díaz companies and partnerships, and lays out a system of corruption with conflicts of interest, the use of privileged information for personal gain, the privatization of policymaking and quid pro quo arrangements that bolstered Díaz’s entrepreneurial career. iv My dissertation shows that Díaz used and abused power for personal gain, concentrating power in the presidency, manipulating legislation to his favor, facilitating the emergence of a hierarchical, loyal and privileged elite, and expanding foreign businesses in the country . v TABLE OF CONTENTS ABSTRACT ...................................................... iv TABLE OF CONTENTS ............................................. vi INTRODUCTION ................................................... 1 Historiography ............................................ 9 The Porfiriato’s Economic History. ....................... 12 Porfirian Elites ......................................... 15 Industrial Expansion and Social Modernization ............ 17 Political Development and Diplomacy ...................... 21 Díaz and Businesses ...................................... 24 Main Arguments ........................................... 26 Chapters ................................................. 31 CHAPTER 1: The Porfirian Economic and Social Transformation of Mexico, 1876-1911. ...................................... 35 Crafting the Porfirian Elite ............................. 38 Unifying Mexican Liberals, Traditional Elites and Foreigners ..................................... 40 Spaniards and Criollo Entrepreneurs ...................... 46 The French Community and Limantour. ...................... 49 Inner Circle, Power Elite and Businesses ................. 52 The Jockey Club .......................................... 55 CHAPTER 2: Peaceful Invasions ................................ 60 An American Deputation visits Mexico ..................... 63 The Diplomacy of Business ................................ 67 Former U.S. Generals invade Mexico ....................... 72 The Porfirian Spirit of Enterprise ....................... 76 Díaz To the North ........................................ 80 Díaz Visits the United States as a Politician-Entrepreneur ............................. 85 Díaz’s Drainage Project .................................. 92 U.S. Businesses Promoted by the Peaceful Invasions ....... 97 CHAPTER 3: The Drainage and Power Generation Companies ....... 100 Compañía Limitada de Canalización y Desagüe de la Ciudad y Valle de México, S.A ............... 103 Water Management for Business ........................... 109 The Compañía Eléctrica e Irrigadora en el Estado de Hidalgo .................................. 117 Monopolization, Political Crisis, and the Sale of the Power Company .................................. 124 CHAPTER 4: The Porfirian Banking System ...................... 130 Post-independence Banking Institutions .................. 132 vi The Creation of the Main Porfirian Banking Institutions . 134 Banco Nacional de México ................................ 141 Banco de Londres y México ............................... 147 The Banking Law of 1897 ................................. 155 CHAPTER 5 Díaz and the Mining Industry ....................... 162 Compañía de las Minas de Cinabrio ....................... 168 Compañía de las Minas de Oro de Cerro Colorado .......... 172 Politics, Friendship and Business ....................... 179 Díaz’s Investments in the Mining Industry ............... 182 CHAPTER 6: The Search for Domestic Capital: Agriculture for Export, Brokerage, and the Stock Market .................... 190 The Compañía Agrícola e Industrial de Ramié, S.A. ....... 193 Finance and Investment Companies: The Sánchez Ramos y Compañía ....................... 205 The Stock Market and the Mexican Stock Exchange ......... 211 Corporations Law, the Stock Exchange and Díaz’s Investments ................................. 214 CHAPTER 7. Toward the Mexican Revolution: Monopolies and the Madero Interests ........................ 225 Elite Privileges, Oligopolies and Monopolies ............ 225 Railroads, a Multinational and State Monopoly ........... 231 Díaz’s Entrepreneurial Legacy: The Rise of Díaz Junior .. 237 The Díaz Family and the Maderos: Two Sides of Business Success ...................... 238 Dynamite and the Compañía Nacional Mexicana de Dinamita y Explosivos ........................... 241 Rubber Production ....................................... 249 Mexican Oil ............................................. 253 CONCLUSIONS .................................................. 265 APPENDIX: DOCUMENTS, CONGRESSIONAL BILLS, NEWSPAPERS, PERIODICALS, AND ARCHIVES ...................... 279 Governmental Documents .................................. 280 Newspapers and other periodicals ........................ 280 Archives and Libraries .................................. 281 BIBLIOGRAPHY ................................................. 282 CURRICULUM VITA .............................................. 308 vii INTRODUCTION Ignorant Mexicans had been led to think that their enemies live on the other side of our northern frontier. Porfirio Díaz James Creelman interview, 1908. In the 1870s Mexican liberals who had triumphed against conservatives and foreign forces started a long process of transformation of the country. Mexico’s modernization began in the confluence of such old regime traditions as caudillismo, the abuse of power for profit, corruption, the triumph of liberal ideas, and the advent of U.S. and Western European modernity. After the administrations of Benito Juárez and Sebastián Lerdo de Tejada, Porfirio Díaz presided over a government in which the liberals, who had fought against foreign invasions, but also against conservative, elitist and authoritarian regimes, introduced a regime not entirely different from those they replaced. 1 From 1876 to 1911, Porfirio Díaz built a regime that led Mexico toward an economic modernization based on industrial capitalism and a new market economy integrating modern aspirations with traditional continuities. During that period, there was a process of class or domestically based bourgeoisie and elite formation, and also a massive influx of foreign investments in capital-intensive industries in a system in which economic and political power could barely be separated. The Porfirian regime represented a process of economic modernization, but also a path to dictatorship, foreign expansion, economic dependency, corruption and severe conflicts of interest. The Porfiriato’s modernity would soon prove that instead of the occasional and chaotic plundering of preceding regimes, it was a regime of continuous and organized thievery that at the end endangered the continuance of the capitalist system. Díaz's corrupt system relied on the use of privileged information for personal gains, the privatization of policymaking, the establishment of permanent conflicts of interest, the selling of his political influence, and quid pro quo arrangements. Díaz began his regime by replacing previous elite