The Porfiriato, 1876-1910
Propitious economic conditions did not greet Porfirio Díaz upon his rise to power in 1876. Mexico remained saddled with a huge foreign debt and an empty treasury. An army of bureaucrats was owed back wages, the country had a poor international credit rating, and persistent current account deficits caused serious balance of payments problems. Investment, whether foreign or domestic, was scarce, and the mining industry had yet to recover from the revolutionary wars. The relatively few mines in operation in 1876 were exploited haphazardly, and extraction and smelting techniques were archaic. Only a few miles of rail had been laid, transportation and communications were rudimentary, and dock facilities were dilapidated and unsafe. Endemic rural violence further hindered commerce.
During his first four years in office, Díaz began to tackle economic backwardness. He first decreed stiff measures against contraband moving across the United States border. Smugglers and bandits crossed the border from both sides, but Díaz would not permit United States troops to enter Mexico in search of them. Instead, he enlarged the Mexican border patrol. In 1877 Díaz agreed to honor US$4 million in claims by United States citizens against Mexico.
In 1880 at the end of his term and despite his followers' wishes, Díaz left office. The next president, Manuel González, continued Diaz's modernization program. Telegraph lines began to operate, and railroad construction was kept apace. In an attempt to meet his foreign debt obligations, González withheld the salaries of government officials, a move that led to a harsh campaign against the president.
During González's tenure, Díaz gathered a large following that restored him to office in 1884. Mexican positivism, embodied in the slogan "order and progress," was the backbone of the modernization scheme supported by the científicos , intellectual followers of Barreda. Led by José Ives Limantour, who served as adviser to Díaz, the científicos developed a plan for economic recovery that was to be carried out through the next twenty-seven years of the Porfiriato.
Diaz's strategy of export-oriented growth led to Mexico's rapid integration into the world economy. The modernization program was based on exploitation of the country's natural resources, using cheap domestic labor and foreign capital and technology for export production.
Foreign capital fueled dynamic growth, and an expanding rail network promoted export agriculture, manufacturing, and mining. Agriculture and livestock export products expanded to include cattle and cattle hides, coffee, cotton, henequen, sugar, vanilla, and chicle. Railroads allowed the exploitation of new land in the north for cotton cultivation and enabled Mexico to double its cotton production between 1887 and 1910.
The Díaz regime encouraged manufacturing through export incentives, high protective tariffs on foreign manufactured products, low transportation costs, and abolition of the transactions tax on business. The number of industrial enterprises--most of them heavily backed by United States, French, German, and British investors--grew rapidly, and the volume of manufactured goods doubled between 1877 and 1910.
The railroads also contributed to the revival of mining because they provided the only feasible means of transporting huge amounts of ore. Legal reforms in 1884 lowered taxes on mining and allowed foreign ownership of subsoil resources, spurring a large increase in United States and European investment in Mexican mines.
Society under the Porfiriato
Ironically, Mexico's economic success during the Porfiriato had negative social consequences. Although the economy grew at an average annual rate of 2.6 percent, real income per capita had recovered only to pre-1821 levels by 1911. After 1900 unemployment increased as mechanization displaced artisans faster than unskilled workers were absorbed into new productive enterprises. Additionally, real and financial assets were increasingly concentrated in the hands of a few local and foreign investors.
The rural peasantry bore most of the cost of modernization. Government seizure of private and communal land increased the landless rural population and led to further concentration of land ownership. Taking advantage of an 1883 land law intended to encourage foreign investment, by 1888 land companies had obtained possession of more than 27.5 million hectares of rural land. By 1894 these companies controlled one-fifth of Mexico's total territory. By 1910 most villages had lost their ejidos, a few hundred wealthy families held some 54.3 million hectares of the country's most productive land, and more than half of all rural Mexicans worked on these families' huge haciendas.
The modernization program was also brought about at the expense of personal and political freedom. Díaz made certain that "order" was maintained at all costs for the sake of "progress." Force was used whenever necessary to neutralize opponents of the regime. Freedom of the press was nonexistent. The army and the rurales became the forces of repression for the maintenance of the Porfirian peace during the Porfiriato. Mock elections were held at all levels of government, while Díaz appointed his loyal friends as political bosses. Despite the modernization, Mexico remained a predominantly poor and rural country, and class stratification became entrenched.
The wealth that flowed into urban areas during the Porfiriato fostered the growth of an urban middle class of white-collar workers, artisans, and entrepreneurs. The middle class had little use for anything Mexican, but instead identified strongly with the European manners and tastes adopted by the urban upper class. The emulation of Europe was especially evident in the arts and in architecture, to the detriment of indigenous forms of cultural expression. The identification of the urban middle class with the European values promoted by Díaz further aggravated the schism between urban and rural Mexico.
SOURCE: Area Handbook of the US Library of Congress