Bulletin of Latin American Research, Vol. 32, No. 2, pp. 149–162, 2013
Some Considerations Regarding
the Persistence of the Economic Elite
in Mexico in the First Half
of the Twentieth Century
JOSÉ GALINDO
University of California, Berkeley
This article presents an analysis of some of the most important works on
the persistence of the economic elite in Mexico during the first half of the
twentieth century. The study seeks to answer the following question: How
did the formation and character of the Mexican economic elites change
during this period? It examines the effect of events such as the Mexican
Revolution (1910–1920) and the agrarian reform programmes, as well
as political instability and institutional uncertainty, on the persistence or
weakening of the landowning and industrial elite who had consolidated
their power during the Porfiriato period (1876–1911).
Keywords: elites, entrepreneurs,
Mexican Revolution.
hacienda,
industry,
landowners,
The main purpose of this work is to examine the changes and continuities that the
Mexican economic elites experienced between the last years of the Porfiriato and the
first half of the twentieth century, in the light of the business history of production in
Mexico. Thus, this work seeks to answer the following question: How did the formation
and character of the Mexican economic elites change during this period?
Undoubtedly, one of the most important concerns for historians has been the evolution of the behaviour of economic elites and enterprises within an environment
characterised by political instability and institutional uncertainty. This work examines
some of the actions taken by landowners and industrialists during the Porfiriato, when
faced with the transformations generated by the Mexican Revolution. The purpose of
this study is to investigate how, and to what extent, the Porfiriato landowners and
industrialists were able to adapt to the new political, economic and social conditions
that emerged after the maderista movement of 1910, the successive armed conflicts
involving different revolutionary factions and the subsequent reconstruction process
occurring over the following two decades. Those decades of reconstruction are considered as the period during which the structure was established that would allow the
regime arising from the Mexican Revolution to stay in power for more than half a
century. It is important to note that this work does not focus on the analysis of specific
individuals, but, rather, mainly examines industrial activities and land ownership.
© 2012 The Author. Bulletin of Latin American Research © 2012 Society for Latin American Studies.
Published by Blackwell Publishing, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street,
Malden, MA 02148, USA.
149
José Galindo
In the second half of the twentieth century, scholars studying these elites began
an impassioned debate on the importance of the specific defining characteristics of
this group. According to Alan Zuckerman, a conceptually valid definition of an elite
is possible; the problem lies in the relative disagreements on the elements of such a
definition (Zuckerman, 1977: 344). Recently, leading researchers have conducted more
empirical studies on the elite; these works adopt theoretical ideas from different studies
to understand the elites from a given country or region. Roderic Camp explains that
according to William Domhoff, the role of the social class, which is an element of analysis within Marxist theory, and the role of institutions, which is an element emphasised
by C. Wright Mills, are both important factors that must be taken into consideration
to understand power. As Camp (2002: 11) writes, ‘the governing class would not exist
without institutions, yet class values permeate institutions’. Other authors assert that
neither the Marxist theory nor the classical elite theory developed by Pareto and Mosca
can be adequately applied to the Mexican case. Classical theorists divide society into
two groups, the governing class, or the elite, and the governed, and, for Marx, those
who govern, or the elite, are the class that controls the means of production. However,
in Mexico, for a great part of the period of study here, economics and politics were
intimately linked, and class identification was malleable, particularly because of the
changes resulting from the Revolution (Wasserman, 1993: 9–10).
Thus, in this work, the power elite, a concept made popular by C. Wright Mills
(1956), will be defined in general terms as economic actors (in this case, landowners
and industrialists) as well as political, military, and social actors with the capacity to
consistently and substantially affect a great variety of national and regional issues (e.g.
economic, religious, military). In this study, the main interest is to review the change in
the composition and character of the economic elite.
This definition takes elements from others, including Mills, but particularly from
the analysis offered by Field et al. (1990). These authors originally sought to define
political elites, but their definition can be expanded to other sets of actors that influence
a society, which are noted in the preceding paragraph. In addition, the regional concept
has been included in this definition to permit its use for Mexico, which, during the
period this study focuses on, was a markedly fragmented country and therefore cannot
be discussed in terms of a single national elite, at least in the economic and political
realms.
Camp notes that, currently, the leaders of the power elite in Mexico do not share
positions outside their sphere of influence; that is, that the political, economic, social,
and military elites do not overlap, apart from a few minor exceptions, particularly
among the military and political elite (Camp, 2002: 12). This conclusion is important
given that, as will be observed in the present work, during the Porfiriato, the economic,
political and military elites overlapped in several regions. Thus, it is critical to explain
the elements that define the elites, focusing, in this case, on the economic and political
elites.
In this work, the economic elite is defined as the group that owned large areas
of land and its productive unit, the hacienda (landowners), as well as the group of
proprietors of large manufacturing businesses. Both groups generally held interests in
other economic sectors, including commerce, banking and mining; sometimes both
groups were inseparable, as will be seen throughout this work. It is important to note
that in the period of interest here, capitalism in Mexico was primarily family-based,
that is, the property of each company was essentially held within one family or among
a small group of families and their partners, who generally had close ties.
150
© 2012 The Author. Bulletin of Latin American Research © 2012 Society for Latin American Studies
Bulletin of Latin American Research Vol. 32, No. 2
The Economic Elite in Mexico
In addition, the political elite is defined here as the group of political actors with the
capacity to control the more significant political conflicts and processes in the country
and, one might add, in the regions of the country (Gil and Schmidt, 2005: 23). It is
important to note that the regional political actors, aside from forming part of the
local political elite, would often, although not always, form part of a broader national
network linked to a national political elite.
When the political and economic elites overlap, according to this definition of elite,
their capacity to consistently and substantially affect the results of different national
and regional issues increases, generally not in positive manner: the regulatory ability of
the government on the economy is reduced, and incentives for companies and haciendas
to operate outside the law, with a number of individual advantages, are generated. This
circumstance often leads to the creation of monopolies and the exaggerated growth of
rural properties to the detriment of other economic agents. Razo notes that the greater
the number of government officials on corporate boards, the more likely it is that the
government shares the policy preferences of economic actors (Razo, 2008: 18).
The Landowners
Agriculture has represented one of the most important economic activities throughout
Mexico’s history, and its productive unit, the hacienda, has been extensively studied.
The history of the hacienda as a productive unit dates from colonial times, but it was
during the administration of Porfirio Díaz that the hacienda once again played a crucial
role in Mexican agricultural production.
Stemming from the works of Molina (1909), and Tannenbaum (1929), the problem
of land concentration by the haciendas and the land surveying companies was the
leitmotif of the Revolution; a law enacted in 1883 authorised the president to contract
land surveying companies to survey vacant lands in exchange for a percentage of
that land. Later studies, especially those made after the 1970s, have considered the
complexity of this process, emphasising the heterogeneity of the hacienda structure and
its work system (Buve, 1998). Accordingly, Nickel (1991: 14) considers that ‘any simple
definition of peonage is insufficient [. . .] (as there are) particular circumstances and
variables found in every region and every time’. Katz (1981: 28) has also emphasised
that ‘The Revolution was not driven mainly by peones nor do the historical facts confirm
the idea that the Revolution originated where the spiritual and material deprivations of
the peones were greater’. Nevertheless, for most of the twentieth century, the majority
of studies on the historiography of the Porfiriato held the idea of the almost complete
domination of agricultural lands by a small group of landowners, in which the labourers
living on the hacienda land represented the majority of the agricultural workers (Tenorio
and Gómez, 2006).
It is important to stress that, throughout the nineteenth century, several Liberal
administrations discussed and enacted laws that were meant to modify land property
rights to foster small individual private land ownership. Although the above was the
expected result, the confiscation of goods, the claiming of vacant lots, the development
of land-surveying companies and the construction of railways instead permitted the
concentration of large expanses of land in only a few hands (Kuntz and Speckman,
2010: 514). However, the transfer of lands during the Porfiriato cannot be generalised;
there were differences between regions, between state governments and even between
© 2012 The Author. Bulletin of Latin American Research © 2012 Society for Latin American Studies
Bulletin of Latin American Research Vol. 32, No. 2
151
José Galindo
towns. For example, there were exceptions to this process in San Luis Potosí, Tlaxcala
and Oaxaca, among other areas (Chassen, 1998: 158–159).
It is difficult to separate the political elites from the economic elites during the
Porfiriato. Although Díaz attempted on several occasions to divide political power from
economic power, encouraging opposition among rival groups, the economic oligarchies
were also able to monopolise the political resources in the long term (Katz, 1981: 11).
In this manner, the political and economic elites were the same in many regions of
the country. Two classic examples stand out: the group formed by the Terrazas-Creel
families in Chihuahua and the Molina-Montes clique in Yucatán. Some exceptions to
this trend emerged in Puebla, Tlaxcala, and Veracruz, among other areas, where there
was no notable dominance by families.
This situation was transformed by the Revolution. Although the political elite had
undoubtedly changed and came to include a younger middle-class demographic, an
important fraction of the economic elite survived this event (Knight, 1986: 519).
Wasserman (1993) provided an important contribution to understanding the survival
of the landowning elites throughout the Revolution: he considered extrapolating from
the interpretations of the French Revolution by Albert Soboul and Arno Mayer to
be useful in illustrating the capacity for adaptation of the landowning aristocracy,
which permitted this group to successfully adapt to the destruction of the feudal order,
assimilating, delaying and even dominating the forces of capitalist modernisation. In this
way, Wasserman approached the elements of change and continuity of the Porfiriato’s
old landowning elite, arguing that its survival was ensured through a system of alliances
with the new elite that emerged from the revolutionary movement.
The paradigmatic example highlighted by Wasserman is that of the Terrazas-Creel
clan, which controlled an unrivalled empire during the Porfiriato. The family included
politicians, ranchers, bankers, mining entrepreneurs, industrialists and merchants. As
landowners, the land titles for this family encompassed 6,075,000 ha in Chihuahua.
During and after the Revolution, the Terrazas-Creel family implemented a broad range
of strategies to maintain their hold on their possessions, from open warfare and
direct negotiations with revolutionary groups for the sale, division and re-purchase
of their properties, to direct alliances with new local and national political leaders,
taking advantage of their weakness and need for support to implement some of their
revolutionary principles (Wasserman, 1993: 69–74). In this way, Wasserman argues,
even though the economic elite in Chihuahua was seriously hurt by the Revolution, it
was not destroyed.
Similarly, Wasserman summarises several regional studies and concludes that the
more diversified the economic activities of the members of the old oligarchy, the higher
the probability that they would survive the Revolution. However, the more dependent
the elite were on their lands, the more vulnerable they were in the long term (Wasserman,
1993: 69). Wasserman offers two illustrative examples: the case of Morelos, in which
the bourgeoisie was mainly composed of landowners and, as a result, was practically
destroyed by the Revolution, and the case of Monterrey, in which the elite was not
solely dependent on land ownership, which is why it was able to survive the Revolution.
The Revolution affected the landowners in different ways in its different stages. In
its first stage, 1910–1913, Francisco I. Madero was very careful to avoid affecting the
landowning oligarchy with his policies, in opposition to what other politicians proposed.
For instance, a congressman from Puebla, Luis Cabrera, thought that restoring seized
properties or providing new land to needy communities was essential. However, Madero
himself came from a landowning family and did not envision any abrupt change with
152
© 2012 The Author. Bulletin of Latin American Research © 2012 Society for Latin American Studies
Bulletin of Latin American Research Vol. 32, No. 2
The Economic Elite in Mexico
respect to land issues. In fact, Madero faced violent opposition from agrarian leaders
such as Zapata, who formally condemned the president and proclaimed, with his
Plan de Ayala, a national campaign to return hacienda lands to the people (Womack,
1991: 136).
This situation changed between 1914 and 1917, a period characterised by intense
armed conflict, when many lands were expropriated. In addition, the economic crisis that
occurred during these years affected many hacienda owners, some of whom abandoned
their properties to pursue other activities. Some of these owners had commercial and
financial businesses in large cities or abroad, all of which they began to manage
directly. During these years, land expropriation varied, depending on the region of the
country, and was concentrated mainly in the states where Francisco Villa and Emiliano
Zapata were most influential: Morelos, Guerrero, Michoacán, Puebla, Tamaulipas,
Nuevo León, Chihuahua, Durango, Zacatecas and San Luis Potosí, among others.
Nonetheless, there were several successful attempts by the landowners to adapt to their
region’s circumstances, seeking arrangements with revolutionary leaders to exchange
part of their harvest for protection. Other landowners left the haciendas in the hands
of managers, who struck agreements with leaders from different sides to balance their
alliances.
In addition to what was discussed previously, we can add that, after 1917, Carranza,
seeking support for his regime, returned lands to several hacienda owners (the returning
of haciendas also encompasses part of the period led by the sonorenses, which started in
1920; however, this topic has rarely been discussed by scholars, and these land returns
are difficult to quantify). In fact, from the beginning, the movement led by Carranza
only seized haciendas on a few occasions. The conditions that were imposed after 1917
to return land to the hacienda owners were as follows: pay all back taxes, forego any
claim to damages and losses, and agree that the return would not spare the hacienda
from undergoing the process of agrarian reform.
After 1920, the governments that emerged from the Revolution, the so-called
sonorenses, took actions that sometimes threatened and sometimes helped consolidate
the power of the old landowning oligarchy. For instance, when the government needed
support from the rural population for conflicts such as the Adolfo de la Huerta rebellion
in 1923–1924 or the Escobar insurgency of 1929, the government turned to land
distribution. This policy was initiated to pacify Zapata’s peasant followers in Morelos,
Puebla, Tlaxcala and the state of Mexico as early as 1920, and the government resorted
to this same action in the years that followed. These new revolutionary governments
sought the modernisation of the economy more than land distribution. Consequently,
Article 27 of the 1917 Constitution, which allowed for the seizure of lands for their
redistribution, was not applied in full until the Cárdenas administration, 1934–1940.
The distribution of lands before Cárdenas was limited to 10 million ha, and the majority
of this land was public, or, if not public, this distribution did not affect the core holdings
of the haciendas.
Additionally, during this period, alliances were also made between the old and new
elites. For instance, a large number of generals became landowners. Knight (1986: 519)
argues that marriage played an important role in the fusion of the old and new elites.
However, the revolutionary elite generally did not share its political power with the
old economic elite; the above-described alliances were important for the survival of
the latter. It is also important to note that, before the Revolution, coalitions between
local political bosses and the large landowners had played a key role in the survival
of the landowning elite. However, the elimination of local political bosses as a result
© 2012 The Author. Bulletin of Latin American Research © 2012 Society for Latin American Studies
Bulletin of Latin American Research Vol. 32, No. 2
153
José Galindo
of the armed conflict forced the landowners to form new coalitions that guaranteed
their survival mainly between 1913 and 1917. In fact, there are data from haciendas
from the centre of the country, for instance in Puebla, Tlaxcala, and in the Llanos
de Ápam, describing new alliances during the Carranza period. Many revolutionary
generals played an important role in these new coalitions (Wasserman, 2005: 342–343).
This last point has been analysed in detail by Haber et al. (2003), who have
addressed the topic of the survival of the elites from the perspective of economic
neo-institutionalism based on the concept of vertical political integration (VPI), taken
from political science, in their book The Politics of Property Rights. Between 1910
and 1920, the major landowners of the Porfiriato were able to mitigate the effects of
political instability and institutional change by creating VPI coalitions with the federal
government and the generals; the latter played the role of a third party, providing
protection in exchange for income.
In the VPI model, a third party (in this case, the generals), received an economic
benefit from the proprietors (a second party: mainly landowners and industrialists) and
ensured compliance with an informal agreement between the first (the government)
and second parties (the proprietors). This agreement guaranteed government protection
of the proprietors’ property rights and other policies favourable to their interests. In
exchange, the proprietors guaranteed an income to the government, generally through
taxes.
The result was that, by means of these coalitions, the agrarian reforms – both de
facto and de jure – regressed between 1914 and 1917. This mechanism also worked in
later years:
Stable coalitions were formed in several regions of Mexico, especially in the
North. Generals, members of the government, and large hacienda owners,
combined their mutual interests to forge alliances that allowed them to
share income. Even Presidents Obregón and Calles participated in these
alliances. (Haber et al., 2003: 313)
In other states within the country, such as Puebla and Tlaxcala, the coalitions were
individually-based, between military supporters of Carranza or Zapata and landowning
entrepreneurs, while the government at this stage was still striving to regain control. In
this regard, it was not until 1917 that the VPI coalitions evolved in the central regions
within the country. Buve and Fowler (2010) provide an analysis of this topic.
The economic crisis that began in 1926 and was reinforced by the Great Depression
had a clear negative effect on land income. However, given that the federal government sought to encourage production during this period, the choice was made not to
negatively affect the landowners, as their experience was needed at the time. Years
later, the trial by fire for the old landowners would be the agrarian reform programme
implemented during the Cárdenas administration. During this administration, approximately 20 million ha were redistributed. This time, even though the landowners used
different methods to keep their lands, such as dividing them, selling them, or using
parties who lent them their legal name, these methods were fallible, and the expropriations had a negative impact on many landowners. For instance, in the states of
Coahuila, Michoacán, Sonora, Baja California, Yucatán, and Chiapas, among others,
large expropriations took place that left many families with little land. This period
of large land expropriations coincided with a period in which the revolutionary generals had weakened considerably. In this regard, the coalitions between generals and
landowners also weakened or disappeared (Medina, 1995).
154
© 2012 The Author. Bulletin of Latin American Research © 2012 Society for Latin American Studies
Bulletin of Latin American Research Vol. 32, No. 2
The Economic Elite in Mexico
However, it cannot be concluded that these families completely lost their economic
power. The diversification of their business activities played an important role, given
that the 1930s were a decade when the country’s industrialisation accelerated. There is
historical evidence that in Veracruz, Puebla, Tlaxcala, the state of Mexico and Jalisco,
among others, diversification was already present as far back as colonial times and
that this diversification was stronger during the late Porfiriato. Textile industrialists,
bankers and large merchants had their own separate trading houses, mills and haciendas,
apart from their industries. In fact, starting at this time, the family members of the
economic elite intermarried in an effort to increase their concentration of wealth
(Olveda, 1986: 32).
Although by 1940 the economically active segment of the country’s population
was still mainly employed in agriculture, in 1937 manufacturing surpassed all other
economic activities in its contribution to the Gross Domestic Product (Sáenz, 1946 cited
in Mosk, 1950: 112). This change is important given that, at the time when Cárdenas’s
agrarian reform took place, there were also many other opportunities to invest obtained
resources, such as resources from the sale of land.
To conclude this analysis of the persistence of landowners during the Porfiriato, it
can be argued that, even though this group was weakened between 1910 and 1940,
and in some states, such as Morelos, their economic power was almost eliminated,
some landowners found different methods to protect themselves from these negative
conditions. These methods, though not infallible, were effective at times. For instance,
mainly in the north and parts of the south of the country, the landowners divided
their lands among relatives to comply with the legal requirements, or they sold or
simply leased their lands. Landowners also used other legal means, such as the writ of
amparo. In addition, some landowners bribed local authorities to be able to maintain
their holdings and took advantage of the fact that some local authorities opposed the
agrarian reform (Wasserman, 1993: 72–73). Some VPI coalitions were also formed to
deal with the effects of political instability and the formal institutional changes. The most
important fact that emerges from this analysis is the role played by the diversification of
assets and economic activities, together with family and social networks, in maintaining
the old elite.
In the centre of the country, where the revolutionary process was notably different,
some peculiar characteristics are noteworthy. In this region, some landowners abandoned their haciendas, and others defended their property with armed dependents or
made arrangements with various revolutionary leaders. These landowners also implemented VPI-type coalitions, but these coalitions were only formed after 1917. Many
of these decisions were based on the conditions of the haciendas, the mindset of the
hacienda owner, and the weight and power of local revolutionaries. Nevertheless, as
noted by Buve, the differences in local conditions in the central region are important,
and, thus, drafting a general outline of the situation can be risky, particularly for the
more turbulent years of the Revolution between 1914 and 1920 (Buve, 1994: 229).
Entrepreneurs
The emergence of non-traditional economic activities that were different from those
traditional to the country (mainly agriculture and mining) took place much earlier than
the Porfiriato. This diversification was an important factor in the formation of new
economic elites. According to Cerutti (1999), at the end of the nineteenth century,
© 2012 The Author. Bulletin of Latin American Research © 2012 Society for Latin American Studies
Bulletin of Latin American Research Vol. 32, No. 2
155
José Galindo
the majority of Mexican entrepreneurs emerged from the commercial activities that
they began to conduct approximately 50 years earlier. The accumulated capital from
these commercial activities was invested in other sectors, which permitted large modern
manufacturing companies producing cotton textiles, shoes, cigars, dynamite, beer,
paper, cement, steel, glass and soap, among other products, to multiply between 1870
and 1910. Some of the factors that contributed to this expansion were the growth of
regional markets and the increasing links among them, new foreign investment starting
in 1880, the development of local capital markets and the creation of new institutional
frameworks for economic activities. Investments in railroad, mining and oil companies
were also a factor, for which foreign investment, mainly from Britain and the United
States, was essential (Marichal and Cerutti, 1997: 24).
In the period under study, and in contrast to the rural areas, the development
of manufacturing industry was concentrated in specifically defined areas. At the end
of the 1860s, the cities of Puebla and Mexico held the majority of manufacturing,
mainly of cotton textiles. During the Porfiriato, cities such as Orizaba, Monterrey and
Guadalajara also underwent important industrial development. By 1930, the percentage
of distribution of the manufacturing production by zone was as follows: Federal District,
27 per cent; central region, excluding the Federal District, 25 per cent; north, 23 per
cent; Gulf, 14 per cent; North Pacific, 8 per cent; and South Pacific, 3 per cent (Reynolds,
1970: 169).
Some merchants also invested in agriculture and cattle farming during the Porfiriato,
which turned them into landowners. In a similar manner, traditional landowners had
begun to transfer resources to other activities such as commerce, mining, banking and
the manufacturing industry, although not in the same proportion as the merchants
(Newell and Rubio, 1984: 19). Further, foreign investment was very important during
the Díaz administration, and on some occasions, foreign investors settled in Mexico
to handle their new projects; in this way, these immigrants also began to form part of
the Mexican economic elite. One example of this was the Barcelonnettes, who came
from France and who accelerated their migration to the country during the Porfiriato
period. By the end of the nineteenth century, the presence of the Barcelonnettes was
felt beyond the commerce and the textile industries, which is where this group began
their business activities. In the financial sector, for instance, they were partners in the
main banks, holding 70 per cent of the Banco Nacional de Mexico, 46 per cent of
the Banco de Londres y Mexico, 60 per cent of the Banco Central Mexicano and of
the Banco de Crédito Hipotecario. Likewise, these investors were involved in much
of the manufacturing production of the period (Gouy, 1997: 65). Contrary to what
some studies state, the Barcelonettes in Mexico were not a homogeneous or uniform
group, and not all became wealthy or reached the same social positions (Gamboa, 2004:
309–314).
In the 1980s, Womack (1987) published an article that critiqued the traditional
historiography of the Revolution and emphasised instead that the economic impact
of this process was not homogeneous, neither by sectors nor by regions. Since the
publication of that key article, as stated by Gómez (2003: 791), the once firm idea that
‘everything had changed’ was discredited. Recently, it has been argued that, in reality,
the revolutionary movement had little or no effect on the country’s economy, based on
the evidence of the ‘physical permanence of the industrial bourgeoisie’ (Rajchenberg,
1997: 274). This assertion, however, must be considered with care, because the nuances
and particularities of the effects caused by political instability in the different industrial
sectors and their specific cases must be accounted for. As Gómez (2003: 794) notes,
156
© 2012 The Author. Bulletin of Latin American Research © 2012 Society for Latin American Studies
Bulletin of Latin American Research Vol. 32, No. 2
The Economic Elite in Mexico
‘it is possible to differentiate two important changes prompted by the Revolution
that radically affected the industrial companies: (a) a transformation in the relation
between industrialists and the government, and (b) a change in the relation between
industrialists and labourers’. Clear examples of these changes took place in the states of
Puebla, Tlaxcala, Mexico, the Federal District and Veracruz. A current interpretation
of this topic in the eastern region of Mexico can be found in Buve and Fowler’s
(2010) work.
Other studies state that, as is the case for landowners, despite the political instability
that emerged from the Revolution and extended beyond the 1920s, and despite the
Constitutional Reform Articles 27 and 123 of 1917, no important changes took place
in private investment; industrial entrepreneurs continued to enjoy favourable conditions
(Haber et al., 2003). These reforms did not affect private investment or industrial
entrepreneurs because, during the Porfiriato and the revolutionary years, entrepreneurs
enjoyed favours from the government through VPI-type alliance mechanisms that
enabled them to survive the new uncertain conditions of the institutional framework
(formal and informal). However, as noted above, the application of this model to the
centre of the country prior to 1917 is highly questionable.
In this case, the third party was composed of members of the political elite, who
shared positions on the boards of directors of different companies. For instance, Pablo
Macedo (President of Congress), Julio Limantour (brother of the Minister of Finance)
and Colonel Porfirio Díaz (son of the president), among others, could monitor the
government and intervene as intermediaries between the state and the industrialists.
After 1918, the labour movement organised and took on the role of a third party, acting
as an institutional entity within the government’s structure (Haber et al., 2003: 124).
Maurer (2002) complements this idea and refers to the influence of the Mexican
banking sector on the persistence of the entrepreneurial elite during the Porfiriato, the
Revolution, and subsequent government administrations. Maurer indicates that during
the Porfiriato, the companies associated with the banks had a reduced likelihood of
going bankrupt or changing hands. At the same time, the companies that were not
associated with the banking sector had a much more limited access to capital. In short,
the bankers loaned themselves money from others, and the banks awarded long-term
loans to individuals and companies associated with the members of their boards of
directors. This, according to Maurer (2002), strengthened groups of entrepreneurs who
were linked with the government through the same banking sector that loaned funds to
the government for its survival.
After the Revolution, the new government focused on objectives similar to those of
Díaz: re-establishing peace and order and obtaining capital for economic development
(Maurer, 2002). In some ways, these efforts sought to rebuild aspects of the Porfiriato
system. Bankers wrote the rules, and the government created the Banco de Mexico; the
goal of both actions was to unite bankers and politicians and ensure that the government
would comply with its promises to the entrepreneurial sector. Maurer (2002) concludes
that Díaz created a highly concentrated banking sector that contributed to the highly
concentrated Mexican industrial structure: ‘the fastest-growing firms were not the best
firms; they were the best-connected firms’ (Maurer, 2002: 115). As stated by the
porfirista senator, Francisco Bulnes, ‘the government is for its friends, and the law is for
everyone else’.
On the other hand, Musacchio and Read (2006) have shown the great influence held
by the entrepreneurial interest networks in the industrialisation of the country during
the late Porfiriato. The connections that entrepreneurs established with politicians were
© 2012 The Author. Bulletin of Latin American Research © 2012 Society for Latin American Studies
Bulletin of Latin American Research Vol. 32, No. 2
157
José Galindo
highly important to this group, in which politicians also formed part of the corporate
boards. However, this close-knit network of interests ended with the growing political
and social tensions that led to the Revolution (Musacchio and Read, 2006).
It is important to highlight that this perspective of the process of continuity of the
industrial elites represents a generalisation that disagrees with other studies. Collado
(1996) notes that when the sonorenses rose to power in 1920, even though the economic
elite of the country was practically the same one that had existed in the Porfiriato, its
political and economic power was extremely diminished. In fact, the elites were found
to be divided and heterogeneous. The industrialists were the group with the smallest
number of advantages compared to the financing and merchant sectors, and they were
forced to lobby strongly when, for instance, the government implemented an income
tax in 1921. These industrialists also struggled to solve the pressing labour problem and
fought for the enactment of a protectionist policy (Collado, 1996: 329–338).
Gómez concurs with this position. In her study on the Barcelonnette entrepreneurs
during the Porfiriato, she argues that, if these entrepreneurs used to have privileged
access to governors, ministers and even the President, the Revolution subjected them
to long waits, and, in some instances, they were not even received by those in power
(Gómez, 2003: 795).
The period between 1926 and 1932 was challenging for Mexican industry because
of the world economic crisis, which led to a substantial reduction in new investments.
The exceptions to this difficulty were the steel and cement industries, whose productive
capacity during these years maintained a record-breaking figure of 53.5 per cent
because of the growth in public project investment by the government. After 1932, the
situation of Mexican industry took a general turn for the better. At the head of this
recovery process were, once again, steel and cement, two traditional industries from
the Porfiriato. Although the 1920s saw new entrepreneurs who invested in the cement
industry, both industries were still managed by the old oligarchy (Haber, 1989: 140).
The consumer goods industry also recovered in the 1930s, and, again, the recovery
process was led by two industries in the hands of old industrialists: beer and textiles.
However, some studies indicate that it is possible that the textile industry had experienced ‘the creation of a large number of small companies that challenged the old
Porfiriato giants with great success’ (Haber, 1989: 181). This interpretation seems convincing given that this industry experienced high growth rates with low earning rates,
which can be explained by an increase in competition. The tobacco industry experienced
similar conditions: the company El Águila, established in 1924, increased competition in
this sector. The Modelo beer brewery was another company that, although established
in 1922, shared an important part of the market in the 1930s with the Porfiriato
industrialists. However, in all of these cases, the Porfiriato entrepreneurs maintained a
leading position in the business. In fact, starting in the revolutionary period, the attitude
of the traditional entrepreneurs towards the newer and smaller business actors was
hostile, and the older businessmen blocked their path when they could. For instance, in
1917, small entrepreneurs were not allowed to send a representative to a convention of
industrialists held in Mexico City (Haber, 1989: 140).
In the 1930s, contrary to what some studies state, Cárdenas did not stand against
industrial development. In fact, between 1935 and 1939, more than 6,000 industries
were established in Mexico’s national territory (Medina, 1995: 117). In 1935, great
investments were made in manufacturing. These investments were made by the old
industrialists, by the companies established in the 1920s, and by new and small
companies, ‘almost all of which recently were established in Mexico (of Jewish,
158
© 2012 The Author. Bulletin of Latin American Research © 2012 Society for Latin American Studies
Bulletin of Latin American Research Vol. 32, No. 2
The Economic Elite in Mexico
Lebanese and Syrian origin) and which were concentrated in industries such as those
producing rayon (silk and high quality cotton) and clothing’ (Haber, 1989: 182). In
addition, the immigration of Republican Spanish refugees after 1937 improved and
consolidated some industries in Mexico. Examples of this change took place in the
chemical, cinematography, and publishing businesses. Thus, this was a period when
new companies, different from the traditional ones, began to share the market with the
old industrialists in particular sectors of the economy.
The most important impact of the Second World War in Mexico was on the country’s
economy. Mexico became a strategic provider of raw materials for the United States,
and, in a more limited manner, the United States became a provider of manufactured
goods for Mexico. At the same time, Mexico was supplied with production goods
imported from its northern neighbour.
The war also changed the government’s vision of the economic development of the
country, and industrialisation became a priority until the mid-1980s. Within these new
circumstances, the old industrialists and their heirs were faced with the emergence of
new investor groups. Such was the case of the so-called ‘New Group’ (NG), identified by
Mosk (1950). This group emerged during the Second World War period and, according
to Mosk, was strengthened considerably and gained influence in the Mexican economy.
The NG was composed of proprietors of small manufacturing industries created to
provide the Mexican market with goods that were no longer available from foreign
markets because of the war (Mosk, 1950: 21).
The group of industrialists of the old guard was composed, for the most part, of
the old Porfiriato entrepreneurs and characterised, according to Mosk (1950: 25), by
their aversion to risk and their conservatism resulting from being raised under the
protection of tariffs and being well established. This group considered the NG a threat
to their interests, which is why they closed ranks before the expansion of these new
entrepreneurs, seeking to block their development during the Third National Congress
of Industrialists, which took place in Mexico City in 1946.
Although Mosk (1950) asserted that the new entrepreneurs would take over the
leadership of industrialisation in the country, displacing the old economic elite, one
of the factors that limited the development of this group was the open invitation
by President Alemán (1946–1952), encouraging US capital to participate in Mexican
industry. For instance, in the textile industry, the company Celanese Mexicana emerged
as a joint investment between private capital, national public funds and US capital in
1947. In the iron and steel sector, the company Altos Hornos de Mexico was launched
as a joint project in 1942. US investment was also present in other industries, such as the
electric, aluminium, and heat-resistant materials industries. This investment gradually
eliminated the potential for the NG to predominate in the long term. According to Niblo
(1995), both the United States and the Mexican government opposed the economic
nationalists [NG]. In fact, tremendous pressure was generated against any politics that
excluded US entrepreneurs from Mexican finances, resources or markets.
Other contemporary authors believe that the NG held a greater importance and
influence not only in the 1940s but also later. For instance, Medina (1995: 126) states
that ‘the New Group, in close alliance with the State [. . .], would serve for many years to
counterbalance traditional industrialists and conservative merchants and would provide
important support to the nationalist economic policy and the government’s intervention
in the economy’.
Although this influence may have been present, it is also true that important barriers
were in place against the growth, influence, and power of the NG. Aside from the
© 2012 The Author. Bulletin of Latin American Research © 2012 Society for Latin American Studies
Bulletin of Latin American Research Vol. 32, No. 2
159
José Galindo
post-cardenista government support for US investments, there was an important credit
barrier that limited the participation of new entrepreneurs, which was put in place by
the commercial banks, and held strong links to the old industrialists. This credit barrier
caused the new industrialists to resort to other forms of funding, such as lenders and
large commercial companies. In both cases, interest rates were much higher than those
offered by commercial banks. Even Nacional Financiera, a credit institution created in
1933 by the federal government, did not support small industrial projects and mainly
benefited the old industrialists. This entire process shows how the old industrial elites
were able to survive for many years after the revolutionary movement.
Final Considerations
The historiography of the Porfiriato and the Revolution, whose concern has been
to explain the survival of the economic elites under conditions of uncertainty, has
used several economics and social science lenses to examine the issue. Although this
approach has sometimes led to polarised positions, in which the argument is that the
Revolution did not affect the elites’ performance in any way or that it led to their
ultimate destruction, it is also true that these interpretations have enriched the debate
on the factors that encouraged the growth or obstacles for the Mexican economy for
the period between the nineteenth and twentieth centuries. Both industrialists and, to a
lesser degree, landowners who led the economic activity following the Porfiriato were
still present in the Mexican economic activity towards the end of the 1940s. Many
elements of both groups were able to survive events that threatened their persistence
as far back as 1910. For instance, they survived the Mexican Revolution that took
away some of their properties, eliminated their political power, and generated a trust
crisis for any new investments. Some of them were also able to overcome the agrarian reform project led by Cárdenas, reinvesting resources into other activities or by
means of other methods or networks that, though not infallible, contributed to their
survival.
The emergence of new domestic companies in the 1920s and 1930s in sectors similar
to those of the old industrialists, and the emergence of the NG in the 1940s, did not
constitute an obstacle that prevented the old elites from maintaining their positions as
leaders of the national industry. In some instances, these old elites shared this leadership
with US investors or with other smaller Mexican entrepreneurs. In the 1940s, the NG,
which was perceived by some as the possible new leader of Mexican industrialisation,
was never able to seize leadership from the old industrialists. This failure does not mean
that new entrepreneurs necessarily disappeared as a result of the actions of the old
industrialists. However, the influence of these new companies was undoubtedly limited
by the old Porfiriato entrepreneurs or their descendants. This situation became evident
in the national industrial conventions, of which we noted the conventions of 1917 and
1946 as examples. The restriction placed on access to credit for the new entrepreneurs
by the old industrialists was also a factor.
It is important to mention that, since this article describes general tendencies in the
evolution of the old oligarchies, there are some exceptions to the patterns described here.
For instance, by the 1950s, participation in Mexico’s industry by the Barcelonnettes had
diminished noticeably, even though this was a French ‘colony’ that developed mainly
during the Porfiriato and became one of the strongest groups with regard to economic
power in Mexico at the beginning of the twentieth century.
160
© 2012 The Author. Bulletin of Latin American Research © 2012 Society for Latin American Studies
Bulletin of Latin American Research Vol. 32, No. 2
The Economic Elite in Mexico
Finally, the persistence of the Mexican economic elite was pronounced at least until
the mid-1980s. Although the emergence of entrepreneurial groups after the NG is not
discussed here, Camp (1990: 80) argued at the end of the 1980s that ‘the leading
Mexican entrepreneurs today did not reach their positions in the same way as their
grandparents did. They are not self-made, but had family help in climbing to the
top’. Camp (1990: 80) continues, ‘Mexico’s entrepreneurs have increasingly closed off
opportunities to most groups’.
References
Buve, R. (1994) El movimiento revolucionario en Tlaxcala. Universidad Iberoamericana/Uni
versidad Autónoma de Tlaxcala: Mexico.
Buve, R. (1998) ‘Un paisaje lunar habitado por bribones y sus víctimas. Mirada retrospectiva
al debate sobre las haciendas y los pueblos durante el porfiriato’ in R. Falcón and R. Buve
(eds.) Don Porfirio Presidente. . . , nunca omnipotente. Universidad Iberoamericana:
Mexico, 121–151.
Buve, R. and Fowler, H. (2010) La revolución Mexicana en el oriente de México 1906–1940.
AHILA/Iberoamericana/Vervuert/Bonilla Artigas: Madrid.
Camp, R. (1990) Los empresarios mexicanos y la política en México: una visión contemporánea. Fondo de Cultura Económica: Mexico.
Camp, R. (2002) Mexico’s Mandarins: Crafting a Power Elite for the 21st Century. University
of California Press: California.
Cerutti, M. (1999) ‘Regional Studies and Business History in Mexico since 1975’ in C. Dávila
and R. Miller (eds.) Business History in Latin America: The Experience of Seven
Countries. Liverpool University Press: Mexico, 116–127.
Chassen, F. (1998) ‘Capitalismo o comunalismo? Cambio y continuidad en la tenencia
de la tierra en la Oaxaca porfirista’ in R. Falcón and R. Buve (eds.) Don Porfirio
Presidente. . . , nunca omnipotente. Universidad Iberoamericana: Mexico, 153–200.
Collado, M. C. (1996) Empresarios y políticos, entre la restauración y la revolución
1920–1924. INEHRM: Mexico.
Field, L., Higley, J. and Burton, M. (1990) ‘A New Elite Framework for Political Sociology’.
Revue Européenne des Sciences Sociales 28(88): 149–182.
Gamboa, L. (2004) Au-delà de l’océan. Les barcelonnettes à Puebla 1845–1928. BUAP/
Sabença de la Valéia: Puebla and Barcelonnette.
Gil, M. J. and Schmidt, S. (2005) Estudios sobre la red política de México. UNAM: Mexico.
Gómez, G. A. (2003) ‘Industrialización, empresas y trabajadores industriales, del porfiriato
a la revolución: la nueva historiografía’. Historia Mexicana LII(3): 773–804.
Gouy, P. (1997) ‘Peregrinaciones de barcelonnettes a México’. Artes de México, FranciaMéxico. Imágenes Compartidas 39: 62–67.
Haber, S. (1989) Industry and Underdevelopment: The Industrialization of Mexico 1890–
1940. Stanford University Press: Stanford.
Haber, S., Armando, R. and Maurer, N. (2003) The Politics of Property Rights: Political
Instability, Credible Commitments, and Economic Growth in Mexico, 1876–1929.
Cambridge University Press: Cambridge.
Katz, F. (1981) The Secret War in Mexico. University of Chicago Press: Chicago.
Knight, A. (1986) The Mexican Revolution, Vol. II. University of Nebraska Press: Lincoln.
Kuntz, S. and Speckman, E (2010) ‘El Porfiriato’ Nueva historia general de México. El
Colegio de México: Mexico, 487–536.
Marichal, C. and Cerutti, M. (1997) Historia de las grandes empresas en México, 1850–1930.
FCE/UANL: Mexico.
Maurer, N. (2002) The Power and the Money: The Mexican Financial System 1876–1932.
Stanford University Press: Stanford.
© 2012 The Author. Bulletin of Latin American Research © 2012 Society for Latin American Studies
Bulletin of Latin American Research Vol. 32, No. 2
161
José Galindo
Medina, L. (1995) Hacia el nuevo estado: México, 1920–1994. Fondo de Cultura Económica:
Mexico.
Mills, C. W. (1956) The Power Elite. Oxford University Press: New York.
Molina, E. A. (1909) Los grandes problemas nacionales. A. Carranza e Hijos: Mexico.
Mosk, S. (1950) Industrial Revolution in Mexico. University of California Press: Berkeley.
Musacchio, A. and Read, I. (2006) Bankers, Industrialists, and their Cliques: Elite Networks
in Mexico and Brazil during Early Industrialization, Working Paper 06-048. Harvard
Business School: Harvard. [WWW document]. URL http://www.hbs.edu/research/pdf/06048.pdf [accessed 20 October 2010].
Niblo, S. (1995) War, Diplomacy and Development: The United States and Mexico
1938–1954. S. R. Books: New York.
Nickel, H. (1991) El peonaje en las haciendas mexicanas: interpretaciones, fuentes y hallazgos. Universidad Iberoamericana: Mexico.
Newell, R. and Rubio, L. (1984) Mexico’s Dilemma: The Political Origins of Economic
Crisis. Westview Press: Boulder.
Olveda, J. (1986) ‘El Proceso formativo de la oligarquía en Guadalajara’ in M. Cerutti (ed.)
De los Borbones a la revolución: ocho estudios regionales. GV/UANL: Mexico, 17–46.
Rajchenberg, E. (1997) ‘La industria durante la revolución mexicana’ in S. M. E. Romero
(ed.) La industria mexicana y su historia. Siglos XVIII, XIX y XX. UNAM: Mexico
253–307.
Razo, A. (2008) Social Foundations of Limited Dictatorship. Stanford University Press:
Stanford.
Reynolds, C. (1970) The Mexican Economy. Yale University Press: New Haven.
Tannenbaum, F. (1929) The Mexican Agrarian Revolution. The Macmillan Company: New
York.
Tenorio, T. M. and Gómez, G. A. (2006) El Porfiriato. CIDE/FCE: Mexico.
Wasserman, M. (1993) Persistent Oligarchs: elites and politics in Chihuahua Mexico
1910–1940. Duke University Press: Durham.
Wasserman, M. (2005) ‘It’s not Personal . . . It’s Strictly Business. The operation of Economic
Enterprise in Mexico during the Nineteenth and Twentieth Centuries’. Latin American
Research Review 40(3): 335–345.
Womack, J. (1987) ‘La economía de México durante la revolución, 1910–1920: historiografía y análisis’. Argumentos, 1 June, 9–42.
Womack, J. (1991) ‘The Mexican Revolution 1910–1920’ in L. Bethell (ed.) Mexico Since
Independence. Cambridge University Press: Cambridge, 125–200.
Zuckerman, A. (1977) ‘The Concept: ‘‘Political Elite’’. Lessons from Mosca and Pareto’.
Journal of Politics 39(2): 324–344.
162
© 2012 The Author. Bulletin of Latin American Research © 2012 Society for Latin American Studies
Bulletin of Latin American Research Vol. 32, No. 2