The Porfiriato: The stability and growth Mexico needed

The presidency of Porfirio Díaz is often remembered as a period of social degradation and
oppression of freedoms in Mexico. His extensive thirty-five-year virtual dictatorship brought
about a great deal of hardship for the lower classes and an inequitable system of wealth
distribution. This image of Porfirio Díaz as a ruthless despot has become an almost
impenetrable one in the post-revolutionary Mexican tradition. However, what is often
overlooked or unaddressed are the immense economic and social benefits that were still
brought about under his rule. Through massive infrastructural improvement programs,
superb financial management, and an unrelenting desire to see the implementation of law
and order, Porfirio Díaz brought much prosperity and stability to Mexico when it needed it
most. Stability, an expression rarely uttered in discussions of Mexican history, was
implemented at all costs under Díaz—no small feat considering the near century of political
and judicial disorder that preceded his rule. This essay in no way intends to justify the
oppressive policies of Díaz, nor excuse the suffering of the lower classes he brought about.
Rather, it intends to provide a more balanced view of his rule; bringing to light the more
beneficial economic and social policies he implemented that would bring Mexico into the
modern, twentieth century world.
From the Mexican colonial period to independence and beyond, the policies and decisions
of Mexican leaders have been constantly surrounded by controversy. The lengthy
presidency of Porfirio Díaz was indeed no exception. His semi-continuous thirty-five year
term as president quite literally transformed Mexico into a modern, industrialized state.
While the rule of Díaz has been both remembered and criticized for its suppression of
liberties and uneven distribution of wealth, the benefits of his rule with respect to peace,
stability, prosperity, and modernization are often unfairly overlooked.
Like many prominent Mexicans, Díaz’s life and career was one of much action and glory—
the life of a stereotypical Mexican caudillo. Born into a poor, peasant mestizo family in
Oaxaca in 1830, Porfirio Díaz rose quickly through the ranks of the military as a young man
and greatly distinguished himself in the War of Reform, emerging as a hero of Mexico and
one of the most resolute supporters of liberalism [1, a].
The Porfiriato, the age to which he would lend his name, began in 1876 when Díaz took
control of Mexico City by force of arms and would continue until 1911 when he was forced
into permanent exile by the new revolutionary government. During the course of his rule,
internal peace and stability came to Mexico, although sometimes at the expense of
individual liberty. As a result, the post-revolutionary tradition has very much characterized
Díaz as a “black” or villainous figure in Mexican history alongside such men as Cortes, Santa
Anna, and Maximillian [2]. However, while his rule is unfairly remembered almost solely as a
time of oppression and injustice, the presidency of Porfirio Díaz brought numerous
economic and social benefits to Mexico, lifting it out of over a century of constant civil war,
anarchy and chaos, and into the modern, industrial world.
MEXICO BEFORE DÍAZ
In order to fully appreciate the improvements Díaz brought to Mexican society, one must
first understand the state of Mexico as a nation in the century preceding his rule. The legacy
of the post-independence period in Mexico was one of constant infighting first between
centralists and regionalists, and then between liberals and conservatives. This constant state
of near political anarchy was only interrupted by the emergence of opportunistic militarists,
of which there were many, most notably Antonio López de Santa Anna [1, b].
Naturally this constant civil conflict weakened Mexico a great deal, and indeed by 1837 it
was in no position to block the movement for Texas’ independence, nor the invasion of
Mexico by the United States in 1846, which by its end would result in over half of Mexico’s
national territory lost. The liberal reform period led by Benito Juárez made some headway in
terms of stability. However its radical social reforms created a great deal of dissension and
unrest, permitting yet another foreign intervention by the French under Napoleon III in
1863.
Emperor Maximillian, a surprisingly liberal monarch of the Habsburg line, would be
overthrown and executed by Juárez in yet another example of Mexican political instability
[1, c]. Fear, strife, and uncertainty were perpetual themes throughout Mexico during this
period, and caused many countries to view the Mexican people as incapable of self-
government, bringing about much foreign interference in their affairs by the Spanish,
French, and Americans [2]. This near century of constantly changing governments and both
civil and international wars instilled within the Mexican people a desire for stability as well
as a strong, confident leader that could restore that stability to Mexico.
The stage was set for the entrance of Porfirio Díaz, who would rule Mexico as an effective
dictatorship for the next thirty-five years determined to put an end to his country’s tradition
of anarchy so that much needed economic development and modernization could occur [3].
Indeed, with this historical context in mind surrounding his rule, it is possible to develop a
greater appreciation of the stability and growth that Porfirio Díaz’s regime brought to
Mexico.
THE MEXICAN ECONOMY UNDER DÍAZ
During the period of instability before Díaz took power, Mexico had lost a great deal of
respect within the international community; political unrest and civil war was not an inviting
scene for foreign investment. Díaz was determined to bring a prosperous economy to
Mexico, and to achieve this in the modern world leaders needed to hold friendly
relationships with foreign powers and attract investment into the country for costly building
projects. By 1888, Díaz had achieved a great deal in terms of foreign relations. Treaties of
friendship, commerce, and navigation had been signed with Sweden, Norway, France, Great
Britain, Ecuador, and Japan, with postal conventions signed with the Unites States and Great
Britain. By 1892, relations had been opened through diplomatic or consular officials with
every European nation except Austria and Turkey [4].
These diplomatic relationships would bring much-needed capital into the country and
restore Mexico’s international prestige to a large degree. Díaz has been widely criticized for
holding an all too friendly, almost subservient relationship with the United States. However,
Mexico benefitted enormously from its relationship with the United States, and it could be
argued that Mexico’s attachment was the inevitable consequence of geographic proximity
and complementing economies [5].
The United States offered a near unlimited market for Mexican goods and by 1900, 63
million dollars in annual trade was passing between the two countries, up from a mere 7
million dollars in 1880, with 75% of Mexican exports going north of the border [6]. In
addition, Díaz had paid the last four million pesos of debt owed to the United States in
January of 1890 and signed an extradition treaty that greatly reduced crime rates and
improved safety on the northern border [4]. Indeed, when Díaz was quoted as saying, “pity
poor Mexico, so far from God, and so close to the United States”, he was surely referring to
political or military risks, as Mexico’s economy was able to flourish from trade with its
northern neighbour [5, d].
The budget and loan management of Mexico is one of the areas where the benefits of the
Porfiriato are most evident. The instability of the previous century had resulted in a great
deal of governmental debt and continuous deficit budgets, while loans that were taken out
were done so at painfully high interest rates. Although criticized for its dictatorial nature,
the relative autonomy afforded to Díaz’s regime due to a lack of formal political opposition
allowed it a great deal of flexibility in terms of financial planning and an economic growth
rate that would have been impossible with constant political bickering and catering to elite
societal factions [7]. As such, as early as 1895 the national treasury had balanced the budget
and was even running consecutive surpluses. This allowed the regime a better negotiating
position with the banks and, for the first time, Mexico as a state negotiated with foreign
powers from a position of unquestioned financial strength [7].
Interest rates on loans were soon fixed at a mere 5% as Mexico was increasingly seen as a
safe investment, and rates were in the process of dropping to 4% when the revolution
began in 1911 [5]. A financial report in 1909 by José Yves Limantour, Díaz’s much praised
Secretary of Finance, reported that between the years 1895 and 1909, Mexico’s aggregate
surplus amounted to over 136 million pesos, with over 71 million of this going towards
public works such as the National Theatre in Mexico City and a canal to drain the Valley of
Mexico to prevent flooding [8]. In addition, this unprecedented government income meant
service workers and the military were paid regularly and fairly, resulting in more satisfied
and efficient officials than could be obtained when bribery and graft were the only ways in
which an official could extract payment for his services [4].
Indeed, the financial management of the Díaz regime brought a great deal of wealth to
Mexico, and proved instrumental in beginning a massive infrastructural modernization
effort in the late nineteenth century.
With respect to the economy, the rule of Porfirio Díaz is remembered most for its
contributions to infrastructure, particularly railroads and mining. Railroads were becoming
an integral part of all modern nations, and were useful for both economic and military
applications. Díaz recognized the important role railroads could play in strengthening the
Mexican economy and embarked on an ambitious building campaign during his rule. In
1875, less than 580 kilometers of track had been laid in Mexico, but by 1896 this number
had increased over 1000% to 11,500 kilometers of track and continued to grow as the new
century approached [4].
These railroads not only had enormous benefits for moving goods and raw materials around
the country quickly, but also provided markets for goods that were previously unavailable
and brought even the most isolated communities the benefits of modernization and
increased trade. For Díaz, railroads proved to be a mixed blessing as increased connection
between communities allowed groups to coordinate and eventually rise up against the
unfair hardships they felt they were subject to [4]. On the other hand, before the
introduction of railroads, there were substantial barriers to mobility, particularly the
transition from the sedentary village lifestyle to urban life. Before the railroads Mexico had
retained much of its tradition of segregation whereby indigenous peoples mostly populated
rural areas while the urban centers were reserved for the wealthier Spanish elite. Railroads
helped break these traditions and offered the rural peoples easier access to the benefits and
opportunities of urban life [6].
With respect to mining, Díaz revitalized and expanded the industry such that the export of
minerals jumped by 650% during his rule, as the new railroad system made it possible to
transport ore to other parts of the country for processing, as well as to the United States for
sale [6]. Díaz also increased the amount of titles given for mining operations and altered
mining laws to encourage foreign investment in this capital-intensive industry and as a
result, silver production more than doubled from 1886 to 1900 [4].
Díaz also altered land titles and tenure in an effort to stimulate economic growth by
disposing of over a thousand land titles owned by the government and putting them into
the public domain. Unfortunately this effort to attract immigrants and new settlers would
end up being abused by officials of both Mexican and foreign origin. However, these lands
were often in undesirable areas that were previously uncultivated and unused, so although
a large portion of them were held in foreign hands, they were at least producing something
instead of nothing as before [4].
In another controversial move, Díaz abolished the ejido (communal land) system in favour of
a private enterprise approach. This decision has been criticized and noted as placing large
tracts of land in the hands of relatively few people, but there was in fact a steady growth in
the quantity of private landowners still taking place, with this number actually doubling
between 1854 and 1900 [4].
Díaz also significantly improved other forms of infrastructure. He ordered the establishment
of 3 new consulates along the border with the United States to better regulate trade, an
average annual construction of over 1 thousand kilometers of telegraph line to improve
communication, and a drastically improved postal service that distributed over 5 million
pieces of mail in 1878 [4]. In addition, Díaz abolished the old alcabalas internal tax system
between provinces that was hampering commerce and ordered the construction of a canal
to drain the Valley of Mexico in order to solve the persistent flooding problem in Mexico
City [5, e]. Indeed, Díaz’s contribution to the economic revitalization of Mexico is due in no
small part to these infrastructure improvements and innovations.
The most significant criticisms towards Díaz’s economic polices have been the uneven
distribution of wealth from industrialization and the high percentage of land and
infrastructure owned by foreign dignitaries. However, what is often overlooked or
deliberately unaddressed is how such significant modernization and economic prosperity
could have been achieved at all without foreign investment. Railroads, ports, canals and
mining operations all require enormous amounts of capital to build and maintain. After
years of civil strife, Mexico had very little domestic capital and certainly not enough to
facilitate the modernization the country required.
Moreover, it would seem that Díaz and his advisors were not actively trying to impoverish
the lower classes as many argue they were. Rather, they believed (albeit, falsely) that the
profits from trade and commerce would eventually trickle down through the middle class
and into the lower classes as Díaz was a firm believer that Mexico had to be, as historian
Nicolas Cheetham has noted, regenerated by “pervasive economic action from above, not
by the promotion of social reform from below” [5, f].
Indeed, throughout history the benefits accrued from economic progress have rarely, if ever
been equal. This is evident during the industrialization phase of nearly every country in the
modern world, and is still a persistent issue even today. Thus is seems unreasonable to
expect the economic growth and modernization of Mexico to have been any different.
THE MEXICAN SOCIETY UNDER DÍAZ
The presidency of Porfirio Díaz has been largely associated with a general decline in the
quality of life of the average Mexican citizen and a lack of emphasis on social welfare
institutions. Díaz, it is true, was certainly more concerned with economic growth and the
attraction of foreign investment in his country than the well being of the people who
inhabited it. However, considering the complete destruction and chaos that reigned
throughout Mexico before his term in office it seems understandable why such an
unrelenting emphasis was placed on the economy, as well as on the establishment of order.
Although Díaz showed little whole-hearted commitment to social welfare and the
betterment of society, he did still contribute much in terms of welfare institutions, religious
tolerance, the promotion of education, and a strong emphasis on law and order as the
backbone of a successful Mexican society.
Given the circumstances around which Díaz took office and the generally unstable condition
of Mexican society with respect to legal adherence, one can see why Díaz made the
establishment of law and order a top priority during his first years in office. The creation of
the rurales, a mounted police force with the objective of putting down insurrections and
assuring compliance with the law, was Díaz’s way of ensuring his rule would not be plagued
by the constant insurrections that had been rampant since the time of independence [4].
The rurales dealt swift and severe punishments upon smugglers, brigands, and rebels that
Díaz saw as a necessity to bring order to the country. Although their methods were brutal,
the rurales brought peace and stability to the majority of the Mexican population by putting
an end to the nearly endemic practice of brigandry and by making the rural areas safe once
again for the passage of trade goods. However, with regards to the justice system itself,
many saw Mexico as having two types of law: one for foreigners and another for Mexicans.
Indeed, foreigners often enjoyed better protection and greater leniency under the law than
indigenous Mexicans did, which was a source of much dissent among the population [4].
This was again an aspect of Díaz’s plan to make Mexico into an inviting environment for
foreigners and thus, their money.
Much of the most fundamental judicial codes and institutions such as the constitution, civil
code, and penal code were already in place when Díaz took office. However, the previously
chaotic nature of the state did not allow for their benefits to be felt. During Díaz’s rule,
these same codes were revised, made more consistent, and complemented with new ones
[3, g]. The most important thing to note regarding law and order during Díaz’s rule is that
the emphasis on adherence to the law placed Mexico on a path to normalcy and stability,
while the law itself attained respectability and stature for the first time in nearly a century
[3, h].
Labour is not normally considered a shining aspect of the Díaz regime, as many point out the
oppressive policies and poor working conditions, particularly of urban workers, as one of the
great stains on the Porfiriato. It is not possible to refute many of these criticisms, as it
cannot be denied that Díaz certainly did condone some oppressive, impoverishing policies
towards the working classes. That being said, the labour policies of Porfirio Díaz were still
not quite as deplorable as Mexican tradition has made them out to be.
Although concessions towards labour unions and workers were largely based upon support
for the regime, the Díaz government did in fact develop a sophisticated array of labour
policies determined to keep worker militancy at a minimum and promote an alignment of
the labour force’s identification of its own well being with the interests of the state [9]. The
state sponsored informal as well as official mediation between workers and employers
during strikes, and even instituted education programs and labour newspapers for the
workers [9]. Díaz supported the Gran Circulo labour federation by providing lodging for their
meetings as well as a state subsidy, and frequently granted them monetary concessions for
the construction of workshops and night schools for workers.

This emphasis on educating the working class was a collaborative project, in that both the
government and the labour groups agreed that education, rather than social revolution, was
what the workers needed most [9, i]. In some states slavery was still an accepted practice,
but a law passed by Díaz in 1896 attempted to lessen the burden imposed on hacienda
workers. The law stated that workers were no longer to be paid in script only redeemable at
the hacienda store, at which they were previously at the mercy of the hacienda owners in
terms of price [4, j]. Most significantly, the economic development that all of these labour
policies were geared towards had created thousands of jobs for unemployed Mexicans,
improving their quality of life and further contributing to the economy [4]. Although Díaz’s
policies pertaining to labour conditions were less than admirable, many of his efforts at
cooperation and conciliation are often overlooked. His regime, unlike previous ones,
recognized the importance of a compliant labour force in fostering economic development,
and his post-revolutionary successors would actually adopt similar policies in their efforts to
expand industrial capitalism in Mexico [9].
Welfare institutions and programs saw some significant growth and improvement during
the Porfiriato. Although it has already been established that social welfare was not a high
priority for Díaz, he did assume direct administrative responsibility for public welfare and
still instituted some beneficial reforms. In Mexico City, Díaz engaged in an ambitious
building campaign in which he moved the city’s largest orphanages, prisons, reform schools,
and hospitals out of their previously neglected colonial era structures into modern, better
equip facilities [10]. The Hospicio de Pobres in Mexico City was transformed into an
institution for sheltering homeless children and for the vocational training of young women.
The government also purchased the property where the city’s trade schools were located
and turned them into vocational training schools where young men could learn a trade [10,
k]. The state also licensed a lottery for the support of public hospitals and welfare
institutions and placed an emphasis on private charity donations, while Díaz often pledged
money himself towards beggar’s shelters and other asylums [10].
Regulations too were changed as Díaz raised control of public institutions such as hospitals
to a higher governmental level, made operators of these institutions accountable for their
actions, restricted their terms to two years, and set firm regulations regarding private
involvement in the management of these institutions [10]. As many as 251 hospitals were
open in Mexico by 1899, and although they were unequally dispersed among the provinces,
it does indeed demonstrate a certain commitment by Díaz towards social welfare. Funding
was also improved over the course of his rule too as a modest 30,000 pesos were spent on
social welfare in 1877 compared to 320,000 pesos in 1898, while over 1.3 million pesos
were spent on building and improving welfare institutions in 1909 alone [4].
In terms of education, only modest sums were spent on the establishment of an adequate
number of schools for Mexicans. However, when Benito Juárez stripped the church of its
educational rights and institutions during the liberal reform, he replaced them with very
little. Díaz’s regime presided over the creation of primary schools literally from the ground
up, of which there were 12,000 with over 1 million pupils in 1910 [5]. With a total
population of over 15 million people at the time this was at best a modest undertaking by
Díaz, but was certainly a more concerted effort than was put forth by his predecessors.
Indeed, it is important to note with respect to criticisms of Díaz’s contribution to education
and welfare that his government developed its approach to these institutions within the
context of rapid urbanization and population growth as well as an almost complete
reconstruction of the state on every level [10].
Relations between the church and state also dramatically improved during the Porfiriato.
Díaz recognized that a policy of conciliation towards the church would win favour with the
masses and would also avoid the clashes that resulted from the secularization policies of
Juárez and the Liberals [5]. Díaz was a leader who understood that the maintenance of
order was essential to prosperity and continued rule.
As a result, he allowed the Mexican states to retain their individual charters they had
created under Juárez that guaranteed, among other things, religious freedom [11]. Díaz
adopted this policy of conciliation towards the church and indeed several aspects of society
in order to maintain order. This policy allowed the church to retrieve much of its previous
freedom of action, but was limited in its ability to influence citizens or criticize the regime.
As a result, previously sensitive subjects such as civil registry and marriage were met with
much less hostility from the church. This is evident when one considers the fact that the
clergy did not object to the requirement that a civil marriage ceremony be performed prior
to the religious one and civil registration precede baptism [11].
Protestants had established a modest presence in Mexico by 1880 through the immigration
of American businessmen, and were the subject of numerous attacks by Catholic mobs. Díaz
was forced to interject several times with federal troops to stop these attacks and enforce
his policy of religious freedom, again in an effort to maintain peace and order within the
country [11]. Although Díaz was certainly an authoritarian ruler, these conciliation policies
towards the church and even previous political rivals demonstrated his moderation in
exercising this authority in many cases for the betterment of the country.
A NOTE ON POLITICS UNDER DÍAZ
Although Mexico may have advanced a great deal economically and, to a lesser extent,
socially during the Porfiriato, it would be impossible to say that Mexico advanced politically
during Díaz’s rule. One cannot speak of the consolidation or alteration of political
institutions during this time because they were simply non-existent [3, l]. The very nature of
a dictatorship like Díaz’s leaves no room for political advancement or formal opposition, if it
did it would cease to be a dictatorship at all. However, some things can be said about the
politics of Díaz’s rule even if it is not regarding beneficial change.
Díaz adopted the “bread or club” policy towards all political opposition. Anyone offering
resistance to his rule was immediately tempted with a lucrative position within the
government or military, a job that certainly held better prospects than being a rebel. If they
refused, the challenger often succumbed to a rather unfortunate accident, and while no
direct blame was usually placed on the President, he had a certain absence of grief towards
the deaths of these challengers [4]. Indeed, this was the nature of politics in Mexico during
the extended rule of Porfirio Díaz. In spite of this many people approved the continuation of
his term, arguing that a short term for a president was not suited for Mexico. Given the
almost routine political turmoil and resorting to arms that previously took place upon the
end or forced secession of the presidential position, one can certainly see their point [4].
Díaz himself claimed in an interview with reporter James Creelman that he believed in
democracy as the one true and just principle of government, “although in practice it is
possible only to highly developed peoples” [12, m]. Perhaps Díaz thought of himself as a
necessary intermediary president between the previous time of political anarchy and the
eventual time of true democracy in Mexico. Although, he noted that during his time in office
Mexicans were not yet prepared as a people for democracy, stating, “our difficulty has been
that the people do not concern themselves enough about public matters for a democracy.
The individual Mexican as a rule thinks much about his own rights and is always ready to
assert them” [12, n]. Ironically the same thing could quite easily be said about Díaz.
Nevertheless, regardless of his motives for such a lengthy rule and lack of political
advancement during it, the fact of the matter remains that even Díaz’s most ardent
opposers cannot deny that his consolidation of juridical, economic, and social institutions
brought about an unprecedented period of peace, prosperity and longevity in Mexico [3, o].
CONCLUSION
The Porfiriato was, and still is a time of much controversy and mixed emotion. On the one
hand, the thirty-five year rule of this president resulted in a great deal of impoverishment
among the lower classes and enormous inequity in terms of wealth distribution. On the
other, Díaz’s policies brought about a swift and enormously beneficial period of
modernization and industrialization, as well as social reforms that continue to have an
impact on Mexico. His term as president certainly contained a great deal of flaws and
unfortunately, his rule is often remembered and characterized by these only. However,
while oppression and injustice are often the most remembered aspects of the Porfiriato, the
presidency of Porfirio Díaz brought numerous economic and social benefits to Mexico, lifting
it out of over a century of constant civil war, anarchy and chaos, and into the modern,
industrial world.

Porfirian Mexico
Yet when Díaz came to power, Mexico was, in many ways, much as it had been a century
earlier. It was a rural, agrarian nation whose primary agricultural output per person was
maize, followed by wheat and beans. These were produced on haciendas and ranchos in
Jalisco, Guanajuato, Michoacán, Mexico, Puebla as well as Oaxaca, Veracruz, Aguascalientes,
Chihuahua and Sonora. Cotton, which with great difficulty had begun to supply a
mechanized factory regime (first in spinning, then weaving) was produced in Oaxaca,
Yucatán, Guerrero and Chiapas as well as in parts of Durango and Coahuila. Domestic
production of raw cotton rarely sufficed to supply factories in Michoacán, Querétaro, Puebla
and Veracruz, so imports from the Southern United States were common. For the most part,
the indigenous population lived on maize, beans, and chile, producing its own subsistence
on small, scattered plots known as milpas. Perhaps 75 percent of the population was rural,
with the remainder to be found in cities like Mexico, Guadalajara, San Luis Potosí, and later,
Monterrey. Population growth in the Southern and Eastern parts of the country had been
relatively slow in the nineteenth century. The North and the center North grew more
rapidly. The Center of the country, less so. Immigration from abroad had been of no
consequence.[37]
It is a commonplace to see the presidency of Porfirio Díaz (1876-1910) as a critical juncture
in Mexican history, and this would be no less true of economic or commercial history as
well. By 1910, when the Díaz government fell and Mexico descended into two decades of
revolution, the first one extremely violent, the face of the country had been changed for
good. The nature and effect of these changes remain not only controversial, but essential
for understanding the subsequent evolution of the country, so we should pause here to
consider some of their essential features.
While mining and especially, silver mining, had long held a privileged place in the economy,
the nineteenth century had witnessed a number of significant changes. Until about 1889,
the coinage of gold, silver, and copper—a very rough proxy for production given how much
silver had been illegally exported—continued on a steadily upward track. In 1822, coinage
was about 10 million pesos. By 1846, it had reached roughly 15 million pesos. There was
something of a structural break after the war with the United States (its origins are unclear),
and coinage continued upward to about 25 million pesos in 1888. Then, the falling
international price of silver, brought on by large increases in supply elsewhere, drove the
trend after 1889 sharply downward. By 1909-10, coinage had collapsed to levels previously
unrecorded since the 1820s, although in 1904 and 1905, it had skyrocketed to nearly 45
million pesos.[38]
It comes as no surprise that these variations in production corresponded to sharp changes in
international relative prices. For example, the market price of silver declined sharply relative
to lead, which in turn encountered a large increase in Mexican production and a
diversification into other metals including zinc, antinomy, and copper. Mexico left the silver
standard (for international transactions, but continued to use silver domestically) in 1905,
which contributed to the eclipse of this one crucial industry, which would never again have
the status it had when Díaz became president in 1876, when precious metals represented
75 percent of Mexican exports by value. By the time he had decamped in exile to Paris,
precious metals accounted for less than half of all exports.
The reason for this relative decline was the diversification of agricultural exports that had
been slowly occurring since the 1870s. Coffee, cotton, sugar, sisal and vanilla were the
principal crops, and some regions of the country such as Yucatán (henequen) and Durango
and Tamaulipas (cotton) supplied new export crops.
Railroads and Infrastructure
None of be of this would have occurred without the massive changes in land tenure that
had begun in the 1850s, but most of all, without the construction of railroads financed by
the migration of foreign capital to Mexico under Díaz. At one level, it is a well-known story
of social savings, which were substantial in Mexico because the terrain was difficult and the
alternative modes of carriage few. One way or another, transportation has always been
viewed as an “obstacle” to Mexican economic development. That must be true at some
level, although recent studies (especially by Sandra Kuntz) have raised important
qualifications. Railroads may not have been gateways to foreign dependency, as historians
once argued, but there were limits to their ability to effect economic change, even
internally. They tended to enlarge the internal market for some commodities more than
others. The peculiarities of rate-making produced other distortions, while markets for some
commodities were inevitably concentrated in major cities or transshipment points which
afforded some monopoly power to distributors even as a national market in basic
commodities became more of a reality. Yet, in general, the changes were far reaching.[39]

Conventional figures confirm conventional wisdom. When Díaz assumed the presidency,
there were 660 km (410 miles) of track. In 1910, there were 19,280 km (about 12,000 miles).
Seven major lines linked the cities of Mexico, Veracruz, Acapulco, Juárez, Laredo, Puebla,
Oaxaca. Monterrey and Tampico in 1892. The lines were built by foreign capital (e.g., the
Central Mexicano was built by the Atchison, Topeka and Santa Fe), which is why resolving
the long-standing questions of foreign debt service were critical. Large government
subsidies on the order of 3,500 to 8,000 pesos per km were granted, and financing the
subsidies amounted to over 30 million pesos by 1890. While the railroads were successful in
creating more of a national market, especially in the North, their finances were badly
affected by the depreciation of the silver peso, given that foreign liabilities had to be
liquidated in gold.
As a result, the government nationalized the railroads in 1903. At the same time, it
undertook an enormous effort to construct infrastructure such as drainage and ports,
virtually all of which were financed by British capital and managed by “Don Porfirio’s
contactor,” Sir Weetman Pearson. Between railroads, ports, drainage works and irrigation
facilities, the Mexican government borrowed 157 million pesos to finance costs.[40]
The expansion of the railroads, the build-out of infrastructure and the expansion of trade
would have normally increased output per capita. Any data we have prior to 1930 are
problematic, and before 1895, strictly speaking, we have no official measures of output per
capita at all. Most scholars shy away from using levels of GDP in any form, other than for
illustrative purposes. Aside from the usual problems attending national income accounting,
Mexico presents a few exceptional challenges. In peasant families, where women were
entrusted with converting maize into tortilla, no small job, the omission of their value added
from GDP must constitute a sizeable defect in measured output. Moreover, as the
commercial radius of Mexican agriculture expanded rapidly as railroads, roads, and later,
highways spread extensively, growth rates represented increased commercialization rather
than increased growth. We have no idea how important this phenomenon was, but it is
worth keeping in mind when we look at very rapid growth rates after 1940.
There are various measures of cumulative growth during the Porfiriato. By and large, the
figure from 1900 through 1910 is around 23 percent, which is certainly higher than rates
achieved during the nineteenth century, but nothing like what was recorded after 1940. In
light of declining real wages, one can only assume that the bulk of “progress” flowed to the
recipients of property income. This may well have represented a reversal of trends in the
nineteenth century, when some argue that property income contracted in the wake of the
Insurgency[41].
There was also significant industrialization in Mexico during the Porfiriato. Some industry,
especially textiles, had its origins in the 1840s, but its size, scale and location altered
dramatically by the end of the nineteenth century. For example, the cotton textile industry
saw the number of workers, spindles and looms more than double from the late 1870s to
the first decade of the nineteenth century. Brewing and its associated industry, glassmaking,
became well established in Monterrey during the 1890s. The country’s first iron and steel
mill, Fundidora Monterrey, was established there as well in 1903. Other industries, such as
papermaking and cigarettes followed suit. By the end of the Porfiriato, over 10 percent of
Mexico’s output was certainly industrial.[42]