MINING

Mines were the source of much of the 1820s optimism concerning Mexico’s economy. Mexican mines, such as La Valenciana, had become worldwide symbols of wealth. Humboldt’s description of late colonial Mexico had been disseminated widely in Europe, further enhancing Mexico’s image as a mother lode of silver.

Clearly considerable effort would be required to restore the mining industry to its former glory. The mines themselves had suffered from more than a decade of cave-ins and flooding. On the surface, financiers and suppliers had disappeared, and skilled labor had dispersed. The mines still in operation were only a shadow of their former selves. In 1822, Joel Poinsett, an unofficial U. S. envoy sent by President Monroe, found that employment at La Valenciana mine had declined from more than 3,000 to 1,000.3

In 1823, since Mexico lacked capital to quickly rehabilitate mines, the government enacted legislation opening mining to foreign investment for the first time. Other 1820s legislation encouraged mining. A modest 3 percent tax on silver production replaced the more burdensome colonial taxes on mining. A newly enacted law permitted the tax-free importation of mercury to refine silver.4

This welcoming of foreign mining investment occurred at a propitious time. In 1824 and 1825, a wave of speculative interest carried capital from a prosperous Britain throughout the world. By 1827, seven British, one German, and two American mining companies had begun operations in Mexico. British investment alone totaled some ?3 million. In addition to capital, England sent negotiators, mine experts, skilled mine workers, and a variety of tools, implements, vehicles, and machines to Mexico.5

The Real del Monte Company, established in London in 1824, overshadowed other British mining ventures. Its investors were convinced that the application of modern capital and technology to the largely ruined Mexican silver mines would both revive the Mexican mining industry and reap handsome profits. The company purchased the Real del Monte mines from Mexican silver magnate Pedro Romero de Terreros. Enthusiasm ran so high in the speculative euphoria of the day that by the end of 1824 Real del Monte mine shares were worth ten times their initial selling price.6

Mexicans shared this enthusiasm. A British Real del Monte employee reported that when his countrymen first arrived at the mine, “The people at our arrival envinced every demonstration of joy by ringing the bells; and a deputation of the priest and principal inhabitants of the place immediately waited on us.” A special Mass was said for the success of the new enterprise.7

In May and June of 1825, 1,500 tons of supplies were unloaded at Veracruz, including nine steam engines for stamping ore, operating sawmills, and pumping out the mine. The company also sent sawmills, pumps, iron-working tools, 150 wagons, 760 sets of mule harnesses, and 123 mine employees, about a score of whom died of fever on the tropical coast before even reaching the mine. The company hired fifty men to improve the road from Veracruz to the mine, which was located near Pachuca, fifty miles northeast of Mexico City. It purchased 200 horses and 500 mules to haul the equipment to the mine, a task that took eleven months.8

Once the British arrived, they plunged into a flurry of activity. Two years of day-and-night work enabled to them to retimber the drainage tunnel and bring it to the vein. The British also built roads to connect mine entrances and mills and established a hacienda to supply food to the 7,000 Mexicans they employed in the mines and mills.9

Figure 8.1 "La Dificuitad" mine, Real del Monte, Hidago

Source: Reproduced courtesy of the Benson Latin American Coiiection, the University of Texas at Austin

The Real del Monte Company introduced steam power to drain its mines and improved the patio technique of refining silver ore. Such innovations paved the way for massive technological change in the Mexican mining industry.10

Unfortunately for the shareholders, despite this Herculean effort, the mine lost millions as mineshafts flooded and workers demanded more pay. By 1849, the company had produced $11 million worth of silver at a cost of $16 million. Shareholders felt they were throwing good money after bad, so they sold their interest for $30,000 to a group of Mexican investors. Real del Monte investors were not alone in suffering financial loss. By 1850, all but one of the British silvermining companies in Mexico had failed.11

In an ironic twist of fate, Real del Monte’s Mexican investors, using the expensive improvements left by the British, soon discovered a rich ore deposit. These investors became some of the richest Mexicans of the era.12

Even though it did not reward shareholders, the massive investment by British mining companies did inject badly needed cash into the Mexican economy. This investment also created many jobs in the production of mining equipment in Great Britain and in Mexican mining and agriculture.13

Beginning in the 1830s, the rehabilitation of old mines and the opening of new ones resulted in a slow recovery of silver production. By the middle of the century, Mexican silver production approached pre-independence levels. At this time, Mexico produced 50 to 60 percent of the world’s silver. In large part, this recovery resulted from the discovery of new mines in Zacatecas and other states.14

With the benefit of hindsight, one can understand why the high expectations of early mine investors were dashed. Repeated changes of government and of policy replaced the stability that the colonial mine operations had enjoyed. Mine operators faced falling silver prices and operated in an economy with poorly functioning commercial and credit networks. Wealthy Mexicans continued to withdraw capital from Mexico. Only rarely could the British successfully combine necessary credit arrangements, political contacts, labor, transport, and imported equipment, and, at the same time, find profitable lodes.15

Labor problems plagued the mining companies. Initially they relied heavily on Cornish miners. Soon, in part due to these miners’ unbridled consumption of alcohol, mine operators switched from a reliance on much more costly foreign labor to European management and local labor. Such a shift, though, only substituted one set of problems for another.16

Epidemics, a product of inadequate sanitation, often decimated the Mexican mine-labor force. British managers were reluctant to allow Mexicans to hold positions involving machinery or the supervision of other employees. These foreign managers had little experience working with Mexican miners and failed to understand their elan. Mexican miners formed part of the labor elite and showed remarkable unity when it came to preserving traditional privileges. They adamantly demanded that they should continue to receive, as in colonial times, a share of the ore produced (the partido) as well as wages in cash. At Real del Monte, mine workers hired their own lawyer to prevent the company from cutting their wages as it sought to reduce costs.17

Various unanticipated problems arose. Mercury prices increased spectacularly between 1825 and 1850 as a result of the Rothschilds monopolizing the world mercury market. Mine operators believed the application of steam power to drain mines, raise ore to the surface, and crush it would revolutionize mining. However, they underestimated the problems involved in transferring the latest British technology to Mexico. Transportation from the port to the mine, as the Real del Monte experience indicated, was extremely expensive and time consuming. The lack of wood to fuel boilers limited the application of steam. British technology required the importation not only of machinery but also of spare parts and technicians. The lack of workers familiar with steam-powered equipment created problems. French botanist Jean Louis Berlandier reported that at the Real de Catorce mine: “About six years ago the English brought in a steam engine to draw up water, but the man who was charged with its care did not understand it and allowed it to blow up.”18

The decline and slow recovery of silver mining reduced both mine employment and the silver-based money supply. During the first half of the nineteenth century, mining contributed between 8 and 9 percent to Mexico’s gross domestic product (GDP).19