TRADE

Independence transformed foreign trade more than any other sector of the economy. Under the colonial system, merchant-exporters in Spain shipped merchandise to Veracruz and from there to mining centers or to retailers. Credit was supplied at the top of the system. Merchants obtained hefty profits at each level. In such a system, commercial profit could not easily be separated from

Usury.

The British merchants who arrived in the 1820s succeeded due to their access to capital. They could pay for goods they bought in Mexico with cash. More importantly, they could extend longterm credit. They replaced the Spanish at the top rung of the distribution system, but would often sell to a Spanish middleman, who in turn would sell to retailers and peddlers. By virtue of being British citizens, these merchants could live a relatively normal life, even in the midst of political turmoil. They were generally protected by the widespread fear of British retaliation against those who harmed them or their property. In addition, the British fleet moved their wealth in safety. As early as 1819, a British naval vessel reportedly docked at San Blas to collect “a large amount of treasure” belonging to a British subject and then safely remove it from Mexico.48

Given these advantages, between 1819 and 1825 the value of Mexico’s trade with Great Britain soared from ?21,000 to more than ?1 million. By 1831, more than twenty British import-export houses were operating in Mexico. These commercial houses remained dominant from the 1820s to the 1850s. During this period, British merchants were among the wealthiest individuals in Mexico. In describing Jalapa, Fanny Calderon de la Barca remarked on the expensive homes with “the best as usual belonging to English merchants.” British merchants even replaced their Spanish counterparts in matrimony. They would marry into leading Mexican families, creating win-win marriages that matched British capital with the local contacts of the bride’s family.49

In the early nineteenth century, neither France nor the United States ever threatened British commercial dominance. The British supplied the elite with a wider variety of manufactured goods of better quality, at lower prices, and usually on better terms, than any other merchants.50

Gaining access to Spanish American markets became a key element of British foreign policy. George Canning, who served as British foreign secretary from 1822 to 1827, proclaimed, “The deed is done, the nail is driven, Spanish America is free; and if we do not mismanage our affairs sadly, she is English.” To bolster their exports, the British promoted free trade, an advantage to their already established industries. They opposed tariff protection for industries being established in Latin America. They would respond to trade restrictions by threatening to press for debt payments, impose economic sanctions, suspend relations, or invade.51

Trade shifted north to the port of Tampico, because for years the Spanish occupied San Juan de Ulua, the island fortress off Veracruz, and shelled the city from that island. The port of Tampico became established and, even after the Spanish departed Veracruz, Tampico continued to ship silver, cattle, cotton, produce, and ixtle for rail-road seat cushions.52

Once freed from Spanish regulation, trade flourished on the Pacific Coast. Acapulco, the port of the Manila Galleon, was forgotten in its tropical splendor, since few affluent buyers lived in the hinterland adjacent to it. Further north, San Blas served Jalisco, Mazatlan served Sinaloa, and Guaymas served Sonora. The principal Asian goods shipped to these ports were textiles from Calcutta and Canton.53

Despite this trade diversification, Veracruz remained Mexico’s principal port and maintained close shipping links with Havana and New Orleans. Its continued prosperity resulted from it being the closest port to the locus of Mexican population, economic activity, and politicking.54

The same items were traded as in colonial times. Silver accounted for 70 percent of exports, followed by cochineal dye, which accounted for 7 percent. During the first sixty years of independence, 90 percent of imports were consumer goods for the wealthy, including textiles, wine, food, perfume, hats, and some durables, such as furniture and mirrors.55

Foreign trade had a mixed impact. Consumers benefited from cheaper goods. Due to technological progress, in 1850 inexpensive imported cotton cloth cost only a quarter of what it had cost between 1810 and 1820. Import tariffs also provided the government with an easily collected source of revenue that created little popular protest. Trade also created jobs. Dressmakers and tailors fashioned imported textiles into clothing for the elite. Foreign trade meant travel, so more innkeepers and others catering to the traveler found employment.56

Foreign trade also carried liabilities. To pay for imports, scarce coinage left the country, thus depriving Mexico of a medium of exchange. The British industrial revolution reached out to ruin textile artisans in Puebla, Queretaro, and Oaxaca. Between 1800 and 1827, the number of working looms in Oaxaca declined from 800 to thirty. Unlike Europe, where factories offered jobs to displaced artisans, there were few factory jobs available.57

Once foreigners quit lending to Mexico, the nation’s ability to import was largely determined by its production of the silver used to pay for imports. During the 1820s, international trade totaled only 67.1 percent of the 1801—1810 level. At mid-century, Mexico’s annual exports totaled only $3.20 per capita, well below the Latin American average of $5.20.58

With most of its production and population in the central volcanic belt or in the mountainous south, Mexico could not rely on water transport for domestic trade, as was occurring in the United States and Western Europe. That left traders dependent on roads, which were generally in poor condition, if in fact any roads existed at all. Road conditions were so bad that it was cheaper to import wheat flour from Kentucky and Ohio to Veracruz than to transport it from central Mexico. In the early nineteenth century, as a result of poor roads, mules continued to haul the bulk of Mexican goods. The perpetually bankrupt governments of the period spent little to improve or even maintain roads.59

As in colonial times, smuggling sharply limited the government’s ability to tax imports. In 1834, liberal leader Jose Luis Mora estimated that two-thirds of Mexico’s imports entered the country illegally. Mexico’s 10,000 miles of coastline made it impossible to prevent smuggling. In 1826, only five vessels guarded Mexico’s coastal waters. One Mexican observer noted, “The savings from evading increased taxes allow merchants to offer bribes of such magnitude that few men have the honor to refuse them.”60

A variety of other problems plagued commerce. Many veterans of the independence struggle became bandits and preyed on travelers. One merchant wrote that “a fly cannot pass from Guanajuato to Silao without losing its little wings.” A lack of coinage led to a proliferation of cumbersome bills of exchange and promissory notes. Given the difficulty of transport and the alcabala, Mexico continued to be divided into numerous small markets. As economist Clark Reynolds observed, “It is highly probable that interregional trade and internal commerce in Mexico were more highly developed at the time of the Aztecs than they were in mid-nineteenth century.” Mexico would have to await the arrival of the railroad in the late 1870s for its national market to achieve the integration it had enjoyed in 1800.61