Vintage scholarly debates die hard. Business historian Mark Wasserman revisits familiar territory when he tackles past scholarship concerning the relative impact of foreign, especially North American, investment in Mexico. Seeking to rebut John Mason Hart's work on the pernicious impact of North American investment in Mexico, Wasserman, who has penned two monographs on the role of foreign and domestic entrepreneurs in Chihuahua before and after the Mexican Revolution, argues in Pesos and Politics that when taking the long view, US investment was, more often than not, unrewarding, and even though it dominated key sectors of the national economy (e.g., minerals, oil, transportation, and industry) and was considerable – approximately US$ 1 billion by 1912, increasing to 1.3 billion by the mid-1920s – the capacity of North American investors to influence the Mexican state was marginal at best. Foreign entrepreneurs played by Mexico City's rules, Wasserman emphasises, ‘Mexico controlled their own economy’ (p. 182). Moreover, there is little evidence, Pesos and Politics contends, that foreign investors treated their workers any worse than their domestic counterparts.
Nor did the various pre- or post-revolutionary Mexican regimes do foreign investors any special favours, especially when compared to their treatment of domestic powerhouses like the Terrazas/Creels and Madero family empires. For every successful robber baron, there were dozens of failed speculators. Potentates, such as Guggenheim and Hearst, struggled mightily to extract profits from an unforgiving business environment. Foreign companies were far from exploitative, Wasserman concludes, nor should they bare blame for Mexican underdevelopment.
Pesos and Politics distils the keys to entrepreneurial success, such as they were, to a basic six-step recipe, which is repeated mantra-like throughout his case studies: sufficient capitalisation, capable management, a relatively stable market for their commodity, a reliable workforce, adequate access to transport, and a felicitous working relationship with local, regional and national authorities. The absence or mismanagement of any of these elements could spell disaster for business enterprises.
What makes this business history unique is its ambitious temporal span. Pesos and Politics tracks in broad strokes the vicissitudes of entrepreneurialism over four very different periods: the chaotic and contentious Reform and Restored Republic era; the relatively stable, business-friendly Porfiriato; the destructive violent phase of the Revolution; and the halting, often roiling, efforts to rebuild the country during the 1920s and 1930s. Wasserman posits that for the better part of a century a rough equilibrium existed among competing interests, as ‘…no one entity – neither the national government/regime, not any national or regional elite faction, nor the military, nor foreign investors, collectively or individually – was so powerful as to dominate the relationships’ (p. 2). Given the shifting political landscape, a mine owner's or landowner's margin for error was slim indeed. In this uncertain climate a proactive federal government played the roles of chief facilitator and broker of what Wasserman calls the elite-foreign enterprise system.
Yet there were limits to Mexico City's reach. Even during the halcyon days of the dictatorship, the federal government was never able to impose its will on obstreperous regional and local powerbrokers, who skilfully defended their interests against the encroachments of entrepreneurs. Moreover, relations between the key actors exhibited more continuity than change over time, nationalist rhetoric notwithstanding. If the Porfirian state was not as welcoming to foreign investment as past scholarship avers, post-revolutionary administrations were not as hostile, Wasserman insists.
Both the Porfirian dictatorship and the post-revolutionary regime, one committed to export-led growth, the other which would undergo a conversion to the gospel of import-substitution-industrialisation, were well aware that Mexico needed a range of foreign inputs, capital first and foremost. But that does not mean the state gave away the railroad, the mine, the hacienda or the ranch, according to the author. Porfirio Díaz’ buyout and consolidation of key railway lines and Lázaro Cárdenas’ nationalisation of foreign oil were only the most conspicuous examples of a state's sovereign determination to defend its prerogatives when it felt compelled to do so. Concurring with economic historian Arturo Grunstein Dickter's research on the nationalisation of the railways, Wasserman portrays Díaz’ Finance Minister José Limantour as a wily, tough negotiator who moved systematically towards consolidation over a period of years. This interpretation offers a corrective to earlier scholarship that contended Limantour had overpaid for the railway lines, thereby helping bail out over-extended foreign railway magnates. Wasserman does, however, leave open the door to the possibility that Limantour and his business associates ‘used insider information to enrich themselves’ (p. 69).
Pesos and Politics tells its story well through a series of detailed case studies of foreign and domestic entrepreneurs. His research builds on a recent wave of more institutionally-minded economic histories by Carlos Marichal, Sandra Kuntz Ficker, Edward Beatty, Noel Maurer, Stephen Haber, among others. Not surprisingly, the author relies principally on his well-honed knowledge of big business in northern Mexico. Much of the source base for his foreign cases comes from company records, trade publications and US government documents. Some may take exception with the author for drawing such grand conclusions from such a circumscribed set of case studies. Others might have wished for some discussion of Mexico's ‘typicality’ during Latin America's late nineteenth- and early twentieth-century export boom. In what ways, for instance, was foreign, especially North American, investment distinctive in Mexico? Was the Mexican state's role as facilitator and balancer all that unusual? No matter, by taking such unequivocal stands on these hot button issues, Mark Wasserman invites us to rethink assumptions about the role of foreign and domestic entrepreneurs and their relationship to the state before, during and after the Mexican Revolution.
