‘COPY NO. 1 
FOR THE PRESIDENT 
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Published 24 January 1951 
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DISTRIBUTION (SR Series) : 
Office of the President 
National Security Council 
National Security Resources Board 
Department of State 
Office of Secretary of Defense 
Department of the Army 
Department of the Navy 
Department of the Air Force 
| 
Atomic Energy Commission 
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Federal Bureau of Investigation 
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Munitions Board 
Industrial College of the Armed Forces 
< 
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> 
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Paper 
SRA} 
TARRY 
BRARY 
PRre>, 
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SECRET; ARY 
— 
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SR-18 
MEXICO 
TABLE OF CONTENTS 
SUMMARY 
CHAPTER I—POLITICAL SITUATION 
GENESIS OF THE PRESENT POLITICAL SYSTEM 
PRESENT GOVERNMENTAL STRUCTURE 
: 
a. Form and Operation of Government 
. 
b. Individual Guarantees 
POLITICAL PARTIES AND CURRENT ieee. 
a. Partido Revolucionario Institucional . 
b. Partido (de) Accién Nacional 
c. Partido Popular 
. 
OTHER INFLUENTIAL GROUPS 
a. Communism 
b. Sinarquismo 
c. Anti-Communist Organizations 
STABILITY OF THE PRESENT ADMINISTRATION 
CHAPTER II—LABOR 
GENESIS OF ORGANIZED LABOR IN MEXICO 
. 
PRESENT NATIONAL LABOR SITUATION 
: 
a. Current Status and Strength of Mexican Labor Organizations . 
b. Extent of Unionism 
. 
: 
: 
ec. Labor Legislation and the Unions 
d. Economic Power of the Unions 
. 
e. Political Power of Unions 
. 
' 
f. Wages and Availability of Mexican Labor 
INTERNATIONAL LABOR ORGANIZATIONS AND ACTIVITIES. 
a. Mexico’s Role in International Labor Organizations . 
b. US-Mexican Labor Negotiations and the Bracero Question 
CHAPTER III—ECONOMIC SITUATION 
GENESIS OF THE PRESENT ECONOMIC SYSTEM 
. 
a. Historical Developments 
. 
b. Role of Government in the National Economy . 
c. Nature of Economic Activity 
DESCRIPTION OF ECONOMIC ACTIVITY 
a. Food and Agriculture, oe and Forestry 
b. Natural Resources 
c. Industry 
d. Transportation and Communications 
€. Money and Banking . 
f. International Trade and Finance 
| 
Page 
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; 
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j
CHAPTER IV—FOREIGN AFFAIRS 
Page 
1. GENESIS OF PRESENT FOREIGN POLICY 
‘ 
; 
g. The Vatican. 
‘ 
‘ 
| 
tentially a) 
3. PARTICIPATION IN re 
ae 
of the US. 
CHAPTER V—MILITARY SITUATION 
} 
that might 
1. 
GerneEsIsS oF PRESENT MILITARY POLICIES 
. 
‘ 
| 
| 
republics. 
e. Finance. 
There are, 
tions: (1) 
c. General Military 
} 
j. Intelligence and Counter-Intelligence 
. 
. 
. 
. 
. 
. 
. 
+. 
 governmen 
4. ORGANIZATION, STRENGTH, AND DISPOSITION OF 
AnmenForcess. 
. 
. 
. 
functionin; 
c. Air Force 
é 
: 
trol. 
Subv 
@. Quasi-Military Organizations 
.. 
the admin. 
GENERAL Estimate or Miuitary INTENTIONS 
among rig 
| 
CHAPTER VI 
one which 
| 
—STRATEGIC CONSIDERATIONS AFFECTING US SECURITY 
. 
, 
to the regi 
} 
APPENDIXES 
Mexican 
| 
Appendix B—Chronology 
labor code, 
Appendix C—Population Characteristics and Statistics 
. 
. 
- 
- 
- 
+ 
nomically, 
Terrain and Transportation 
| 
Organization and Disposition of Armed Forces 
Note: 
Natural Resources 
Climate 
Physiographic Regions 
/ Paps 
Se 
y 
| HARRY 
SBRARY 
PREST 
TRUMAN 
ARY 
|
SUMMARY 
Mexico is strategically important to the US 
because of geographic, political, economic, and 
military factors. 
It is an important source to 
the US of various strategic materials, and po- 
tentially an active war participant on the side 
of the US. 
Mexican territory includes sites 
that might be valuable for bases. 
In addition, 
US-Mexican relations have an important bear- 
ing on US relations with other Latin American 
republics. 
Mexico is a federal republic with constitu- 
tional provisions for organization and func- 
tions generally paralleling those of the US. 
There are, however, several important distinc- 
tions: 
(1) the Mexican Constitution details 
governmental functions which in the US are 
handled by legislation; (2) the Mexican Con- 
stitution attributes to the national govern- 
ment a more extensive list of functions than 
does the US Constitution; 
and 
(3) actual 
functioning of the government results in a 
much higher degree of centralization in Mex- 
ico than in the US. 
Several factors in the 
Mexican political system, namely, “personal” 
government, caudillismo, caciquismo, and the 
one-party system, have limited democratic 
functioning of government by US standards. 
The 
Partido 
Revolucionario 
Institucional 
(PRI), the government party, is firmly in con- 
trol. 
Subversive elements are: Communism, 
Which does not constitute a serious threat to 
the administration, and Sinarquismo, which 
among rightist groups is probably the only 
one which in any respect represents a danger 
to the regime. 
Mexican organized labor, which is guaran- 
teed many economic advantages by a liberal 
labor code, is potent politically as well as eco- 
“nomically, partly because of the political am- 
bitions 
of professional 
labor 
leaders. 
Al- 
Note: The intelligence organizations of the Departments of State, the Army, and the Air Force 
have concurred in this report. 
The Office of Naval Intelligence concurs with the excep- 
though the administration is in control of the 
labor situation, left-wing labor groups pose 4 
potential threat to both the Mexican Govern- 
ment and US security interests. 
The Mexican economy is based primarily on 
agriculture and extractive industry. 
Agricul- 
tural production, mostly on communal tracts 
or small individual holdings, is primarily for 
domestic consumption, although there are 
some exports of commodities such as hene- 
quen, sugar, cotton, and fresh fruits and vege- 
tables. 
Wheat is the major staple item of im- 
port. 
Mexico is rich in natural resources, 
particularly those of strategic value to the US: 
petroleum, copper, lead, zinc, silver, antimony, 
bismuth, mercury, and others. 
These consti- 
tute the principal exports, while imports are 
chiefly manufactured goods, which, because 
of the shortage of foreign exchange, are le- 
gally limited to heavy machinery and equip- 
ment for the construction of government and 
industrial projects. 
Although the Mexican economy is based 
primarily on private capital and initiative, in 
recent years there has been a trend toward 
nationalization 
of subsoil 
minerals, 
water 
power, transportation, and other key sectors 
of the economy, and an increased degree of 
government participation in economic activi- 
ties. 
Nationalization is in keeping with the 
philosophy of the Revolution of 1910, and 
greater government regulation is a develop- 
ment of more recent years to meet needs of 
the economy not met by private capital in the 
country. 
Mexico is committed to a policy of political 
and ideological alignment with the Western 
Powers. 
It has supported and furthered the 
development of the inter-American system, 
with strict adherence to a policy of arbitra- 
tions noted on pp. 50 and 63. 
The report contains information available to CIA as of 
1 October 1950 except for Chapter V, “Military Situation,” which contains information as 
of 1 November 1950. 
EEE 
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tion and conciliation for the peaceful solution 
of disputes. 
Mexico supports US views in ma- 
jor international issues, and relations with 
this country have been increasingly friendly 
and mutually cooperative. 
Mexico’s military establishment, the third 
largest in Latin America, is adequate to per- 
form its primary function of maintaining in- 
ternal order and probably also to assume its 
obligations under the Inter-American Treaty 
for Reciprocal Assistance. 
Mexico could not 
wage alone a successful defensive war against 
any strong nation or group of nations, and its 
economy would not support a greatly ex- 
panded armed force. 
Mexico manufactures a 
sufficiency of small arms and ammunition, 
but must import all heavier equipment, in- 
cluding artillery, vehicles, ships, aircraft and 
parts. 
The trend in Mexico is to pattern or- 
ganization and training on that of the US, 
and to mechanize the armed forces as rapidly 
as the financial situation will permit. 
Army 
ground and air forces are concentrated in the 
Mexico City area, primarily to defend the seat 
of the government against possible internal 
disturbances. 
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CHAPTER | 
POLITICAL SITUATION 
‘ 
1. Genesis of the Present Political System. 
During 
the colonial 
period 
(1521-1821) 
grievances against the essentially feudal ag- 
ricultural society of New Spain resulted in 
demands for change in turn causing upheavals 
which were successfully resisted. 
During the 
eighteenth century increasing tension was 
manifested in more frequentplots against the 
viceregal government. 
Mexico achieved its 
independence from Spain in 1821 and after 
that the demand for reform became a force 
which could no longer be entirely suppressed. 
Thus there came into being the alternating 
process of change and resistance to change 
which has characterized Mexico’s history from 
independence to the present day. 
This proc- 
ess found its most violent expression in the 
nineteenth century when two great civil wars 
were fought: the Wars of Independence be- 
ginning in 1810 and the Wars of Reform be- 
ginning in the middle of the century. 
Broadly speaking, 
it can be said that 
throughout the history of Mexico as an inde- 
_ pendent nation the groups that have advo- 
cated and fought for a centralized oligarchic 
government (sometimes even a monarchy); 
‘or a wealthy powerful Church; for mainte- 
nance of large landed estates; and for the 
preservation of special legal rights for the up- 
per Class, have done so in order to maintain 
the status quo. On the other hand, the groups 
favoring change in the direction of a modern 
democratic state and from whom the present 
‘evolutionary regime claims ideological de- 
scendancy have fought for a federal republic 
with at least a semblance of universal man- 
hood suffrage; for the restriction of the wealth 
4nd political power of the Church; for the di- 
“!sion of the large landed estates; and for the 
“quality of all classes before the law. 
With the beginning of industrialization in 
‘the twentieth century, the problems of urban 
abor have emerged as an issue second only 
to control of the land. 
In their resistance to 
any alteration of the status quo, the landed 
aristocracy was now reinforced by the support 
of the new industrialists. 
In opposition to 
this coalition the groups favoring change have 
added to their program protection of labor 
unions and of the workers, through such gov- 
ernment measures 
as the eight-hour day, 
workmen’s compensation, and assurance of 
some degree of social security. 
The third and latest example of a period 
when resistance to change led to prolonged 
civil war was the Revolution of 1910 which 
equaled and even surpassed previous struggles 
in bitterness and bloodshed. 
The landless 
and the workers were attracted to the revo- 
lutionary banners and could be pacified only 
by promises of land distribution and labor 
guarantees. Their demands were written into 
the Constitution of 1917 in a series of clauses 
which aimed to transform Mexico from a 
backward country into a modern progressive 
nation. 
Thus, Article 27 of the Constitution 
provided for the distribution of Mexico’s vast 
landed estates among the landless peasantry; 
Article 123 enacted a rather detailed series of 
guarantees for labor; Articles 24 and 130 re- 
affirmed the separation of Church and State; 
and Article 3 aimed to establish a free, uni- 
versal and secular system of elementary edu- 
cation. 
Other 
articles 
outlined 
the basic 
structure of a federal republic modeled, more 
or less, after that of the United States. 
The first stage of the Revolution of 1910 
lasted until 1920 and was characterized by vio- 
lence and chaos. 
Implementation of the re- 
form program as outlined in the Constitution 
of 1917 was begun in the 1920’s and continues 
to the present day. 
The almost exclusively 
agrarian character of the initial period of the 
Revolution; the errors and abuses of its lead- 
— 
ers; the tenacious resistance of anti-reform 
groups; and Mexico’s historical position as a 
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weak country subject to outside pressures, all 
these influences have slowed up and at times 
arrested the application of progressive Consti- 
tutional provisions. 
In the early 1920’s distribution of land and 
partition of the large landed estates was be- 
gun and proceeded fairly rapidly until 1928. 
The labor clauses of the Constitution, also, 
were interpreted in favor of the working class 
and tended to be enforced. 
However, with the 
acquisition of power and wealth by the revo- 
lutionary party, and with the development of 
this group into an official party of the govern- 
ment continuously in power, it developed con- 
servative tendencies and suspended the appli- 
cation of a program which threatened their 
newly acquired wealth. 
Land distribution 
came to a stop in the late 1920’s and labor 
courts began to decide with increasing fre- 
quency in favor of the employers. 
The sur- 
viving aristocracy of the Diaz regime (1880- 
1910) gladly accepted the protection of the 
rich revolucionarios while despising them as 
upstarts and scoundrels. 
Thus developed the 
makings of a conservative bloc with enough 
cohesion to arrest further application of the 
reforms guaranteed by the Constitution. 
The election of Lazaro Cardenas in 1934 
marked a turning point in this development. 
Resurgence of the group which favored change 
and opposed the old regime brought about a 
‘reimplementation of the Constitution of 1917. 
Labor regained its ascendancy. 
Land dis- 
tribution was resumed on a greater scale than 
before. 
In 1938 the petroleum industry was 
nationalized. 
As the Cardenas administra- 
tion developed its program, the large-scale 
landowners, industrialists, and investors re- 
sisted its application with increased vigor. 
The Cardenas program not only threatened 
to complete the elimination of the wealth 
which survived from the Diaz regime but also 
to undermine the new fortunes that some 
revolucionarios had acquired since 1910. 
The exigencies of World War II as well as 
an underlying feeling that Cardenas had 
pushed reforms too rapidly set the tone for 
the administration of Avila Camacho which 
began in December 1940. 
In following a mid- 
dle-of-the-road policy he maintained an un- 
easy truce between the supporters of the 
Cardenas program and the agricultural and 
business interests who opposed further imple- 
mentation of reforms and desired to annul the 
measures already applied. 
Postwar problems have plagued the admin- 
istration of Miguel Aleman since his inaugura- 
tion in 1946. 
The truce which had prevailed 
during the war years came to an end as was 
indicated in the resumption of labor-manage- 
ment struggles and the renewed agitation 
over the agrarian problem. 
Adherence to the 
constitutional precepts of 1917 continues to 
guide the actions of the present administra- 
tion though its policies with regard to land 
reforms and labor guarantees are not nearly 
so liberal as those of Cardenas nor as equivocal 
or evasive as those of Avila Camacho. 
De- 
mands for political reform aiming at the elimi- 
nation of the official party monopoly of the 
country’s political processes have become more 
insistent both from the extreme Right and 
the extreme Left. 
The balance between these 
forces has been kept by Aleman by following a 
policy which is essentially a mean between two 
extremes and by keeping control of the of- 
ficial party. 
The electoral law (the keystone 
in Mexico’s political structure) was “reformed” 
upon the insistent demand of the leading op- 
position parties without in the least endanger- 
ing the privileged status of the government 
party. 
Wholehearted support by the admin- 
istration of the industrialization program, a 
firm policy toward labor, and protection of 
productive estates have kept the Right from 
appealing to violence for redress of their 
grievances. 
Similarly, the Left has had to ac- 
cept grudgingly a situation in which they can- 
not deny the government’s recognition of 
labor’s revolutionary gains, its approval of 
the Revolution’s land distribution program, 
and its apparent adherence to democratic 
principles. 
And, 
most 
important 
of 
all, 
neither the Right nor the Left has been able 
to alienate the Army from the Administration. 
2. 
Present Governmental Structure. 
a. Form and Operation of Government. 
(1) Theoretical Structure of Government. 
The Constitution of 1917 now in effect pre- 
scribes that the government of Mexico be a 
representative, democratic, federal republic. 
It is composed of 28 states, three territories 
and a federal district. States 
are free to 
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adopt their own constitutional organizations 
subject to the express limitation of the Fed- 
eral Constitution. that state governments be 
republican, representative, and popular in 
form. 
National Government. 
The exercise of the 
supreme executive power is vested by the Con- 
stitution in the “President of the United Mexi- 
can States,” who must be a son of Mexican- 
born parents and a Mexican citizen by birth, 
in full enjoyment of his political rights. 
He 
must be at least 35 years of age and have 
resided within the country a full year before 
the election. 
If a military man he must re- 
nounce active military service six months be- 
fore election day. 
Cabinet officers or gover- 
nors of states or territories must resign six 
months prior to the election in order to be 
eligible for the presidency. 
‘The term of office 
is for six years and re-election is forbidden. 
In case of vacancy in the office, there being 
no vice-president, the Congress selects his suc- 
cessor. 
It is the duty of the President to promulgate 
and execute the laws passed by the Congress. 
The Executive may introduce bills before Con- 
gress and has item veto as well as full veto 
power over all bills passed by Congress. 
With 
the approval of the permanent committee, the 
President may call Congress in extraordinary 
session. 
The President has the usual appointive pow- 
ers: he appoints and removes freely the Secre- 
taries of the Cabinet, the governor of the 
federal district and the governors of the ter- 
ritories, the attorney general of the federal 
district. and 
territories. 
Other appointees, 
however, must be approved either by the Sen- 
ate or the Chamber of Deputies. 
The Presi- 
dent, as in the US, is the Commander-in- 
Chief of the armed forces, and conducts the 
country’s foreign relations. 
Of particular interest is the power of the 
Executive to declare null any contract or con- 
cession made by governments previous to 1876 
Which has resulted in a monopoly of lands, 
Waters, and the natural wealth of the nation 
by @ single person or company and is seriously 
Prejudicial to the public interests. 
dent to suspend ‘personal guarantees are 
Extraordinary powers allowing the Presi- 
granted by Congress in times of invasion, seri- 
ous disturbance of the public peace or any 
other emergency. 
Such suspensions are to be 
enforced only for a limited time. 
The Executive is assisted in administering 
the government by secretariats and depart- 
ments, the number and scope of which are 
prescribed by the Congress which requires a 
report from each department to be given at 
the opening of the regular annual session. 
The legislative power of the Mexican Gov- 
ernment is vested in the national Congress 
composed of the Chamber of Deputies and the 
Senate. The members of both chambers are 
chosen by direct popular vote and cannot be 
reelected for succeeding terms. 
Regular ses- 
sions begin each year on 1 September and last 
four months. 
Extraordinary sessions of the 
Congress, or of only one chamber, may be 
called by the permanent committee on its own 
initiative or at the suggestion of the Presi- 
dent. 
Only the specific problems which occa- 
sioned the call may be considered at extraordi- 
nary sessions. 
The Chamber of Deputies, composed of 147 
representatives, is elected in its entirety every 
three years on the basis of proportional rep- 
resentation. 
There is one deputy for each 
150,000 inhabitants or for a fraction over 
75,000 in each state. 
The minimum number 
of representatives, however, is two for each 
state and one for each territory, regardless of 
its population. 
The Chamber of Deputies 
originates bills concerning loans, duties, taxes, 
or the recruitment of troops, has exclusive 
powers to make the final and official canvas 
of votes cast for President and to announce 
the name of the candidate elected by the ma- 
jority, and approves the annual budget. 
The Senate, consisting of 58 members, two 
from each State and two from the federal dis- 
trict, is elected in its entirety every six years. 
Special powers vested in the Senate are to 
ratify 
presidential 
appointments; 
approve 
treaties and.conventions made by the Presi- 
dent with foreign powers; and appoint pro- 
visional governors of the states. 
A Permanent Committee, composed of 14 
Senators and 15 Deputies, appointed by their 
respective Chambers on the eve of adjourn- 
ment, is empowered to perform some of the 
functions of Congress during the annual re- 
Papen zs of 
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cess. 
It also passes judgment on all pending 
matters in order that they may be continued 
in the next session. 
Vacancies in either chamber of the Congress 
are filled by substitutes who are elected at the 
same time that Senators and Deputies are 
elected, thereby eliminating the necessity of 
having special elections for those posts. 
The judicial function of the Mexican Gov- 
ernment is discharged by the Supreme Court 
of Justice, 6 circuit tribunals, and 42 district 
courts. 
The Supreme Court of Justice is com- 
posed of 21 Ministers, who are appointed for 
life by the President subject to the approval 
of the Senate. 
The court is divided into four 
chambers, which deal with criminal, civil, ad- 
ministrative, 
and labor matters. 
The Su- 
preme Court sitting en banc has exclusive 
jurisdiction over all contreversies arising be- 
tween two or more states, and those between 
the federal government and the states. 
A special function of the Supreme Court is 
the power to investigate any act or acts con- 
stituting a violation of individual guarantees, 
abuse of the public vote, or any offense pun- 
ishable by federal law. 
The Circuit Court judges and district judges 
are appointed, supervised, and assigned to 
their posts by the Supreme Court. 
The cir- 
cuit courts are intermediate courts of appeal 
and have the power to decide on writs of 
amparo, which are granted by the District 
courts (courts of first instance). 
The writ of amparo (literally protection) is 
@ special feature of the Mexican legal system. 
Issued for the purpose of protecting the in- 
dividual against the abuse of power by public 
officials, it combines the Anglo-American writ 
of habeas corpus as well as the writs of man- 
damus and certiorari, and is a means of en- 
forcing the numerous individual guarantees 
set forth in the Constitution. 
In addition, 
the writ of amparo is the means by which 
federal and state jurisdictions are delimited 
when the courts set aside state laws invading 
the sphere of the federal authority and vice 
versa. 
Because it can be issued only by fed- 
eral courts the states usually come out second 
best. 
| 
Local Government. 
Mexico is divided into 
28 states and three territories which are in 
turn subdivided into municipalities. 
The government of the states is conducted 
by a governor, chamber of deputies, and state 
courts in accordance with the respective state 
constitutions and within the limitations im- 
posed by the national constitution. 
Governors are elected by direct popular vote 
for a term of 6 years and cannot be re-elected. 
Members of the unicameral legislature are | 
also elected by direct popular vote but are pro- 
hibited from re-election only for the term im- 
mediately succeeding. 
The size of the legis- 
lature is limited to a minimum of 7 and a 
maximum 
of 11. 
The Mexican Constitution states that pow- 
ers not expressly granted in it to the federal 
government are reserved to the states and that 
the states are free and sovereign in all that 
concerns their internal government. 
How- 
ever, federal intervention in state affairs is 
prescribed by the Constitution to a greater 
degree than in the United States. 
Restric- 
tions concerning term of office of state gover- 
nors, re-election of governors and deputies, 
and size of state legislatures are imposed by 
the Federal Constitution. 
The administrative and judicial functions of 
the territorial government are controlled di- 
rectly by the President of the Republic who 
may freely appoint and remove the governor, 
and, with the approval of the Chamber of Dep- 
uties, the magistrates of the superior tribunal 
of justice. 
The national congress legislates 
on all matters relating to the territories and 
to the federal district. 
The President governs the capital of the 
nation through the Department of the Fed- 
eral District whose head he appoints with the 
approval of the Chamber of Deputies. 
Local representative government 
is pro- 
vided for in the Constitution in the form of 
the 
free 
municipality 
(municipio 
libre), 
roughly equivalent to a county in the US. 
In 
all states the municipio is under administra- 
tion of an elected city council (ayuntamiento) 
whose members serve for two years, usually 
without compensation. 
The chief executive 
officer is the Presidente Municipal, who is 
either directly elected or chosen from among 
the council membership and usually receives 
nominal salary. 
The ayu7 
functions 
forcement : 
latter deriv 
legislature. 
isario serves 
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Municipal j 
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There is no 
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parties; (2) 
tees of Elec 
of voters a 
places; (5) 
of elected 
charges of ! 
public fund 
The law 
zation whi 
must have 
organizatio 
in each of t 
a regular 
and be pro} 
the Ministr 
before the 
ticipate. 
Institucion 
Ministry of 
register or 
its authori 
time, oppo. 
express per 
The Feds 
vision is c 
whom are 
District, ar 
pletely don 
mittees 
vide distric 
pervise ele 
\ 
| 
HARRY 
<IBRAR 
| 
Y's 
| 
ENT 
SECREy 
\
The ayuntamiento has limited legislative 
functions and is responsible for local law en- 
forcement and administration of funds, the 
latter derived from taxes fixed by the state 
legislature. 
An ayudante municipal or com- 
isario serves as deputy of the municipal coun- 
cil in. other villages of the municipality. 
Municipal judicial authority is vested in “con- 
ciliatory judges,” either directly elected or ap- 
pointed by the municipal council as auxiliaries 
to state judicial authorities. 
The Electoral System. 
The electoral sys- 
tem, which governs the selection of govern- 
mental officials at all levels, is the key to the 
one-party system of government in Mexico. 
There is no difference in theory and practice 
in the electoral system, since it was established 
by the government party in order to perpetu- 
ate itself in office, which it does through con- 
trol of: 
(1) the registration of opposition 
parties; (2) federal, state, and local Commit- 
tees of Electoral Supervision; (3) registration 
of voters and filing for offices; 
(4) polling 
places; (5) the counting of votes, certification 
of elected representatives, and investigation of 
charges of fraud or irregularities; and (6) the 
public funds and resources. 
The law requires that any political organi- 
zation which desires to function as a party 
must have at least 30,000 members, with party 
organization and not less than 1,000 members 
in each of two-thirds of the 28 states; support 
@ regular publication and maintain offices; 
and be properly organized and registered with 
the Ministry of Gobernacién at least one year 
vefore the election in which it wishes to par- 
ticipate. 
Since the Partido Revolucionario 
Institucional (PRI), official party, controls the 
Ministry of Gobernacién, with its authority to 
register or refuse registration to parties, and 
‘ts authority to cancel registration at any 
‘ImMe€, opposition parties exist only with the 
“xpress permission of the controlling party. 
__ The Federal Committee of Electoral Super- 
“Sion is composed of six members, five of 
‘hom are PRI representatives. 
Territorial, 
District, and Local Committees are also com- 
P letely dominated by this party. 
These com- 
mittees prepare lists of registered voters, di- 
‘de districts into precincts, prepare and su- 
Pervise elections, appoint members of the 
polling committees and tabulating commit- 
tees, announce election results, and make legal 
investigations of the electoral process and re- 
solve complaints. 
Through control of Super- 
visory Committees, PRI is assured that the en- 
tire electoral machinery is in the hands of 
loyal party members. 
There are stringent legal provisions for reg- 
istration of voters. 
A provision of the law 
authorizing the president of the poll to make 
up supplementary lists, however, making pos- 
sible multiple registration, nullifies any effec- 
tiveness of the formal registration. 
Other 
electoral malpractices working to the ad- 
vantage of PRI include the conduct of ballot- 
ing in such a manner that it is not always 
secret (e.g., advising illiterates in voting, not 
furnishing private booths, etc.); padding of 
voting lists by members of the official party 
through such devices as registration of dead 
persons; and inaccurate tabulation of votes. 
Any protests of fraud or irregularities are first 
reviewed by the Electoral Supervisory Com- 
mittee and in case of appeal by the appropri- 
ate Electoral College, all of which are con- 
trolled by the PRI, so that decisions favoring 
the opposition are only rare tokens of demo- 
cratic impartiality. 
| 
The PRI’s main source of strength is in its 
control of the agencies and resources of the 
administration: 
public funds, law enforce- 
ment officers, the army, public employees, all 
are used by the official party to maintain itself 
in power. 
Thus opposition parties have to 
battle not a party as such but essentially a 
one-party government, an impossible battle 
to win under current conditions by any meas- 
ures short of revolution. 
The current condi- 
tions most responsible for the system are the 
general lack of civic consciousness and the 
acceptance of centralization and concentra- 
tion of authority. 
(2) Government in Practice. 
‘National Government. 
Whereas in theory 
the national government in Mexico is charac- 
terized by separation of powers—executive, 
legislative, and judicial—in actual practice 
the separation is more apparent than real. 
There is, in effect, personal government by the 
President of the Republic. 
The chief source 
of the President’s power has traditionally been 
ENT ts 
— 
| 
iucted | 
i state 
byes 
hs im- 
| 
| 
vote 
e are 
| 
e pro- 
| 
| 
im- 
.egis- 
ind a 
| 
OW- 
: 
ieral 
ithat 
that 
is 
scater 
‘ric- 
2. 
by 
ins of 
di- 
‘who 
Nor, 
| 
¢Dep- 
| 
junal 
| 
Jates 
| 
and 
ihe 
| 
the 
| Ing 
| 
stra- 
-4 
to) 
tally 
ive 
Oo 1s 
ong 
Mives 
|
the army! 
More recently, organized labor has 
been added as a source of power without, how- 
ever, displacing the army as an important 
factor. 
The machinery through which much 
of this power is exercised is the official govern- 
ment party, through selection of the senators, 
deputies and state governors, and through the 
President’s appointive powers over the judici- 
ary, cabinet and many other officials. 
The roots of one-man rule are buried deep 
in Mexico’s political history. 
Rule by a gen- 
eral has been inseparable from caudillismo, as 
most of the early dictators were “men-on- 
horseback” who rose to power by barracks revo- 
lution (cuartelazo). 
They carried with them 
to the presidency a nucleus of armed support, 
and they employed terror and violence to 
maintain themselves in power, holding office 
until death or defeat overcame them. 
They 
usually followed constitutional forms so long 
as it served their interests to do so. 
Though 
the manifestations of caudillismo tended to 
take a less violent form after the Revolution 
of 1910, it has persisted. 
The President selects as members of his 
Cabinet persons completely subject to his dom- 
ination. 
This is particularly true as regards 
the important post of Minister of Gober- 
nacién, who exerts federal authority over the 
states, territories and Federal District. 
Since 
- 
it is chiefly through this Ministry that the 
President maintains his tight control over the 
country, the Minister is generally the second 
most powerful individual in Mexico. 
The legislative branch is under the complete 
domination of the executive. 
Official party 
candidates for the Senate and Chamber of 
Deputies are usually hand-picked or at least 
approved by the President or his designated 
representatives, so that he will be assured of 
the absolute loyalty of the members of Con- 
gress. 
Major projects of law are initiated by 
the Executive Branch, each Ministry having 
the authority to present to Congress proposed 
legislation regarding its own operations. 
In 
the past several sessions, every law enacted 
had been drafted in the Executive Branch and 
passed with very little debate, and, it is un- 
derstood, in many cases without the legis- 
lators even having the opportunity to read 
the measures and without the bills having 
been referred to Committees for action. 
Most 
of the sessions, from 1 September to 31 De- 
cember each year, are spent in debate on in- 
significant questions with the major work 
being transacted hurriedly in the last two 
weeks merely to “rubber-stamp” the program | 
of the administration. 
The President does 
not use his veto power, since measures that 
might incur presidential disfavor are not en- 
acted by Congress. 
Furthermore, the wide 
discretion given to the administrative depart- 
; 
ments to issue detailed decrees having the 
force of law has restricted the legislative power 
of Congress vis-a-vis the executive branch. 
Members of the Judiciary are very respon- 
} 
sive to the influence of the Chief Executive. 
Theoretically the change in tenure of Minis- | 
ters of the Supreme Court in 1944 from 6 years 
to life terms granted them independence of 
action, but in practice such is not the case. 
, 
They are still appointed by the leader of the 
; 
Official party for basically political reasons, 
' 
so that a change of President does not affect 
the party relationship of the executive and 
judicial branches. 
Clear examples of the sub- 
servience of the judicial to the executive have 
been refusals of the Supreme Court to use its 
Constitutional authority to investigate po- 
litically important cases of abuse of executive 
powers. 
In fact, there are no known cases 
where the court has over-ruled an executive 
decree. 
Supreme 
Court 
appointments 
of 
justices and magistrates of lower courts are 
even dictated by the executive. 
Local Government. 
State governors are of 
two types—those who are selected and imposed 
as puppets of the national government, and 
those who are selected through negotiation 
with the national government on basis of 
‘strong local political support. 
In many cases where the governor is a pup- 
pet of the national administration, the Mili- 
tary Zone Commander in the state acts as the 
tool of the governor in maintaining order and 
subservience of the citizenry. 
In other cases, 
the governor is kept in line through the power 
of the Army quartered in the state. 
State 
governors who do not faithfully follow the 
national party line—unless they are backed 
by strong political machines—are ousted as a 
result of national interference in state politics 
through the Ministry of Gobernacién, and re- 
placed by supporters of the administration. 
Caciq 
by the b 
is a tré 
often be 
nationa! 
example 
tosi, wa: 
the force 
Almazar 
cient m 
other h 
tion anc 
selves. 
Caciq 
repute 
ers, and 
to lesser 
system. 
has been 
states in 
the caci 
number 
the nati 
ques use: 
All otl 
ject to ar 
legislatu 
actual pi 
tice thre 
esses. 
E 
by state 
often su 
and in 
neros de 
synonym 
The 
tories an 
through 
the Chie: 
Muncij 
home rul 
often “in 
ments. 
. 
Federal ¢ 
been mal 
some of ' 
force. 
T 
tido Acci 
erza 
elections 
centrated 
nicipaliti 
| 
S, 
IR 
RESIDENT 1 
MAN 
~~ 
SECRET 
\ 
g 
} 
| 
|
31 De- 
te on in- 
lor work 
last two 
program 
| 
ont does 
res that 
not en- 
he wide 
‘| depart- § 
ing the 
fe power 
ch. 
respon- 
ecutive. 
Minis- § 
5 years § 
Caciquismo, the system of state domination 
by the boss of a strong local political machine, 
is a tradition in Mexican politics, and has 
often been the causé of friction between the 
national government and the states. 
As an 
example, Cedillo, the cacique of San Luis Po- 
tosi, was forced into open revolt and killed by 
the forces of President Cardenas and General 
Almazan in the 1930’s. 
Caciques with suffi- 
cient military and political support, on the 
other hand, have thwarted the administra- 
tion and risen to national prominence them- 
selves. 
Caciquismo, like caudillismo, is now in dis- 
repute with the administration and its follow- 
ers, and there has been a trend in recent years 
to lessen the outward manifestations of the 
system. 
Popular discontent with caciquismo 
has been demonstrated in uprisings in several 
states in recent years to throw off the yoke of 
the cacique. 
The system still prevails in a 
number of states, however, largely because 
the national government finds pro-PRI caci- 
ques useful for its own ends. 
All other powers within the state are sub- 
ject to arbitrary action by the governor. 
State 
legislatures are weak institutions with little 
actual power. 
There is little recourse to jus- 
tice through the courts or other legal proc- 
esses. 
Even the municipalities are dominated 
by state administration. 
Local business is 
often subject to the whims of the governor, 
and in some instances 
(notably, Heneque- 
neros de Yucatdn) the state government is 
synonymous with industry in the state. 
The operations and functions of the terri- 
tories and the Federal District are controlled 
‘nrough both legal and extra-legal means by 
the Chief Executive of the Republic. 
_ Muncipalities under the Constitution have 
“ome rule, but actually municipal officials are 
often “imposed” by Federal and State govern- 
ments. 
Popular discontent over State and 
Federal domination of local government has 
cen manifested in demonstrations and riots, 
“ome of which have been quelled by military 
The rightist opposition parties, Par- 
cién Nacional (PAN) and Partido Fu- 
“opular (PFP), realizing that municipal 
ri 
ons are a source of discontent, have con- 
nitrated their electoral activity in the mu- 
Nicipalities with limited success. 
The official 
Ac 
erza P 
elect 
| 
party PRI, recognizing the necessity of elimi- 
nating obvious weaknesses in order to keep its 
control, countered in 1947 by announcing that 
in the future municipal officials must be resi- 
dents of the community and must, moreover, 
have a legitimate and honorable means of live- 
lihood within that community. 
The PRI re- 
quirements have not been met by all its own 
candidates, although there has been some im- 
provement. 
The municipal president as a general rule 
dominates the other powers in the local gov- 
ernment, and he is in turn dominated by state 
and 
national 
officials. 
Municipal 
govern- 
ments theoretically collect taxes for their own 
support, but actually taxes are paid to the 
federal government and rebated to the mu- 
nicipality in the amount deemed necessary for 
local expenses. 
At the level of the munici- 
pality more than any other, pressure is exerted 
on the government by the Church, resulting 
in a Church-State coalition in some localities 
and Church-State warfare in others. 
Other 
significant influences on local politics are 
wealthy landowners or business men in some 
instances, and ejidatarios (communal land- 
holders) in others. 
| 
Typical Characteristics. 
The mordida (lit- 
erally translated the “bite”’) is a particular 
Mexican institution 
of graft on the part 
of 
government 
functionaries. 
The 
tech- 
niques 
used 
vary 
according 
to 
circum- 
stances, as do the amounts that must be 
paid. 
The various types of mordidas may be 
classified as bribes, hush-money, graft, ex- 
tortion, blackmail, suborn, protection money, 
kick-backs, et cetera. 
The mordida is applied 
universally, from the lowest clerks to Cabinet 
officers. 
It is sometimes 
administered 
di- 
rectly, and at other times through a coyote, 
or go-between. 
Coyotes are generally lawyers 
with good “connections.” 
specialists, and it is difficult for the uninitiated 
person to do business without one. 
They are 
most active in securing necessary papers for 
foreigners and in cases involving hearings out- 
side of the regular courts of law. 
Coyotes for 
a fee keep labor cases from coming to trial. 
The mordida, because it gives the moneyed 
class an advantage over the poor, is a serious 
obstacle to the democratic functioning of gov- 
They are usually 
ernment in Mexico, and has probably been the 
| 
S. 
AR 
| 
ENT Is Sic 
| 
| 
| 
| 
| 
ence of 
| 
ic Case. 
of the 
asons, 
affect 4 
and 
ie Sub- « 
© have 
its 
ce po- 
‘utive 
cases 
‘cutive 
| 
‘iS 
of 
‘S are 
are of 
posed 
. and 
ation 
is of: 
| 
Milim 
and” 
owerg 
| 
‘ates 
the 
. 
cked 
a 
ities 
TO reed 
On.
outgrowth of many influences. 
One factor, 
which is particularly important among gov- 
ernment workers, is the low salary they re- 
ceive (in 1944 about $US30 per month for 
lower-paid employees with a maximum of $US 
170 per month for directors of federal agen- 
cies). 
For many, the mordida is essential as 
a source of income in order to make ends meet. 
Another important factor is the willingness of 
the general population to pay a mordida rather 
than take the time, expense, and trouble of 
complying with the law or insisting that their 
rights under the law be respected. 
The payment of a mordida is generally es- 
sential to secure approval of business transac- 
tions, such as registering contracts, validat- 
ing leases; as an extra fee to secure govern- 
ment services which are supposed to be free 
or for a standard fee, sueh as tourist permits, 
visas, automobile licenses, birth certificates, 
and burial permits. 
It is standard practice 
for businesses and individuals to pay taxes 
(income, 
property, 
production 
and 
other 
taxes) at a cut rate with a mordida to the 
assessor and collector. 
Mordidas are paid to 
police and customs officials to overlook actual 
law violations, from speeding or overparking 
to smuggling, and there is evidence that even 
more serious crimes may be overlooked for a 
fee. 
Any government official handling gov- 
ernment purchases or contracts takes his “cut” 
whether on army purchases, highway and 
public works contracts, or even competitive bid 
contracts. 
Bribes and gratuities must be paid 
to officials of the National Railways in order 
to secure empty freight cars for loading goods 
or to get loaded freight cars moved. 
Even 
the movement of goods by motor truck is ham- 
pered by the necessity of paying mordida to. 
secure permits for each truck load. 
Mordida 
is extracted in the form of extortion by threats 
of unfavorable reports by any government in- 
spectors, whether issuing sanitary certificates 
to restaurants and food-processing plants or 
safety certificates 
to mines and factories. 
Government employees are even required to 
“kick back” part of their pay to Cabinet offi- 
cers or hiring officials, and prospective em- 
ployees are required to pay considerable sums 
as admission fees, often under the guise of 
purchasing raffle tickets for the benefit of 
sick employees. 
Most Mexicans feel that there is no question § of press, ° 
of morality involved in the institution of the 
§to bear 4 
mordida. 
It is an accepted practice which § from arbi’ 
means no more in Mexico than a tip to agjdue proce 
restaurant waiter would in the US. 
While § cepted rig 
there are no actual figures to show how much g ‘These 
= 
this practice costs the government each year, § vidual lib 
even the most conservative estimates have 
tions in 
never set a figure below 25 percent and it is § US, becau 
reported that the government may lose as § US and tl 
much as 40 percent of its potential revenue § legal syst’ 
annually because of corrupt practices. 
by jury in 
Pistolerismo (“gun-toting”), flagrant among @ JUTY is vé 
Mexican officialdom, has led to a regime of 
| 
be held o 
lawlessness subject to criticism particularly § Tesidence, 
by the Mexican press. 
Members of Congress 
§ 
OF Other 
usually are armed, and in the heat of debate § DOWeVer: 
within the Chambers of the Senate and Depu- 
| 
localities i 
ties there is occasional gunplay, resulting in § °! the loca 
injury or death to various of the participants. 
cceP' 
purpose 0 
lic peace.” 
the press, 
erally cor 
loss of life 
is violated 
notorious 
shot “‘atte 
undue sea 
lice authc 
Political assassinations are frequent on the 
part of gun-bearing officials. 
The Mexican press and occasional 
out- 
spoken officials of the government initiate 
campaigns against the anarchy of the official- j 
dom and in favor of despistolizacién. 
They } 
call for a law strictly regulating the bearing 
of arms through the issuance of permits in 
cases of proven need, so that private citizens 
will not be the victims of force by political 
machines. 
So far these campaigns have been 
penoe ware 
thorns in the side of the administration, but @ V!°!@ted P 
have accomplished nothing. 
A pronounced characteristic of the Mexican 
yo ; 
political scene is futurismo—political jockey- 
°° 
ing for position long in advance of an election. 
§ 
* on & 
This is most important as regards the office of 
Pp er t 
President. 
Those who aspire to public office 
launch their campaigns, and “favorite sons” 
are given active support by their followers. 
— 
we 
By the last two or three years in a Presidential 
3. 
Politic 
term, the field has usually been narrowed to 
Once ev 
a handful of leading contestants, and by the 
and Sena: 
last year at the latest the man on the street 
with the 
is relatively sure of the official party’s choice 
causes a. 
for the next leader of the country. 
administri: 
b. Individual Guarantees. 
cial gover: 
The Mexican Constitution grants to Mexi-. 
can citizens most of the individual guarantees 
cece | 
which the US Constitution provides for US 
A 
citizens, namely freedom of speech; freedom # 
— ° 
\ 
Pape 
HARRY 
| 
TRUMAN 
< 
= 
|
26: 
of press; rights of petition and assembly; right 
to bear arms; freedom of religion; freedom 
from arbitrary arrest and punishment without 
due process of‘law, and othef’generally ac-- 
cepted rights of freemen." 
These Constitutional guarantees of indi- 
vidual liberties .are subject 
to certain restric- 
tions in Mexico that are not applicable in the 
US, because of thé commof law heritage in the 
US and the Roman law basis fqr the Mexican 
legal system. “There: is no-guarantec of trial- 
by jury in criminal eases, and in fact trial by 
jury is very rare; religious ceremonies may 
be held only in’ places of worship or private 
residence, thus. barring religious processions 
or other outdoor: services:» This restriction, 
however, has often been ignored in certain 
localities in recent years with the acquiescence 
of the local governments. 
Censorship, though 
not accepted in principle, is permitted “for the 
purpose of protecting 
life, morality, and pub- 
lic peace.” While there is relative freedom of 
the press, criticism’ of.the- President is gen- 
erally considered taboo. 
right against 
loss of life except through due process of law 
is violated by application of the ley fuga, when 
tered political parties in Mexico. 
The PRI 
completely dominated the elections with the 
exception of 8 seats in the Chamber of Depu- 
ties won by 4 separate opposition parties. 
Of the ten parties registered in 1946, only 
‘two, PRI and Partido (de) Accién Nacional 
(PAN), were registered for the 1949 elections, 
along with a new party organized since 1946, 
Partido Popular (PP). 
Other opposition par- 
ties, with the exception of Partido Communista 
Mexicano. (PCM) and Partido (de la) Fuerza 
Popular (PFP), have completely disappeared 
for lack of leadership or vital programs, and 
_have generally been absorbed by the PRI. 
_ PCM failed to meet the legal requirements for 
registration for the 1949 elections, and PFP 
had its registration cancelled on grounds that 
it was linked to a foreign political power (the 
Catholic Church). 
(Since both PCM and 
PFP are politically active even though not reg- 
istered, they are discussed in connection with 
other influential groups.) 
A broader use of the term “party” in 
Mexican political scene is indicated by the ex- 
istence of other groups which go. 
by that clas- 
sification but do not participate in electoral po- 
notorious criminals: 
or political prisoners are 
shot “attempting to escape.” 
Rights against 
undue search and seizure are violated by po- 
lice authorities; 
and the prohibition against 
\ litical campaigns. 
The Partido Liberal Mezi- 
‘cano, a party only in name, becomes regularly 
active once a year commemorating the birth 
of Juarez. 
Its party line is anti-clericalism 
labor except with consent of the individual is 
and its activities are directed toward keeping 
violated particularly 
by the:states, as Indians ~ a close watch on violations of the religious pro- 
are conscripted for public works projects... 
_.» visions of the Constitution by clerical elements. 
Most civil rights are extended. 
to aliens as 
Its.loose organization and lack of systematic 
well as to citizens; and in:fact:treatment of | procedure is compensated by its ability to en- 
aliens is generally equal to that: 
of nationals 
if not better. 
Though Article 33. gives the 
President the arbitrary power to expel a for- 
eigner from the country as undesirable, it is 
3. 
Political Parties and Current Issues. Pete 
Once every six years when the Presidential 
and Senatorial terms expire simultaneously 
with the term of the Deputies, the election 
causes a complete turnover in: the- Mexican 
administration. 
During such years, the offi- 
cial government party, the major opposition 
_ Parties, and numerous small. parties, organ- 
only for the election, engage in feverish 
Political activity. During-the-. presidential 
of 1946, there were':10:legally ,regis-, 
list leading anti-clericals of 
opinions in its ranks. 
a. Partido Revolucionario Ins 
diverse political 
. 
Mexico is essentially a one-party country, 
the Partido Revolucionario Institucional (PRI) 
. being in complete control of the government. 
. 
Opposition 
groups 
wield 
little 
influence: 
While the single party has existed in fact since 
the Revolution of 1910, it was not until after 
the murder of President-elect Obregén in 1928 
that the government party was formally 
_created.. From 1928 until 1938, the official 
party was known as Partido Nacional Revolu- 
_ctonario (PNR), and was merely an amalga- 
mation of regional political machines... Presi- 
dent Cardenas in 1938 transformed it into the 
ote 
| 
» 
| 
| 
| question 
+ 
on of the 
e which 
tip 
| 
3. 
While 
much 
ch year, 
‘es have 
' 
and it is 
| 
Jose as 
revenue 
| ticularly: 
| Songress 
| debate 
ad Depu- 
| ing im 
pantss 
, 
On thes 
out- 
| initiate 
| 
official=# 
The 
Je€aring 
nits 
ins 
itizens 
jliticak 
. 
ve beem 
bu 
b a 
‘ 
‘ 
‘ 
jockeys 
‘ 
ection’ 
so 
1cé OF 
| 
‘ed 
te 
the 
| 
treet 
“noice 
ntee 
r US
& 
~ 
Partido 
de la Revolucién Mexicana (PRM), a 
fusion into one political entity of four autono- 
mous sectionswlabor, peasant; popular (com- 
\posed of miscellaneous groups not included in 
the other sections), 
and army. This was a 
particularly auspicious time for the launch- 
ing of a popular front organization, since ex- 
propriation of:the ‘oi? industry in Marchr 1938 
had rallied the people in support of Cardenas. 
* Partido Revolucionario Institucional (PRI) 
was created shortly before the Presidential 
election in 1946; representing little more than 
arenaming 
of PRM. The PRI is a complicated 
organization, divided many ways, both geo- 
graphically and functionally. 
There are sec- 
tions within the PRI representing special in- 
tersts, such as labor and the peasants, 
each 
having cells atthe local and state levels. 
(For more detail regarding political activity 
of labor, see the..gection on Labor.) 
Both 
at municipal and state levels there are often 
rival factions, the-struggles between which 
may**resolve particular regional problems. 
Major control of the party, however, is central- 
ized in the national organization, and the re- 
sult is in effect one-party government in spite 
of the’ existence of other parties. Debate on 
basic’ political principles takes place in the 
privacy of the party chambers,.and the public 
is given no opportunity 
to express its will. 
Party funds are derived from the “voluntary” 
contributions of government employees as well 
as from the budgets of government agencies, 
semi-autonomous organizations, and labor 
unions:; PRI candidates for congress and 
state’ governorships. are hand-picked by the 
President and top party officials to assure the 
election of 
completely 
=e ad- 
| 
ministration. 
PRI in March 1949 issued a ear 
sib wi 
ing no changes in recent party policy. It de- 
clares that PRI stands unequivocally for a 
ax 
' democratic form of. government, that the 
ideals of the Mexican revolution now form in- 
tegral institutions of Mexican life which PRI 
will defend, and that PRI’s campaign is aimed 
at educating the people in civic responsibility. 
Individual points of the platform made their . 
municipal polities, and the comman people i 
b. Partido (de) Accién Nacional. 
Partido (de) Accién Nacional (PAN), the 
strongest 
and most 
consistent. opposition 
group in Mexico, is composed 
of the 
middle-class, pro-Catholic element.. 
It is con- 
servative, opposing the: socialist trend of the 
revolutionary movement... Were there to be 
honestly conducted elections, PAN would not 
displace PRI nationally, but would secure po- 
litical control in several states and districts 
where its internal organization is strongest. 
PAN officials have stated that they do not as- 
pire at the present time to attain control of 
the government, but only to build up by con- 
structive criticism a recognition by Mexicans 
of their patriotic intentions and to endeavor 
to exert some influence over government policy 
and actuation. 
It has devoted much at- 
tention to a propaganda 
program aimed at 
securing control of the municipalities, so that 
by starting at the lowest political level it can 
ultimately 
build 
up. state 
and 
national 
strength. 
PAN in 1946 and again in 1949 
Deputies. 
PAN deputies in 
have 
a 
series of measures representing the program ‘ 
of the party, 
such as: (1) protection 
for small. 
. 
landholders; (2) complete home rule in mu- 
nicipalities; (3) electoral reforms; (4) creation 
of a National Agrarian Commission to plan the 
coordination of the agrarian program; (5) fi- 
- nancial and economic reforms; (6) increase of 
irrigation projects and expansion of farm | 
credit; 
(7). reorganization of the National 
Railways; and (8) guarantees against illegal 
suspension 
or dismissal of workers. PAN op- 
poses the laws restricting religious activity in ; 
Mexico and has proposed changes especially 
aimed at restoring religious education. 
Some 
influence, however, is evident in national legis- 
lation by the appearance of PAN programs in 
bills sponsored in 
— ‘by the: 
appeal to. the various groups whose. interests 
Partido’ Popular, the most 
organ- 4 
the party ostensibly;!protects, namely, .the 
political. partyin Mexico, was officially 
peasants, labor, the Indians, 
tered. 
1948.-; Vicente 
Ne we 
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bardo Toledano took the initial steps to form 
such a party at‘a series of Round Table meet- 
ings held in Mexico City in January 1947. 
It 
is significant that, although there had been 
previous attempts of Marxist or socialist ele- 
ments to gain political unity outside the Com- 
munist Party, it was immediately after one of 
his trips to.the USSR that. Lombarda made a 
definite move to organize a party. In spite of 
his own Marxist sympathies, however, Lom- 
bardo made an attempt to appeal to non- 
Communist elements and was successful in 
securing the adherence of several elements 
representing opposing political views, includ- 
ing liberals who opposed the monopoly of the 
government party, dissident Communists, and 
even some rightists who were not willing to 
join forces with the pro-Catholic PAN. 
The fact that various political elements were 
represented in the National Executive Com- 
mittee does not mean, howevVer, that they had 
equal strength within the party. 
In fact, the 
preponderance of Communist influence was 
evident, a majority of the National Executive 
Committee being known Communists or sym- 
pathizers. 
Non-Communist elements within 
PP appeared to serve merely to cloak its Com- 
munist orientation with democratic peEpece- 
Because of Lombardo’s influence in the Mex- 
ican and Latin:American. labor movements, 
PP contains many labor elements among its 
membership, although no labor organizations 
as such have officially aligned themselves with 
the party. 
PP affiliations with other groups 
and organizations are maintained - largely 
through personal contact, the only official 
front group being Movimiento de la Juventud 
Popular, a youth movement now being organ- 
ized in the various schools and districts of the 
Federal District. 
PP propaganda and news 
reports are regularly published in Lombardo’s 
newspaper, El Popular. Through Lombardo 
and various professors and educators, PP 
maintains 
close contact with 
Universidad 
Obrera, the National and state universities, 
and prominent officials in the Teachers’ Union. 
The party has exerted influence over writers 
and intellectuals through such prominent fig- 
roby as Diego Rivera and David Alfaro Siquei- 
res, Communist artists, and Narciso. Bassols, 
former Ambassador to the USSR; and over the 
‘Mexican Government through its two Sen- 
ators; and one Deputy, officials in the various 
Ministries and in state and local governments, 
and judges in the National and Federal Dis- 
trict Courts. 
Many PP members are promi- 
. 
nent in other Communist-front groups, such 
as Unidn Democratica Polaco-Mezxicana; the 
Mexican-Russian Cultural Institute; FOARE 
(pro-Communist group for aid to Spanish ex- 
iles) ; Frente Socialista de Abogados (group of 
radical attorneys); Accidn Socialista Unifi- 
cada, @ group which left the Communist Party 
because of differences over the party line; and 
various others. 
. Perhaps of even greater sig- 
nificance than the interlocking membership of 
Partido Popular and Communist-front organ- 
izations is the relationship, primarily through 
Lombardo 
himself, with the Communistic 
Confederacién de Trabajadores de (la) Amé- 
rica Latina and the Communist bloc in the 
World Federation of Trade Unions. 
PP participated actively in elections of 3 
July 1949 for Federal Deputies and State Gov- 
ernors winning only one seat. 
It had a regis- 
tered strength of 31,500 members, as reported 
by the Ministry of Gobernacioén, and it claims 
- 182,450 members, the actual figures being 
somewhat between these two. 
The influence 
of PP as an opposition party has declined, es- 
pecially since the schism which — 86 fu- 
ture uncertain. 
- PP announced its general unnent of the ad- 
ministration on internal matters and on ef- 
forts of the government toward increased eco- 
nomic nationalism. 
It opposes the Federal 
Electoral Law, however, and supports a sys- 
tem of proportional representation. 
In inter- 
national affairs, PP follows the Communist 
line; e.g., it has opposed the Bogota Pact as 
an agreement that would make Mexico sub- 
servient to the militaristic ambitions of the 
US, has attacked US proposals for economic 
cooperation, and has opposed the US and UN 
action in Korea while encouraging the sign- 
ing of 
Stockholm Peace 
4. 
Other Influential Groups. 
449 
In Mexico most of the usual pressure and 
mmeciel interest groups are subdivisions of the 
official party. 
These 
subdivisions 
include . 
labor, agrarian interests, indigenous popula-. 
Ay 
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A 
two important movements in Mexico, the poli- 
cies of which if allowed to prevail would be in- 
imical to:US security interests: Communism 
“and Sinarquismo. 
Both of these movements 
have as recently as the 1946 presidential elec- 
tion participated in political activity as regis- 
tered parties. ‘Neither is currently registered, 
however, so that any = influence reed 
have is:indirect. * 
a. Communism. 
Becomes there are more influential Mexican 
4: Communists outside the party than within it, 
- 
the influence of Communism in Mexico is 
much greater than that of the Partido Com- 
munista Mexicano (PCM). PCM was founded 
~ 
ia September 1919 by a group of dissenters 
. within the Confederacién Regional de Obreros 
Mexicanos (CROM), the dominant labor or- 
- ganization atthe time, and elements of the 
Mexican Socialist Party. Outlawed in 1929 
. by the Portes "Gil administration, the party 
- 
regained recognition prior to the elections of 
1934. 
It maintained its status as a registered 
‘party until May 1948 when it failed to meet 
- the membership requirements set by the gov- 
ernment. 
Not being a registered party, its 
only participation in the July 1949 elections 
was either in support of Partido Popular or by 
“write-in” votes for its own candidates. 
*» PCM proper is a small and politically weak 
organization....It had an estimated member- 
Ship of 15, 000 in 1945 (3,000 of whom were 
-Teported to be foreigners, mostly Spanish) , but 
has declined to no more than 10,000 at the 
- present time, the majority of whom are in the 
worker class. .There is a concentration of 
about half the entire membership in Mexico 
City. PCM 
influence 
is exerted 
mainly 
through its cells in factories, unions, and 
— 
schools. 
ews 
-In Mexico it is of particular importance to 
distinguish between the PCM and Commu- 
nism, as also between Communism and the 
Mexican revolutionary movement. 
The most 
_ effective Communist leaders, for example, are. 
either in splinter or front groups such as the 
Partido Popular. 
Furthermore, the Mexican 
revolution, starting in 1910, had as its prin- 
ciples many basic social reforms which are co- 
incident with many of the principles of Com- 
or sate 
Foe 
ronson, 
Russian Communism, which developed later 
than the Mexican revolution, found in Mexico 
a climate favorable to some of its principles. 
It must be understood, however, that the 
not now Communists. 
i 
The PCM in its official publication, La Voz 
2 | 
de Mérico, as well as in its resolutions 
and { 
statements of policy, follows the Moscow line 
of attacking Yankee “imperialism” and es- 
pousing general Marxist principles. 
It also 
follows the Communist line common to most 
Latin American countries, that of aligning its 
policy with the progressive bourgeoisie and/or 
economic nationalists to urge industrializa- 
tion and economic development of the country. 
Many dissident Communists have left the | 
Mexican Communist Party because of their 
disagreement over the strategy of combining 
_ with nationalist forces to lessen US economic { 
influence, as opposed to more strictly Marxist : 
principles. 
There is a large number of kate 
| 
and Communist-front groups in Mexico, none 
: 
of which individually has any great influence. 
% 
For example, Accién Socialista Unificada and % 
Alianza Obrera Popular, dissident Communist 
@ 
group merged with the Comité Reivindicador, 
are “splinter” parties. 
Other groups, such as 
Lombardo Toledano’s Universidad Obrera, Par- 
tido Popular, Confederacién de Trabajadores 
@m 
de (la) América Latina (CTAL), and Semi- 
nario Cultural, are recognized to be Commu- 
§ 
nist-dominated, but through contact with the 
Cominform rather than PCM. 
Foreign Com- 
munist political groups, such as the Spanish 
and Basque Communist parties in Mexico, 
Federacién de Organismos de Ayuda de los 
Republicanos Espanoles (FOARE), and Com- 
munist-front 
Jewish groups, while they main- 
tain contact with PCM, retain their independ- 
| 
ent status. 
There are a number of cultural 
q 
groups with Communist orientation, notably @& 
the Instituto de Intercambio Cultural Mezi- 
@& 
cano-Ruso, 
Federacién 
Eslava, 
Asociacién 
@ 
Union 
Democratica 4 
Mexico-Czechoslovaka, 
Polaco-Mezicana, and others, which cooperate 
with the diplomatic missions of Russia and 
j 
the satellite countries.; The only known aff- 
: 
liates or front-groups of the PCM itself are the 4 
Confederacién de la Juventud Mexicana (CJM) 4 
| 
i 
I 
a 
| 
| 
|
re 
Rot 
and the Bloque Nacional de Mujeres Revoluci- 
Communism’ as a composite movement is 
not strong in numbers. in Mexico, and its 
strength is. considerably. lessened by its dis- 
unity. 
Should any unification of Communist 
forces be effected, their influénée in political, 
economic, 
amd cultural affairs would be en- 
hanced, but. probably not to a point*of being 
able to overthrow the present administration. 
The Unién Nacional Sinarquista (UNS) was 
organized in Leén, Guanajuato, on 23 May 
1937. 
According 
to the. official Sinarquista 
version, its founders were three Mexican law- 
yers and an hacendado who were disturbed by 
the moral, political, and economic disorder 
emanating from the Revolution and decided 
to form a union to restore the Christian social 
order. 
According to other versions, however, 
there were two representatives of the Spanish 
Falange and a German-nazi engineer in the 
founding group. 
fay 
The UNS has a highly centralized organiza- 
tion, with a systematic chain of command 
from the national jefe (chief) at the top to 
the humblest sub-jefe in the small rural com- 
munity. 
The national chief and national 
committee set policy for the group on all im- 
portant matters. 
In addition to national, re- 
gional, district, and municipal committees, the 
UNS has special groups, such as feminine sec- 
tions and children and youth groups. 
_ 
The Sinarquista program, in opposition to 
the reforms of the Revolution, favors indi- 
Yidual land ownership, freedom of workers 
‘rom exploitation by union bosses, cooperation 
between capital and labor, equitable distribu- 
ticn of wealth (but not abolition of private 
Property), and the restoration of the “Chris- 
an social order.” 
The Sinarquistas have 
stressed their plans for preservation and pro- 
tection of the family, the rights of the family 
5 Opposed to the state in education of chil- 
- and their loyalty to Christianity. 
On 
pic have the theoreticians of Sinarquismo 
‘ten more voluminously and passionately 
enemy 
which is their avowed arch- 
itera, Sinarquismo is also anti-J ewish, anti- 
» and basically anti-democratic. 
The 
"quistas picture the US as one of two 
4. 
=. 
evils, being, they say, materialistic, capitalis- 
tic, and liberal, as opposed to materialistic and 
Communistic Soviet Russia. 
In sharp con- 
trast is the attitude of UNS toward Franco 
Spain, which it admires greatly. 
Where the 
PAN represents generally the pro-Catholic, 
middle-class, conservative element, UNS is a 
semi-mystic, peasant class, ultra- 
UNS from its founding in 1937 until 1 
worked exclusively as an unrecognized group, 
holding regular mass meetings, parades, and 
demonstrations. 
Direct action by Sinarquismo 
in opposition to the Mexican Government has 
only occasionally reached a point of violence, 
although the Sinarquistas are credited with a 
number of massacres and damage to property. 
In order to win over groups opposed to them, 
the Sinarquistas have resorted to infiltration, 
with some success among union workers and 
ejidatarios. 
Sinarquista propaganda on the 
whole is well organized and shrewdly planned, 
using less of facts and logic than of invective, 
abuse and ridicule to stimulate in its ignorant 
followers a burning and irrevocable hatred 
against persons, institutions and conditions 
singled out for attack. 
: 
Sinarquismo first became a registered polit- 
ical group under the name of Partido (de la) 
Fuerza Popular in 1946, and was registered 
again in 1948 for the 1949 elections. 
After a 
public demonstration and speeches deroga- 
tory to Mexican heroes and current Mexican 
officialdom early in 1949, however, its regis- 
tration as a political party was cancelled on 
grounds that it was affiliated with a foreign 
political power (the Catholic Church). While 
the UNS is believed to have had more than 
900,000 supporters in 1944, it is believed to 
have declined in influence and numbers since, 
representing at most a half-million followers. 
Its greatest strength lies not in the direct in- 
fluence it can wield in Mexican politics, but 
in the indirect damage which its supporters 
can inflict on US-Mexican relations (as in the 
foot-and-mouth disease campaign) and in its 
potential threat to overthrow the Mexican 
c. Anti-Communist Organizations. 
There are a number of anti-Communist a 
al. 
groups in Mexico, including Frente Popular 
~ 
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A 
Anti-Communista, 
Legién 
Panamericana, 
Unién 
Nacional 
Anti-Communista, 
Comité 
Democratico de Lucha Contra el Comunismo, 
and others, none of, which is particularly in- 
fluential or active.’ Most of their activities 
- 
consist of public statements against Commu- 
nism or Communist groups. 
The anti-Com- 
-munist group oflongest standing and greatest 
activity is Los Dorddos, an organization of sus- 
pected fascist tendencies, founded by some of 
the followers of Pancho Villa, active in anti- 
| 
labor and pro-church demonstrations during 
the Cardenas administration, and now reacti- 
vated to fight both Communism and oe 
Stability of the Present Admicitration. 
' Miguel Aleman, representative of Partido 
Revolucionario Institucional, the official gov- 
ernment party, was elected to the Presidency 
of Mexico in 1946, to serve until 1952. 
Ale- 
man has around him, in the Congress, his 
Cabinet, and even State and Municipal offices, 
loyal members of the government party. Even 
though at several periods during the Aleman 
administration there have been evidences of 
general unrest and uneasiness because of the- 
country’s difficult financial situation, these 
have not developed to the point of seriously 
threatening stability by armed revolutions 
Should armed revolt have taken place before,# 
or should it occur prior to 1952 (an event nc 
anticipated), any group strong enough to suc ' 
ceed in its attempt would probably represent 
the same principles and possibly even the same 
governing group, since the majority of Mexi 
can people are thoroughly in support of the 
principles and organization represented by the 
government party. 
It is anticipated that Ale- 
man will serve out his term, and since he 
is 
not eligible for re-election, be succeeded 
by 
someone of his own party and —_ of £ 
The stability of the present administra on 
and any actions of this group while in office 
would not be subject to the influence or pres- 
sure of any foreign country except the US. 
In Mexico as in other Latin American coun- 
tries, approval of an administration by the 
US is essential to stability, and by the same 
token revolutionary groups would have little 
chance of success without either the tacit or 
explicit approval of the US. 
Politicians, how- 
ever, must exercise caution in advocating close 
cooperation with the US to avoid the politically’ss 
dangerous charge of subservience to US in-4 
terests. 
A factor contributing to the stability | 
of the present regime in Mexico is its close co- 
@ 
ce 
> 
| 
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7.4 
©
— 
1. 
of 
Labor in 
Organized. labor was not toleratéd by the 
Diaz regime (1876-1910), the first labor unions 
being organized clandestinely by radical lead- 
ers in the early‘1900’s... It was not until the 
Madero Revolution of..1910 that the labor 
movement received its first impetus with an- 
archo-syndicalist groups participating. in the 
struggle for revolutionary power. 
‘Since then 
organized labor has been closely identified 
with the revolutionary principles of social and 
agrarian reforms which characterized 
the 
country’s development... The Constitution of 
1917, for example, has been the basis of subse- 
quent labor legislation. reflecting those pm 
The first labor organization on a national 
scale, the Confederacién Regional.de Obreros 
de Mézico (formed in 1918 under the leader- 
ship of Luis Morones) was backed by the revo- 
lutionary armies of Obregén and Calles. 
Ex- 
panding to approximately a million members, 
CROM became the moving force in trade 
unionism until Cardenas assumed the presi- 
dency in 1934.. By that time CROM had be- 
come more conservative.’ Cardenas’ determi- 
nation 
to reassert the leftist trend of the Mexi- 
can revolution impelled him to organize a 
more radical competitive federation under 
government sponsorship resulting in the for- 
mation of the Confederacidén de Trabajadores 
Mexicanos by Lombardo Toledano. 
US labor 
influence was considerable in the early de- 
velopment of Mexican labor. CROM for some 
years maintained close relations with Samuel 
Gompers and the AF of L. Later Lombardo 
received the collaboration of John L. 
forming the CTM. 
2. 
Present National Labor ‘sthuation, 
a. Current Status and Strength of Mezican 
The complex pattern of the present labor 
movement is: 
a resus of the series of = and 
ally favor various political and labor affilia- 
realignments which have occurred since 1947. 
Defections from CTM reflected political rival- 
ries among the leaders; extreme Marxists 
broke away because of disagreement with Lom- 
bardo, and subsequently Partido Popular ad- 
herents followed Lombardo out of CTM when 
it decided to remain with the government 
party (PRI). 
By 1948 CTM was reduced to 
one-third of its peak strength and had become 
subject to administration control. 
After de- 
fecting from CTM, radical labor, including the 
most important industrial unions, formed a 
solidarity pact early in 1948 in order to com- 
bat the hostility of a progressively conserva- 
tive administration. 
In 1949 various of these 
unions were constituted into the leftist-ori- 
ented-labor federation—the Union General de 
Obreros y Campesinos de México (UGOCM), 
led by Lombardo Toledano, who continues to 
be the chief spokesman for radical labor. 
At present the basic struggle in Mexican 
labor is between CTM and UGOCM for polit- 
ical advantage and control of labor in stra- 
tegic industries. 
In mid-1949 organized labor 
in Mexico was estimated to be evenly divided 
among the pro-government CTM, the Lom- 
bardist 
UGOCM, 
and 
the 
“independent” 
unions. 
Recent defections from UGOCM (in- 
cluding the important petroleum workers and 
miners) have added to the strength of inde- 
pendent groups, whereas CTM has been hold- 
ing its own. 
Today the “independent” unions and the 
unions composing the CTM and UGOCM vary 
greatly as to their political alignment and pre- 
sent such a complicated pattern that the real 
or potential strength of these three major 
groups cannot be estimated. 
Some of the 
CTM affiliates, for example, are Communist- 
dominated; some of the “independent” unions 
- 
are government-dominated nationally but lo- 
tions; other “independent’”’ unions follow the 
Communist Party or one of the various dissi- a 
~ 
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| 
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fore, 
not 
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dent or front Communist parties; some are 
even.conservative and reactionary. 
Whatever 
the official political alignment of the union, 
there are always strong currents of opposing 
political doctrines which may be capable of 
gaining control. ané reversing union Polley. 
Extent of Unionism. 
“Although the percentage cannot be esti- 
mated, the majority of Mexican industrial 
workers belong to some labor group. 
There 
is, of course, a wide variation in the extent of 
organization. 
For example, labor is better 
organized in the long-established and strate- 
gically important industries—petroleum, min- 
ing, textiles, railroads, ports, maritime indus- 
try; and the electrical industry—than it is in 
the new ones. The organization of farm la- 
bor, which has been.progressing slowly since 
the Revolution, has developed more rapidly in 
the ejidal (collective farming) regions. 
c. Labor Legislation and the Unions. 
aint: Mexican labor legislation is based 
on liberal principles, the government’s pre- 
rogatives in such legislation have enabled the 
Aleman administration to keep labor in line. 
A modern labor code, based on the Constitu- 
tion of 1917, provides general safeguards such 
as an &hour day, overtime pay, minimum 
wage and profit-sharing, regulations for strikes 
and dismissals, and Boards of Conciliation 
and Arbitration for labor disputes. 
However, 
as union officials must be recognized by the 
Labor Ministry, the government in cases where 
factions develop within the union (sometimes 
at government instigation) can select those 
officers most likely to follow the administra- 
tion’s wishes. 
Furthermore, the government 
can control the legal existence of unions by 
its authority to recognize labor organizations. 
Since the election machinery of the Concilia- 
tion and Arbitration Boards (composed of gov- 
ernment, labor, and management representa- 
tives) also is in the hands of the authorities, 
the government controls membership on the 
boards as well as their decisions. 
Cone 
Pes 
d. Economic Power of the Unions.» 
- 
Organized labor, being concentrated. in the 
Major industries, has become a powerful fac- 
tor in the Mexican economy. - Through gen- 
_ 
and personal gain than to help labor. 
Fo 
> 
temporarily—the nation’s industrial life. 
Al<§portt 
though through the years the rights to strikeljrew . 
and to bargain collectively have been—and™cann 
still are—used to improve wages and workinggicies : 
conditions, these weapoms have been moregfaggr: 
, often employed by labor leaders for political@ernm 
while 
this reason the administration 
has been 
ham-@#the 
pered in its efforts to bolster production, and 
over 
> 
the national economy has on occasion beengg 
shoul 
placed in jeopardy. 
To limit such excesses#™ 
leade! 
where national interests are at stake, the gov-@% 
are b< 
ernment has gradually curbed labor’s power. @ they ‘ 
Shortly after Aleman’s inauguration in 1946,@% 
of aid 
for example, the full weight of the government @ from 
supported the national petroleum adminis-4 
tration in breaking the illegal oil strike. 
In@ 
f. ¥ 
view of the various controls which the govern- 
The 
ment exerts, including labor legislation, as 
Mexic: 
well as the unofficial subsidies upon which 
coin 
most unions rely heavily, the administration 
should be able to prevent labor from tying up 
their 
the country’s economy. 
gon 
€ 
€. Political Power of Unions. 
, Mexican labor, having been closely allied to 
contri 
several recent administrations, accepts as its 
“mord 
due the right to representation in the national 
by gov 
government as well as in key party positions. 
Labor’s political power is also closely related 
scien tii 
to the force of public opinion insofar as it can 
‘orit 
be consolidated through the press and mass 
ne. 
demonstrations. 
From its vantage point. la- 
Wag 
bor has been able to exert considerable polit- 
deal lo" 
ical influence, one of the most illustrative 
« 
obs. 
cases being Cardenas’ expropriation of for- 
ll 
eign-owned oil properties in 1938 as an imme- 
the US 
diate result of labor pressure. 
Whereas Presi- 
one-sixt 
dent Aleman has permitted the continued. ac- 
# 
office w 
tivity of labor leaders in government and 
cin 
od 
party affairs, he has limited labor’s political 
Ps 
power through manipulation of such devices 
+ 
Mexic 
at his command as government control of elec- 
agricult 
toral machinery, of labor boards, and of sub- 
» 
variatio 
sidies to unions and publications. 
His suc- 
§ 
paid in | 
cess in this respect may be seen in his ability, * 
handica 
even under extreme pressure from labor, to re--# 
trained 
sist expropriation of 
railroad 
cal pers: 
electrical andustries. 
due to |; 
Labor’s political power is ‘also limited. by-4 
the frequent changes of political alignments.4 
1 ready 
Oe Mexican labor groups because of the op-i 
centives. 
j 
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hea
“1 
“g 
‘ 
portunism: of most Mexican labor leaders. | 
Few have convictions so deep-rooted that they 
cannot easily change political parties or poli- 
cies should there be an opportunity for self- 
aggrandizement:and the interests of the gov- 
ernment notrbe threatened. For example, 
while most:of the labor groups now ‘support 
the government, a majority could easily go 
over to the Communist-controlled opposition 
should this serve the personal interests of their 
leaders. 
Likewise, even though these leaders 
are basically “anti-imperialist” and “anti-US”, 
they are quite capable of changing to a policy 
of aiding the US if under. sufficient pa 
wre 
ay 
f. Wages and Availability of Mexican 
There is a wide variation in the wages paid 
Mexican labor. 
The highest wages with cer- 
tain exceptions are paid by US companies or 
their subsidiaries. 
On the other hand, the 
lowest wages throughout the country are paid 
by the Mexican Government and the semi- 
official Banco de México, a factor which has 
contributed to the widespread acceptance of 
“mordidas” (bribery; see Chapter I, pp. 9-10) 
by government officials. 
Few Mexican corpo- 
rations have a job classification system or 
Scientific bases for wage rates, relying on se- 
niority as a semi-rigid basis for pay scales.” 
Wage rates in Mexico are generally a oo 
deal lower than in the US or Canada for like 
jcbs. 
For example, rates for professional and 
managerial jobs are about one-tenth those in 
‘he US or Canada; technicians, one-fifth to 
one-sixth; skilled factory workers, one-third; 
office workers and unskilled office and and 
help, about one-half. 
Mexico has a sufficiency of labor owe in the 
@gricultural and unskilled categories. 
The 
"variation in wages in comparison with those 
Paid in the US points up one of Mexico’s major 
handicaps to industrialization—the lack of, 
trained professional, managerial, and techni- 
Cal personnel. 
The latter problem is partially 
to lack of training facilities in the coun- 
but even more to the EE wage in- 
ganizations. 
3. International 
Labor Organizations 
and 
Activities. 
a. Mexico’s Role i in 
, 
International Labor Or 
Mexico’s leadership in 
labor 
organizations has suffered a major setback as 
@ result of the breach in world labor between 
East and West. 
Lombardo Toledano, Mexi- 
co’s outstanding international labor leader, 
who had founded the Confederacion de Tra- 
bajadores de (la) América Latina (CTAL) in 
1938 and was one of the organizers of the 
World Federation of Trade Unions (WFTUV) in 
1945, lost considerable support when he threw 
his lot with the East, and non-Communist af- 
filiates throughout Latin America withdrew 
from CTAL and WFTU. 
Lombardo’s position 
of the late 30’s and early 40’s as the represen- 
tative in international organizations of a mil- 
lion Mexican laborers was undermined when 
CTM deserted him, the Mexican Government 
discouraged further affiliation of Mexican la- 
bor with the Communist bloc (CTAL and 
WFTU), and Lombardo failed to secure adher- 
ence of a sufficient number of national syndi- 
cates to meet the requirements of the Mexican 
labor laws for 
of the new 
central UGOCM. 
_ The expectation that CTM, after its defec- 
tion from the Lombardo group, would assume 
leadership in non-Communist international 
labor organizations, 
has not materialized. 
CTM succeeded in forcing Lombardo’s resig- 
nation from the vice-presidency of ILO in 1948, 
but after that single accomplishment has itself 
been relatively inactive. 
CTM has not par- 
ticipated in either the AF of L’s Confederacién 
Inter-Americana de Trabajadores (CIT) or the 
‘(International Confederation 
of Free Trade 
Unions, but there are indications that it and 
other non-Communist Mexican labor organ- 
izations will become active in the western la- 
bor bloc.. 
Although Argentine labor attaches in Mex- 
ico and the Confederacién General de Traba- 
jadores de Argentina have made overtures to 
_ Mexican labor for support of an Argentine- 
sponsored inter-American labor confederation, 
the appeal has not been—and probably will 
.. 
Mot be—successful except in certain limited 
, 
é 
| 
| 
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fields. 
Mexican labor, however, while not spe- 
cifically supporting Argentina, probably tends 
to support the Argentine thesis that Latin 
American labor should not be dominated by 
either Moscow or the United States. 
It is 
doubtful that Mexican labor will resume a 
role of international labor leadership in the 
near future largely because it lacks an indi- 
vidual of, forceful 
to 
present 
Ar 
b. US-Mezican Labor Nego 
Bracero Question. . 
: 
A phase of the Mexican labor situation 
which has had social, economic, and political 
effects in. both Mexico and the US is the ex- 
tensive emigration of Mexican workers (bra- 
ceros) to the US. The problems that have 
caused concern to Mexico have been primarily 
the discriminatory treatment in wages, hous- 
ing, use of public- facilities, and alleged out- 
rages committed by “Anglo-Americans” in the 
Southwest, thus accentuating the traditional 
feeling over differences in cultural, economic, 
and political background. 
A difficult prob- 
lem for the US, in addition to the strain on 
international relations created by Mexican 
sensitivity to discrimination against braceros, 
has been the arrest and handling of “wet- 
backs” or illegal immigrants by US authori- 
ties. 
Since 1942 the contracting of Mexican 
labor has been by bilateral agreements be- 
tween the two governments. 
Each of these 
agreements has been an improvement over 
the previous one in matters of dpe to 
tions 
‘ond. the 
- 
> 
= 
workers, details of contracting, and handling 
of illegal entrants. 
With the settlement 
of 
issues causing primary concern to the two 
governments, however, other issues have des 
veloped, namely, dissatisfaction of US ems 
ployers over high wages and other guarantee 
‘ for laborers; fears of US labor that Mex: 
workers, in easing the tight labor market, 
| 
lessen their own bargaining 
powers; and an 
. Uipathy of nationalistic groups in Mexico 
tc 
ward helping the US. 
Even with carefully 
stipulated guarantees, the problem of discrimi 
nation against Mexican workers in the US 
mains vexatious, and the repetition of un- 
pleasant incidents will probably cause concern 
to the two governments for some time. 
In addition to legal migrants, farm workers¢ 
for many years have been illegally entering 
the US by wading or swimming the Rio Grande # 
(because of their mode of entry, these workers 
# 
are called ““wetbacks’’). 
These illegal entrants are now being de-# 
ported each month by the Immigration and 
$ 
Naturalization Service but no means has yet § 
been found for completely sealing the border 
j 
against further illegal entrants. 
On 3 June 1950, a US Executive Order estab- 
lished the President’s Commission on Migra- § 
tory Labor to make a broad study of conditions 4 
among migrant workers in the US and other 
problems created by the migration of workers 4 
into this couniry. 
It is understood that the 
question of Mexican agricultural labor in the 
US will draw a large share os ‘he ottention of 3 
ents 
Tar 
1. Ge 
a. Hi 
The 
were ir 
and ca 
ing. 
} 
today 
On the 
was en 
basic 0 
Spanis 
fluenti 
most ¢ 
ous Ix 
which 
an est 
the co 
the Cc 
found 
consti 
prope! 
large 
Porfir 
the ex 
das t 
ning 
form 
> 
™ 
| 
> 
| 
| 
| 
| 
| 
| 
| 
| 
| 
| 
Cons 
decre 
| 
: 
tract 
no 
la 
ve 
4q
1. Genesis of the Present Economic System. 
a. Historical Developments. 
they 
The original Spanish explorers in Mexico 
were interested primarily in precious metals 
and cared little for agriculture or landhold- 
ing. 
Most of the important mineral deposits 
today have been worked since the early 1500’s. 
On the other hand, the indigenous population 
was engaged in agriculture, which still is the 
basic occupation of the Indians and mestizos. 
Spanish land grants made by the Crown to in- 
fluential peers were in extensive tracts, which 
most often included the holdings of numer- 
ous Indian families. 
The Catholic Church, 
which following the colonial period had held 
an estimated four-fifths of the real estate in 
the country, was deprived of its holdings by 
the Constitution of 1857; and its lands, which 
found their way into the hands of laymen, 
constituted the basis for some of the largest 
properties in the country. 
The acquisition of 
large estates was further promoted by Dictator 
Porfirio Diaz (1874-1910), 
who frequently at 
the expense of the Indian owners gave hacien- 
cas to his supporters. 
Thus, by the begin- 
hing of the present century the characteristic 
‘orm of land ownership was the latifundia. 
AS a result of the Revolution of 1910, the 
Constitution of 1917, and subsequent laws and 
Cecrees, the pattern of land ownership has 
Seen changed to that of the ejido (communal 
act) and small individual holdings. Where- 
na in 1910 88 percent of all rural families held 
=o land, by 1940 72 percent of the farm fam- 
ites held land. 
The solution to the landhold- 
“8 Problem brought an attendant decrease 
mn “fSciency, largely because of the uneco- 
~ 
distribution of land, the absence of 
en or modern farming methods on 
small tracts, and the deterrent to im- 
provements or even planting caused by in- 
“curity of landholdings. 
“9, 
yt 
ay 
| 
A 
‘ 
sf 
‘4 
a” 
. 
CHAPTER Iil 
i 
» 
oF 
~ Db. Role of Government 
in the. National 
Economic controls in Mexico are employed 
to a wider extent than in many countries to 
carry out a definite national program. 
Al- 
though all the important types of private busi- 
ness enterprise are provided for under Mexi- 
can law, an important aspect of the Mexican 
national economy has been: (1) the trend to- 
ward nationalization of water power, forest 
rights, transportation, and other key sectors 
of the economy; and (2) an increased degree 
of government participation in economic ac- 
tivities. 
The first is in keeping with the phil- 
osophy of the Constitution of 1917, and the 
second represents a later development which 
started under Calles but has been executed 
primarily by Presidents Cardenas, Avila Ca- 
macho, and Aleman. 
The government has 
increased its participation in industry by im- 
porting and distributing commodities, invest- 
ing in commercial enterprises and finance 
companies, subsidizing crops and certain in- 
dustrial production, and controlling produc- 
ers’ cooperatives. 
At least a partial explana- 
tion of the government’s increased economic 
activity lies in the fact that private capital is 
unwilling to invest in long-term industrial de- 
velopment—because of a preference for real 
estate or for the higher profits of quick com- 
mercial deals, and a fear of the long-range 
safety of industrial investment. 
On the other 
hand, governmental policy has to a certain ex- 
tent stifled private enterprise, particularly 
among US and other foreign investors. 
“e. ‘Nature of Economic Activity. 
a Total national income for 1948 is estimated 
at 22,500,000,000 pesos; per capita income 
would average 945 pesos (about US$135). Ac- 
cording to 1948 estimates, the gainfully em- 
- ployed population was 7,110,844 out of a total 
population of 23,876,343, divided as follows>) 
od 
' 
adling 
| 
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2 tw 
| 
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ida 
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ering 
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ande 
kers 
de 
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an 
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rdez 
stab 
igra 
lO 
> 
the 
th 
ion o 
baal 
2.
Agriculture and livestock production 
Industry 
Commerce 
- 
Mining and petroleum 
2) 
- Communications and transportation 
Professions 
Domestic labor 
? 
Public administration 
Other occupations 
| 
Agricultural production has traditionally 
been for domestic consumption, whereas min- 
ing and petroleum accounted for 65 to 70 per- 
cent of the exports of the country. 
In 1949 
the sharp decline in both prices and produc- 
tion of base metals, as well as exceptionally 
good harvests at increased rates under the 
agricultural development program, altered the 
export picture: agri@ultural, animal and food 
products accounted for almost 50 percent of 
the exports, while mining and petroleum ac- 
counted for less, than 40 percent. 
Rising 
metals prices will partially stem the new trend, 
but generally increasing agricultural produc- 
tion will probably remove agriculture from the 
subsistence to the export category on a per- 
manent basis. 
In an economy of this nature, 
the great bulk of the population exists at bare 
subsistence levels, wealth is concentrated in 
the hands of a very few, and there is only a 
small’ middle-income group of shopkeepers 
and: tradesmen... Legal imports are concen- 
trated in heavy machinery and equipment for 
the construction of government and industrial 
projects. 
Smuggling is extensive. 
- 
nr 
2. 
Description of Economic Activity. | 
a. 
and 
<4 
and For- 
estry.. 
(1) Food and ‘Agriculture. 
adi 
_ Position of Agriculture in the National 
Economy. 
Agriculture and livestock produc- 
tion is the basic industry of Mexico, support- 
ing 65 percent of the gainfully employed popu- 
lation. 
By the end of 1946 the program of 
land distribution had placed 31 million hec- 
tares of land in the hands of 1,735,650 bene- 
ficiaries.. However, there were still 455,000 
campesinos eligible for‘land who had not yet 
received their tracts.. Farm production lags 
behind the needs’ and 
of the 
| 
acreag e planted and. higher yields per acre, J 
country, largely because of the following prob 
lems: (a) The post-revolutionary agrarian re 
form has resulted in the uneconomic distribu 
tion of land. 
Some holdings are too small 
_ particularly for livestock and sugar-cane pro 
duction, and other estates which had been im 
proved by irrigation, drainage, farm building 
and processing plants, should have been 
re 
tained as economic units. 
This, coupled wit 
the lack of interest in increasing productio 
on the part of the Indians and many peons 
means that agriculture is faced with an up 
hill climb. 
(b) Only 12 percent of the coun 
try, or 23.5 million hectares, is tillable, and 
less than half this amount has sufficient water? 
and satisfactory climate for agricultural pro- 
duction under current conditions. 
3 percent of the country’s total in 1910 to 3.6 
percent in 1946, the population had nearly 
doubled, changing Mexico to a food-importing 
country. 
(d) The insecurity of private land- 
holdings (occasioned by fear of illegal seizure # 
of lands) hindered improvements and even 
(e) Agriculture was not@ 
planting of crops. 
mechanized and employed very few scientific 
farming practices, such as the use of fertilizer 
and improved seeds. 
(f) There was insuffi-4 
cient water for irrigation, and soil depletion 
and destruction of forests substantially re- 
duced the productivity of the arable soil. 
é 
President Aleman, on taking office in De- 
cember 1946, launched a new agrarian pro-: 
gram designed to cure the agricultural ills of’ 
the country. His first achievement was an 
amendment to Article 27 of the Constitution, 
whereby adequate security was provided to 
encourage farmers to improve and work their! 
lands. 
Subsequent decrees provided for irri- 4 
gation projects to cost $300 million and to in- | 
crease the area of irrigated land by 150 per-»* 
cent; expansion of farm credit for improve- 
| 
ment and the procurement of machinery; 
expanded colonization program to relieve the ‘ 
population pressure in the central zone of the 
country; and the creation of various govern- ; 
. ment commissions to administer the six-year 
plan whose aim is to make Mexico a net eX | 
porter of essential foodstuffs. 
- Food Crops. 
Because of an increase in thed 
(c) While# 
the area of cropland harvested increased from4§ 
Mex 
subs 
Other 
Ref 
*En 
Sow 
and L 
Me 
tities 
tities 
coffee 
until 
war p 
the U 
tion o 
cludir 
ucts, i 
of the 
¢ 
i 
A 
as Ir 
TAE 
»» 
Total 
100 
Cor 
wh 
Ric 
Vegel 
Bea 
Gal 
bes 
Tor 
| 
Fruit: 
Bar 
Pin 
Oth 
¢ 
Meats 
Bee 
| 
Por 
sump 
eggs, 
porta 
oats, 
in 19 
a@grici 
ent a 
new § 
| 
sugar 
In ad 
—
Mexican agricultural production has increased 
substantially over that of/the prewar period, 
as may be seen from the following table: 
TABLE 1. MEXICAN AGRICULTURAL PRODUC- 
TION, 1935-39 AND 1948 
. 
(Thousands of Metric Tons) 
| 
Average 
1947 
“1948 
1949 
duction 
duction:*duction duction 
Corn 
1,715 
2,518. 2,832 
2,300 
| 
Garbanzos 
119 
iil 
Tomatoes 
(246 
Fruits 
Bananas 
624 
- §20° 
Pineapples 
130°° 
100° 
Beef 
226 
276... 
333 
Pork 
117... 
125 
Others 
Refined sugar 311 
611° 
G45 
645 
Coffee 
Source: Official data from Ministry of Agriculture 
and Direccién General de Estadistica. 
: 
| 
Mexico currently produces sufficient quan- 
‘ies of major food items;for domestic con- 
sumption with the exception of wheat, beans, 
*ggs, milk, lard, and coconut oil. 
Other im- 
portant commodities with a minor deficit are 
cats, barley, malt, hops, and tallow. 
Mexico 
7" 1949 became self-sufficient in corn. 
The 
4gmicultural development program of the pres- 
«nt administration, plus the addition of five 
new sugar mills, has changed Mexico from a 
fgar-importing to a sugar-exporting country. 
addition, Mexico exports substantial quan- 
ri of rice, garbanzos, bananas, pineapples, 
eae and fresh vegetables, most of which, 
on recently, went to the US. 
In the post- 
tine Lana increasing quantities are going to 
‘K and Canada; and a general distribu- 
Fad of any surplus Mexican commodities, in- 
‘ng meat and non-food agricultural prod- 
“ts, is being made to E 
under rovisions 
f the Marshall Plan. 
Non-Food Agricultural Products. 
Mexico 
produces sufficient quantities of most non- 
food. agricultural commodities for domestic 
consumption, with quantities of henequen, 
cotton, and chicle for export. 
Less than 5 
percent of the total leaf tobacco used in Mex- 
ican factories is imported, although the sale 
of contraband US cigarettes, particularly in 
northern zones since the end of the war, has 
reached sizable proportions. 
Mexican hene- 
quen and sisal, purchased during the war by 
the US, are now sold on the open market, an 
increasing portion of the trade going to the 
USSR.. All cotton for domestic use is grown 
in Mexico except for small supplies of the long 
staple variety. 
Most of the chicle crop goes 
to the US chewing-gum industry. 
Animal Industry. 
Mexico has a substantial 
livestock industry, with about 14.5 million 
head of cattle, 5.1 million head of sheep, 5.6 
million head of hogs, and about 8.9 million 
head of goats. 
From these, Mexico normally 
has sufficient meat for domestic consumption, 
with an exportable surplus. 
Numbers of dairy 
cattle, chickens, hogs, horses, and mules are 
relatively small for a predominantly agricul- 
tural country the size of Mexico. 
Approxi- 
mately 50 percent of the milk consumed in 
Mexico, 30 percent of the butter, and a sub- 
stantial quantity of poultry and eggs are im- 
ported from the US. 
Except for the fact that insufficient lends 
were provided under the agrarian program for 
livestock raising in the central and southern 
parts of the Republic, the industry as a whole 
was in rather good condition until the disas- 
trous aftosa fever (foot-and-mouth disease) 
struck at the end of 1946. 
With US financial 
and technical collaboration on the Joint Com- 
mission for Eradication of the Foot-and-Mouth 
.Disease, Mexico launched an extensive cam- 
paign to slaughter and bury all infected and 
exposed animals. 
The killing of oxen—the 
work animals of the peons—was disastrous to 
small farm operations; and agricultural ma- 
chinery, even with substantial Export-Import 
credits for its purchase, was slow in arriving 
and inadequate in meeting the problem. 
By 
November 
1947, when 
the campaign was 
changed from slaughter to vaccination and 
quarantine, the program had cost the US and 
Mexico approximately $30 million each, and 
& 
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successful eradication was several years and 
many more millions in the future. 
With. the closing of the US borders to all 
Mexican livestock, a serious problem arose re- 
garding the disposal of surplus healthy cattle 
in the North of Mexico, 500,000 of which were 
normally shipped each year to the US for 
fattening and slaughter. 
There was insuffi- 
cient fodder to fatten them in Mexico, and 
since they were range-fed only, they were fit 
solely for canning. 
Since Mexico had previ- 
ously shipped live cattle, there was little de- 
velopment of meat-packing facilities. 
Private 
capital advanced by the livestock interests and 
government funds, secured in part by Nacional 
Financiera credits from the Export-Import 
Bank, went for the construction 
of eight 
slaughter and chilling plants, two freezing 
plants, and seven canneries. 
The US Depart- 
ment of Agriculture has been consulted on 
sanitary regulations and requirements for ex- 
port; and canned meat has been sold to the 
Commodity Credit Corporation for later sell- 
ing to European nations under the European 
Recovery Program. 
Because of the difficulty 
in selling the canned meat, however, 66 mil- 
lion pounds of it still remain in Commodity 
Credit Corporation stocks. 
Mexican produc- 
ers have switched emphasis to frozen beef 
products, and sales have been made from time 
to time to Greece for ECA dollars. 
The only important non-food animal prod- 
ucts produced in Mexico are hides and skins, 
home use. with a 
sur- 
plus. 
dent Aleman in his Emergency Plan intended 
by 1952 to eliminate the deficit in production 
of wheat, corn, and beans, and to increase 
substantially. the production of rice and ses- 
ame for export. 
It is thought that the pro- 
gram will be easy to accomplish except that 
for wheat production. . Major defects’ of the 
program may be noted as follows: (a) Other 
products, such as coffee and cacao, should have 
been included for export, and copra and bar- 
ley for domestic use. 
The production of ad- 
ditional sesame oil seed will not eliminate the 
need for importing other oils such as copra 
or cocoanut... (b) Failure to include planning 
for the livestock industry left no program for 
"te 
eliminating the deficit of lard and wool, al4§ 
of | 
though reform of the Agrarian Code in De@j a; 
cember 1949 may provide such incentive in the 
future. 
(c) Since Mexico produces only soty 
wheat, increased acreage will not eliminate 
the necessity of importing hard wheat. 
Mexico, forced by dollar shortages by 1947 
to eliminate imports of luxury items, reducedg 
fish 
its purchases of agricultural items from 
the 
por 
US and Argentina. 
If the government is ablegg 
ties 
to overcome certain major obstacles, such as 
pro} 
the shortage of foreign exchange for purchas-™ 
is r 
ing machinery (for farms, irrigation, and foodggy 
tim: 
processing), the shortage of tin plate for can-4 
. 
ning foods, the foot-and-mouth disease, andi 
194’ 
special problems dealing with the distribution@™ 
that 
and improvement of lands, agriculture should 
org: 
develop to a much higher position in the na-@% 
the 
tional economy. 
we Fur 
The references above to “self-sufficiency ing 
can 
agriculture” envision maintaining per capitag® 
and 
food consumption at its present level, and not®® 
all 
improving standards of living or the quality 
visic 
of the average diet. 
The Mexican diet is ing 
Cub 
general deficient. 
The effects of inadequategm 
fishi 
diets fall most heavily on children, who are@™® 
ters 
undernourished 
and enter adult 
life with 
Mex 
physical handicaps beyond repair. 
Milk and 
leas! 
fresh foods are not available for most Mexi- 
to a 
cans, whose standard diet is composed of tor 
a fis 
tillas (bread made of corn meal and water), 
of C. 
frijoles (beans), bananas, chiles (peppers) 
stric 
(2) Fishing. 
The mere fact that Mexico hee six thousand 
Mex: 
miles of coastline does not mean that the coun- @& agre 
try has a sizable fishing industry. 
Fish is not 
men: 
an important part of the Mexican diet, most 
part 
of the catch being luxury items (shrimp, tuna, 
Mex 
sharks) for shipment to the US. 
The annual 
@y 
+ 
catch of fish in Mexico is only eight pounds 
- 
per capita, over two-thirds of which is ex- 
ported, as compared with a catch of 35 pounds 
@ 
em 
per capita in the US, most of which is con-‘ 
the 
sumed domestically along with added meal 2 
poun 
in substantial quantity. 
— 
thori 
Mexico has numerous problems to overcome 
| 
before developing a substantial fishing indus- : 
(3 
try. Cheap fish, such as sardine and mack-4 
Fo 
erel, are not being utilized in any degree com-4 
sever 
parable to their abundance; and the supply 
dens 
~ 
‘ 
| 
Ci 
4. 
at”
~ 
an 
| 
tot 
c+ 
of Juxury fish is being exploited about as much 
as possible, without any prospects of main- 
taining or further developing present fishing 
areas. 
Several steps would probably be nec- 
essary in order to solve’ the problem: (1) 
higher standards of living for the Mexican 
people, including increased consumption of 
fish; and (2) improved and increased trans- 
portation, refrigeration and processing facili- 
ties. Since Mexico: has;not as-yet started 
proper development of the fishing industry, it 
is reasonable to assume that it will be some 
time before the problems will be solved. 
The Mexican Government on 31 December 
- 1947 adopted a new fishery law which requires 
that persons engaged in: commercial fishing 
organize cooperative societies, registered with 
the Ministry of Treasury and Public Credit. 
Furthermore, foreign vessels fishing in Mexi- 
can territorial waters must register, post bond, 
and pay fees required by export tariff laws on 
all catches. 
Because of. these ‘particular pro- 
visions of the law, most vessels of Guatemalan, 
Cuban, or US origin which wish to engage in 
fishing operations solely within Mexican wa- 
ters find it necessary to transfer their titles to 
Mexican registry, which: usually involves at 
least a “paper transaction” sale of the vessel 
to. a Mexican cooperative. A new project of 
a fishery law introduced in the 1949 session 
of Congress would wero etch some of these re- 
strictions. 
After several years ‘of intermittent "negotia. 
tions, Mexico and Cuba have finally arrived 
at a fisheries agreement, and the US and 
Mexico have arrived at tentative bases for an 
¢sreement. 
The delay in coming to agree- 
=ent was due primarily to the refusal on the 
Part of both the US.and Cuba to recognize 
“fexico’s claim of jurisdiction over nine miles 
cf coastal waters instead of the three-mile 
jurisdiction established by international law. 
Friction frequently arose out of this situation, 
rarticularly as foreign vessels fishing between 
“€ three and nine-mile 
limits were im- 
~ounded and fined aoe by Mexican au- 
orities. 
Forests and woodlands occupy about one- 
*venth of the total land area of Mexico, the 
ig? 
st being along the coasts and in the 
southern states. 
Soft woods are cut primarily 
for the domestic market, although 
small 
amounts of pine are licensed for export to the 
- US; and hard woods are normally produced 
for both the domestic and export markets. 
Current policy of the Mexican Government is 
to conserve forests through severe restrictions 
on exploitation and prohibitions on — 
particularly of mahogany. 
In spite of the belief of the Mexican Govern- 
ment that forest resources are being severely 
depleted, the Food and Agricultural Organ- 
ization (UN) estimates of growth and drain 
of forests in Mexico from 1937 to 1946 indicate 
that net growth exceeded total cut by 30 per- 
cent and 45 percent respectively. 
For the 
world as a whole, the cut in 1937 was approxi- 
mately 100 percent of net growth and in 1946 
it exceeded net growth by 9 percent, thus in- 
dicating Mexico’s favorable position in com- 
parison to world totals. 
The most important 
forest products in 
Mexico are not wood, but chicle, used as a 
base for chewing gum; copra, used in the 
manufacture of cocoanut oil; camphor; co- 
quito palm oil; copal; and zacatén root, used 
to make coarse brushes; and guayule rubber. 
There are possibilities for profitable exploita- 
tion not only of the non-lumber products, but 
also of the vast tracts of virgin forests in 
Mexico now inaccessible because of lack of 
roads, rivers, and other means of transporta- 
tion. 
| 
Mexico’s forest resources have been used 
more to provide firewood and charcoal for 
household fuel than for any other use. 
The 
Ministry of Agriculture estimate of charcoal 
production in 1944, for example, was 173,231 
metric tons, valued at 24 million pesos, while 
the Armour Research Foundation estimated 
that annual consumption of charcoal is three 
or four times as much as official estimates 
show. 
In addition, the Mexican Government 
authorizes annual cutting of firewood in the 
amount of over 600 thousand cubic meters, 
and actual cutting is probably much greater. 
In order to conserve forested areas, numerous 
legislative measures designed to control tim- 
ber-cutting for fuel have been adopted in re- 
cent years. 
However; legislation to control 
or prohibit the burning of wood fuel can reach 
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only the industrial plants and urban areas 
effectively, since rural. areas 
have 
access to: 
rid-other 
of 
b. Natural Resources. 
Mexico is;rich in natural resources, par- 
., ticularly insthose 
‘of importance to the US: 
petroleum,.copper, lead, inc, silver, antimony, 
i bismuth, and: mercury. 
Its entire economy 
“*Iras since colonial days been based on exploita- 
. tion of the land and the sub-soil, and until the 
decade little thought has been given to 
processing or manufacturing industries. 
In 
of economic 
crisis, Mexico thinks first of 
“exploiting further its natural resources. 
Di- 
rect federal taxes imposed on minerals and pe- 
 tfoleum amount annually to about 20 percent 
of. the total federal taxes collected in the Re- 
public, and as: Such contribute substantially 
government finances. 
. 
., Americans were-among the first prospectors 
to’ take up mining claims 
in Mexico in the 
1820’s, just. as Americans at the turn of the 
twentieth century were the first to develop 
Mexico’s petroleum. 
Spanish Crown law and 
its successor, Mexican constitutional law, have 
always provided that sub-soil resources were 
the ‘patrimony of the State. Although the 
Cardenas administration saw fit in 1938 to 
invoke the legal provisions to expropriate oil 
properties, and’ “although Mexican labor has 
demanded in recent years that the same laws 
be applied to mining properties, no action has 
been taken by the Mexican Government to 
seize such foreign-held interests. Perhaps one 
reason is that the: government monopoly of 
oil and the few mining ventures which have 
become cooperative or have sold to the gov- 
ernment have not been profitable: The ma- 
jority’of Mexican mining properties are under 
US ownership 
operation, ‘the largest in- 
vestor being the American Smelting and Re- 
fining Com 
(2) ‘Fuels and Power. 
tinge 
Petroleum. 
From the time of drilling of the 
first oil well in Mexico by the American, Ed- 
ward L.. Doheny, in 1901, until the present day, 
the development of Mexican petroleum has 
involved far-reaching’ political as well as eco- 
nomic: consequences:for the nation. Porfirio | the Expropriation Law of 1936, reached an: 
Diaz’ high tax policy plus his favoring the | 
British concessionaires caused US oil interests 
to support the Madero Revolution in 19114 
Between 1911 and 1917, US, British, and Dutch 
oil interests 
supported 
one 
revolutionary 
group after another in an attempt to secure 
political protection.. 
In spite of almost con 
tinual anarchy and revolution during the 
period, the oil companies managed, by payingg 
for protection, to avoid serious damage to in4 
stallations. 
The interference of foreign busi 
ness in Mexican politics was a curse to the 
Mexican people, and was one of the factors 
leading to eventual 
of such 
terests. 
Mexican oil production reached its peak ing 
1921 when, with 193,400,000 barrels of crude, 
Mexico ranked second only to the US in oil 
output. 
Thereafter production declined, even4 
though during the period 1923-1927 there was 
the greatest splurge of oil exploration and 
drilling in the history of the country. 
Be- 
cause of the unstable political situation in 
Mexico, and the increasingly uncertain po- 
sition of foreign capital under the Constitu- 
tion and laws, many of the oil companies cur-. 
tailed their production, although exploration 
and drilling continued. 
The Mexican move to expropriate oil proper- 
ties was directly occasioned by the labor 
struggle. 
In 1936 the various unions in the 
oil industry merged into a single union affili- 
@ 
ated with the Confederacién de Trabajadores 
a 
Mexicanos (CTM) of Vicente Lombardo Tole- 
one 
dano. 
In October 1936 the union held its first 
- 
general convention and approved a contract4 
a8 
to be submitted to all oil companies. 
By the4 
es 
end of May 1937 it became apparent that no 
oy 
agreement was in sight between labor and in- § 
dustry. 
When the oil companies refused to 
5 sage 
comply with an award made by a government 
iit 
board, union leaders ordered all 18,000 work- 
= 
t} 
ers to strike on 18 March 1938. 
Nationaliza- 
of M 
tion of the industry was accomplished by the 
Expropriation Decree of 18 March 1938, by 
In 
which exclusive administration and operation | 
Pem« 
of the properties were vested in an autono- 
mau: 
mous 
agency, 
Mexicanos 
with 
(Pemex). 
ae 
in 19 
The Mexican Government, under terms of 
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indemnification agreement with US owners 
© 
in November 1941, and with the British and 
Dutch in September 1947. . The debt of US$27 
million to American interests has now been 
paid, and the second installment of approxi- 
mately 8.6 million dollars has been paid on 
the US$81.2 million commitment to British- 
Dutch interests. . 
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| 
The immediate cause of expropriation— 
labor difficulties—continued unabated under 
Pemex. 
Tlegal work stoppages (paros) and 
called strikes, together with continually in- 
creasing wage and salary demands and added 
social and medical benefits, have increased 
operation costs to such an extent that they 
are an important factor in Pemex’ inability to 
show a profit. 
One of the immediate conse- 
quences of expropriation was a decline in pro- 
duction from 48,000,000 barrels of crude in 
1937 to 38,500,000 in 1938. Shipping difficul- 
ties resulting from the war as well as loss of 
the European market kept production down, 
so that it was 1946 before the pre-expropria- 
tion level was again reached. 
Pemex, lacking 
both the financial resources and technical 
ability to engage in systematic and energetic 
exploration, during the ten-year period follow- 
ing expropriation has drilled only 356 wells, 
or one-fourth the number drilled in the ten- 
year period immediately before expropriation. 
Most of the drilling has been in proved fields, 
few new reserves having been developed. 
Mexico’s proved petroleum reserves are esti- 
mated currently to be one billion barrels. 
Most of the known reserves, as well as 60 per- 
cent of the annual crude production, are in 
the Poza Rica field. 
Mexican and US oil 
officials believe that the greatest undeveloped 
ou field is in northeast Mexico, between Tam- 
Pico and the Rio Grande, and westward as far 
as the border of Nuevo Leén. 
It is their 
opinion that, geologically, this area is similar 
‘o the fields of Texas to the north, and those 
of Mexico to the south. 
In spite of the difficulties which have faced 
Pemex for the past ten years, Mexico still re- 
mains a substantial oil-producing country, 
¥ith an output of 56,000,000 barrels of crude 
in 1947, 98,500,000 barrels in 1948, and 60,910,- 
= barrels in 1949. 
(See map, Appendix II, 
ST petroleum fields.) 
However, as the domestic demand for petro- 
leum increases rapidly, Pemex is under greater 
pressure to expand its production program. 
Domestic consumption increased from 49.6 
million barrels in 1948 to 51.9 million in 1949. 
Although no definitely established new fields 
were discovered during 1949, there were some 
promising indications. 
More extensive de- 
velopment of new fields in Mexico would help 
to alleviate the growing world demand for oil, 
the need of the US for petroleum in the West- 
ern Hemisphere, and Mexico’s own need for 
dollars. 
Mexican oil refineries (see map, Appendix 
II) produce all the principal refined products: 
gasoline, kerosene, gas oil, fuel oil, lubricants, 
asphalt, and paraffin wax as well as small 
quantities of liquefied gas. 
Refinery output 
in 1949 totaled 50,805,000 barrels, as compared 
with 
47,547,000 
barrels 
in 1948. 
Mexico’s 
major exportable refined product is fuel oil of 
which 5,627,225 barrels were exported in 1949. 
Imports, all refined products, were necessitated 
largely by the lack of local transportation to 
the west coast. 
Total exports of petroleum 
and products in 1949 were 14,126,000 barrels. 
Most of Mexico’s refineries, built by foreign 
companies before expropriation, are critically 
in need of repairs and new equipment. Those 
showing particular deterioration are the Ciu- 
dad Madero, Arbol Grande, and Mata Redonda 
plants, which serve the Tampico and Southern 
fields with a combined capacity of 87,000 
barrels per day; the Minatitlan refinery, which 
processes all the Isthmus production and some 
shipped in by barge from the Southern fields; 
the older units at Poza Rica; and several 
smaller refineries serving Nuevo Laredo, Mon- 
terrey, and Ciudad Juarez. 
New facilities re- 
cently constructed by Pemex with the finan- 
cial assistance of the Export-Import Bank (the 
Poza Rica absorption plant, compressor sta- 
tions and stabilizing plant, and the Atzcapot- 
zalco refinery) have added substantially to the 
total refining capacity, particularly of gaso- 
line and fuel oil. 
In addition, Pemex has in- 
augurated a new refinery at Salamanca, to 
have a capacity of 30,000 barrels per day; and 
plans are under way for future construction 
of similar refineries at Salina Cruz and Guay- 
mas, which it is hoped will relieve the petro- 
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leum shortage on 
the 
west 
coast and 
in Baja 
California. . 
One of the more serious probleme ra the 
Mexican, petroleum industry has been the 
. shortage ‘of: transportation equipment, which 
additional tankers secured through the US 
Maritime Commission may help to alleviate. 
The shortage of tankers has seriously ham- 
-. pered the supply of petroleum to the Mexican 
. west coast and 
shipment 
to the US east 
. coast. ‘Internal transportation 
is also in- 
adequately provided by the maladministered 
National Railways. 
One of Pemex’ chief com- 
plaints: has.been that non-maintenance of 
schedules, frequent. paros (illegal work-stop- 
pages), and the lack of adéquate rolling stock 
have crippeld internal 
of 
Pemex: pipe-line facilities te map, Ap- 
"pendix II) are the most nearly adequate of 
the various parts of the distribution system. 
Mexico in 194% had a total of 443 miles of 
single pipe line, 47 miles of double line, 126 
miles of triple Tine, and 106 miles of branch 
_ Ime within the various fields. 
In addition, 
- Pemex during 1949 partially constructed a 
line from Poza Rica to Salamanca, where a re- 
finery has been built, and one from Minatit- 
lan to Salina Cruz to free Pemex from depend- 
ence on rail transportation 
to supply the west 
. 
coast area. A second line: from Poza Rica to 
An additional problem is created 
gitenetommas by’ virtue of the fact that Pemex 
has few and inadequate bulk storage facili- 
ties. _Much of the storage is owned either by 
private business interests or by the Mexican 
Navy; consequently, a considerable part of the 
oll is not available for general consumption. 
Only in Tuxpan and Campeche are storage fa- 
cilities adequate for the area served. 
Much 
of the storage in other localities is intended 
for fuel oil only. Storage for other refined 
oils including. aviation 
in 
Pemex divides the task of deictebiesn: of 
petroleum products with private companies. 
Most‘ of the US oil companies which export 
petroleum to-.-Mexico 
handle. sales 
there 
through their own 
or 
recognized distributors. 
Mexico’s new dutie 
on imported lubricants, however, are expectec 
to force most of the independent US impo 
ers out of business, leaving only two or 
of the major US oil companies and Pemex 
Pemex recently cancelled the contract wit + 
the Standard 
Oil of New Jersey for the distrig 
bution of aviation gasoline, and it is reported 
that Pemex may become the sole distributog 
of all petroleum products in Mexico. 
Mexico is seriously interested in substang 
tially increasing 
its petroleum production | 
both to supply its growing domestic need anc : 
to provide exports. 
It is believed that Pemex 
May be able to make some progress in develop 
ing Mexico’s petroleum resources, particularly 
by signing 
contracts with US oi 
firms. 
The Mexican Government and 
lieve that the state should possess ultimate 
ownership of natural resources and contro 
over their exploitation. 
This attitude has not¥ 
changed despite the need in the petroleum in¥ 
dustry for expanded output and profits. 
It ig 
this difference in concept between the US andj 
Mexico which caused the suspension of oil loang 
negotiations in July 1949. 
Mexico has, how4™ 
ever, retained its basic concept of state owner4 
ship of oil resources but altered its operational 
policy to permit private foreign oil capital 
t 
develop its latent reserves. 
Contracts signed with foreign oil compantll 
take one of two possible forms: (a) A contrac 
may be signed, similar to that concluded with 
the Cities Service Company, whereby the com# 
pany will lend certain sums of money to Pe4 
mex, and will be repaid in crude oil, amounts 
up to 80 percent of the production. 
Other 
variations of the same type would be the furg 
nishing of equipment to Pemex, such as pipe; 
well-casing, et cetera. 
In such cases, all ex 
ploration, drilling, and production would - ba 
performed solely by Pemex. 
(b) Contracts 
may be signed under which foreign oil com4 
panies could drill in Mexico at their own ex¢ 
pense. 
Should no producing wells be brought 
in, the company would stand the loss. 
Should™ 
they strike oil, they would be repaid for cost™ 
plus a reasonable profit in oil produced fromm 
the wells. 
Several contracts of the latter nagm 
ae have already remy signed, and one ne 
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field started. « Since the Mexican oil future 
seems to rely so heavily on the ingress of US 
or 
oil interests, future expansion prospects may 
be largely conditioned by the operational 
1exfam 
policy of Pemex as related to the demands of 
private investors. 
» 
Natural Gas. 
Mexico has natural gas avail- 
able, but not. extensively developed, in the 
states of Tamaulipas, 
Nuevo Leon, and Coa- 
huila, all immediately across the Rio Grande 
from the large Texas natural gas fields. 
Most 
of the gas now used for operation of industries 
(principally at Monterrey and Piedras Negras) 
is brought in by pipe line from Texas. 
Two 
pipe lines have been operated from the Texas 
border to Monterrey, and repeated attempts 
have been made to secure substantial increases 
in the supply of fuel allowed them. 
Texas, 
interested in conservation of its resources, ob- 
jected to increased fuel movements on the near 
certainty that ample supplies of Mexican gas 
could be secured south of the border if Mexico 
would simply develop them. 
Pemex has there- 
fore since 1946 been conducting explorations 
for gas in Tamaulipas and has several proven 
natural gas and gas-distillate fields in the 
Reynosa district, including the Misién, Cam- 
: ‘ar-9 
argo, Valadeces, Reynosa, 18 de Marzo, and 
Brasil fields. 
Moreover, gas has been dis- 
covered in the Poza Rica field, and in this con- 
nection Pemex has constructed a gas pipe line 
to Mexico City, designed to move 60 million 
cubic feet of gas daily. 
Since a shortage of 
‘uel and power (whether coal, oil, or electric 
energy) is one bottleneck in the further in- 
custrialization of Mexico, the successful de- 
velopment of domestic natural gas fields might 
conceivably provide a suitable substitute fuel 
for industrial use, and, in addition, conserve 
foreign exchange for purchases of industrial 
machinery and other goods not feasible for 
comestic production. 
J 
¢ 
Solid Fuels. 
The 
solid 
fuels 
situation, 
mm 
¥nich is limiting the production of steel and is 
‘x- 
afecting the expansion of base metals pro- 
nt & 
duction in Mexico, is due to lack of develop- 
ment of coal resources and not to a lack of 
coke-making facilities. 
.The Sabinas fleld in 
the State of Coahuila is the major source of 
a- 
ituminous coal in Mexico, with reserves esti- 
mated at one billion tons. 
The coal is soft 
“4 
‘ 
and friable and contains considerable ash, so 
that it is not suitable for long-distance trans- 
portation, but it is a substantial source and 
the only known supply of coking coal in Mex- 
ico. 
Mexico’s coke deficit in 1949 was 30,000 
The American Smelting and Refining Com- 
pany (ASARCO), which operates under the 
name of Cia. Carbonifera de Sabinas, S.A., has 
a large coke plant and 60 by-product ovens 
at Rosita, State of Coahuila. 
ASARCO pro- 
vides coal for the plant by mining the “Rosita” 
and “Cloete” properties, both under lease. 
Certain contracts with Mexican firms and eco- 
nomic and political considerations in Mexico 
require that ASARCO sell as much coke as 
possible to Altos Hornos, Cia. Fundidora de 
Fierro y Acero, and other companies, in addi- 
tion to supplying its own needs for base metal 
smelting and processing. 
The Mexican Gov- 
ernment has exerted pressure on ASARCO to 
increase its coal and coke operations, but to 
in 
date the company has resisted such pressure. 
Cia. 
Carbonifera 
Unida 
de Palau, 
S.A. 
(CUPSA), the coal-producing company con- 
trolled largely by Nacional Financiera, S.A., 
was producing about 20,000 tons of coal per 
month from the Sabinas fields, and has been 
granted a $2.7 million Eximbank loan for ex- 
panded production. 
Transportation from the Sabinas district to 
the steel plants in Monterrey is supplied by 
the National Railways, over track mostly of 
light rails which do not stand up well under 
the heavy loads transported. 
There is also a 
scarcity of rolling stock and locomotive power, 
which has forced the steel mills to supply the 
own freight cars. 
te 
It is an odd fact that in all of its varied 
moves toward industrialization, the Mexican 
Government has paid so little attention to its 
coal. 
Extensive coal deposits exist in various 
regions of Mexico, but few of these have been 
developed. 
The Mexican Government 
has 
been 
contemplating 
exploitation 
of some 
mines in order to use coal as a substitute to 
relieve the severe fuel oil shortage in the north- 
western coastal area. 
- Since, however, a rail- 
road would have to be built to transport coal 
from the mines, the project could not be com- 
pleted in the near future. 
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Firewood and wood charcoal have always 
been virtually the only household fuels used 
throughout Mexico, but it is impossible to ob- 
tain even reasonably sound figures for pro- 
duction 
(see Forestry, page 25). 
There is 
some use of sugar-cane bagasse and wood 
waste as fuel, and a much wider use is pos- 
sible. Avery small amount of petroleum coke, 
for which there is always a ready market, is 
made as a by-product in Mexican refineries. 
Electric Power. 
Because of the shortages 
of electric power suffered in recent years, plus 
the Mexican industrialization program which 
envisions a greatly expanded demand for elec- 
tric power, Mexico has begun a. vast electrifi- 
cation project designed to increase the power 
supply by over 100 percent by 1952, about half 
of which would be hydroelectric power. 
Pri- 
marily because of the expense involved in such 
projects as compared with the financial situa- 
tion of the Mexican Government, and the 
shortages of machinery and equipment in the 
postwar period, Mexico’s electrification pro- 
gram is lagging behind schedule; but Mexican 
officials hope that financial and technical aid 
from the US will still enable them to provide 
the electricity for industrial expansion. 
The annual output of electric power has in- 
creased substantially in recent years. 
For 
many years, Mexico has imported about 20 
‘million kilowatt hours of electric energy an- 
nually, principally along the border of Baja 
California. 
The installed capacity at the be- 
ginning of the Aleman administration in 1946 
was 756 thousand kilowatts, about half of the 
plants being hydro and the other half steam, 
utilizing petroleum, gas, or coal for fuel. Even 
though hydroelectric plants accounted for only 
50 percent in number, they provided about 
70 percent of the total installed generator 
capacity of public-service corporations. 
During the dry months in Mexico there has 
normally been a hydroelectric power short- 
age, which frequently becomes so acute that 
industrial plants have to curtail production 
and all users of electricity experience hard- 
ships, and in addition the lack of water for do- 
mestic consumption results in dangerously un- 
sanitary conditions. 
Since Mexican power 
supply is not adequate on a year-round basis 
for normal use by existing consumers, a very 
at 
owe 
great increase in power supply must be e 
fected before Mexico can proceed with itg 
plans for industrialization. 
In recent years, plans for construction o 
new power plants have been carried on unde 
auspices of the Comision Federal de Electrt 
cidad, created in 1937 to organize and 
c 
a national system for the generation, trans 
mission and distribution of electric power or 
a non-profit basis. 
The Ixtapantongo hydro 
electric project for supply of the central regior 
of the country was started in 1938 and thé 
first unit began operations in 1944. 
Othef 
projects planned and begun by the CFE aré 
now serving the States of Michoacan, Nayarit 
Guerrero, and Morelos; and the future plan 
include extension of services to coastal and 
rural areas not presently served by electricity 
Many of the projects are closely related to ir 
rigation programs, others are part of the ru 
ral-electrification program, and still othe 
involve expansion of current facilities in or 
der to provide added kilowatt sapecty 5 for ing 
dustrial needs. 
President Aleman in his inaugural addr 
delivered 1 December 1946 announced that a 
new Ministry of Hydraulic Resources would be 
created, its purpose to supervise the construc 
tion of major irrigation systems. 
Hydroelec- 
tric projects in connection with such systems 
are also under the Ministry. 
At the time 
the 
new Ministry was created, the administrationg 
announced plans to spend US$16 million im 
mediately to meet the power shortage and to 
undertake a six-year electrification program 
which would provide an additional one millior 
kilowatt capacity. 
Major irrigation projects 
under construction, which include hydroelec- 
tric plants, are the Papaloapan (known as 
the 
“Mexican TVA”), the Tepalcatepec, and the4 
Naxas projects, estimated to cost at least 
US$300 million in the aggregate by the time# 
they are completed. 
In addition projects de 
signed primarily for hydroelectric power andj 
currently under construction, or being ex-' 
panded, include the Santa Barbara, Lerma,’ 
Colimilla, El Durango, Mecaxa, El Encanto; 
Minas, and Ixtapantongo plants, which wilF% 
provide a combined added capacity of 178 
thousand kw. 
Steam plants being installed 
. at Tacubaya, La Laguna, Guaymas, Bellz 
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Vista, Monclova, Ciudad Juarez, Guadalajara, 
Ciudad Obregon, and other places will add ca- 
pacity of 182,thousand kw.. The International 
Bank and the US Export-Import Bank have 
granted substantial credits to help in the pur- 
chase of machinery for the electrification pro- 
gram. 
Pemex is now constructing a thermal 
plant at Atzcapotzalco to provide power for its 
new refineries... While this installation will 
have a surplus for other consumers,it is not 
intended to be a part of the general electrifi- 
cation program. 
Private industry, particularly the Cia. Mex- 
icana de Luz y Fuerza Motriz, S.A. (owned by 
Belgian, Canadian, and US capital and di- 
rected by US ex-Ambassador Messersmith), 
is 
also planning a construction program and is 
relying on the Export-Import Bank for funds 
for equipment and machinery. 
It has been the policy‘ef the Mexican Gov- 
ernment, while handling the general direction 
and over-all planning for the electric power 
industry, to rely on private industry to han- 
dle the work of transmitting and distributing 
electric power. 
Where rural centers offer no 
incentive to private utilities, the Comisién 
Federal de Electricidad has embarked on a 
program of rural electrification. 
And where 
private capital cannot finance the extensive 
developments essential to the industrializa- 
tion program, the government has been han- 
dling such constructions to provide the power 
to private companies for 
| 
Cia. Mexicana de Luz y Fuerza Motriz, S.A. 
operates in Mexico City and surrounding 
areas and is the most important electric dis- 
tributing company 
in the 
country. 
This 
company serves an area of 2,500 square miles 
and annually sells over half the total elec- 
tricity generated 
in the country. 
Among 
other light and power companies, the most 
important are subsidiaries of American and 
Foreign Power Company (a US corporation), 
which operates in various parts of the coun- 
try... A group of companies in the State of 
Sonora is owned and operated by US inter- 
ests, and a number of small independent com- 
panies are operated by Mexican capital. 
The 
Mexican Government has also entered the 
light and power industry through Nacional 
Financiera, which has constructed various 
projects including facilities for transmission 
and distribution in some instances where pri- 
vate capital is not attracted. 
(3) Minerals and Metals. 
Mineral Production. 
Mexico’s mineral pro- 
duction has always been an important source 
of its foreign exchange. 
Mineral products 
currently account for 30 to 40 percent of total 
Mexican exports. 
The wartime and postwar 
demand for minerals and metals has kept 
Mexican mines, mills, and smelters working 
at capacity. 
The mine workers in Mexico are 
estimated to number 90 thousand. 
Prewar and postwar production of major 
Mexican minerals may be shown as follows: 
: 
“TABLE 2. MEXICAN MINERAL PRODUCTION 
. (Metric tons except where designated otherwise) 
Rankin 
@ 
| 
| 
| 
| 
| 
| be 
| 
th i 
| 
: 
‘10n of 
unde 
| 
llectré 
| direc 
; 
trans 
| 
Wer OF 
hydre 
regio 
id the 
| Other 
are 
| 
| 
Plans 
| 
ricity: 
| toir 
rue 
Jthers 
n or 
or in 
’ 
idress 
lat 
ild be 
truc 
elec 
tems 
2 the 
atio 
1 im 
1d toa 
: 
elec 
Minerals 
! 
Production 
1938 
1948 
1949 
: 
1947 
Production 
Production 
Production 
the 
Gold 
28,734 kg. 
11.4 
12.6 
. thes 
Silver 
Cea 
2,520 
1,789 
1,538 
east 
Copper 
41,851 
59,076 
57,246 
time 
Lead 
ging 
282,369 
193,318 
220,764 
ded 
Zinc 
172,218 
179,030 
178,402 
: 
d 
Antimony 
| 
8,069 
7,380 
5,753 
Mercury 
294 
165 
181 
Arsenic 
8,894 
7,572 
3,576 
Cadmium 
762 
905 
819 
Graphite 
9,611 
35,261 
23,812 
will 
Tin 
| 
| 
253 
184. 
364 
178 
Tungsten 
lledi 
Iron 
111,093 
226,533 
246,573 
Bismuth 
186 
154 
249 
‘
The value of Mexican mineral production in- 
creased substantially during the war. 
While 
there was some increase in tonnage, there has 
been such drastic inflation in the world market 
price for base metals that the increased value 
of Mexican mineral production is largely a 
result of price rather than volume increase. 
Since the cost of labor, materials, machinery, 
and taxes have increased correspondingly, the 
profit ratio is no} Snougys: to 
to have been 
improved. 
Mexico’s mineral sroduction in 
1946 dropped 
25 percent below that of 1945, largely because 
all unionized mines except copper were on 
strike almost the entire first quarter of the 
year. 
The Aleman administration’s relatively 
stringent labor policy, coupled with the fact 
that mining contracts did not come up for re- 
newal, kept the mines in operation during 
most of 1947, so that production increased 
substantially. 
Toward the end of 1947, how- 
ever, labor became~cestive; the miners formed 
new alliances with other industrial syndicates; 
and by January 1948 it became apparent that 
the mining industries were facing paralyza- 
tion by widespread strikes over renewal of the 
biennial labor contract.1 
From January un- 
til March the largest mining operations in 
Mexico were closed by strikes, and 1948 pro- 
duction showed a net tonnage decline of 5 per- 
cent from 1947 levels.. 
The sharp decline in 
world prices for base metals in 1949, amount- 
ing to almost 50 percent in zinc and 40 percent 
. 
in lead, created some difficulties for mining 
interests, particularly those Involving mar- 
ginal operations. 
Mexico is one of the primary sources to the 
US of the following strategic minerals: lead, 
zinc, antimony, bismuth, cadmium, and amor- 
phous graphite. 
Mexico is also an important 
source to the US of copper, mercury, and 
strontium ores, and during World War II sup- 
plied the US with varying tonnages of other 
strategic minerals such an manganese, tung- 
sten, and tin. 
Although Mexico is a major ex- 
porter and self-sufficient in many minerals 
and metals, scrap iron, tin plate, and special - 
‘There was an estimated 32 percent increase, 1947 
. over 1946, in production of the seven most important 
metals: — silver, copper, lead, zinc, ny 
iron. 
steels are imported from the US. 
Althouglt 
Mexico has now about 130 smelters and proc 
essing plants scattered through the mining 
areas, considerable quantities of ore and con 
centrates, particularly copper and zinc, 
are 
shipped to the US for smelting and refining 
Should Mexico’s plans for development o 
heavy industry materialize, exports to the US 
of many minerals ne eo either cease or 
be 
substantially curtailed. . 
Important Mining Companies and Districts 
The principal mining districts in Mexico 
are 
in the western regions from Sonora to Michoa: 
can. 
The American Smelting and 
Refining 
Company, the principal lead and zinc prc 
ducer, has most of its mines and smelters 
in@ 
the States of Chihuahua and Zacatecas, wi 
other deposits in San Luis Potosi, Guanajuato# 
Oaxaca, and Michoacan. 
Second among US 
lead producers is the American Metal Com 
pany, Ltd., whose lead investments are prin 
cipally in Mexico. 
The Cananea Consolidated 
Copper Company, an Anaconda subsidiary, 
the principal copper producer with most of its} 
operations in the State of Sonora. 
Silver ands 
gold, both as separate deposits and as by 
products of lead and zinc mining, are found 
principally in Chihuahua, Hidalgo, and 
tecas. 
The principal antimony mines in § 
Luis Potosi, Durango, and Oaxaca, and 
the 
large smelter in Laredo, Texas, have been tes | 
chased from British interests by the US-ownec 
National Lead Company. 
US investments 
in 
Mexican mining enterprises are the 
largest 
bloc of US investments in any Mexican ind 
_try and the largest bloc of foreign control 
in 
the Mexican mining industry. 
In terms of 
value the US investments are principally 
ing 
lead, zinc, gold and silver; but the antimony 
copper, and graphite production are largelys 
controlled by US capital. 
a 
Outlook for Mexican Minerals. 
It is aif 
cult to estimate the actual or potential 
serves of Mexican minerals and metals, since 
many areas thought to contain rich deposits 
have never been tested, and others have beeniiaEE 
abandoned because of transportation or other 
difficulties, leaving known deposits of unes 
mated value. 
For example, many mountaing 
ous areas have long been known to offer prom4 
_ ising mineral deposits, but the latter could bg 
| 
car 
or. 
wa' 
the 
cap 
| 
the 
| 
pro 
bee) 
| 
COIr 
| 
the 
| 
Beles 
eigr 
port 
| 
mar 
stag 
use 
prov 
| 
min 
| 
field 
| 
done 
eral 
licer. 
| 
fash 
raw 
dollz 
nom 
from 
Se 
| 
| 
omy. 
In 
impo 
woul: 
trial. 
Cally 
cost 
Mani 
Amer 
Pre 
the gr 
tional! 
poses 
‘ 
— 
produc 
to 
a 
‘ 
»* 
ye
carried to smelters and markets only by burro. 
In many instances, it would not be profitable 
or feasible for mining interests to build high- 
ways and railroads, owing to high taxes and 
the government’s 
attitude toward 
foreign 
capital. 
Exploratory and development work, 
therefore, may be forced to: wait for public 
projects, which will be slow 
at best. 
ye 
Exploitation of new mining properties fs 
been retarded by the retuctance of mining 
companies to expand investments in face of 
the extreme burden of taxation,’ spiralling 
labor costs, and the uncertain outlook for for- 
eign capital in Mexico; by inadequate trans- 
portation facilities and the inaccessibility of 
many prospective mining areas; and by the 
fact that Mexico is still in a relatively early 
stage of technological 
as 
use of some metals. 
oe: 
Even though Mexico is interested in im 
proving its foreign exchange position, with 
minerals currently playing the star role in the 
jeld of exports, the Mexican Government has 
cone little to encourage exploitation of min- 
eral resources. 
Mexico’s export and import 
censing system operated. in a restrictive 
‘ashion to block the imports of machinery and 
raw materials during the.period of extreme 
collar shortages. 
Improvement in the eco-— 
romic situation has brought about a relief 
‘rom these restrictions. 
c. Industry (Manufacturing). 
“sy Role of Industry in: the National Econ- 
in comparison with the US, UK, or other 
a 
“Dortant industrialized countries, Mexico 
"ould be considered as primarily non-indus- 
@ 
“lal. 
Despite certain disadvantages, espe- 
@ 
“lly the lack of extensive‘ deposits of low- 
@ 
“st coal, however, Mexico ranks fourth in 
* manufacturing among the nations of Latin 
America (Argentina, Brazil, and Chile are the 
leaders). 
Mexico. produces ey 
‘Production taxes amount to about 25 percent of 
4 Re gross rates of minerals and metals; and, addi- 
me “Maly, a presidential decree of August 1948 im- 
4 new 15 percent export tax.on all mine prod- 
a. The latter tax has been subsequently re- 
on some commodities. 
Taxes on mineral 
tion are ad valorem on a sliding scale eeoeee- 
the peso-dollar exchange rate. 
textiles, food products and other light con- 
sumer goods, with some heavy industry. 
Just 
- 
as production is concentrated in only a few 
industries, plants are also concentrated geo- 
graphically, with one-third by value of all 
manufactured goods in Mexico produced in 
the Federal District and the remaining two- 
thirds concentrated in Guadalajara, Monter- 
rey, Puebla, Mérida, Aguascalientes, Torredén, 
Leén, San Luis Potosi, and Veracruz. 
Manufacturing development began in Mex- 
ico about half a century ago. 
The period 
1880-1910 was one of rapid industrial develop- 
ment because of Dictator Porfirio Diaz’ policy 
of encouraging foreign investments, trans- 
portation development, and private hydroelec- 
tric power projects. 
Many of the important 
manufacturing enterprises in existence today 
were established from 1892-1906, e.g., the more 
important textile mills, the Orizaba jute fac- 
tory, the Monterrey iron and steel works, the 
San Rafael paper mill, the Laguna cottonseed 
— 
oil and soap works, and leading breweries and 
cigarette factories.. After the revolution of 
1910, interest was centered primarily in agrar- 
ian reform and development of communica- 
tions, public utilities, and natural resources. 
Very little attention was given manufacturing 
by either private interests or the government 
until, during the recent war, shortages of 
goods for import stimulated domestic produc- 
tion. 
The Mexican Government in its over- 
all economic planning is, during the post- 
War 
era, 
industrialization 
over 
agriculture. 
(2) Industrial Activity. 
Production of major Mexican manufactur- 
ing industries may be shown as follows: 
(a) Industries in Which Mezico is Essen- 
tially Self-Sufficient. 
Mexico’s most impor- 
tant industries are those which are traditional 
domestic enterprises, such as food-processing, 
textiles, and handicrafts; and they also repre- 
sent the fields in which the roe 
is essen- 
tially self-sufficient. 
The most important group of 
ing industries is food-processing, comprised 
of flour-milling, sugar grinding and refining, 
edible fats and oils, canned and preserved 
_ foods (fruits, vegetables, fish and meat) , meat- 
candies one biscuits, 
i= 
> 
‘ 
> 
j 
* 
| 
ae 
| 
| 
+o 
j 
a 
= 
+ 
~ 
| 
. 
« 
ty 
ler 
: 
. 
| 
va 
~ 
‘
af 
PILE 
‘ 
TABLE 3. PRODUCTION OF MAJOR MANUFACTURING INDUSTRIES 
| 
.. 
(Thousands of Pesos) 
rt 
1940 
1947 
1948 
82,710 
356,605 
413,357 
«62,615 
247,040 
248,809 
ft 
16009 . 
48018 
52,694 
| 
18,889 
41,150 
56,595 
«90,437, 
283,461 
225,705 
"$06,860. 
‘1,099,489 
1,192,811 
Cotton yarn and cloth 
106,878 
618,790 
692,783 
Wool yarn and cloth. 
41,990- 
102,573 
104,943 
_,. Silk and rayon yarn, and cloth 
$1,444 
62,328 
87,483 
Dry goods 
6,799 
37,843 
50,076 
Shoes 
25,098 
43,104 
55,284 
Work clothes 
; 
14,084 
22,788 
24,067 
en 
45,981 
103,735 
129,427 
bul 
Cement 
15,455 
65,022 
75,175 
the 
Brick, tile, ete... 
3,068 
8,989 
ext 
and wall 
ete. 
3,553 
16,155 
14,535 
go 
‘i: 
-.. 
Alcohol 
| 
13,574 
53,690 
48,140 
.- Rubber manufactures... 
~=«:32,993 
169,512 
an 
Carpentry and furniture 
11,105 
17,910 
19,486 
Cigars and cigarettes ° 
/ 
68,894 
164,896 
175,257 
her 
Iron and steel foundries: fae 
«~ 
44,776 
183,081 
211,566 
He! 
| 
and (A 
(including beer, A mes- 
have been built in various cities, largely with 
@ 
by 
) 
cal, tequila and aguardiente, and non-alco- 
foreign capital; at least three new sugar re-@ 
\ 
holic beverages). 
Over 90 percent of the ma- 
_fineries have been built since the war, partially 
@y 
terials for food and beverage industries are 
with Export-Import Bank funds; Hawaiian 
#4 .° 
: 
of domestic origin; and this percentage isim- 
Pineapple, Ltd. is planning the construction 
@ i 
| 
proving as domestic production of wheat,corn 
of a pineapple-packing 
plant. 
Most 
food 
me —.. 
= 
and other products increases under the 
processing is for domestic consumption, with @ por 
( 
agrarian program. 
Furthermore, the food- 
some exports of meat. 
tle 
processing industry is in a state of almost 
The second most important Mexican indus- - 
Th 
| 
aA 
constant expansion: new fish-canning plants _ try in terms of value of annual production is @ 
prit 
= 
are being built on the west coast; the foot- . 
the textile industry. 
The leading branch of 
# 
| 
and-mouth disease has made necessary the: 
the textile industry is cotton cloth, produced 
Hae 
sé 
construction of meat-canning, packing, and 
__in sufficient quantity for domestic consump- 
. 
_ 
freezing plants to dispose of surplus-herds; 
tion with an exportable surplus, and supplied am =" 
| 
| 
new pasteurization and milk products raagel entirely by domestic raw cotton production., 
ont 
‘ 
- 
hd
Mexico: also 
expanding industry in 
rayon and woolen textiles. 
Whereas before 
the war, no rayon yarn was produced in 
Mexico, imports coming chiefly from Japan 
and Italy,,. @ substantial part of the yarn is 
now produced domestically; and fwo new Cel- 
anese Corporation plants constructed since 
the war have added substantially to the vol- 
ume of rayon fabrics produced domestically. 
Although woolen textiles are manufactured 
in quantities almost sufficient. for domestic 
requirements, two-thirds of the wool required 
must be imported, since the Mexican sheep 
industry. has never. been substantial. 
Aus- 
tralia was the normal source of Mexican wool 
imports before the war, but Argentina became 
the primary source tee the war and still 
holds the market. 
D> 
The Mexican clot 
Msatry is large 
enough to provide 
most of domestic needs, 
but, since most of the clothing is produced 
in homes and in small tailor and dress shops, 
there are: no Official statistics to show the 
extent of output. .: Shoes, a part of the leather- 
goods industry, are also produced sufficiently 
to meet domestic needs 
the 
tan- 
ning industry. 
An industry closely: related to edie 
and textiles, and in which Mexico is an im- 
portant exporter, is the native fiber industry: 
henequen, sisal, ixtle, zacatén root, and kapok. 
Henequen and sisal, grown particularly in the 
Yucatan peninsula, are important in the man- 
ufacture of rope and cordage, sold entirely 
to the US during the war, when manila fibers 
were in short supply; and. purchased in in- 
creasing amounts 
hare 
A 
period 
by the USSR. 
_ 
i. 
There are a 
of 
manufactur- 
ing industries in which Mexican domestic pro- 
duction is sufficient or near sufficient to meet 
demand. 
These include the production of 
soap, candelilla wax, tobacco products, tur- 
pentine and resin, matches, razor blades, bof- 
tle caps, luggage, and floor and wall tiles. 
These 
manufactures,.. furthermore, 
primarily on domestic raw materials... 
(b) Industries in Which Mezico is Partially 
Self-Sufficient. 
There. is a wide variety of 
manufacturing industries in which Mexico is 
only partially: self-sufficient,, most of which, 
ath. 
y 
in addition, rely heavily on imported raw ma- 
terials. 
Some of these industries started dur- 
ing the war and have been encouraged and 
protected by the government since that time 
in an effort to build an industrial economy. 
Among the manufactures in this category are 
chemical and allied industries (including in- 
dustrial 
chemicals, 
pharmaceuticals 
and 
drugs, fertilizers, paints and varnishes), paper 
and paper products, lumber and wood prod- 
ucts (including plywood and furniture), plas- 
tics, and rubber products (tires, tubes and 
other rubber goods). 
The Mexican Govern- 
ment has applied protective tariffs to most 
of these industries, even though they supply 
only part of the needs of the country. 
(c) Assembly Plants. 
Foreign capital has 
so far entered the Mexican manufacturing pic- 
ture only to a limited extent, being concen- 
trated primarily in the assembly of imported 
parts. 
Ford, General Motors, Chrysler, Nash, 
Hudson, Willys, Packard, and Studebaker have 
erected automobile assembly plants; and In- 
ternational Harvester assembles trucks and 
certain farm implements in Mexico.! 
Three 
firms import from the US and assemble air- 
conditioning 
and 
refrigerating 
equipment, 
and General Electric, Westinghouse, Norge, 
Bendix, RCA-Victor, Philco, and Zenith have 
branch plants in Mexico assembling all types 
of electric 
equipment. 
President 
Aleman, 
during 1947, began to stress the need for de- 
velopment of heavy industry in Mexico and 
with this aim has been encouraging the de- 
velopment of facilities prerequisite to heavy 
industry. 
(d) Military Industry. 
The Department of 
Military Industry of the Mexican Government 
controls the four factories now in operation 
which produce arms and ammunition. 
These 
include the Fdbrica Nacional de Cartuchos, 
which produces cartridges up to .50 caliber 
except for .22; Fabrica Nacional de Pédlvora, 
producing smokeless powder, black powder, 
TNT and sulphuric and nitric acids; Fdbrica 
Nacional de Armas, producing Mosquetén 
rifles, Mendoza machine guns and equipment 
for the same; and Fundicién Nacional de 
Artilleria, producing 60 and 81 mm mortars 
*The majority of farm implements, however, are 
| 
i 
‘ 
a 
‘ 
- 
| 
; 
i 
j 
= 
‘ 
q 
‘ 
| 
¥ 
ith 
j 
l] y 
on 
od 
& 
th 
lS 
¥ 
of 
£3 
‘ 
is
Al 
and ammunition, 37 mm AT ammunition, 
hand grenades, helmets, canteens, etc., and 
maintaining a repair shop for large pieces of 
‘ordnance. 
There are no other plants produc- 
ing arms and ammunition, ang@.only two 
others, the dynamite plants near 
and 
in Durango, which produce explosives. 
The 
munitions industry relies on domestic raw ma- 
terials with the exception of sulphur from the 
US, nitrates from Chile, special steel imported 
from the US, and copper from a Texas plant 
; 
which refines Mexican ore. 
Existing facilities 
are adequate to:supply the army with the 
: 
types of material produced, but heavier equip- 
i 
ment and supplies must be imported. 
A new 
ordnance factory,. Maestranza de Artilleria, 
| 
now under construction, is designed to pro- 
) 
duce everything needed by the army, includ- 
‘ing arms, ammunition and medicine. 
Mexico 
anticipates that this factory will also enable 
| 
it to sell arms and ammunition, manufac- 
ae 
tured 
to meet specifications 
of the Hemi- 
sphere arms-standardization 
to 
nations 
of Latin America. 
—__.; 
hy. 
(e)} Handicrafts. 
Mexico 
one of the 
richest craft traditions 
in Latin America. 
Many pre-conquest arts are still flourishing, 
and many others, such as ceramics, tile, and 
lacquer work, were introduced by the Spanish 
priests and taught to native craftsmen. Each 
community 
has -its own 
style, developed 
through centuries, and certain 
areas may be 
regarded 
as collection 
centers 
producing 
handicraft articles typical of the region. 
The 
principal handicraft articles are in the tex- 
tiles, 
woodwork, basketry, 
leather, 
glass, 
ceramics, metals, and stone. 
At the height of 
the export boom, during World War II, about 
three million Indian artisans (15 percent of 
time employed in the production of handicraft 
articles, and an even larger number of persons 
were dependent on the craftsman’s income. 
There are no official statistics of any kind cov- 
ering the manufacture of handicraft goods in 
Mexico, and no export statistics in any line 
except silver. 
The total maximum annual ex- 
port value of all Mexican handicraft articles, 
including goods exported by tourists, is rough- 
ly 
to be US $11 million. ; 
‘ one that lacks technical training. 
' vestment in Mexican industry. 
the national population) were part or full- 
(3) Outlook for Mexican Manufacturing. 
There is a limited local market for manu 
factured goods in Mexico because of the low@ 
purchasing power of the population, main-§ 
tenance of traditional standards of living by 
large segments of the population, and virtual™ 
isolation of many rural areas from markets . 
and centers of production. 
However, Mex-@ 
ico’s manufacturing industry can be expected§ 
to expand in the near future provided factor 
now limiting manufacturing can be overcome: 
The more rn of these limitations are 
as follows: 
1. The establishing of industries which are : 
not able to meet US competition has partially# 
dislocated the economy insofar as resources@ 
are not put to their most economic use. 
_. 
2. Shortages of fuel and power currentlyg 
hamper the development of heavy indust 
particularly. 
3. Mexico has a large cheap labor force, but 
4, Capital in large sums is needed for in- 
5. Transportation and storage facilities are 
inadequate to support an industrial economy: 
Mexican Government economic and com 
mercial policies have been aimed, though in 
consistently, toward aiding industrialization# 
Measures adopted so far have been import®™ 
| 
tariffs, exemption from taxes for industries@ 
deemed important to the national welfare 
building of power projects, sponsoring and¥ 
financing some industries, and guaranteeing 
loans to others. 
A modification of certai 
other government policies, such as restrictions@ 
on foreign capital and labor, may be the steps 
which Mexico will adopt to foster sound: 
¢ eco 
nomic growth in the future. 
120 
d. Transportation and Communications. 
(1) Transportation. 
Highways. 
kilometers of passable highways: 3,800 kiloqw 
meters are asphalt-paved; 7,700 kilometers areg 
federal surfaced gravel highways; 2,000 kilo- 
meters are graded federal country roads; 7,000 
kilometers are country, state, or village roads#m™ 
and 3,700 kilometers are federal ungraded ¢ 
roads (see transportation map in Appendix} 
The Pan-American, highway now extends 
. 
through Mexico from Nuevo Laredo, Tama 
Mexico has more than 29, 200 
pas, on 
malan t 
adminis 
000 pesc 
daily. 
Lineas | 
Laredo : 
There 
of sustai 
outside t 
dad 
road for 
out of M 
and Ciu 
rural are 
of perso) 
burro; a: 
as hand 
from the 
Railwe 
portatior 
separa 
Nacional 
The prir 
Mexico C 
British — 
road, 
ar 
The Nati 
Veracruz 
der. 
Th 
13,332 ki} 
suffer 
power an 
ated, and 
lic. The 
agegravati 
ing repai 
tuities to 
fore emp 
loading. 
The S2 
tween 
kilometer 
railways 
Inland 
Mexico h: 
All 
pé 
pe 
sions 
4a) 
There a) 
class bt
_« 
5. 
civil aviation agreements with the US and UK 
e. Money and Banking. 
+ 
are believed to be Mexico’s desire to develop 
(1) M 
~ 
and protect domestic civil aviation, which is 
not in a position to compete with major US. , 
Monetary unit is the peso. 
| 
or UK air lines. 
Although the Mexican Gov- 
devaluations have changed its value 
pe 
itat 
i 
ernment takes a firm 
stand to protect the in. 
 ‘?¢ dollar following the first World War to 8.65 
a 
terests of its US-dominated airline service, it 
at Tast 
con 
rder nearly 
xicat 
hant 
does little else to aid operations within the 
porarily, reversed 
the down~ 
on the 
1952, the 
org 930,- 
time nation, 
trade, 
country. 
ward trend in reserves of foreign exchange 
.ring 
an border 
to 
spend 1,230 
mostly 
ig and tugs, consisting 
(e) Conclusions. 
Mexican transportation 
8°!d; consequently, the rate is likely 
to 
| 
is commit 
of 419 vesse 
153, 
‘ 
remain stabilized 
at 8.65 d 
age 
| 
tion 
and totalling 
is in 
general inadequate and inefficient, and 
Temain 
s 
at 
5.65 
during the immedi 
900 pesos 
in°Mexica, are 
principally © of 31 
December 1948 
1.000 
as such has retarded the economic develop- 
ject 
All p 
associations in which cop 
g00 DWT 
is of more 
D ry 
| 
ment of the country. 
There are essentially 
ore 
of ‘money. in 
Org 
and operated by ted to Mexicans by 
there are 
109,089 gross 
are met 
no lateral highways connecting the east and 
whe 
sions are restric 
and 190 secon 
tons, 
port requireme 
Mexican 
west 
coasts except through Mexico 
City. 
ppro 
~ aly Conssant at about 3,500 million 
be i 
There are 
first ey Mexico City te 
‘s 
o expo reign-flag V 
ls. 
+* 
a better 
. 
There is almost a total lack of improved 
P alias until 1948, and increased to above 4,500) 
mis: 
pusses leaving 
tant trucking line 
jargely by 
red in developing 
ground transportation facilities in Baja Cali- 
Pesos in mid-1950. 
ed The most gn oe opera 
between 
ernment, ail to form 4 joint enterprise 
> 
fornia. 
There is.a highway’ and railroad 
(2) Banking 
| 
Be 
a 
g 
€ 
ig 
Lineas 
ides 60 
and Mexico City. 7 
fieet, is nee American coun 
: 
across the Isthmus ef Tehuantepec, but the 
The Banco de Mézico, S.A., was created as. 
ways capa 
with Cen 
Mexican po 
area itself has no good connections with the 
the central bank by the law of 25 August 1925, 
well 
There are very Sy a 
rt and bus S© pe 
e principal 
Coatzacoalcos, ciuda 
en- 
; 
rest of Mexico. 
Many prospective mining or 
_ 
in accordance with provisions of the Consti- 
14 {| 
of sustaining 
ame 
Highway- The ‘ass 
TUXpaN, 
peche Progreso, 
The 
ultural 
tution 
1917. 
Its capitalization is 50 milliongam 
to 3 
atside the 
way isa 
Carmen, 
, paz, and Gua 
, 
y are accessible only 
by burro. 
pesos. 
Its functions are as follows: to reg-# 
ket, 
Juarez-Mexico 
Bus 
zanillo, 
trade are on 
| 
Mexico's economic and war potential, as well 
ulate the coinage of money, printing of 
try’: 
q 
road for bus and yadalajara, Nuevo 
chief seapor's 
ports being 
as social and cultural development, are seri- 
notes, and disposition of foreign exchange; 
tog 
able 
out of 
pstantial. 
, the 
trade. although 
| 
hed the lack of adequate trans- 
operate as a reserve bank and clearing house 
(3 
ana civ aad 
of transpo 
to coas 
west coast, 
ports 
acilities. 
| 
for affiliated institutions; to maintain reserves#™ 
At 
= 
rural areas the 
tural commodities, 
good narbors 
th the central pla 
-§ 
(2) Communications. 
required for expressed purposes; to revise reso-j 
or agricul 
almost as much 
nications wi 
They will 2 
lutions 
of the Nati 
| 
ce & 
of persons 
burro is used 
minerals 
comm 
nett development. 
are con- 
Telephone. 
The two telephone systems in 
Oe 
nna: Sanking Commission 
the | 
burro; and 
carts to transport 
inhibited 
foreign trade until they 
ade- 
Mexico, Cia. Mexicana (IT and T subsidiary) 
as they affect operations of the 
as hand-pushed 
essing plants. 
attract much fore". "the coun 
and Ericsson (formerly held by Swedish in- 
°° 
4s fiscal agent of the Federal Govern-@ 
from the mines 
(see 
ected with the 
ortation. 
terests and now directed by Axel Wenner- 
in operations involving foreign 
\ 
-jes 
Railway 
Appendix) are operated 
. 
quate peasant 
ation. 
There are two Jp aswel 
Gren, former black-listed Nazi sympathizer) 
—_ 7 
ic credit and attention to public proj- 
tion 
onom 
rtation map 
t agency, 
iways) 
Air Transport riers operating 
ays, 
were merged in July 1950 to form Cia. Con- 
Be reasury service of the; 
Cure 
com 
a separate gove 
(N 
‘City 
ercial air 
es and Pan American 
solidada de Teléfonos de Mézico, and domestic 
tric 
| oh 
Nacionales 
es are 
Mexico 
the 
American Airlin American company; 
CA) 
‘Service is much more efficient than formerly. 
anes aconetary 
d and Internati 
| 
hone 
= 
The 
principal lin 
(formerly 
one Central 
icanos 
(TA 
There are telephone connecti 
for Reconstruction and Development. 
q 
ini 
P City-Orizaba — 
oceanic Rail- 
and 
Aéreos Centro-Amerte 
Mexican 4 
th 
jor 
f 
On 31 December 1948 the total number of 
Mexico 
way), 10 
portes 
three major 
ne Major 
foreign countries. 
Gc 
British - M 
Rail City — Jalapa — Veracruz 
In addition, there are 
de 
Av 
(CMA), 
Telegraph and Cable. 
Domestic telegraph 
and auxiliary institutions in 
‘elf 
road, 
and mene? 
5 also operate a line — 
ers: Cid. se 
aare which dominates 
: 
service in Mexico has been a government func- . was 331 main offices with 448 branches and 
p 
taine 
te 
The National eae on the Guatemsitr al 
of 
Pan Amerie su with approximately Baowd 
tion for years, in line with the Mexican policy 
agencies. 
National banking offers very little’ | 
for si 
| teen 
Veracruz to Suc ei Railways, with 
& 
air, 
Mexican aviat 
aviation business; Aer Pan 
of nationalization of public services. 
Effec- 
C°™Petition 
to private credit institutions, 
ing t 
| -ertain 
der. The Natio = are in a poor state of Te ase 
third of the total 
th 
participation Dy A 
tive 1 July 1949, concessions to Western Union 
 ‘“!¢e it operates in fields normally shunned 
13,332 kilometer 
shortage of both 
vd Lineas Aéreas 
and other private companies to handle foreign 
PY ‘he latter, such as in promotion of agri-§ 
suffer from a S€ 
? 
are inefficiently pair 
American; an 
se qnolly 
by nc 
telegraph and 
cable services have been can- 
culture, investment in public works and hous-# 
Yea 
power and rolling ay 
"11 areas of the Rep 
(LAMSA), which 
numerous 
secondary 
celled, and such services will be performed by, 
/8 Mmitiation of industrial enterprises not@ 
194 
| 
ated, and do 
shortage of rolling 
Airlines. 
operating 
the Mexican Government. 
Ay 
initiative, financing im-% 
1944 
‘ 
lic. The sev 
- slowness 
carrie 
ovias 
: 
Radi 
ports 
and 
purchasing surplus 
crops, 
andj 
194" 
re 
rs: 
‘Mexican 
any, Aer 
io.. There is an extensive radio network 
PS, 
: 
aggravated by 
of paying 
country. 
A new 
tugal and 
in Mexico with commercial, news, and gov- 
°"Couragement of individual savings accounts4 
: 
ing repairs, eo in charge of car srry for _ flies from Mexico 
many Mexican air serv ae 
ernment stations. 
The disagreeable feature 
The Mexican Government exerts strict con 
1950 
tuities to officia 
cars can be obtain 
: 
of war 
dreer operators are the me 
_ 
Of Mexican radio stations is their almost con- _ trol over banking institutions in the country 
si 
fore empty frelg 
thirteen 
international lin 
of the 
tinual interference with US border stations. . Not only all gold and foreign exchange buf 
éxico, ope 
signific 
the US and 
\ 
The Sud-Pacifico de M 
with 1,855 
i) points in 
map 
Nogales 
with @ 
uadalajara and 
owned 
of 
and other privately 
world for passen 
areas. 
utes)- 
clusion of 
railways, operate only in 
Shipping. 
for air 
ted. the successful 
and 
Inland Waterways 
vigable rivers and 
Mexico has no important 
. 
aa 
M 
ndix 
tend 
‘ 
| 
a 
ah
ry 
"<4 
HO 
Oo 
© 
ow 
| 
also silver operations of all banks are phe 
to regulation by the Bank of Mexico. 
The 
government determines for private institu- 
tions: (1) minimum capital required; (2) lim- 
itations on loans and investments by type of 
enterprise (real estate, agriculture, industry, 
commerce); (3) percentage margins of re- 
sources available for loans and investments; 
and (4) requirements for deposit of percent- 
age of liabilities in central bank. 
The open- 
ing and functioning of deposit banks are sub- 
ject to regulations of the Ministry of Finance. 
Organization statutes ‘of clearing 
houses 
where the Bank of Mexico has no branch must 
be approved by the N atonal Banking Com- 
mission. 
Interest rates, as in all Latm America, are 
high. 
Rates to first class enterprises were 
742 percent to 8 percent in “i048, while less 
well-known companies pay from 12 percent to 
14 percent. 
Private lenders may charge up 
to 35 percent per annum. The money mar- 
ket, nevertheless, is the tightest in the coun- 
try’s history, for the supply of money avail- 
able for credit purposes is far below demand. 
(3) Government Finance. 
At the beginning of the Aleman Samii. 
tration in December 1946, Lic. Ramén Beteta, 
the new Minister of Finance, outlined a com- 
prehensive financial policy, based on soundly 
conceived measures. 
The policies have not 
deen successful, however, in stemming infla- 
tion largely because the government has not 
curbed expenses, 
has not successfully 
re- 
stricted credit, and has not controlled dis- 
honest practices on the part of the fiscal ad- 
ministration. 
Government Revenues: ‘and Expenditures. 
Mexico for the first time in recent years sus- 
‘ained a budgetary surplus in 1949. 
Budgets 
‘or selected years are eo; 
in the: follow- 
ing table: 
(Thousands of Peace): “tre 
Revenues 
977,004 
1,295,338 
1,683,000 
2,154,600 
3,061,300 
2,748,000 
Expenditures 
631,544 | 
1,453,334 
1,803,000 
-. 2,302,600 
2,941,000 
~ 
“1949, budget is end-of-year. 
. 
Of Mexico’s total federal budget of expendi- 
tures for 1950, 22 percent was allocated to pub- 
lic debt, over 17 percent to communications, 
approximately 10 percent each to National De- 
fense, Public Education, and Hydraulic Re- 
sources, and approximately 5 percent each to 
miscellaneous, 
Public 
Health, 
and 
Invest- 
ments. 
The remaining 15 percent was allo- 
cated to fourteen other departments, the more 
important being Finance, Marine, Agriculture, 
Foreign Relations, and National Economy. 
Leading revenue sources are (in estimated 
order of importance) income taxes, export 
taxes, including the 15 percent surtax, im- 
port duties, and taxes on business. 
Mining 
production taxes also constitute a substan- 
tial item in government revenues. 
Taxes for state and municipal expenditures 
are often levied as duplicates of the federal 
taxes. 
The fault most commonly found in 
the present fiscal system is the multiplicity of 
taxes. 
Down through each succeeding fed- 
eral, local, and municipal administration, in 
order to meet the needs of the public treasury, 
new taxes have been gradually added which 
were to have been temporary but which have 
become indefinitely rooted in the fiscal system. 
As a result of the complexity of the tax struc- 
ture, high collection costs make many taxes 
actually unprofitable for the government. 
. Public Debt. 
Mexico’s funded internal debt 
has increased from 976.5 million pesos in 1943 
to 1,960.2 million in 1949, largely the result of 
deficit financing by the government. 
Funded 
external debt decreased from 328.0 million 
_ pesos in 1943 to 225.4 million in 1949.1 Funded 
internal debt of the States and Department of 
the Federal District, which is guaranteed by 
the Federal government, totalled 35. 1 million 
pesos in 1949. 
Floating internal debt increased from 69. 1 
million pesos in 1943 to 226.5 million in 1949. 
The 
1949 
floating 
external 
debt 
totalled 
$US 127.8 million, plus insignificant amounts 
in other currencies. 
Completion of the agree- 
ment to cover Seeropceton claims of British 
| This does 
include the 
of the 
way debt as agreed upon between the Mexican 
Government and the International Committee of 
Bankers on Mexico on 24 wevemner 
| 
= 
‘ 
. 
he 
| 
2 1 
; 
M4 
J, 
| 
“ 
ito 
‘ 
‘ 
> 
* 
+, 
= 
‘ 
1340 
— 54,540 
a 
—120,000- 
1349 
4-120,900 * 
1950 
2,000 
ZA 
» 
|
petroleum interests caused the external debt 
to. jump from $US. 25.6 million in 1946 to al- 
most $US 150 million in 1947. 
The above amounts do not include Spanish 
— 
claims for damages during the revolution, or 
the railway debt whith,cannot be registered 
until liquidation proceedings are terminated. 
Mexico was in partial or complete default on 
its funded and assumed external debt obliga- 
tions from 1914 to 1942. 
According to the 
Agreement of 5 November 1942, the dollar debt 
was reduced to pesos at the rate of one to one, 
so that the funded external debt of 230.6 mil- 
lion pesos (due in various currencies) was 
written down to 47.5 million pesos, of which 
half was considered enemy property and not 
eligible for payment. 
In recent years Mexico 
has serviced its public debt regularly, allo- 
cating 22 percent of~its 1950 federal budget 
of expenditures for this purpose. 
f. International Trade and Finance. 
(1) Government Trade Policies. 
In addition to a complex system of internal 
control, the Mexican Government maintains 
many controls over foreign trade, with various 
objectives, including the protection of domes- 
tic industries, promotion of industrialization, 
raising of revenues by customs duties on both 
imports and exports, and control of strategic 
raw materials. 
Furthermore, since July 1947 
Mexico has prohibited imports of luxury and 
semi-luxury goods by statutory restriction, 
more to save dollars than to protect domestic 
industry. 
Despite the extensive control ex- 
erted over the economic system by the Mexi- 
can Government, and the shortage of dollar 
exchange, Mexico is one of the few countries 
of the world which have not adopted qamenge 
control. 
Historically the Mexican customs tariff has 
been primarily a fiscal instrument, the total 
of import and export duties in 1947 accounting 
for 23 percent of the total federal revenues. 
In recent years, however, increasing emphasis 
has been placed on protection, particularly for 
the benefit of newly —— manufactur- 
ing industries. 
Mexico’s attitude in this pa a was evident 
at the ITO Conference in Havana in January 
of 1948, when Mexican delegates opposed the 
eh 
a 
> 
* 
general lowering of tariff barriers by mult 
lateral agreement. 
a 
(2) Trade Agreements. 
The same nationalistic 
spirit whick 
prompted Mexican delegates to Havana to op 
pose general lowering of tariff barriers 
wag 
largely responsible for the inability of — icarm 
and US negotiating teams to reach an 
agree 
ment, and the US-Mexican trade agreemenf 
was denounced effective at the end- of 1950. 
Mexico has since the end of the war com: 
cluded a trade agreement with Canada and @ 
compensation agreement with Czechoslovakiag® 
Commercial modi vivendi have been extended 
with Chile and El Salvador, and most-favored# 
nations trade agreements signed with Guate@ 
mala, Italy and Czechoslovakia. 
Considera@ 
tion has been given to establishment of com# 
mercial agreements with various other coun 
trieS. 
Barter agreements as a means for Mex=a™ 
ico to augment its foreign trade have assumeday 
considerable 
importance, 
particularly. with 
Europe, whereby necessary imports can be sé 
cured without further expenditure of dollz 
reserves. 
(3) Pattern of International Trade. 
During and since World War IT, Mexico hag 
ranked third in Latin America in value 
of 
total foreign trade and since 1946 it has rankee¢ 
first in Latin America as a purchaser of ug 
goods. 
No accurate figures are available for Mexit 
can imports or exports. 
Official Mexican im 
port statistics cannot be relied upon, sinceg 
they do not account for: (a) contraband im 
ports valued at about $48 million annually fo 
commodities used in Mexico (excluding arms 
and ammunition for transshipments for vari. 
ous revolutionary movements); 
(b) impo 
through the customs free zones of Baja Cali 
fornia and various border cities; (c) importsy 
by official, semi-official, or military govern-™ 
ment agencies, such as purchases of railway 
equipment by the National Railways, petro-@ 
leum machinery and equipment by Pemex, 
and arms and ammunition for the Mexicang® 
armed forces; and (d) undervaluation of im 
ports to evade duties assessed on an ad valoremy 
basis. 
Although there is no clear indicationgg 
of the degree of inaccuracy of Mexican imam 
port statistics, US statistics show that Mexicag 
iat 
+" 
taxes. 
Acc 
| 
items 
= 
from 
vehicl 
ll pe 
pharn 
troleu 
produ 
perce! 
perce! 
Likt 
US ap 
als, 3% 
per, 
mony 
erages 
cent; 
and o 
lumbe 
(4) 
As } 
tion,e 
garba) 
table 
and 
export 
ton, cz 
and ca 
to imy 
exploit 
aid of 
compa 
| 
| 
A 
ILE 
. 
the 
the L 
cate 
of 5.€ 
millic 
tallec 
were 
contr 
It ha 
ican 
clude 
EX} 
rate, 
contr 
clude 
the ci 
uatio) 
classe 
| 
>
. 
imported $511.4 million worth of goods from 
the US in 1948, whereas Mexican figures indi- 
cate (at an average exchange rate for the year 
of 5.8 pesos per dollar) imports of only $441.4 
million. 
In 1949 US imports from Mexico to- 
talled $244 million and US exports to Mexico 
were valued at $462.4 million. 
Both US and 
Mexican figures would 
be exclusive of certain 
contraband not licensed for export by the US. 
It has furthermore been. discovered that Mex- 
ican statistics on imports from the US also in- 
cluded some from Canada and other countries. 
Export statistics are also considered inaccu- 
rate, for the following principal reasons: (a) 
contraband exports from Mexico are not in- 
cluded; these are particularly significant in 
the case of narcotics and gold; (b) underval- 
uation of merchandise is, practiced by all 
classes of exporters to evade export duties and 
taxes. 
| 
According to US statistics, the following 
items constitute Mexico’s principal imports 
from the US, in order listed: machinery and 
vehicles, 44 percent; metals and manufactures, 
1l percent; foods, 9 percent; chemicals and 
pharmaceuticals, 7 percent; gasoline and pe- 
troleum products, 2 percent, paper and paper 
products, 2 percent; cotton manufactures, 2 
percent; synthetic fibers and manufactures, 2 
percent; and all others, 10 percent. 
ert. rly 
_Likewise, Mexico’s principal exports to the 
US appear to be as follows: metals and miner- 
als, 38 percent (in order of value: lead, cop- 
per, zinc, crude petroleum and fuel oil, anti- 
mony ore, and others) ; food products and bev- 
frages, 35 percent; sisal and henequen, 7 per- 
cent; crude chicle, 2 percent; vegetable oils 
and oil seeds, inedible, 2 percent; soft pine 
‘umber, 4 percent; and all others, 12 percent. 
(4) Trends in Foreign Trade. 
| 
, As Mexico increases its agricultural produc- 
“on, exports are increasing in pineapples, rice, 
_ 88rbanzos, fresh vegetables, flaxseed, and vege- 
ee The building of manufacturing 
~“ 
Processing plants is also contributing to 
*xports of cotton textiles instead of raw cot- 
bs Canned and frozen meat instead of cattle, 
to Ant fish and vegetables. Mexico hopes 
cms Prove its balance of trade by increased 
ioitation of petroleum resources with the 
Of development contracts with private 
~laws and regulations. 
4} 
-\Mexico’s growing agriculture and industry 
have been changing the pattern of imports. 
The: construction of hundreds of chemical 
plants has substantially reduced Mexican de- 
mand for imported chemicals while the re- 
quirement that automobiles be assembled in 
the country has changed the importation 
from vehicles 
to parts. Mexico 
has in the past 
few years changed from a sugar-importing to 
an exporting country, and demands for other 
food imports, primarily wheat, have been re- 
duced substantially under the agricultural de- 
velopment program. 
Efforts to attain self- 
sufficiency in some commodities have aug- 
mented import requirements of others, partic- 
ularly of machinery from the US for agricul- 
ture, industry, irrigation and electrification, 
highway 
construction, 
railroads 
and port 
works—all of which are expensive for a coun- 
try which is trying to build industry from the 
‘ground up. 
Contraband Trade. 
| 
A factor in Mexico’s foreign trade, which has 
assumed an imposing role for its political as 
well as its economic significance, is that of 
contraband. 
Smuggling has been a constant 
problem of border officials since long before 
the present economic difficulties, and has only 
been enhanced by Mexico’s prohibition on 
some imports and high duties on others. 
Commercial imports of military arms and am- 
munition, long prohibited, have continued 
clandestinely by air, automobile, and ship. 
The illegal traffic in arms has increased con- 
siderably in recent months and now includes 
contraband aircraft and parts. 
It is believed 
that pressure in various parts of the world to 
secure US arms has made Mexico the logical 
go-between for Central American and Carib- 
bean revolutionary activities as well as for 
Mexico’s own 
latent revolutionary 
groups. 
Commercial importation of specified “sport- 
ing” arms and ammunition is legal, but is 
regulated by the government. 
To the arms 
traffic there has now been added a big busi- 
ness in luxury goods.*' There seems to be no 
satisfactory solution to the basic problem pre- 
sented by the widespread corruption in the is- 
suance of Mexican import and export licenses 
and in the administration of Mexican customs 
fs 
. 
iTi- 
| 
ef 
Va 
LS 
O! 
> 
sq 
o 
‘l- 
@ 
~ 
Z 
> 
at 
| 
Se 
| 
: 
~ 
gu 
§ 
- 
«4 
‘ 
ar
: 
There is a certain amount of contraband out 
The reserves as of 30 June 1949 were 
req@™m 
the perio 
of Mexico, but the volume is believed to be 
quired in entirety as backing for the currencyggm 
70 perce! 
negligible except in the case of narcotics, sil- 
Reserves are believed to have been below th@™m 
in Mexicc 
ver and gold. 
Gold is smuggled to Cuba, 
legal minimum recta cra’ 
at least the f 
had been 
Spain, and Argentina, where there isthe great- 
half of 1949. 
est demand, but the naroctics traffic goes al- 
It is to be noted that reserves declined to 
: 
distribu 
most entirely to the US. 
Vast fields in north- 
greater extent in the latter half of 1947. afte 
ing a gr 
western Mexico are devoted entirely to raising 
years, hoi 
imposition of severe import restrictions, 
opium poppies. 
Processing plants for pro- 
a 
investmeé! 
they had during the first half of the ye: 
duction of heroin and morphine, and landing 
the $54.7 million decline in total reserves d 
strips to facilitate air smuggling are scattered 
we 
ing the last half of 1947 would have 
‘ 
along the border. 
Even though Mexico and 
 preater by $42.5 million but for loans of $24 
the US have a joint informal agreement to 
mijiion from the US Stabilization Fund ang 
suppress the traffic, and even though Mexican — 90 5 million from the International Monets 
officials, 
in’ accordance 
with 
a resolution 
Fund. 
adopted at ECOSOC in 1947, have conducted 
1948 and 1949 a 
| 
anti-narcotics 
campaigns, 
the 
traffic 
still 
urin 
: 
thrives. 
It is not believed that much can be 
‘SMuggling and heavy imports and paymentg 
done within Mexico to end the illicit drug 
made on foreign debt further reduced rem 
exican 
various positions, 
from 
the 
, 
police to presidential advisers, are profiting 
in addition 
Bank 
hag 
substantially as long as it continues. 
on 
er the 
(6) Balance of International Payments. 
(7) Foreign Investments in Mezico. 
: 
The only apparent manner of determining 
The Bank of Mexico in a study 
of foreigt 
the extent of imbalance is by investigation of 
direct investment in 448 prow, Fra d 
a 
| 
reserves of the Bank of Mexico in gold, silver, 
q 
and foreign exchange. 
The following table 
| 
* These were the result of official disregard of imam 
indicates total official holdings of the central 
+ controls, coupled with a decrease in exports andl 
the wars 
notion’ financial 
ft é End of 
(Valued at $35 
Silver 
Foreign Exchange 
Month 
ounce) 
Holdings 
Holdings 
Total 
(Millions of US dollars) 
June 
1945 
228.6 
5.3 
97.4 
331.3 
December 
1945 
292.5 
26.0 
50.5 
369.0 
June 
1946 
233.2 
34.8 
42.9 
310.9 
December 
1946 
180.0 
39.4 
43.3 
262.7 
June 
1947 
130.3 
35.2 
41.9 
207.4 
December 
1947 
100.4 
:29.0 
142.7 
December 
1948 
41.7 
35.2 
22.5 
99.4 
January 
1949 
413 
39.6 
ow 
98.3 
June 
1949 
31.5 
24.0 
23.3 
78.8 
June 
1950 
70.9 
32.3 
27.1 
130.3’ 
August 
1950 
29.7 
203.0 
4 Less obligations of $20.1 million. 
Total reserves on 26 August 1950 were $203.1 
‘ 
million, less obligations of $14.9 million, a new peak since stabilization of the peso. 
Excess reserves after coverage of legal metallic reserve requirement and foreign 
= 
exchange obligations on 26 August totalled $83.6 million. 
> 
| 
| 
.
& 
& 
iv 
the period 1938-1945 (believed to cover about 
70 percent of total direct foreign investment 
in Mexico) reveals that 80 percent of the total 
had been channeled to public services, trans- 
portation, and mining. 
Manufacturing and 
distributive undertakings have been acquir- 
ing a greater relative imaportance insrecent 
years, however. 
Sixty percent of total foreign 
investment was US capital, with Canada, Eng- 
land, France, Sweden, and Spain following in 
order of importance. 
The flow of additional 
US capital into Mexican enterprises since the 
end of the war has probably substantially in- 
creased the proportionate holding of US in- 
terest. 
The value of total foreign investments 
in Mexico in 1943 was approximately $US 750 
(latest figures available). 
- 
od 
= 
+A 
é 
. 
° 
i 
> 
« 
id 
t« 
» 
J 
é~ 
| 
a 
st 
| 
| 
~ qd 4 
> 
~~. 
e 
‘4 
‘ 
. 
e% 
f 
*s 
ty 
. 
“ia 
te, 
iv 
y 4 
+
CHAPT ER v 
aj, 
1. Genesis of Present Foreign Policy. : 
Historically, Mexico’s foreign policy is es- 
sentially that of its relations with the US. 
The continental expansion of the US, which 
was at its most intense stage in the early years 
of Mexico’s political development, constituted 
a definite and prolonged threat to Mexico and 
gave rise to the latter’s defensive policy. 
Fear 
of aggression and economic domination by the 
US have traditionally governed Mexico’s re- 
lations with the US and have also influenced 
its policy toward other aha 
countries to a 
considerable degree. 
.. 
The early establishment of 
te- 
lations with other Hispanic nations was moti- 
vated primarily by this fear, although it was 
strengthened by a common political and cul- 
tural heritage as well as by a common desire 
to form a strong alliance to safeguard their in- 
dependence against European 
domination. 
These factors persisted as Mexico developed 
and its foreign policy matured, giving rise, as 
a result, to some of the principles (still main- 
by Mexico) which 
apparently anti- 
Since the 1920’s saat! ind suspicion have 
gtacually given way to cooperation and re- 
spect. Although the relations between Mexico 
and the US have not always been cordial, 
progress toward the establishment, by inter- 
national action, of the principles of equality, 
‘reedom, and individual rights of nations, has 
veen steady. 
Mexico’s: vigorous advocacy of 
‘Ne principle of non-intervention is the result 
“ta long series of diplomatic controversies 
“ith the US arising out of US diplomatic and 
‘tmed interventions in Mexico and in the 
cther Latin American 
areas. 
Mexico, 
fre- 
{4ently supported by the other Latin Ameri- 
“an governments, has persistently opposed 
=tervention 
at 
all 
international policy- 
axing: assemblages: 
the US policy of in- 
“rvention was challenged : at the Havana 
Conference of 1928, the Montevideo meet- 
ing of 1933, and the Buenos 
Aires Con- 
ference of 1936. 
President Roosevelt’s decla- 
ration of non-intervention in 1936, coupled 
with previous evidences of improved relations, 
did much to allay the fears of Mexico and of 
Latin America generally, and it established 
non-intervention as a principle of Western 
Hemisphere relations. 
The abolition of colonial possessions in the 
Western Hemisphere has been supported by 
Mexico since the promulgation of the Monroe 
Doctrine in 1823. 
Consistent with this tradi- 
tion, Mexico has, in more recent years, sup- 
ported in principle those American states in- 
volved in controversy over the ownership of 
the Falkland Islands, Antarctica, and British 
Honduras, recommending 
arbitration and con- 
ciliation as a just and anameicen means of 
settling these matters. 
One of the strongest supporters of the policy | 
of asylum, Mexico has traditionally opened its 
embassies and legations to important foreign 
political figures, thereby occasionally antag- 
_onizing friendly governments. 
Another facet 
of Mexico’s policy of asylum is its liberal atti- 
tude toward the admission of political exiles 
representing various tendencies provided they 
refrain from engaging in political a 
while in the country. 
The basic norm of Mexican athe on ‘the 
question of recognition of foreign governments 
is the Estrada Doctrine, formulated in 1930 
by Foreign Minister Genaro Estrada. 
This 
doctrine emphasizes that diplomatic repre- 
sentations are accredited to a state rather 
than to a particular government. 
It stipu- 
lates that a change of government in another 
country, even if effected by revolutionary or 
illegal means, does not constitute per se the 
basis for granting or withdrawing recognition, 
thereby implying approval or disapproval of 
the new government. 
ATR 
ix 
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2. 
Foreign Relations. 
a. The United States. 
The Good Neighbor Policy ar done much 
to allay fears, suspicions. an 
which, though latent, still persist. 
Amity and 
cooperation characterized. the relations be- 
tween Mexico and the US during World War 
II, highlighted by President Roosevelt’s visit 
to the city of Monterrey in 1943. 
Immediately 
after the Japanese attack on’ Pearl Harbor, 
Mexico broke relations with the Axis powers 
and in June 1942, entered the war on the side 
of the US and its allies. Mexican military 
participation in the war was limited to an air 
squadron sent to the Pacific. Mexican citizens 
residing in the US, however, yolunteered mili- 
tary service, bringing a total of approximately 
15,000 Mexicans serving in=the US Armed 
Forces. 
Mexico’s greatest contribution to the 
war effort was strategic raw materials to the 
US and over 300,000 laborers to relieve os 
manpower shortage in the US. 
In the postwar period, relations have re- 
mained cordial. 
Mexico is definitely commit- 
ted to a program of Hemisphere defense and 
continental solidarity. 
Its role in the estab- 
lishment of‘ the Inter-American System has 
been significant and Mexican support of the 
program of inter-American military coopera- 
tion no less so.’ At the Pan American Confer- 
ences during and after the war, Mexico has 
taken a prominent part in supporting the US 
policy to consolidate Hemisphere defense. 
In 
addition, the Mexican Foreign Office has offi- 
cially pronounced support of the US stand on 
the North Atlantic Pact. 
The Marshall Plan 
is also viewed by Mexico as an important meas- 
ure in bringing about the defense of the Euro- 
pean nations against further Communist ex- 
pansion. 
Mexico’s contribution to this pro- 
gram of economic rehabilitation is in agricul- 
tural goods. 
It is accompanied, however, by 
a plea for continued US economic assistance to 
the Latin American nations which are oul u un- 
developed industrially. 
Unsettled issues between Mexico and the us 
are primarily economic (see Chapter III, pp. 
21-43). 
Aside from these are minor territorial 
and boundary disputes. Ownership of nine 
islands off the California Coast between San 
Diego and Santa parbare: and not included in 
animosities 
. 
' carried out by the Argentine Embassy staf 
to both “capitalist and Communist imperi 
the terms of the Treaty of Guadalupe Hidalge 
is occasionally claimed by the Mexican na 
tionalist press. 
It is not believed probable 
however, that Mexico will press the issue aftez 
sO many years and with so many other vite 
affairs requiring greater attention. 
The land 
known as the Chamizal has long been undemg 
dispute because of a shift in the channel of theag 
Rio Grande between El Paso and Ciudad 
Juarez on the Texas border in the 1880’s. 
The 
question was placed before an international 
commission of arbitration and a decision favora™ 
able to Mexico was rendered but no action was 
ever taken by the US to return the land. 
recently as 1947, when President Trums 
visited Mexico, there was speculation in Me: 
ican newspapers as to whether the matten 
would 
be discussed. 
Mexico 
continues 
tag 
claim the Chamizal, and although it is no@ 
believed likely that it will ever press this claimm 
to the point of causing any serious impair 
ment of relations, its settlement in accordanceé™ 
with the arbitration cited above would be reg 
garded with considerable favor in Mexico. 
b. Argentina. 
A well-planned campaign by the Perén Gova™ 
ernment to win Mexican friendship, and am 
half-hearted reception of these overtures on™ 
the part of Mexico have characterized Mexa™ 
ican-Argentine 
relations 
in recent 
yearg 
Mexico in general and Mexican officialdom im 
particular do not feel as friendly toward thé 
Argentine people as they do toward othe 
Latin American peoples. 
An aspect of nationalism in both countries 
, 
is a fear of US political and economic dominag™ 
tion. 
Although 
less 
pronounced 
betweem™ 
Mexico and Argentina than between Mexica™ 
and some other Latin American countries@y 
there.are cultural ties in which the work of thay 
Argentine Cultural Institute in Mexico plays 
a significant 
role. 
Not only is this work 
but it is supported and strengthened by Mexa™ 
ican intellectuals who favor a closer relationg 
ship of the two countries. 
To augment 
| 
gentine leadership and lessen US influencég™ 
Argentina has attempted to create a Latiigg 
American “third position” labor bloc opposegay 
‘Se 
isms.”- To implement its proposals for cle a] 
er. 
’ 
economic ties, 
ico special cri 
However, P 
the support ¢ 
“third positio: 
President Ale 
ness to supp 
Peron himselL 
of the “third 
domestic sph: 
Argentina 
money in Me? 
has made str 
“Latin Ameri 
nomic ties st 
nation. 
Mex 
cultural unit: 
advances, bu 
ward the “P 
solidarity” id 
ico would acc 
flict with th 
fense progra: 
c. Spain. 
Mexico ha: 
lations with 
mercial and 
altogether s 
cial air trave 
every day as 
trade betwee 
probably no 
ing dollars, \ 
f 
and there i: 
Mexico for t 
Cultural 
primarily tr 
mirers of S) 
pathizers fo 
concept of } 
guage, and 
Peoples of. 
many years 
count 
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acteristics 
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