Evening star. [volume] (Washington, D.C.) 1854-1972, 1911-03-21
MEXICO.
W-Go Government. Owned
Railroads.
By Frederic J. Haskin.

No phase OF Mexican progress has af-
forded President Diaz more satisfaction
than the development OF the railway mile
age OF the republic under his rule. When
he came into office Vera Cruz was the
only city that could be reached by a rail-
road; while now the whole country is
opened up by them. But the browning
feature Of Mexican railroad history, to his
mind, is the acquisition by the govern
ment of controlling interest in the
merged lines now operated under a sys-
tenn known as the National Railways of
Mexico. A decade ago the roads which
now constitute this thoroughly modern
system were a lot of independent lines,
some barely meeting fixed charges. some
dangerously near receivership, and all in
that condition of financial decrepitude
which makes them prey to Wall street
interests. The government became fear
full lest the late K. II. Hartman, then in
the heyday of his rule of the railroad
empire, might descend upon Mexico. an
mex these lines to his holdings, and make
Mexico tributary to his empire. 1t was
felt that this would so hamper the gov
eminent that steps must be taken to pre-
vent il.
In taking these steps the government
played practically the same cards that
Hartman might have played, and &C
quircd the same domination over the rail-
roads that Hartman would have ac-
Quired. The relation of the government
to the National Railways of Mexico is COM
parable to no other railroad situation In
the world. 1t might be likened to the old
system of Joint public and private owner
ship of canals and turnpikes in the earlier
days of the American states. In those
days company would be formed for the
building of canal or turnpike and the
state would acquire three-hfths OF the
stock, permitting the highway to be oper-
ated as a purely commercial enterprise,
with a majority of the board of directors
acting in behalf Of the state. The differ
ence lies in the fact that the controlling
interest in the stock of the railway sys-
tenn was acquired in the process OF re-
organization, and long after the roads
were built.
The story of Mexico's launching into
railway finance begins with 1907 In
that year the
Changed From Narrow Mexican Ma.
to Standard Guage. company was
reorsanized as the National Railroad
Company of Mexico. under the auspices
Of the Speyer interests. The chief OBJ
ject of the reorganization was to con-
vert the line from narrow to standard
gauge, although another aim was to
offset the advantage of the Mexican
Central by reason of its deep-water outlet
1t Tampico. In carrying out this pur-
pose the Speyer interests began quietly
to acquire control of the Interoceanic
Railway Company. controlled by English
capital up to that time, and operating
a through line between Mexico City and
Vera Cruz
At this time President Diaz and his
minister of finance were persuaded that
heroic measures must be taken or Amer
lean interests would dominate the Mex
lean railroad situation. So they decided
to play the financial game against the
Speyers by buying a controlling interest
in the InterOceanic. which they did. buy
ing on the London market S5.OOO,0 900
worth of AZ second debenture stock.
At this juncture Minister Iimantour
went to Europe, stopping in New York.
Speyer, during an interview in that city,
offered to sell the Mexican government
Ale per cent of the stock of the National
Railroad of Mexico for 5000 900. accept
ing the debentures of the Interoceanic as
half payment. In this way, owing to
peculiar stock conditions. the Mexican
government got controlling interest In
the National. although parting with its
direct control of the Interoceanic. BY
this transaction the Interoceanic came
under the control of the National, and
a. the National was controlled by the
government, it practically controlled both
lines