CHAPTER 5: The Role of Foreign Powers in the Mexican Revolution, 1910-1940
European and US Economic Influence in Mexico Prior to 1910
Key Question: What was the extent of European and US economic influence in Mexico prior to
1910?
From 1876, Porfirio Díaz invited foreign investment, believing Mexico needed modernization
and that a stable government was crucial for economic growth. This was a response to the
political instability Mexico experienced post-independence(1822): 75 presidents in 55 years, two
foreign invasions, territorial loss, and a civil war. Díaz aimed to attract US and European
investors to build modern infrastructure while ensuring Mexican progress.
One of Díaz's first measures was promoting railroad construction. This involved negotiation with
local communities to acquire land for sale to investors.
Foreign Investment in Mexico Before 1910
Where did foreign investors invest, and how were they treated? To attract investment, modern
transportation to ports and the US border was necessary. Díaz granted concessions to foreign
and national investors.
In the 1880s, the first railroad line (Mexico City to El Paso, Texas) was given to US investors
(Mexican Central Railroad Company).By the late 1880s, more lines connected to Pacific and
Atlantic ports, with British and French investors joining.
British and US Investment: While Díaz did have contracts with Japanese firms, most
foreign investment came from Britain and the USA. Díaz negotiated for favorable terms for
Mexico, though this wasn't always successful.
S. Pearson and Son Ltd.
“This British engineering company, founded by Samuel Pearson in 1884, rebuilt a railroad
connecting the Pacific and Atlantic at the Isthmus ofTehuantepec. The Mexican government
provided significant infrastructure support. Between 1889 and 1900, Pearson's contracts totaled
$12.4 million, encompassing railroads, electricity, trams, mining, and oil.”
Pearson's Political Influence: Samuel Pearson's influence extended to British
politics, supporting Mexico in loan applications and border disputes with Guatemala.His firm
employed influential Mexican politicians (including Díaz's son), creating a network that benefited
Díaz, even securing his safe exile in 1911.
Duty-free Manufactured Goods: Luxury consumer goods, usually foreign-made, sold without
customs duties to stimulate consumption.
Other Investments
Other investors, like US contractor Thomas Braniff, negotiated special deals; Braniff
profited from transporting duty-free goods. Some investors (French and US) focused on building
contracts, becoming suppliers of machinery or services after project completion (e.g., canal
irrigation). After completing the Tehuantepec railroad, Pearson operated it profitably as a partner
with the Mexican government.
Table 2: S. Pearson & Sons Construction
Contracts in Mexico, 1889-1911
, Name of Date Client Nominal value in source of
contract Value pesos finance
(Sterling)
Mexico City 1889-1898 Mexico City £2,000,00 $9,062,000 55% External
Canal drainage Municipality 0 debt,
8% Internal debt,
23% Federal
Govt.
revenue, 14%
Municipal revenue
Veracruz 1895-1903 Mexican £3,000,00 $30,027,92 Almost all by
Harbour Federal 0 4 internal debt in
Government 5% silver bonds
Veracruz 1901-1903 Veracruz £400,000 $3,964,494 Mostly 5% State
drainage water State Government Bond
supply Government
Julie Railway 1896-1900 Vera Cruz £100,000 N.A. S. Pearson & Son
(Mexico) Ltd. as
owner of Railways
Ltd Vera Cruz
(Mexico) Railways
Alvarado 1900 Vera Cruz £100,000 N.A. S. Pearson & Son
railway (Mexico) Ltd. as
Reconst owner of Railways
Ltd Vera Cruz
(Mexico) Railways
Tehuantepec 1896-1906 Mexican £2,500,00 N.D. Partly in Silver
Railway Federal 0 Bonds
Government
Coatzacoalcos 1896-1909 Mexican £1,400,00 $21,751,34 External Debt:
port works Federal 0 4 $20,532,153 from
Government the 1904 4% Gold
Debt
Selina Cruz 1899-1907 Mexican £3,300,00 $24,983,40 Internal Debt, c.
port works Federal 0 0 $26,000 in 5%
Government Silver Bond
Selina Cruz 1905-1907 Mexican £385,000 Internal debt
and Federal
Coatzacoalcos Government
Mazatln 1906-1908 Sinaloa State £60,000 N.D. State Government
European and US Economic Influence in Mexico Prior to 1910
Key Question: What was the extent of European and US economic influence in Mexico prior to
1910?
From 1876, Porfirio Díaz invited foreign investment, believing Mexico needed modernization
and that a stable government was crucial for economic growth. This was a response to the
political instability Mexico experienced post-independence(1822): 75 presidents in 55 years, two
foreign invasions, territorial loss, and a civil war. Díaz aimed to attract US and European
investors to build modern infrastructure while ensuring Mexican progress.
One of Díaz's first measures was promoting railroad construction. This involved negotiation with
local communities to acquire land for sale to investors.
Foreign Investment in Mexico Before 1910
Where did foreign investors invest, and how were they treated? To attract investment, modern
transportation to ports and the US border was necessary. Díaz granted concessions to foreign
and national investors.
In the 1880s, the first railroad line (Mexico City to El Paso, Texas) was given to US investors
(Mexican Central Railroad Company).By the late 1880s, more lines connected to Pacific and
Atlantic ports, with British and French investors joining.
British and US Investment: While Díaz did have contracts with Japanese firms, most
foreign investment came from Britain and the USA. Díaz negotiated for favorable terms for
Mexico, though this wasn't always successful.
S. Pearson and Son Ltd.
“This British engineering company, founded by Samuel Pearson in 1884, rebuilt a railroad
connecting the Pacific and Atlantic at the Isthmus ofTehuantepec. The Mexican government
provided significant infrastructure support. Between 1889 and 1900, Pearson's contracts totaled
$12.4 million, encompassing railroads, electricity, trams, mining, and oil.”
Pearson's Political Influence: Samuel Pearson's influence extended to British
politics, supporting Mexico in loan applications and border disputes with Guatemala.His firm
employed influential Mexican politicians (including Díaz's son), creating a network that benefited
Díaz, even securing his safe exile in 1911.
Duty-free Manufactured Goods: Luxury consumer goods, usually foreign-made, sold without
customs duties to stimulate consumption.
Other Investments
Other investors, like US contractor Thomas Braniff, negotiated special deals; Braniff
profited from transporting duty-free goods. Some investors (French and US) focused on building
contracts, becoming suppliers of machinery or services after project completion (e.g., canal
irrigation). After completing the Tehuantepec railroad, Pearson operated it profitably as a partner
with the Mexican government.
Table 2: S. Pearson & Sons Construction
Contracts in Mexico, 1889-1911
, Name of Date Client Nominal value in source of
contract Value pesos finance
(Sterling)
Mexico City 1889-1898 Mexico City £2,000,00 $9,062,000 55% External
Canal drainage Municipality 0 debt,
8% Internal debt,
23% Federal
Govt.
revenue, 14%
Municipal revenue
Veracruz 1895-1903 Mexican £3,000,00 $30,027,92 Almost all by
Harbour Federal 0 4 internal debt in
Government 5% silver bonds
Veracruz 1901-1903 Veracruz £400,000 $3,964,494 Mostly 5% State
drainage water State Government Bond
supply Government
Julie Railway 1896-1900 Vera Cruz £100,000 N.A. S. Pearson & Son
(Mexico) Ltd. as
owner of Railways
Ltd Vera Cruz
(Mexico) Railways
Alvarado 1900 Vera Cruz £100,000 N.A. S. Pearson & Son
railway (Mexico) Ltd. as
Reconst owner of Railways
Ltd Vera Cruz
(Mexico) Railways
Tehuantepec 1896-1906 Mexican £2,500,00 N.D. Partly in Silver
Railway Federal 0 Bonds
Government
Coatzacoalcos 1896-1909 Mexican £1,400,00 $21,751,34 External Debt:
port works Federal 0 4 $20,532,153 from
Government the 1904 4% Gold
Debt
Selina Cruz 1899-1907 Mexican £3,300,00 $24,983,40 Internal Debt, c.
port works Federal 0 0 $26,000 in 5%
Government Silver Bond
Selina Cruz 1905-1907 Mexican £385,000 Internal debt
and Federal
Coatzacoalcos Government
Mazatln 1906-1908 Sinaloa State £60,000 N.D. State Government
