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American investment in tropical Mexico: rubber plantations, fraud, and dollar diplomacy, 1897-1913.

American Investment in Tropical Mexico: Rubber Plantations, Fraud, and Dollar Diplomacy, 1897-1913

As the nineteenth century ended, India rubber became a critically important commodity. Demand outstripped production; prices skyrocketed from about $.50 to $2.07 by 1910, and frenzied speculation in London produced a "rubber bubble"--a commodities folly on the scale of Holland's sixteenth-century tulip mania. (1) These events were foreshadowed, however, by a now forgotten boom in which, encouraged by their government and lured by promises of returns of as much as 1,000 percent, American investors poured millions of dollars into Mexican rubber securities and plantations. (2)

Washington's policy encouraged investment abroad as an instrument of geopolitical influence. Known as the "Open Door" in the Orient and as "Dollar Diplomacy" in Latin America, this policy attained its fullest expression in the Mexico of Porfirio Diaz (Porfiriato). Americans of the day believed that the internationalization of their commerce and capital was a progressive development in foreign relations. As President William H. Taft observed, "[S]ubstituting dollars for bullets . . . appeals alike to idealistic sentiments, to the dictates of sound policy and strategy, and to legitimate commercial aims." (3) Today historians take a much darker view.

Briefly stated, the most recent consensus on Mexico's "penetration" (a word suggesting domination and abuse) by American capital is this: In collusion with members of Mexico's ruling elite, American investors drained the country of its wealth and created economic under-development by squeezing out local entrepreneurs and by exporting profits rather than reinvesting. This left an "impoverished populace" and conferred on Washington almost hegemonic economic, political, and cultural influence in Mexican affairs. (4) Lately, however, this paradigm has begun to fray at the edges. Even recent studies by some of its supporters point to Mexico's ability to manipulate the process of foreign investment. (5) Some have rejected core elements of the paradigm by noting that Americans who made fortunes in Mexico were exceptions to the rule and by calling attention to the limits of hegemony; others have challenged the notion that widespread anti-Americanism was an important factor in the coming of the revolution of 1910. (6) As yet, however, no coherent revisionist interpretation of the effects of American investment and Dollar Diplomacy on porfirian Mexico has been propounded.

This article attempts such an interpretation by examining corrupt business practices that to date have received little attention, except as a vague moral criticism of the Diaz regime. For years it was an open secret in Mexico that many plantation companies were fronts designed to defraud U.S. investors. A Gordian knot of private business interests, porfirian development policies, and Washington's hemispheric ambition permitted, even encouraged, this situation. Indeed, Washington suppressed investigations of investment fraud by the consul general's office when it became clear that its activities imperiled the entire structure of U.S. investment and Dollar Diplomacy in Mexico. The U.S. government subsequently appointed an ambassador intimately connected to interests identified as corrupt by the consul general.

Development and Dollar Diplomacy

Porfirio Diaz was concise in his well-known (though possibly apocryphal) appraisal of Mexico's geopolitical situation as ". . . so far from God, and so close to the United States." He and his fellow puros (or Jacobin) liberals, most notably his minister to Washington, Matias Romero, courted American investment in an attempt to turn the inevitable to Mexico's advantage. Puros sought a relationship with the United States that would provide "all of the fruits of annexation without any of the dangers," in which American capital, technology, and markets would be used to build Mexico's economy and to strengthen national sovereignty. They were counterpoised within the government by the cientifico (positivist) faction, headed by finance minister Jose Y. Limantour, who favored European development capital over American. (7) Outside government, the conservative opposition was openly hostile to American influence and repeatedly pointed out that the Yankees' so-called peaceful invasion was invasion nonetheless. (8) But Romero was closest to Diaz, and his view, that Mexico could absorb American colonists and capital without losing its national sovereignty or character, prevailed. (9)

The positions of these porfirian factions proved complementary and produced structural safeguards against U.S. domination. European colonists were brought to the tropics, and Germans in particular developed many coffee estates, mainly in Oaxaca, from the 1840s. (10) Limantour and the cientificos supported a British company's claim to a valuable colonization concession in Chiapas against an American company backed by Romero, Diaz, and other puros. (11) Romero's death marked the ascent of Limantour as Diaz's principal advisor and the relative decline of American influence. Soon thereafter, Limantour ended the power of individual Mexican states to contract foreign loans, a business dominated by U.S. banks, and he continued to place virtually all of Mexico's foreign debt in Europe despite lower American interest rates. (12) He was instrumental in the selection of Sir Weetman Pearson (Lord Cowdray) to modernize and operate the strategic transisthmus Tehuantepec Railway and its terminal ports of Salina Cruz and Coatzacoalcos (now Puerto Mexico) over railroad magnate Cyrus P. Huntington, one of Diaz's closest American friends. (13) Cowdray's acquisition of oil concessions in 1906 at the expense of U.S. petroleum companies, usually cited as the origin of this trend, merely followed in its wake.

The ends of Diaz's development policy were antithetical to those of Dollar Diplomacy: Mexico sought national strength through economic development, whereas Washington sought geopolitical influence; but the means of the two policies--the encouragement of American investment and settlement in Mexico--meshed perfectly. (14) Washington's domestic economic rationale for directing private capital abroad was "oversavings," a theory elaborated by a trio of politically influential economists, Arthur Twining Hadley (Yale), Jeremiah W. Jenks (Cornell), and Charles A. Conant. They argued that "savings in excess of profitable investment outlets" had depressed U.S. interest rates and, in a chain reaction, had led to ill-conceived or redundant investment, overproduction, and low prices that produced boombust economic cycles. (15) "The stability and prosperity of the American economy," they concluded, "depended on its ability to expand freely into, and exercise a controlling voice in, the international economy." (16)

Manufacturers and agriculturalists enthusiastically supported Dollar Diplomacy as a way to expand foreign markets, but American capitalists reacted coolly. Few made foreign investments in response to Washington's agenda. (17) Domestic economic trends--a flat economy during Grover Cleveland's second term and a loss of confidence by American investors during the depressions of 1893 and 1895--created a favorable climate for investment abroad, particularly in Mexico. (18) Proximity, political stability, encouragement from Washington, and, above all, the puros' incredibly effective promotional campaign (masterminded by Romero) brought one-half of all U.S. foreign investment to Mexico by 1900. (19)

Tropical investment figured prominently in Mexico's economic development. From 1867 to 1884, prior to rail links with the United States, tropical exports shipped from the ports of Veracruz and Progreso to New York and New Orleans fueled a significant expansion of Mexico's entire economy. (20) As minister to the United States, Romero successfully promoted southern Mexico (where he himself had substantial investments) as a golden opportunity. (21) Excited by Romero's speeches and press reports, by the high price of coffee, and by the growing market for cacao, vanilla, fruit, and nuts, American organized companies for plantation agriculture and land speculation; others settled individual fincas (farms). Even with relatively favorable conditions, however, successful coffee growing required careful management, and many planters failed. (22) Between 1894 and 1898, coffee prices fell 43 percent and stabilized there. (23) Many gave up on coffee. Growers later reported to the consul general that they had not bothered to pick their coffee for years. Beans rotted in the trees and on the ground. (24)

Plantation companies and land speculators were particularly hard hit. In order to continue paying their bonded debt and to protect their own investments, they had to continue selling their securities and so-called improved lands. Until this time, castilloa elastica (the Mexican rubber tree called Ule or Hule) had been planted mainly to shade coffee and cacao. (25) Inspired by soaring rubber prices, promoters speedily switched to Ule as the basis of their extravagant claims for the profitability of tropical agriculture.

This switch to rubber cultivation coincided with an expansion of the U.S. economy "so rapid, thorough, and comprehensive . . . that by 1900 the capital market was glutted with money for investment and speculation." (26) Plantation companies, like other highly overcapitalized "bubble" companies that mushroomed at this time, did not meet the strict requirements for listing on the New York Stock Exchange. Instead, they employed paid journalists and bold advertising to peddle their securities directly to unsophisticated investors--physicians, school teachers, clerks, waiters, laborers, widows and other susceptible women, and others with money to invest. (27) Before the decisive entry of the general public into financial markets, "boomers" (as the promoters of such projects were known) had concentrated on securing large investors. (28) Afterward, they used the names of prominent individuals--respected bankers, business leaders, ex-governors, senators, a former Treasury secretary, and other cabinet members--to "sell confidence to the investing and speculative public." (29)

"Rubber! rubber! rubber! The promoter's golden tongue was belling it full and free. . . . Every state--almost every town--had its company. . . . It was all worked out in plain figures; which never lie--so many trees to the acre, so much rubber per tree . . . [so] that there was nothing left for the public but to believe." (30) Rubber was not a risky investment but a sure thing, boomed the promoters, indispensable in this modern age. Its cultivation was a scientific business and prices continued to rise. Had the respected Matias not predicted returns as high as 1000 percent on a well-managed rubber plantation? Had the famous tycoon Cyrus P. Huntington not declared that rubber would make more millionaires than had oil? (31)

Much of this was honest enthusiasm. From the start, however, a great many unscrupulous promoters envisioned milking investors, not rubber trees. The prototype for the wave of American-run tropical land scams was actually a British firm, Indian Rubber Company (Mexico), Ltd., which became mired in scandal only a year after its charter by W. O. Clough, a prominent Member of Parliament, in 1896. (32) Investor complaints prompted an independent investigation into charges of insider manipulation of the purchase of corporate properties, after which it was concluded that "a grosser swindle could [not] have been perpetrated." (33) This scandal, and others that followed, contributed to the ban on trade in rubber plantation securities by the London Stock Exchange in 1909 but did remarkably little to dampen enthusiasm for rubber speculation. (34)

Nor was the U.S. market for Mexican rubber securities affected by the black cloud under which the industry began, primarily because both the Washington and the Mexican government countenanced highly questionable claims by plantation promoters. The imperial reinvention of the Monroe Doctrine and the U.S. acquisition of Hawaii and the remnants of Spain's empire had markedly increased the strategic importance of the Tehuantepec Isthmus and Washington's desire to see American-owned properties there. (35) The U.S. Department of the Interior mailed pamphlets throughout the country extolling investment opportunities in Mexican tropical agriculture. (36) Plantation owners played on this, touting the Tehuantepec as the "spine" of the Americas and the "Bridge of the World's Commerce . . . admired by presidents." Investors were advised to "get hold of a vertebra before it is too late." (37)

The Ministry of Development (Fomento) provided the promotional information used by the Interior Department, and both agencies prepared reports assuring the American public that tropical investment was sound. (38) When Fomento abandoned its program of government-sponsored colonization and turned to private enterprise to create a proprietary class, plantation companies seemed ideally suited to the purpose. (39) Even after its policy changed to one of developing agriculture with "domestic resources," the porfirian government continued to support plantation companies. (40) With the help of a relative of Diaz, Congressman Thomas Moran, Mexico's first agricultural research station was established on land of the interlocking Ubero plantation companies, later cited by the consul general as among the most blatant frauds. (41) Not surprisingly, Fomento published the promoters' wild claims of productivity and profitability as fact. (42)

The confirmation of promoter claims by official publications of both governments made plantation securities seem attractive and save. Stocks, bonds, and harvest (or plantation) certificates, which granted limited property rights and a percentage of the harvest, were sold on time payment plans to reach investors of modest means. Rubber promoters pointed out that interest rates in the United States were "ridiculously low." Their securities, each backed by so many acres planted in rubber, were said to be "better than a savings bank." For only a small monthly payment, each investor would "become a mint unto himself" with "an annual income for life, and a legacy for heirs." (43)

Promoters played up the favorable dollar-to-peso exchange rate by claiming that the cheap peso made Mexico's exports more competitive and increased profits for exporters who were paid in gold. (44) When, in 1905, Finance Minister Limantour (assisted by Conant, Jenks, and the U.S. Commission on International Exchange) converted Mexico to the gold standard and fixed the peso's price at 49 cents (U.S.), promoters glibly altered their pitch to praise the investment security of a fixed currency. (45)

Investment in tropical Mexico served to cure the ill of oversavings in a manner unforseen by Conant and his fellow economists. Promoters targeted specific metropolitan areas (for example, Kansas City, Chicago, St. Louis, and Boston) and members of specific professions, particularly teachers. A single company sold $250,000 of worthless rubber plantation securities to Philadelphia teachers. (46) Pensions, banks, holding companies, trusts, and other financial institutions were weakened by investment in plantation securities. Even the managers of widows' funds, considered the most conservative of investors, were frequently taken in. Like thousands of others, Lucille Wetherell lost her life's savings. In 1900 she invested $7,000 in Vista Hermosa plantation company, chartered in her home state of Maine. In 1905 the company went into receivership, ruining 1,800 stockholders--though preserving the interests of the A-bond holders (company insiders). Rather than lose everthing, Wetherell took up residence on the property that had backed her securities and managed the plantation store until 1914, when the revolution finally forced her out. (47)

In addition to securities, plantation promoters sold land "on time" to small investors. Land was "improved" by extracting everything of value (rubber, chicle, vanilla, and mahogany and other cabinet woods), by clear-cutting and burning the underbrush, and by guaranteeing to plant rubber and coffee seedlings. It might be settled by the buyer or managed by the plantation company for a fee or portion of the harvest. Sometimes the process repeated itself and the property became the basis of yet another stock company.

One of the promoters' most effective sales tools was the low-cost tourist junket for those who agreed to inspect the sponsoring company's property. (48) The Mexican government pioneered the practice in the late 1870s to introduce prominent American capitalists to the general possibilities of investment in modern Mexico. American promoters refined these tours, perfecting them as a minor art form designed to secure investment in specific projects. (49)

Tourist-investors came, Kodaks [R] slung about their necks, for a good time in colorful, sunny Mexico. By their own admission, "not many of them had any intention of buying anything," but after getting the royal treatment in Mexico City, they began to change their minds. Ambassador Powell Clayton, former governor of Arkansas, paraded crowds of vacationing Yankee businessmen through Chapultepec palace for group audiences and intimate interviews with the president, who occasionally gave tips on prime isthmus lands and discussed methods for improving rubber yields that he was trying on his own hacienda in Oaxaca. (50) Later, ambassador David E. Thompson not only continued this unseemly act of glorified tour guide but was himself an agent of the Pan-American companies, one of the most corrupt operations in Mexico, as we shall see.

After the grand tour of Mexico City, a meeting with the president, and a banquet at the elegant Hotel Sanz in the company of notable Mexicans, government officials, the U.S. ambassador, and prominent members of the American colony, the vacationers found it hard to resist on-site sales pitches from slick-talking agents armed with colored maps showing the lots still available and those snatched up by other lucky buyers. Land fever swept the tour members; vacationers became investors: "And the fellows began to holler out I will take such a section and this section, and they sold within half an hour about 45,000 acres of land. I don't think there was hardly a man in the bunch that didn't buy land." (51) The rubber boom brought thousands of Americans to the thinly populated tropics. The fever- and alligator-ridden isthmus jungles were among Mexico's most frequented tourist destinations, and newly built hotels there filled with Americans. (52) By 1905 Tehuantepec was promoted--with little exaggeration--as "Uncle Sam's District." (53)

Many honest (or at least well-intentioned) planters were caught up in the rubber boom J. H. Foster was one of those whose imagination was ignited by the "pyrotechnics of get-rich-quick rubber planting companies . . . [and by] consular reports of trees giving 10-50 pounds in one heat." He left his small rubber goods factory in Connecticut and bought Buena Vista, a plantation near Tula (Veracruz) already planted in rubber, where he lived year-round with his family. To finance his operation, he formed the Rubber Alphabets Company and floated stock "with promises of only as many ounces as most companies were claiming pounds per tree." (54) By operating a plantation personally, keeping costs low and production estimates realistic, Foster and other careful planters might stay in business and keep their integrity. But selling securities was a slippery slope. It was all so easy. One business broker advertised that "securing desirable tropical lands as well as the organization and capitalization of plantation companies [was] a specialty" --a package deal. (55) Legitimate planters, trying to survive until their Ule trees matured and convinced that rubber prices would continue to rise, might be drawn into disreputable financing arrangements to protect their own investments. Once involved in these operations, investors--particularly large investors--were reluctant to call attention to irregulatiries lest they endanger their own holdings. The investors' representatives who occasionally inspected the companies were misled, corrupted, or convinced by the enthusiasm of true believers. (56)

Thousands of Americans came to strike it rich in tropical Mexico, but few succeeded. Tropical agriculture presented immense hardships that modern, scientific Yankee techniques often failed to overcome. Smallpox, malaria, floods, army ants, and other natural adversities took their toll. american planters who spoke of improving production techniques often found local agricultural practices superior to their own. Crop diversification was limited because few plantations possessed the proper mix of microclimates (mountains, plains, and lowlands) needed to grow vanilla, tropical fruit, coffee, and rubber. Extremely high-priced crops such as rubber, chicle, and vanilla were stolen unless guards were hired, and still other to watch them. (57) Without access to a railroad or a navigable stream, products went out by mule just as in colonial days. Even if the planter got a fruit crop to port, steamer delays might cause it to rot before reaching New York. In the tropics one saw "countless wrecks and ruins of sugar mills, distilleries and other evidence of former American industry, which mark[ed] the last traces of blighted ambitions and ruined fortunes." (58) Realities like these were not found in plantation company brochures.

Nor did their brochures mention the chronic labor shortages. On the contrary, low labor costs were cited as a major advantage of investing in Mexico. But low labor costs were embedded in traditional arrangements and local economies. Sometimes local conditions allowed American planters to adopt the traditional methods of offering land and credit to attract and maintain resident labor. (59) Ultimately, however, plantation companies undermined traditional labor systems, and, as competition for workers became keen, wages rose from twenty-five centavos to thee pesos a day. At festival time, American planters "piled silver pesos in great heaps on tables, bid against established Mexican hacendados and against one another until their labor cost them up to 1,000 pesos per head." (60) This easily led to debt peonage for peasants and to stiff losses for planters if their workers ran away. (60)

Contract labor, in reality coerced wage labor, slavery in all but name, developed in Mexico primarily in response to the demands of commercial tropical agriculture. (62) It dependably supplied workers from outside the region (the easier to control them), but it was not cheap. Yaqui Indians were the system's most famous victims, but it also consumed rateros (petty criminals), Italians, Russians, Japanese, Jamaicans, and especially Chinese. (63) Some plantation companies ran black markets in contract labor by smuggling Chinese coolies into the United States, where their import was banned and their contracts brought a much higher price. (64) Most coolies wanted to enter the United States and stayed on American-owned plantations only long enough to learn some English before going north. (65)

The entrapment of American citizens by labor contractors made U.S. officials well aware of the abuses. The case of Michael Green, who was arrested for begging, shipped out to the tropics as a contract laborer, and beaten to death by a Spanish plantation owner, was on Ambassador Clayton's desk from 1896 to 1904. (66) Meanwhile, American hobos continued to be made enganchadores without official protest. (67) Consul general Andrew Barlow knew that African-American laborers were lured from the southeastern United States with false promises and held against their will at the American-owned la Junta Plantation. But apart from helping those who escaped la Junta's lockup to return to the United States, American officials did nothing. (68)

Although American planters were dependent on contract labor, it was inefficient and expensive, at best a necessary evil, and they took the lead in developing cheaper, more humane alternatives. (69) After labor gang revolts in Mexico City, the business establishment supported a reform campaign begun by Zuniga y Miranda, who had run against Diaz for president in 1896. Modern Mexico and the semi-official El Imparcial condemned contract labor as "reprehensible" and "slavery" and called for extensive reforms and government inspection. (70) But the reform impulse was overwhelmed by the rapid expansion of commercial agriculture, and the system continued through the presidency of Francisco Madero. (71)

By 1902 rubber planters began to see that they had been unrealistically optimistic about the prospects for Ule cultivation. They had grossly underestimated development costs, and the first plantings, now four to five years old, had been tapped with disappointing results. (72) The Ministry of Development had estimated the start-up cost of a typical 400-hectare rubber plantation at $230,000 with a potential gross profit of $300,000, assuming an average yield of 1.5 kilos per tree at $2.00 per kilo. (73) However, the biggest and best-cultivated tree seen by the consul general during his inspection--a six-year-old Ule--gave only 2.5 ounces of crude rubber, a far cry from promoter claims of 2.5 to 3 pounds, but a typical yield according to honest planters. (74)

In fact, Ule rubber culture was doomed to failure. Unlike Brazilian Hevea, grown in neat rows on East Asian plantations, Ule was difficult to domesticate. (75) It grew quickly when young (which made for impressive advertising claims), but its growth rate slowed substantially after the third or fourth year. Ule rubber, although of high quality, had to be coagulated with the juice of either of two common local vines or cured by drying for long periods -- both labor-intensive processes. When harvesting the sap, unsupervised workers almost always cut the tree too deeply, but careful supervision was difficult and costly. Efforts to develop a special tool to prevent deep cuts demonstrate the seriousness of this problem. Brazilian Hevea could be tapped three times a year, but Ule only once -- or twice, if the tree was eight or more years old. Chicle planters could tap their trees only once every three years. (76) Promoters promised profits by the fourth year, however, leading to premature tapping that often killed cultivated trees. Huleros (rubber-gatherers) and chicleros (chicle-gatherers), who tapped wild Ule and Zapote trees, often sold their harvests to planters, who passed the rubber and chicle off as their own cultivated products.

Inaccurate private and official estimates of cost and profit set up the planters for failure from the outset. Many plantation companies, confident of success, had paid dividends on their A-bonds with the capital of small investors and developed their own lands while neglecting those of absentee investors. When their Ule came in, as they were certain it would, they would have the funds to develop the other lands as promised and to pay investors a good dividend, if not as large as advertised. Now, however, knowledgeable observers realized that this break-even point might not be reached for three, four, or more years. Some sold out. From this period, the purchase of one plantation company by another increased markedly. (77) Others decided to continue as before, either as deliberate frauds or with hopes (now postponed) of building productive plantations. From the investors' viewpoint, the latter could be distinguished from the former only by good intentions. On these questions of fraud and feasibility, the American and Mexican business communities remained silent. As one sadder-but-wiser planter commented, "it was not consonant with business interests to dissuade American enterprise and investment there, no matter how ill-advised the speculation might be." (78)

In the end, tropical Mexico never became a significant producer of rubber. At least 80 percent of all rubber shipped from the area was gathered wild, not cultivated. Ironically, research and investment by Mexicans made Guayule, a wild shrub found on the high plains of northern Mexico, America's major source of rubber outside Brazil. (79) Its price soared from $7.50 to $50.00 per ton, unrefined. The Compania Explotadora Coahuilense of Francisco and Gustavo Madero denuded vast tracts of land of the plant. In 1911, with the shrub near extinction from overharvesting, the Maderos sold out to Nelson Aldrich's Intercontinental Rubber Company, a sale that gave the brothers liquidity for revolution. (80) Guayule cultivation was perfected in 1931, but Ule plantations stood abandoned, covered in secondary jungle growth. Not even a crash development program spurred by the shortages of the Second World War could revive them. (81)

The Barlow Report and Scandal

The unsavory aspects of Mexican tropical agriculture were exposed by consul general Andrew Barlow, who had a history of bad relations with the American colony's business community. Barlow had come to his post expecting to wield considerable influence. During Grover Cleveland's second administration, the consulate's prestige had risen as that of the legation declined. Matt Ransom, minister from 1895 to 1897, was lethargic and indifferent to the astronomical increase in American commerce and investments during his tenure, and he had a low opinion of Mexico's "adventuring Americans." (82) Consul general T. T. Crittenden, on the other hand, had tried to enlarge the powers of his office. (83) The former governor of Missouri busied himself promoting American interests, particularly those of St. Louis, the city that had for years kept a lock on the office of Mexican consul general under both Democratic and Republican administrations.

But Barlow, a former postal employee who owed his office to his father's position in St. Louise politics, was denied respect and generally disliked. (84) His messy firing of the popular vice-consul J. F. Bennett earned him lasting disfavor, and his peccadillos were later cited by business leaders demanding a reform of the consular service. (85) A great many other complaints were lodged against Barlow during his seven years in Mexico, without effect. After his first year in Mexico City, his name ceased to appear on the guest lists of the glittering affairs reported in the Sunday society pages. He seldom attended legation functions.

In 1990 the U.S. legation was raised to embassy status and Minister Clayton then became an ambassador, although his efforts on behalf of American businessmen, and his escorting of tourist-investors for interviews with Diaz made him seem more "consul plenopotentiary" than ambassador. (86) Unrespected, the prestigious functions of his office usurped, Barlow became embittered, an outsider within the American colony. Thus he was receptive when his vice-consul, Edward M. Conley, wished to include an expose of tropical agriculture in a comprehensive report on U.S. investment in Mexico requested by the State Department.

Conley had been a reporter for the Mexican Herald, a paper dominated by its general manager and financial editor, Paul Hudson (who also edited the monthly magazine Modern Mexico). The Herald exemplified the interconnectedness of the American colony's business establishment, the embassy, and the Mexican government. As the influential "voice" of the American colony, its opinions were often forwarded to Washington as the ambassador's own, yet the Herald was also a semi-official publication of the porfirian government, paid a subsidy of $12,000 a year, and some believed its editorial department was controlled by the Mexican government. It did sometimes take positions clearly at odds with Washington on critical hemispheric issues, but it also criticized the Diaz government when the American colony's vital interests were threatened. (87)

Conley became editor of the Herald's arch-rival, Mexico City's oldest English-language newspaper, The Two Republics. (88) He was, in fact, its last editor. (89) Before it ceased publication on 1 December 1990, The Two Republics had often called attention to speculative abuses in tropical agriculture--charges generally rebutted in the Herald. (90) For Conley, the report on U.S. investment continued The Two Republics' rivalry with the Herald; for Barlow it was an opportunity to humble powerful members of type American colony who had snubbed him. Prior to Conley's arrival, Barlow had appeared indifferent to the problem. Indeed, his former vice-consul, John R. Hardy, who was an enthusiastic supporter of the plantation companies, had resigned to manage the Chicago-based San Marcos Rubber Plantation. (91) Had high society accepted the consul general, he might well have limited Conley's criticism to the most blatant offenders.

The "Barlow Report on United States Enterprises in Mexico, 1902" estimated that Americans had invested $500 million in Mexico, over one-half of it since 1896. (92) Of the total, $28 million was in rural property and agriculture. Although only 87 of the 228 rural properties identified by Barlow were rubber plantations (those enterprises producing rubber alone or with other tropical crops in any combination), they accounted for over 62 percent of all American investment in Mexican agriculture. By 1912 Americans controlled 68 percent of Mexico's rubber business. (93) Rubber plantations represented one-half of all highly capitalized American-owned agricultural properties in Mexico. Significantly, of the sixty-two agricultural enterprises that refused to reveal their levels of capital investment, forty-six were rubber plantations. No doubt some 'rubber companies" were state-side boiler-room operations with no real connection to Mexico, but the companies that attracted the attention of the consul general's office, and with which we are concerned, owned and sold large tracts of land in Mexico. Men such as J. J. Fitzgerrell, "the Alive Business Broker" (who bought, sold, and financed tropical plantations, government concessions, mines, and industrial propositions), and Mexican enterpreneur Benjamin Barrios (who organized plantation companies incorporated in the United States to facilitate tapping American investors) lived their lives and conducted their business affairs in Mexico. (94)

It is impossible to say with any certainty how much of this capital arrived or remained in Mexico. Some observers thought most of it did, but this seems unlikely. (95) No doubt investor funds frequently went ultimately to the pockets of corporate insiders in the United States. Still, the amount of capital that did find its way south was large relative to the size of the Mexican economy. An informant claimed that crooked comapnies brought in $300,000 a month on the isthmus alone. (96) One frequently cited figure, placing American investment in rubber (including Guayule) at $15 million by 1911, is far too conservative. (97) A more realistic appraisal put investment in Ule alone at $50 million by 1908. (98) I estimate that it probably reached $75 million by Madero's fall in 1913.

Although exactly how and to what ends plantation company funds were diverted remaisn unclear, as do the precise economic effects within Mexico, it has been shown that investment in ill-conceived or fraudulent enterprises can integrate national economies and link them to larger global systems. (99) Tropical investment contributed substantially to Mexico's international reputation as an excellent credit risk, indirectly facilitating the conversion of its bonds to lower and lower interest rates after 1899. Also, requirements that concessionaires post their performance guarantees in government securities pushed up the value of Mexican bonds worldwide. (100) Cash flows generated by tropical investment helped offset the loss of European (particularly French) capital. (101) Plantation company funds circulated among various sectors of the Mexican economy--construction companies, labor contractors, railroads, and banks and trusts--by means of interlocking directorates and dummy corporations. One company organized a plantation for the purpose of diverting funds into its mining operations, and presumably others did the same. (102) The growth of sociedades anonimas (corporations) and the creation of modern banking at this time are more than coincidental. (103) Overvalued plantation properties were used to secure loans from individual lenders, including merchants and jefes politicos (local political bosses), and they also formed a significant portion of the assets of trust companies and banks. (104) The Pan-American Company concession allowed the establishment of a bank, Banco de Chiapas (the only bank in that state), which was authorized to issue $750,000 in bank notes against capital of $125,000. This was soon increased, no doubt in part by the diversion of investor funds from the company's plantation operation, to $500,000, then to $1 million with a bank note issue of $3 million, a striking example of the multiplier effect of tropical investment. Significantly, Enrique C. Creel, Mexico's future ambassador to Washington, sat on the bank's board of directors. (105)

The plantation boom sparked a great deal of related development. John Coatsworth has shown that rural land values increased substantially with the local arrival of railroads and the opportunity for commercial agriculture. (106) In the tropics, however, hyperinflation of land values preceded railroads in many areas served by navigable rivers. Shipyards wer were built to supply riverboats for the planters, and a steamboat company was organized to supply regular service. Companies were formed to build canals, improve river navigation, and build dock facilities; stores, hotels, and restaurants were built, and all this commercial growth rippled through local economies. (107) In effect, risky direct investment by Americans was the "small cake of yeast in the big pan of dough" that was the Mexican economy. (108)

Barlow's debunking of tropical agriculture, and of the promoters' extravagant claims, threatened all of this. "If there were any sure 200 per cent investments to be made in that region," he wrote, "they would certainly be taken up by persons on the ground who are thoroughly familiar with conditions there." Worse still, his sweeping indictment struck at the very concept of foreign investment. Some good investment opportunities existed, but 'in nine out of ten cases," he cautioned, "the money could be invested to better advantage in the United States." (109) Washington and the American colony were horrified.

Planters initially responded in the press with low-key rebuttals, giving production figures and emphasizing the high price of rubber. (110) They criticized Barlow and Conley for preparing their report without having visited a tropical plantation and for condemning the good with the bad. (111) Problems, said apologists, stemmed not from intent to defraud buy rather from poor management, a problem inherent in plantation companies with absentee owners and reliance on mayordomos. (112) The future of tropical agriculture, they explained, was with individually run operations. (113) Meanwhile, in the United States a bipartisan defense of American investment sprang up. (114) Democratic party leader William Jennings Bryan staged a well-publicized tour of Mexico that restored flagging public confidence not only in tropical agriculture, but also in Mexican investments generally. (115)

Bryan, who owned land in Mexico himself, visited Hacienda Yale, which the boomers had presented as an ideal plantation. Its very name proclaimed its Ivy League owners' intent to make the jungle productive through American know-how. In a speech there, reported by wire services to newspapers throughout the United States, Bryan declared that the owners' " college training [had] been of great benefit" in the scientific development of their property. Bryan, perhaps purposefully confusing means with ends, praised American investment as a tool of U.S. foreign policy "one and mutual" with Mexican interests. (116) Bryan followed up this performance with generous references to Mexico in his state-side speeches.

In fact, the consul general's investigations did little to interrupt the flow of American capital to Mexico. Relatively little negative publicity appeared in the American press. Indeed, the promoters' crisis management ability, plus a superlative porfirian press operation with its subsidized English-language publications, turned Bryan's tour and speech-making into a publicity triumph that attracted many new investors and colonists, completely overshadowing the scandal. (117)

Although it appeared that the crisis had passed, Barlow remained a thorn in the side of both governments, and a permanent solution was sought to the problem of the consul general. Barlow was subsequently involved in a mysterious "incident" at the American Club, and his resignation demanded. In effect, the consul general was declared persona non grata. (118) Washington was deluged with complaints. Barlow claimed to be the victim of a plot by Paul Hudson and others to discredit him because he had told "the truth as to the situation [in Mexico] . . . saving thousands of men and women . . . from making [bad] investments." (119) Given the threat to Dollar Diplomacy, this was not a defense likely to find favor with secretary of state John Hay. Barlow had weathered serious complaints before during his seven years in Mexico, but this time he was replaced. (120) To restore confidence in both the office and Mexican investments (which meant quickly putting the Barlow report and its associated scandals to rest), Theodore Roosevelt offered the post to his friend, James R, Parsons. (121)

A noted educator and author, then secretary of New York University, formerly consul at Aix-la-Chapelle under President Cleveland, fluent in Spanish, French, and German, Parsons was one of the best qualified men ever to serve as consul general to Mexico. When he arrived in Mexico City in June 1904, he found Conley facing charges of misconduct. At first, in what seems to have been an effort by the American colony's business elite to win him over, Conley had been praised by the Mexican Herald as "a man of genuine ability and correct conduct" and recommended as Barlow's logical successor. (122) But the vice-consul's refusal to repudiate the report soon provoked harsh personal attacks on him. (123) Other U.S. consuls contradicted Conley's findings and lampooned Parsons in the press, hardly surprising since they were usually local businessmen or professionals tied to the status quo. (124) Alexandria Gold Mining and Smelting Company, whose diversified interests included tropical plantations, declared the report false and slanderous, and joined Joseph Cummins of Mexican Mutual Planters Company in demanding that Parsons undertake an unprejudiced investigation. (125) Parsons, fully confident of Conley, agreed. (126)

In mid-February 1905, Parsons left Mexico City accompanied by a friend, banking attorney William A. McLaren, whose clients included trustees for a number of agricultural enterprises. Parsons traveled over 2,000 miles through southern Mexico, including 200 miles on foot and horseback. After recovering from thypoid fever contracted on his trip, he prepared thirteen reports, all very critical of the plantation companies.

Parsons found fraud only among stock companies, not at individually owned and operated properties. The worst offenders were found among forty-six companies that had declined to declare their levels of capital investment for Barlow's initial report. Eleven of these were exposed immediately, and many others were highly suspect. "The public," Parsons declared, "is being grossly swindled . . . American stock jobbing schemers have taken advantage of [reports of fertile Mexican soil] and the comparative remoteness of the location to swindle . . . widows, school teachers and others who can ill afford it." (127)

The Alexandria Company, said Parsons, was "shameless." "Machinery, buildings and supposed development were nonexistent; and published photos had not the slightest connection with the advertised undertaking." It did not even own the property offered for sale, and the plantation operation seemed designed to raise capital for diversion into the company's mining operations. The interlocking Ubero Plantation companies, whose elaborate deceptions to maintain the illusion of productivity included purchasing coffee in New York for resale as their own product, had only $70,000 in "bona fide improvements" to show for the many millions of dollars said to be invested. (128) These discrepancies somehow escaped the notice of Ubero's financial agent, a former Indiana secretary of state, on his inspection tours. (129) The Mexican Plantation Company, whose "unsavory reputation" rivaled Ubero's, burned its records to destroy evidence. Within weeks of Parsons's return to Mexico City, a "record number of heavily capitalized American companies were forced into liquidation," including Boston Tropical Company, Anglo-American Company, Southern Sugar Company, Jumiapa Plantation Company, and Ubero Plantation Companies; sixteen plantation companies folded along the Tehuantepec Railroad right-of-way alone. (130) The rapid liquidation of these operations indicates that very little capital was tied up in improvements for, as Parsons discovered, it was common practice to "declare gross profits as dividends, . . . pay dividends out of capital [and leave] creditors in the lurch." (131) He recommended that immediate charges of using the mails to defraud be brought against the Alexandria Company and eight others. (132) Disquieting rumors circulated that a stockholder protection law, to be policed by U.S. postal inspectors, would soon require American companies to show the origin of funds paid as dividends. (133)

However, when Parsons blasted the Pan-American Land and Colonization Company, which had interlocking directorates with the Pan-American Railway, as "one of the biggest fakes on record," he may have gone too far. Company officials pointedly warned him that Pan-American was "very close to the Washington government." (134) Indeed, Roosevelt and Hay viewed the plan to link individual railroads into a single system running from Canada to the tip of Chile as a cornerstone of Dollar Diplomacy, and the Pan-American Railway Company's proposed route through Chiapas into Guatemala was a critical link in this project. Washington saw the system as a way to block European capital in the hemisphere, and in southern Mexico the railroad was "enthusiastically received by American Consular officials who anticipated increased American trade in this area." (135) In addition to controlling the Banco de Chiapas, the company was associated with the Pan-American Bank and Trust Company, which shared directors with the Oriental Bank of New York, People's Bank of Buffalo, and Standard Oil, a cartel that hoped to "practically control the finance of Mexico." (136) Also, Pan-American vice-president J. M. Neeland, a well-known Los Angeles contractor, was on the board of the United States Bank, one of the most prominent financial institutions in the American colony. (137) If Parsons continued his investigations, if Pan-American were discredited, Washington's plan for a U.S.-dominated hemispheric railroad network would be derailed. If the titles of too many American plantations were invalidated, "Uncle Sam's District" might become John Bull's or, worse yet, the Kaiser's.

With so much at stake, the planters responded vehemently. Stories appeared ridiculing Parsons's findings as reports made "from the hurricane-deck of a mule." Parsons and his informants had reason to fear for their lives. (138) An official of the Alexandria Company had wired his plantation manager that the consul general was to be "straightened out . . . at any cost." (139) Parsons's informants required that they not be named in official reports lest their identity be reported back to the promoters by their Washington contacts. Neeland offered Parsons a thinly veiled $60,000 bribe that the consul general chose to ignore. Perhaps already feeling pressure from Washington, he did not seek prosecution. (140)

Parsons could not be bribed, fixed, or set up as Barlow had been. He put the American colony on notice; he intended to see that business ethics were upgraded substantially. Previously, it was noted, "[I]n Mexico, men whose methods of business are fastidiously honorable . . . are extremely rare; far more rare than they are at home." If forced to choose between trusting a business matter to an American or a Mexican, one planter declared, "I should . . . trust the Mexican." (141) Wrong-doing was exposed only when local interests suffered. (142) "I know of a great many cases where stockholders have been defrauded," admitted another, "but they were stockholders in the United States." (143) Parsons used his authority and personal prestige in a campaign to bring honesty to American business in Mexico.

This novel concern with honesty affected Mexico City's English-language press. The Anglo-American admitted that, "tropical land thieves . . . have manipulated in and out of Mexico for the last dozen years." (144) The Mexican Investor, discredited by its attempted whitewash of the Ubero Plantations affair, was sold. Reporters who had criticized Parsons harshly while in the pay of the promoters were fired. (145) The press no longer accepted advertising uncritically. The Mexican Herald and its twin Modern Mexico announced through Paul Hudson that they had dropped very profitable prepaid advertising from suspicious firms. Then, with considerable audacity for a magazine that had recently carried the advertising of virtually every fraudulent plantation, Modern Mexico assured its readers that the best way to select an honest company was from among its advertisers. (146)

Yet given the structure of North American investments in Mexico, it was impossible to stop the frenetic promotion without risking a general collapse. Punctuated by admissions of past abuses and assurances that they would never recur, the booming continued. "Nothing," proclaimed Modern Mexico, "but this lack of experience [in practical management] could make any reasonable enterprise fail, where conditions are as faborable as they are in Mexico." (147) Even the Mexican Investor's new management could not refrain: "We have never had any fears as to the future of Mexican plantations run on the right lines; Consul-General Parsons' report adds to rather than diminishes our grounds for confidence in this matter." (148) All that was needed now, said the apologists, was adequate capital. (149) The argument was sheer brass, but planters, faced with inflated labor and development costs, found its logic inescapable.

Parson's next move sent a tremor through both the American colony and Washington. Fraud so widespread, he felt, compelled him to investigate the whole spectrum of American business in Mexico, beginning with mining, which comprised almost one-quarter of all American investments. Parsons had been sent to end the scandal and to restore confidence. Instead, he presented Washington with a potential disaster of major proportions--the possible collapse, not only of the plantation companies, but also of the entire structure of Dollar Diplomacy in Mexico. This was too much. Geopolitical considerations demanded that the investigations be stopped. In October 1905, only weeks after becoming secretary of state, Elihu Root offered Parsons a minister's post in Europe to remove him from the Mexican scene and to end the ruinous investigations once and for all. Parsons apparently refused. (150)

What further action the State Department planned for its incorruptible consul general is unknown. Parson's activities were cut short when he was killed in a collision between his cab and a streetcar. (151) His death caused genuine grief, particularly among the consulate staff: "We feel that our government has lost one of its strongest men; . . . an officer whose bidding it was always a pleasure to answer; . . . a MAN of irreproachable character whom it was rare good fortune to know. . . . May God Bless him." (152) Neeland, who had attempted to bribe Parsons, attended the funeral, no doubt jubilant at his own good fortune. Parson's death spelled victory for the boomers. Washington broke up his dedicated staff, who had hoped to continue Parsons's program, and posted them elsewhere. His successor, A. L. M. Gottschalk, was ordered to suspend the investigations and to concern himself with administrative reform and with reporting the Mexican political situation. Henceforth, Washington forbade its consuls to express any opinion whatsoever on the reputation or viability of American businesses in Mexico. (153) The appointment of David E. Thompson, well known in Mexico as the "prime mover" behind the Pan-American Railway, as U.S. ambassador made clear the shape of things. (154)

A self-made man whose checkered career mixed business and machine politics, Thompson was America's first ambassador to Brazil. (155) Charged with improper conduct, he was cleared by Root and shortly thereafter posted as ambassador to Mexico. His appointment ignored the "safe rule" that a diplomat should "have no interests of any business character whatever in the country of his residence." (156) Although Thompson owned a hacienda and a large plantation near Veracruz, conflict of interest was not an issue. (157) Indeed, it is likely that Root (seen in Mexico as the "ambassador of American business" and only incidentally as the U.S. secretary of state) approved the appointment precisely because of Thompson's business interests. (158)

Immediately on his arrival, Thompson began to undo Parsons's work. He urged Diaz to suspend legal proceedings against officers of the failed International Bank and Trust Company, long-time residents of Mexico City, who were deeply involved in corrupt plantation dealings. Like Pan-American (a Nebraska company incorporated in New Jersey), International Bank and Trust had exploited the ambiguities of doing business in two countries by protocolizing (registering) its companies before the Mexican courts as native corporations subject only to Mexican law in order to inhibit any possible legal action by investors. (159) Although these companies lost the right of diplomatic appeal through the U.S. government, this did not deter Thompson from interceding "informally" with porfirian authorities on their behalf. (160) Attorneys in charge of the bank's liquidation demanded Thompson's recall. He denied acting improperly and airily informed the lawyers that Washington was aware of his actions. Shortly thereafter, the president of that failed bank organized yet another, the Pan-American Bank. (161)

The ambassador and a group of associates including Neeland bought the Pan-American Railroad, but its reformation was cosmetic. The 300-mile railway, subsidized by 700,000 pounds sterling under its Fomento concession, was so poorly built that all bridges and much of its track washed out in the rainy season. After repairs, shoddy construction continued to plague the road. In 1910, just after his resignation and less than a year after the project's completion, Thompson facilitated its sale to the Mexican government. The Pan-American became part of the national system of railroads organized by Limantour; its American promoters never even had the risk of its operation. Moreover, the Pan-American's associated colonization company retained large tracts of land for speculation. (162)

Thompson's damage-control operation was a success. The scandals faded and, as the Tehuantepec port and rail improvements neared completion, promoters looked forward to the arrival of even more American investors. British or not, port and rail facilities benefited all concerned; therefore the American colony's business elite had never shared Washington's dissatisfaction with the award of the isthmus rail and port contracts to Lord Cowdray. Even Ambassador Clayton's protest at the time was more pro forma than Washington might have desired. Promoters found the improvements most effective as advertising and sales tools. (163) The United States Bank in Mexico City purchased the entire Veracruz state bond issue ($700,000 worth) for Cowdray's port improvements, and American companies profited handsomely by subcontracting for the British firm. (164) American maritime and commercial interests eagerly awaited the project's completion. (165) By Cowdray's estimates, the cost of shipping freight from Los Angeles to New York via Tehuantepec would be half that of shipping overland via the U.S. rail system, and it would take only a week longer. (166) Speaking on the theme of Tehuantepec as "the bridge for the commerce of the world" at a Grand Army of the Republic banquet honoring the inauguration of Cowdray's project, Thompson drew applause from toastmaster J. J. Fitzgerrell and other prominent promoters as he declared that "by the close of 1907 . . . there will be no less than 4,000 Americans in that section bent on developing its natural resources." (167) There was good reason for promoters to applaud. As predicted, the number of Americans who wished to homestead swelled just as the Diaz government halted the sale of public lands to colonists. More than ever, colonists and investors were at the mercy of promoters and speculators. (168)

Diaz trusted Thompson and made him a virtual minister without portfolio in the Mexican government. He was adept at manipulating U.S. agencies and policies to help Diaz solve internal problems of rebellion and dissent, even to the point of irritating Washington. (169) Thompson was deeply involved in Mexican politics, and he played a key role in the preparation of Diaz's infamous interview with James Creelman that precipitated the fall of the regime. (170)

Thompson's pro-business attitudes and his special relationship with Diaz should have made him the boomers' ideal ambassador. But, even as he was praised by many, he was also criticized severely, ostensibly because he divorced to marry his secretary. (171) This may have hurt him socially (although parties at his home and at the embassy were well attended), but the real issue was that he was not a neutral player, as Clayton had been. Business and diplomacy were fused in the ambassador's person. Thompson (acting for himself? for Pan-American? for Washington?) was accused of using his influence with the Mexican government to invalidate the land title of a "very large rubber property" in which "some pretty influential men" had invested several million dollars. (172) True or not, Thompson's own substantial interests in Mexico had become, for practical purposes, semi-official U.S. interests. Dollar Diplomacy had been carried to its logical conclusion, with results not entirely pleasing to the American colony.

Here were the limitations, the defects, of Dollar Diplomacy. The degree of "control" that Washington derived from the presence of American investors was a function of how closely U.S. government interests coincided with those of a rather corrupt Mexican-American business establishment. By suppressing investigations and giving in to the promoters, Roosevelt and Root determined that the business of Dollar Diplomacy need not be legitimate. Taft, as the words quoted earlier in this article suggest, recognized only "legitimate commercial aims" and reversed his predecessors' policy decision. To reassert control over the process of Dollar Diplomacy, Taft made financial arrangements between Americans and Latin American governments subject to State Department approval. (173) He restored propriety by removing ambassador-local businessman-porfirian insider David Thompson and appointing an ambassador with no Mexican business interests, Henry Lane Wilson. But the informal, fundamental patterns of Dollar Diplomacy remained intact. Like his predecessors, Wilson served the American colony business establishment and its porfirian allies, favoring their policies over those of Washington. Given this context, Wilson's unauthorized involvement in the plot to overthrow Madero was not an aberration (as has been suggested by Alan Knight) but rather standard, Mexican-style Dollar Diplomacy. (174)

Conclusions

Did American economic penetration in the form of tropical investment drain Mexico of its wealth during the Porfiriato? Certainly its effects with regard to debt peonage and the destruction of the tropical environment and the traditional economy--village landholding and hunting and gathering--were severe, although the changes also offered opportunity to some. (175) But with regard to the national Mexican economy, the answer is clearly "no." Tens of millions of dollars in American capital entered Mexico via tropical plantations with little or no return; "the story of fantastic profits derived from Mexican soil and labor usually omits these casualties." (176) Here, the prevailing flow of wealth was north to south, a finding consistent with recent scholarship showing the unprofitability of American investment in Latin America in general. (177)

American investment in tropical Mexico began in earnest during the Cleveland depression and grew during the lengthy Republican prosperity. It peaked in 1901, a period of economic growth in the United States and of recession in Mexico, and peaked again in 1905, the year of a brief "Bankers' Panic" in America and of economic growth in Mexico. (178) This suggests that the Mexican business cycle was not then a captive of that of the United States, although a "striking coincidence" in the two countries' business cycles had existed before Washington fixed the convertability of the peso in gold alone in 1879. (179) Commerce between the two nations increased dramatically during the Porfiriato, but Mexico's economic cycle derived from its major export, silver, and especially from the demand for pesos in the Orient. (180) Limantour believed, as did many economists of the day, that a conversion to the gold standard would favor British capital at American expense, but currency reform instead seemed to synchronize Mexican and American economic cycles. For only the second time during the Porfiriato, recession in the United States coincided with recession in Mexico. The effects of the 1907 Wall Street panic, amplified by a drop in silver prices, reached Mexico by early 1908. (181) Yet once again, economic decline in the United States had the effect of creating a surge of American investment in tropical plantations and other Mexican lands from 1907 to 1908, a time when the Mexican economy as a whole was slipping into recession. This continuing direct investment softened the worst of the downturn. By 1909, Mexico had almost completely recovered. (182)

Did Washington acquire geopolitical influence as a result of American investment? If by "influence" one means the ability to guide or shape events, then the effectiveness of Dollar Diplomacy is problematic. American capital was at best an unreliable tool of geopolitical power. (183) By its very nature Dollar Diplomacy granted Washington's representatives considerable autonomy. Washington reacted to events, leaving the effective formulation of Mexican policy to its various representatives. From 1898, its ambassadors were functionaries of an American business establishment intimately tied to public and private Mexican interests that undercut Washington's authority and increased the political influence of Mexican elites. (184) Diplomatic representatives set their own agendas with minimal guidance from the State Department. We have many examples. Barlow and Conley used the occasion of a report on American investments ordered by the State Department to publish their damning report, largely for personal reasons. Parsons, sent by Roosevelt to lay scandal to rest and to restore the appearance of propriety, instead tried to extend the inquiry to all American enterprises in Mexico. Thompson, who was Root's creature and who lost office when he lost his protector, did what Root expected he would do--followed his own interests. Whether such behavior constitutes effective control by Washington seems at least open to question.

Taft's recall of Thompson, disguised as a resignation, did not renew the threat of investigations. The American colony returned to business as usual. Hustlers took up their familiar stations at the Hotel Iturbide and along the Calle de San Francisco to prey on prosperous-looking American tourists. Advertisements appeared once again in the North American press alerting investors to the fortunes to be made in tropical Mexico, this time by growing oranges and other tropical fruits--200 percent returns on capital guaranteed. Consular reports glowed with optimism and, despite warnings in a number of tourist-investor guides, American capital continued to flow into tropical plantations until Madero's overthrow. (185)

As an old gringo businessman remarked, "We put a lot into Mexico and we gave them a lot. But we took some out too." (186) The case of tropical investment examined here demonstrates the need for a more subtle and impartial evaluation of American investment during the Porfiriato.

(1) "Mexican Rubber," and "Rubber Is Scarce," Mexican Herald, 15 and 24 Jan. 1899, and "Great Demand for Rubber," New York Times, 12 Oct. 7. Production figures are available in D. M. Phelps, Rubber Development in Latin America (Ann Arbor, Mich., 1957), 171-73; Charles M. Wilson, Trees and Test Tubes: The Story of Rubber (New York, 1943), 146; Randolph R. Resor, "Rubber in Brazil: Dominance and Collapse, 1876-1945," Business History Review 51 (Autumn 1977): 341-66.

(2) "American" in this article is used to mean a resident of the United States or pertaining to the United States.

(3) Taft, quoted by Harold U. Faulkner in The Decline of Laissez Faire, 1897-1917 (New York, 1951), 70.

(4) For the quote, see Michael Meyer, one of the most influential proponents of this view, in this introductionm to Essays on the Mexican Revolution: Revisionist Views of the Leaders, ed. George Wolfskill and Douglas W. Richmond (Austin, Texas, 1979), xiv; and a similar statement more recently in "Mexican Views of the United States," in Twentieth-Century Mexico, ed. W. Dirk Raat and William H. Beezley (Lincoln, Nebr., 1986), 290. Textbooks, the repositories of conventional wisdom, by and large accept the leyenda negra; see Michael Meyer and William L. Sherman, The Course of Mexican History (New York, 1979), 453-64; Benjamin Keen andMark Wasserman, A Short History of Latin America (Boston, Mass., 1984), 199-206; most general accounts do as well; see, for example, Daniel James, Mexico and the Americans (New York, 1963); Jules Davids, American Political and Economic Penetration of Mexico, 1877-1920 (New York, 1976). Ramon Eduardo Ruiz, The People of Sonora and Yankee Capitalists (Tucson, Ariz., 1988), and John Mason hart, Revolutionary Mexico: The Coming and Process of the Mexican Revolution (Berkeley, Calif., 1987), ix and passim, are some of the most recent monographic statements of what I call the leyenda negra.

(5) Christopher Armstrong and H. V. Nelles, "A Curious Capital flow: Canadian Investment in Mexico, 1902-1910," Business History Review 58 (Summer 1984): 178-203; Mark Wasserman, "Enrique C. Creel: Business and Politics in Mexico, 1880-1030," ibid. 59 (Winter 1985): 645-62; and Jonathan C. Brown, "Domestic Politics and Foreign Investment: British Development of Mexican Petroleum, 1889-1911," ibid. 61 (Autumn 1987): 387-416.

(6) Jan Bazant, A Concise History of Mexico from Hidalgo to Cantenas, 1805-1940 (New York, 1978), 116; Stanley Lebergott, "The Returns to U.S. Imperialism, 1890-1929," Journals of Economic Hitory 40 (1980): 229; and William Schell, Jr., "Col. R. C. Pate: Mexico's First Modern Sports Promoter," paper presented at the South Eastern Conference of Latin Americans, Myrtle Beach, S. C., 1989. Alan Knight, The Mexican Revolution, 2 vols. (New York, 1986), dismisses anti-Americanism as a contributing factor to the 1910 revolution. His debate with John M. Hart is ongoing; see Knight, "The U.S. and the Mexican Peasantry c. 1880-1940," and Hart, "U.S. Economics Expansion and Social Unrest in the Mexican Countryside, 1876-1920," from the research workshop, "Rural Revold, the Mexican State and the U.S." Historical and Contemporary Views," Feb. 1987, Center for U.S.-Mexican Studies.

(7) The quote is from Donathon C. Olliff, Reform Mexico and the United States: A Search for Alternatives to Annexation, 1854-1861 (n.p., 1981), 7. Also, see Robert J. Deger, Jr., "Porfirian Foreign Policy and Mexican nationalism: A Study in Cooperation and Conflict in Mexican-American Relations, 1884-1904" (Ph. D. diss., Indiana University, 1979), 38 and passim.

(8) For example, see "The Tiempo of Yesterday," The Two Republics, 1 Jan. 1887. At the close of the century, it was the subject of monthly editorial exchanges between the conservative El Tiempo and the semi-official El Imparcial, the Mexican Herald, and Modern Mexico.

(9) Matias Romero, "The Annexation of Mexico by the US," North American Review 148 (1889): 525-37; Kenneth S. Cott, "Porfirian Investment Policies, 1876-1910" (Ph. D. diss., University of New Mexico, 1979), 142 and passim.

(10) William Henry Bishop, Old Mexico and Her Lost Provinces: A Journey in Southern Mexico . . . (New York, 1883), 202; Daniela Spenser, "Soconusco: The Formation of a Coffee Company in Chiapas," in Other Mexicos: Essays on Regional Mexican History, ed. Thomas Benjamin and William McNellie (Albuquerque, N.M., 1984), 129.

(11) Olney to Ransom, 27 Jan. 1897, Diplomatic Instructions of the Dept. of State, 1801-1906: Mexico [hereafter cited as Instruction], vol. 24, M-72, roll 120, 182-86, instruction 21.

(12) "Loans of States," Mexican Herald, 12 April 1901.

(13) Brown, "Politics and Foreign Investment"; on the Diaz-Huntington friendship, see David Pletcher, Rails, Mines and Progress: Severn American Promoters in Mexico, 1876-1911 (New York, 1958), 217; Gene Z. Hanrahan, The Bad Yankee (El Peligro Yankee): American Entrepreneurs and Financiers in Mexico, 2 vols. (Chapel Hill, N. C., 1985), 1:171; and Cott, "Porfirian Investment Policy," 155. Also see James M. Callahan, American Foreign Policy in Mexican Relations (New York, 1932), 493-94.

(14) This push-pull relationship of means and ends is still the subject of debate by proponents of dependency and mode of production (MOP) theories, two of the most influential paradigms in Latin American studies; see the introduction to Dependency and Marxism: Toward a Resolution of the Debate, ed. R. H. Chilcote (Boulder, Colo., 1982), ix.

(15) James Livingston, "The Social Analysis of Economic History and Theory: Conjectures on Late Nineteenth-Century American Development," American Historical Review 92 (1987): 77.

(16) Carl P. Parrini and Martin J. Sklar, "Thinking about the Market, 1896-1904: Some American Economists on Investment and the Theory of Surplus Capital," Journal of Economic History 43 (1983): 578.

(17) Thomas C. Cochran and William Miller, The Age of Enterprise: A Social History of Industrial America (New York, 1961): 208-10; and Lebergott, "Returns to U.S. Imperialism," 231.

(18) Robert H. Wiebe, The Search for Order, 1877-1929 (New York, 1967), 230-31; and Jeffrey G. Williamson, "Late Nineteenth-Century American Retardation: A Neo-Classical Analysis," Journal of Economic History 33 (1973): 581-607.

(19) Callahan, American Foreign Policy, 494-98. Most of the remaining American capital invested abroad was in Canada for the same reasons.

(20) Richard J. Salvucci, "Aspects of United States-Mexico Trade, 1825-80: A Preliminary Study," paper delivered at the American Historical Association Meeting, Chicago, 1986.

(21) Matias Romero, Coffee and India-Rubber Culture in Mexico, Mexico and the United States, and Geographical and Statistical Notes on Mexico, all (New York, 1898). In these books, Romero discusses his efforts over some fifteen years to bring U.S. capital to Mexico. Harry Bernstein, Matias Romero, 1837-1898 (Mexico City, 1973), 230-41, 259.

(22) Bishop, Old Mexico, 201-2.

(23) Spenser, "Soconusco," 130, table 1.

(24) Parsons to Loomis, 15 March 1905, Records of the Dept. of State, Record Group 59; Despatches from US Consuls in Mexico City, 1897-1899 [hereinafter cited by microfilm as Consular Despatch], M269, roll 15, 98.

(25) "The India Rubber World . . .," Modern Mexico, Dec. 1902, 41-42.

(26) Faulkner, Decline of Laissez Faire, 25; Sereno S. Pratt, The Work of Wall Street: An Account of the Functions . . ., 3d ed., rev. J. F.Crowell (New York, 1928), 130, 201.

(27) Ranald C. Michie, "The New York and London Stock Exchanges, 1850-1914," Journal of Economic History 46 (1986): 185-86; Robert Sobel, The Big Board: A History of the New York Stock Market (New York, 1967), 180-81; Cedric B. Cowing, Populists, Plungers and Progressives: A Social History of Stock and Commodity Speculation, 1890-1936 (Princeton, N. J., 1965), 67.

(28) William W. Fowler, Inside Life of Wall Street, or How Fortunes Are Won and Lost. . . (1874; New York, 1971), 298-325.

(29) Pratt, Work of Wall Street, 211. Some of the prominent men involved in these ventures were senator Charles Fairbanks and governor W. T. Durbin of Indiana; Charles Foster, former governor of Ohio and U.S. Treasury secretary; George W. Peck, ex-governor of Wisconsin; W. W. Cargill of the giant Grain Company; Thomas A. Edison; and many others.

(30) Herman Whitaker, The Planter (New York, 1909), 2-3.

(31) "The Aztec Plantation Company," Modern Mexico, March 1902, 4, advertisement.

(32) The story was chronicled in the Mexican Herald; see "India Rubber Co.," 29 April 1898; "Tropic Mexico," 22 Sept. 1898; "Rubber Muddle," 14 Oct. 1898; "Neighbors' Talk--Rubber Bubble," 22 Oct. 1898; "Mexican Rubber," 15 Jan. 1899; "Notes in the Rubber Muddle," 16 Jan. 1899; and "Rubber Still," 22 Jan. 1899.

(33) "India Rubber," Mexican Herald, 2 Jan. 1899.

(34) Michie, "The New York and London Stock Exchanges," 184.

(35) Matias Romero in The Tehuantepec Isthmus Railway (Washington, D.C., 1894), 3-15.

(36) U.S. Senate, Investigation of Mexican Affairs--Preliminary Report and Hearings of the Committee on Foreign Relations, Sen. doc. 285, 66th Cong., 2d sess., (Washington, D.C., 1919-20), 1:1708 [hereinafter cited as Fall Report].

(37) For the case of Panama, see Cochran and Miller, Age of Enterprise, 209; advertisement for the International Land and Colonization Co., "Humboldt's Prediction," in Modern Mexico, April 1905, 7.

(38) Augustin Barroso, "Tierra Caliente," Modern Mexico, May 1906, 20. Barroso also supplied text for J. J. Fitzgerrell's Fitzgerrell's Guide to Tropical Mexico, published to push Fitzgerrell's company lands.

(39) Moises Gonzalez Navarro, La Colonizacion en Mexico (Mexico, 1960), 11-12.

(40) On the shift in agricultural policies from 1902 to 1908, see Cott, "Porfirian Invesment Policies," 317-18.

(41) "Important Move," Mexican Herald, 28 Dec. 1901; and Parson to Loomis, 15 April 1905, Consular Despatch, M296, roll 15, 115.

(42) "A Mexican Rubber Estimate," Modern Mexico, Jan. 1905, 25-26, by Miguel A. Logo, an agricultural engineer with the Ministry of Development, offers "conclusive" proof that plantation cultivation of Ule was profitable.

(43) "Better than a Savings Bank," Modern Mexico, Sept. 1902, 29; "Three Questions," Modern Mexico, Oct. 1901, 11, an advertisement for the Isthmus Planters Association.

(44) David M. Pletcher, "The Fall of Silver in Mexico, 1870-1910 and Its Effects on American Investments," Journal of Economic History 18(1958): 33-55.

(45) The price of the peso ranged from near parity with the U.S. gold dollar in 1890 to a low of 39 cents. Hart's characterization of Limantour's reform as a 50 percent devaluation of the peso, Revolutionary Mexico, 96, 155, 171073, is incorrect.

(46) Parsons to Loomis, 17 March and 21 April 1905, Consular Despatch, roll 14, 100, and roll 15, 123, 124.

(47) Fall Report, 1: 1685-90.

(48) Parsons to Loomis, 2 June 1905, Consular Despatch, roll 15, 148, and Parsons to Loomis, 15 June 1905, ibid., 153.

(49) One of the earliest description of the investor-tourist junker is John F. Finnerty Reports Porfirian Mexico, 1879, ed. Wilbert H. Timmons (El Paso, Texas, 1974). Such trips were well reported by the American press; see, for example, "Big Excursion to Mexico," New York Time, 4 Jan. 1893, 3: 4. The tourist-investor junket developed in Mexico was used in the United States to promote the Florida bubble of the 1920s and other projects; see Morton C. Paulson, The Great Hustle (Chicago, Ill., 1974), 46-48; and Charles N. Glass and A. Theodore Brown, A History of Urban America (New York, 1976), 256-57.

(50) "At the Palace," "Saw Gen. Diaz," "An Amateur," Mexican Herald, 23 Feb., 4 March, 27 Aug. 1899.

(51) Fall Report, 1: 1050-52. After Diaz's fall, provisional president Francisco de la Barra continued meeting North American tourist-investors. After the revolution, Cardenas and his successors resumed meeting with tourist groups, remarkable given the state of official relations over the nationalization of U.S. oil fields in Mexico. See Douglas Murphy, "Mexican Tourism, 1876-1940: The Socio-Economic, Political, and Infrastructural Effects of a Developing Leisure Industry" (M.A. thesis, University of North Carolina, 1988).

(52) "About Tehuantepec," Mexican Herald, 4 April 1899.

(53) Advertisement, "Paul Fahle and Company . . .," Modern Mexico, Sept. 1905, 14.

(54) "Consul Headen Praised," and "Talks of Mexico," Mexican Herald, 4 Sept. and 6 Oct. 1901; and J. Herbert Foster, "A Little Journey by a Rubber Planter," Mexican Investor, reprinted in Modern Mexico, Feb. 1907, 22.

(55) Advertisement for William Vernon Backus Co., Mexican Herald, 20 May 1901.

(56) George S. Montgomery, "One Lonely Rubber Tree in a Vast Mexican Wilderness," San Francisco Chronicle, 26 Sept. 1900, 12.

(57) A. J. Lesfrinasse (consul at Tuxpam, Veracruz) to State, 20 Dec. 1907, Numerical and Minor Files, roll 746, case 10845/8, reports: the "pilfering of chicle and other products throughout this region is an unchecked evil."

(58) Henry H. Harper, A Journey in Southeastern Mexico; Narrative of Experiences, and Observations on Agricultural and Industrial Conditions (Boston, Mass., 1910), 50-100; also E. H. Blichfeldt, A Mexican Journey (New York, 1912), 88-91.

(59) For example, see J. C. Harvey to Wm. Canada, 23 Aug. 1912, in Abajo El Gringo: Anti-American Sentiment during the Mexican Revolution, ed. Gene Z. Hanrahan (Salisbury, N. C., 1982), 131-32.

(60) Wallace Thompson, The People of Mexico: Who They Are and How They Live (New York, 1921), 326.

(61) Matias Romero, "Wages in Mexico," North American Review 154 (1892): 39.

(62) Immanuel Wallerstein, The Modern World System, 1: Capitalist Agriculture and the Origins of the European World Economy in the Sixteenth Century (New York, 1974), 91, might say "coerced cash-crop labor." Friedrich Katz, "Mexico: Restored Republic and Porfiriato, 1867-1910," Cambridge History of Latin America, c. 1897 to 1930, ed. Leslie Bethell, 5 vols. (New York, 1986), 5: 54-55; and Knight, Mexican Revolution, 1: 88-89.

(63) On the Yaqui, see Evelyn Hu-DeHart, Yaqui Resistance and Survival: The Struggle for Land and Autonomy, 1821-1910 (Madison, Wis., 1984). Some representative articles on the labor shortage from the Mexican Herald are: "Italian Laborers," 24 May 1900; "Chiapas Planter," 20 April 1900; "Interested in Mexico," 31 May 1900; "Work for All," 27 Oct. 1900; "The Japanese" 17 Aug. 1899; "Labor Problem . . . Jamaica Negroes to be Imported," 6 Sept. 1899; "Ratero Labor," 13 Oct. 1899; "The Treatment of Labor," 21 May 1901; and "Planters Find Labor Scarce," 20 Oct. 1907. On Chinese labor, see Modern Mexico, Oct. 1901, 14.

(64) Parsons to Loomis, 10 Aug. 1904, Consular Despatch, M296, roll 14, 26.

(65) "Chinese Smuggling," Mexican Herald, 13 Oct. 11901.

(66) Frederick S. Dunn, The Diplomatic Protection of Americans in Mexico (New York, 1933), 300-302.

(67) Barlow to Peirce, 26 May 1903, Consular Despatch, M296, roll 14, 504.

(68) Ibid.

(69) "Contract Laborers," Mexican Herald, 4 July 1899; and El Imparcial, quoted in "Contract Laborers," 4 July 1899; and El Imparcial, quoted in "Contract Labor," Mexcian Herald, 1 July 1899. "Observations in the Tropics," Modern Mexico, Feb. 1906, 13-14, condemns contract labor as slavery. It took some courage to take this position, as Diaz regarded charges of slavery in Mexico as "the grossest calumny"; see Alan Knight, "Mexican Peonage: What Was It and Why Was It?" Journal of Latin American Studies 18 (1986): 52. Knight has the "strong impression" that Anglo-Americans relied more on wage labor than did Mexican and Spaniards, 59.

(71) John K. Turner, Barbarous Mexico (Austin, Texas, 1969); Herman Whitaker, "The Rubber Slavery of the Mexican Tropics," American Maganize 69: 4 (1910): 546-55. On coerced labor under Madero, see Fall Report, 2: 2204 and Knight, Mexican Revolution, 1: 420.

(72) "Labor Question," Mexican Herald, 2 May 1901.

(73) "A Mexican Rubber Estimate," Modern Mexico, Jan. 1905, 25-26.

(74) Parsons to Loomis, 15 March 1905, Consular Despatch, M269, roll 15, vols. 26-27, 98,; and Foster, " A Little Journey," 22.

(75) Wilson, Trees and Test Tubes, 1-14.

(76) "Mexican Rubber," "Better Rubber," Mexican Herald, 27 Sept., 10 Nov. 1900; F. M. Guernsey, "Orizaba in Summer," Modern Mexico, June 1906, 28-29; and "About Chicle Gum," Mexican, Herald, 18 Aug. 1901.

(77) For example, "To Look Up Trade," Mexican Herald, 18 May 1901.

(78) Harper, A Journey, 52.

(79) On the Mexican Origins of Guayule technology, see vice-consul Ernesto Lux to Loomis, 28 Oct. 1904, Despatches from U.S. Consul in Veracruz 1822-1906, M183, roll 18, vol. 18, 394. Phelps, Rubber Developments, 171, gives the U.S. consumption for this period as 81,668 long tons. Total reported exports of rubber for fiscal year 1908 and 1909 were $10,702,839 (Guayule) and $690,968 (Ule), at about 50 cents a pound. "American Investments and Economic Conditions in Mexico, 1909-1910," report by consul general Arnold Shanklin, reprinted in Gene Z. hanrahan, The Bad Yankee (El Peligro Yankee): American Entrepreneurs and Financiers in Mexico, 2 vols. (Chapel Hill, N. C., 1985), 1: D-73-d-74.

(80) Howard and Ralph Wolf, Rubber: A Story of Glory and Greed (New York, 1936), 271 and passim; William Schell, "The U.S. and the Fall of Porfirio Diaz: Changing Interpretations of the U.S. Neutrality Acts, 1911" (unpub. MS, 1987).

(81) Wilson, Trees and Test Tubes, 10; also see Vernon Herbert and Attilio Basio, Synthetic Rubber: A Project That Had to Succeed (Westport, Conn., 1985).

(82) Matt Ransom to Matt, Jr., 14 April 1895, box 39, folder 465, Matt Ransom Papers, Southern Historical Collection, University of North Carolina, Chapel Hill, N. C.; William Schell, Jr., "Matt Ransom: Last of the Romans," The State 55 (Feb. 1988): 29-28; and Schell, "Evaluating Matt Ransom," ibid. (April 1988), 6-7.

(83) Despatch, Crittenden to W. Rockhill, 22 Feb. 1897, Consular Despatch, M296, roll 11.

(84) Item, Mexican Herald, 6 April 1904; "Andrew D. Barlow," Mexican Herald, 6 June 1897; J. F. Bennett to Sec. of State, 12 Nov. 1898, Consular Despatch, M296, roll 12. All subsequent despatches and the local press confirm this opinion of Barlow, as does Charles F. Lummis, The Awakening of a Nation: Mexico To-Day (New York, 1902), 101.

(85) Lummis, Awakening of a Nation; also "[Col. Bennett] Is Vindicated," Mexican Herald, 13 Jan. 1899; and Bennett to Sec. of State, 24 Jan. 1899, Consular Despatch, M296 roll 12. On consular reform, see Thomas G. Paterson, "American Businessmen and Consular Service Reform, 1890's to 1906," Business History Review 40 (Spring 1966): 75-97.

(86) Francisco Bulnes, The Whole Truth About Mexico: President Wilson's Responsibility (New York, 1916), 123.

(87) E. G. Church to State, 15 Dec. 1909, Numerical and Minor Files, roll 495, case 8183/308. After the subsidy was ended in 1909, the Herald became much more critical of the Diaz regime. Herald clippings were commonly used as the text of despatches. William Schell, Jr., "The Diaz Doctrine: A Vision of Greater Mexico?" Lecture 1 in his series on Porfirian Mexico for the UNC-Chapel Hill Institute of Latin American Studies, Dec. 1987; "Clearing the Atmosphere," Mexican Herald, 5 July 1905.

(88) "It Is to Laugh," Mexican Herald, 13 June 1899.

(89) Barlow to Cridler, 30 May 1901, Consular Despatch, M296, roll 13, vol. 23, 341.

(90) "Attack Answered," Mexican Herald, 1 Oct. 1900.

(91) "Visited Chiapas," and "Mr. Hardey Resigns," Mexican Herald, 15 May and 31 June 1901; and Barlow to Cridler, 30 May 1901.

(92) Barlow's report was published in Commercial Relations of the United States with Foreign Countries (Washington, D.C., 1905), 1: 403-533, reprinted in Hanrahan, The Bad Yankee, 1: D-1-D-71. The report is not comprehensive and must be viewed with care, but it is a useful guide to U.S. investment in Mexico.

(93) Callahan, American Foreign Policy, 519.

(94) Fitzgerrell's advertisement ran daily in the Mexican Herald from 1900; for example, see 18 May 1901; "Deprecates the Streets," Mexican Herald, 25 May 1901.

(95) Fall Report, 2: 2432-33, the testimony of William W. Canada, who was for over a decade U.S. consul in Veracruz.

(96) Parsons to Loomis, 17 March 1905, Consular Despatch, M296, roll 14, 100.

(97) "The Wealth of Mexico in 1911 . . .," Albert B. Fall, in Hanrahan, The Bad Yankee, 2: D-381.

(98) Percy F. Martin Mexico of the XXth Century, 2 vols. (New York, 1908), 2: 242.

(99) Eric S. Schubert, "Innovations, Debts, and Bubbles: International Integration of Financial Markets in Western Europe, 1699-1720," Journal of Economic History 48 (1988): 299-306.

(100) "Bank Concession Granted," Mexican Herald, 29 Sept. 1901.

(101) Hart, Revolutionary Mexico, 140, notes the drying up of European capital. Cott, "Porfirian Investment," 301, notes the positive effect of direct foreign investment; also see Raymond Vernon, The Dilemma of Mexico's Development: The Role of the Private and Public Sectors (Cambridge, Mass., 1965), 46.

(102) Parsons to Loomis, 15 July 1904, Consular Despatch, M296, roll 14, 14.

(103) For example, Frank L. Torres, manager of the Isthmus Rubber Co., was a director of the Mexican Trust Co. of Mexico City. Paul Hudson, editor of Modern Mexico, was a director of Mexico City Banking Co., S.A. Limantour dated the rise of corporations and modern banking from 1900 and feared their collusion would result in trusts in Mexico. See Carlos Diaz Duffo, Limantour (Mexico, 1922), 150-54.

(104) A. J. Lesfrinasse to State, 19 March 1910, Numerical and Minor Files, roll 1159, case 24155.

(105) "Concessionaires Are Sad," Mexican Herald, 28 Oct. 1901; and Martin, Mexico of the XXth Century, 1: 172; "Chiapas' New Bank," Mexican Herald, 21 March 1902.

(106) John Coatsworth, "Obstacles to Economic Growth in Nineteenth-Century Mexico," American Historical Review 83 (1978): 80-100.

(107) "A Big Enterprise," "River Navigation," and "River Steamers," Mexican Herald, 14, 28 April, 18 May 1901.

(108) Edward M. Conley, "The americanization of Mexico," Review of Reviews 32 (1905): 724-25.

(109) Barlow Report, in The Bad Yankee, 1: D-5.

(110) "The Production of Rubber in Mexico," Modern Mexico, Nov. 1902, 38; and "A Rubber Grower Speaks Regarding Profits," Modern Mexico, Feb. 1903, 29.

(111) Wm. Ryder, general manager, Mexican Development and Construction Co., in Modern Mexico, March 1903, 46; and "Tropical Agricultural Companies," Modern Mexico, Feb. 1903, 25.

(112) "The Laguna Chica Plantation,"Modern Mexico, Oct. 1902, 39.

(113) "Many Inquiries," Modern Mexico, Dec. 1902, 24.

(114) " . . . Bryan and McKinley agreed on the necessity and desirability of expanding the American marketplace, and of extending American power and influence around the globe. Their disagreements concerned the means, not the ends." See "Anticolonial Imperialism and the Open Door Policy," in the Shaping of American Diplomacy, ed. William A. Williams, 2 vols. (Chicago, Ill., 1972), 1: 336. As President Woodrow Wilson's secretary of state, Bryan supported the U.S. invasion of Veracruz.

(115) William J. Bryan, Commoner, Jan. 1903, reprinted in the Mexican Herald.

(116) "With Col. Bryan and Family in Tropical Mexico," Modern Mexico, Feb. 1903. 32. Some details of Bryan's property holdings in Mexico are contained in Hart, Revolutionary Mexico, 137. During Florida's land boom, Bryan was retained at $50,000 a year as a pitchman by the developer of Coral Gables; see Paulson, Great Land Hustle.

(117) Fall Reporst, 2: 1709.

(118) Item, Mexican Herald, 13 Dec. 1903.

(119) Barlow to H. D. Pierce, 20 Dec. 1903, Consular Despatch, roll 14, vols. 24-25, M296. 569.

(120) Telegram (cipher), John Hay to Powell Clayton, 10 March 1904, Diplomatic Instructions of the Dept. of State, 1801-1906, Mexico, microfilm 77, roll 121, vol. 25, 679.

(121) C. C. Eberhardt to Robert Bacon, 9 Dec. 1905, Consular Despatch, M296, roll 15, 212; Parsons wrote Prussian Schools Through American Eyes, French Schools Through American Eyes, and Professional Education in the United States.

(122) Conley to Pierce, 11 April 1904, Consular Despatch, M296, roll 14, vols. 24-25, 612.

(123) "Cultivated Rubber," Modern Mexico, Oct. 1904, 28.

(124) "Through Consular Eyes," Charles H. Arthur, U.S. consul, Oaxaca, Modern Mexico, Nov. 1904, 36. The title is a jab at Parsons, a parody of his book titles (see note 121).

(125) Parsons to Charles Loomis, 23 July 1904, Consular Despatch, M296, roll 14, 20.

(126) Parsons to Loomis, 15 July 1904, 14, ibid.

(127) Ibid.

(128) Ibid.; "Ban on Ubero Companies," New York Times, 18 April 1905, 6: 2.

(129) "Interested in the Isthmus," Mexican Herald, 15 Feb. 1901.

(130) Parsons to Loomis, 21 April 1905, Consular Despatch, M296, roll 15, 123-24; ibid., 24 April, 125; ibid., 16 May, 139; Whitaker, "Rubber Slavery," 549.

(131) Parsons to Loomis, 24 April 1905.

(132) Parsons to Loomis, 17 March 1905, Consular Despatch, M296, roll 15, 100; "Ban on Ubero Companies."

(133) Item, Mexican Herald, 8 Aug. 1905.

(134) Parsons to Loomis, 21 April 1905.

(135) Item, Mexican Herald, 12 Jan. 1905, quoted in Joseph B. Romney, "American Interests in Mexico: Development and Impact during the Rule of Porfirio Diaz, 1876-1911" (Ph.D. diss., University of Utah, 1969), 31-32.

(136) Quote from "Plan for Mexican Bank," New York Times, 11 June 1903, 3. See also, all in the New York Times: "A Pan-American Railroad Company," 9 June 1091, 5; "The All-Rail route to South America," 17 April 1904; and "Pan-American Railway," 14 March 1904, 5.

(137) Martin, Mexico of the XXth Century, 1: 168.

(138) Parsons to Loomis, 17 March 1905.

(139) Ibid., 15 March 1905, 98.

(140) "An Extended Tour," Mexican Herald, 24 April 1901; Parsons to Loomis, 29 May 1905, Consular Despatch, M296, roll 15, 145.

(141) Charles M. Flandrau, Viva Mexico! (Urbana, Ill., 1964), 222.

(142) A. J. Lesfrinasse (consul at Frontera) to State, 19 March 1910, Numerical and Minor Files, roll 1159, case 24155. Despite repeated complaints about the "Giant] Banana Company," the consul reported to State only after local creditors "put attachments on the property."

(143) Fall Report, 2: 1396, testimony of W. B. Loucks. Another statement to this effect may be found in the testimony of Wm. W. Canada, long-time U.S. consul at Veracruz: "Those stock companies in the United States, selling their stock to school ma'arms, barbers, clerks . . . some of them lost it all, but he Mexicans got the benefit of it all." Ibid., 2: 2432.

(144) Anglo-American, 3 Dec. 1905.

(145) Parsons to Bacon, 5 Dec. 1905, Consular Despatch, roll 15, 206, and ibid., roll 14, 100.

(146) "Buying Tropical Lands," Modern Mexico, Dec. 1906, 26.

(147) "Foreign Companies in Mexico," Modern Mexico, March 1904, 44.

(148) Mexican Investor, 2 Dec. 1905.

(149) John H. Cornyn, "The South Country," Modern Mexico, Oct. 1906, 32.

(150) Eberhardt to Bacon, 9 Dec. 1905, encl. 3, Consular Despatch, M296, roll 15, 212.

(151) Eberhardt to Bacon, 9 Dec. 1905.

(152) Eberhardt to Bacon, 7 Dec. 1905, ibid., 211.

(153) Blichfeldt, Mexican Journey, 88-89.

(154) Romney, "American Interests," 31-32.

(155) The U.S. legation in Brazil was raised to embassy status immediately before Thompson's appointment.

(156) John W. Foster (former minister to Mexico), Diplomatic Memoirs, 2 vols. (Boston, Mass., 1909), 1: 120.

(157) Letter, H. A. Harrison to President's Secretary, 11 Jan. 1906; Memorandum by Root, 27 Dec. 1905; and "His First Public Office," Washington Star, 31 Jan. 1902 (clipping); all in the D. E. Thompson Archive, Nebraska State Historical Society, Lincoln, Nebr.

(158) The testimony of Wallace Thompson, former Mexican Herald news editor, in Fall Report, 2: 1915.

(159) Advertisement, "International Land and Colonization Co.," Mexican Herald, 19 May 1901. On protocolization, see Fall Report, 1: 231-32, testimony of E. L. Doheny.

(160) For another example, see Despatch, Thompson to State, 3 June 1907, Numerical and Minor Files, M862, roll 1217.

(161) "Assail on Ambassador," New York Times, 23 Oct. 1906, 1.

(162) Fall Report, 2: 2559-60; Martin, Mexico of the XXth Century, 2: 290; Fred W. Powell, The Railroads of Mexico (Boston, Mass., 1921), 154; and William F. Sands, Our Jungle Diplomacy (Chapel Hill, N. C., 1944), 133.

(163) "The Ubero Plantation Company of Boston," Modern Mexico, March 1902, 11.

(164) Martin, Mexico of the XXth Century, 1: 167-68; and "Tehuantepec Railroad," Mexican Herald, 4 Feb. 1901.

(165) Thompson to State, 22 Dec. 1906, concerning transit of U.S. goods across the isthmus, Numerical and Minor Files, M862, roll 1216, case unnum.

(166) "Sir W. Pearson," Mexican Herald, 26 May 1901.

(167) Thompson to Root, 11 Jan. 1907, Numerical and Minor Files, M862, roll 1217, Despatch 389.

(168) Cott, "Porfirian Investment," 317.

(169) Former first secretary at the U.S. embassy under Thompson, Sands, Jungle Diplomacy, 133-34, portrays Thompson as Diaz's informal minister. For an example of Thompson's manipulation of internal U.S. policies for Mexican ends, see Numerical and Minor Files, roll 42, case 333, urging application of neutrality acts to arms sales to Yaqui Indians, and roll 1217, Instruction 91, Bacon to Thompson, 9 Aug. 1906, for State's rebuke to the Mexican government and (by implication) to Thompson. Also, see W. Dirk Raat, Revoltosos: Mexico's Rebels in the United States, 1903-1923 (College Station, Texas, 1981), 107 and passim.

*170] William Schell, Jr., "The Creelman Conspiracy: Towards a Reappraisal of the Fall of the Porfiriato," South Eastern Latin Americanist 24 (1985): 47-63. The language used in Despatch, Thompson to State, 3 Aug. 1908, Numerical and Minor Files, roll 594, case 8183/124-25, suggests that Thompson is reporting his participation in the Creelman interview for the first time.

[171] D. Wright to Theodore Roosevelt, 19 Nov. 1905, D. E. Thompson Archive; also, see Raat, Revoltosos.

[172] Letter, private and confidential, unnamed senator to Thompson, 7 May 1909, Thompson Archives.

[173] Sands, Jungle Diplomacy, 196.

[174] The Mexican Revolution, 1: 485, refers to Wilson's "freelance role" as "an exception."

[175] Hans Gadow, Through Southern Mexico . . . The Travels of a Naturalist (New York, 1908), 163; and John M. Hart, "The Peasants' War in Southeastern Mexico," in Riot, Rebellion and Revolution: Rural Social Conflict in Mexico, ed. Friedrich Katz (Princeton, N. J., 1988), 265-68.

[176] Bazant, A Concise History of Mexico, 116.

[177] Lebergott, "The Returns to U.S. Imperialism," 229-53. Josefina Zoraida Vazquez and Lorenzo Meyer, The United States and Mexico (Chicago, Ill., 1985), 91, seem to be reevaluating the assumption that American investment was inherently exploitative.

[178] "Mexico Finances," and "Mexico's Business," Mexican Herald, 21 Jan. and 23 March 1901; "Rubber Planting in Mexico," Modern Mexico, March 1903, 57; Thomas L. Benjamin, "Passages to Leviathan: Chiapas and the Mexican State, 1891-1941" (Ph.D. diss., Michigan State University, 1981), 93-95.

[179] Mexico's economy grew from 1873 to 1878, a period of contraction in the United States. From 1878 to 1882, the two economies both expanded. Mexico continued to grow through 1883, while the U.S. economy declined and crashed in 1884, coinciding with a downturn in Mexico. The U.S. economy revived the following year, whereas recession lingered in Mexico until 1887. Thereafter, Mexico held its own and then grew rapidly, while the United States suffered a flat economy and two severe depressions in 1893 and 1895. Salvucci, "Aspect of United States-Mexico Trade," 38-39. For an indication of the performance of Mexico's economy, see Estadisticas Historicas de Mexico, ed. Instituto Nacional de Estadistica, Georgrafiae Informatica, 2 vols. (1986), 2: 501, 603, 663, 665, and Estudisticas Economicas del Porfiriato: Comercio Exterior de Mexico (Mexico City, 1960).

[180] In spite of U.S. efforts to replace it, the peso was the universal trade coin in the Far East; see "The Mexican Dollar," and "Mexico in the Orient," Mexican Herald, 6 Feb. and 28 March 1901; also, James D. Cockcroft, Mexico: Class Formation, Capital Accumulation and the State (New York, 1983), 89.

[181] Dufoo Diaz, Limantour, 200-202, 227-29.

[182] Item, Mexican Herald, 30 June 1908; and Cott, "Porfirian Investment," 302.

[183] A fact noted by others; see David Healy, Drive to Hegemony: The United States in the Caribbean, 1898-1917 (Madison, Wis., 1988), 282-83.

[184] Gilbert M. Joseph, Revolution from Without: Yucatan, Mexico and the United States, 1880-1924 (New York, 1982), 40-41; Allen Wells, Yucatan's Gilded Age: Haciendas, Henequen and International Harvester, 1860-1915 (Albuquerque, N. M., 1985), 44 and passim; and Mark Wasserman, Capitalists, Caciques and Revolution (Chapel Hill, N. C., 1984), describe the relationship between foreign investment and elite political power.

[185] See Martin, Mexico of the XXth Century, 2: 242; G. B. Winton, A New Era in Old Mexico (Nashville, Tenn., 1905), 12; and Blichfeldt, Mexican Journey, 88 and passim; see the advertisements in any Modern Mexico from 1906 on; Shanklin report, reprinted in Hanrahan, The Bad Yankee, 1: D-73-D-74; Hart, Revolutionary Mexico, 8.

[186] Hanrahan, The Bad Yankee, 1: 120.

WILLIAM SCHELL, JR., is a Ph.D candidate in Latin American-Iberian history at the University of North Carolina, Chapel Hill.

I wish to thank Richard Salvucci, Gilbert Joseph, William Barney, and two anonymous readers for the Business History Review for their criticism and encouragement.
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