Native Mexican Americans first settled along what used to be the shores of shallow lake Texcoco, present day Mexico City, in 1500 BC. By the early 1300s AD, the Aztecs established roots on an Island in this lake which later became the capital of the Aztec Empire: the City of Tenochtitlan.
In 1521 the Spanish explorer Hernan Cortez captured and razed the city, building a Spanish city in its place. The new city served as capital of the then colony of New Spain which extended as far south as Panama. In 1821, Mexican revolutionaries under General Agustin de Iturbide, a Spanish creole, captured Mexico City and broke all ties with the Spanish crown. The city was occupied by the United States in 1847 during the Mexican War and by France for four years starting in 1862, when Maximilian archduke of Austria, was named Emperor of Mexico by Napoleon III.
Heavy fighting ensued from 1910 to 1915, the years of the Mexican Revolution. The end of the Revolutionary movement marked the beginning of a period of dramatic social changes which led to the creation of the Mexican Constitution of 1917. Widespread land reform and nationalization of the country’s basic industries were achieved during the 1930’s.
The last 60 years have been characterized by industrial expansion, rapid population growth and political domination. In the first six years of the 1980s things slowed down as a result of a recessionary world economy. Vast austerity and strict debt restructuring measures were a direct result of that decade for the Mexican economy.
In the past few years, the Mexican government has carefully tried to steer a new and prosperous Mexico in the direction of becoming a first world economy. However, and despite the efforts in allying itself as partner in trade with Canada and the United States unexpected political and economical events in the early 1990s have conspired to delay achievement of this goal.
These next few pages, summarize the evolution of the Mexican people since the early settlers to the present day restructuring of the Mexican Economy. We believe that the following information will provide you with the historical insight, to be better able to understand the importance of the events of the past 500 years. Events which are a direct reflection of where Mexico, as a young and promising economy, is today and more importantly where it is heading towards.
PRE HISPANIC PERIOD: 2000 B.C. – 1521 A.D.
Prior to the arrival of the Spaniards the struggle for life characterized Indian life. Conflicts frequently arose between different groups over competition for such life sustaining resources as hunting grounds, arable lands, irrigation water and trading goods.
Two types of civilizations emerged in Mesoamerica: the highland and the lowland type. The highland type was advanced in organization and culture. It was characterized by a conglomerate of states and empires consisting of elaborate social class structures, complex organizational traits, advanced urbanization and architecture, bureaucracies, and densely settled agrarian areas. The lowland type, was composed of primitive aboriginal groups with little or no social structure, government or architecture. After 1,000 B.C., the growing problem of food supply forced these groups to develop more complex forms of social organization.
These new civilizations had a social structure dominated by a ruling class priest. From their ceremonial centers these priests, acting as the representative of the gods, distributed land, allocated food surpluses, stored seeds, sponsored trade and employed skilled craftsmen.
These theocracies reached their peak in the central highland cities of Teotihuacan (outside the boundaries to the north of today’s Mexico City), Monte Alban (to the southwest in the State of Oaxaca), and in the great centers of the Mayas of southern Mexico in the Yucatan Peninsula.
The growing opulence of the urban religious centers bred envy and later resentment in the surrounding villages, whose labor provided the surplus needed to support the magnificence of those empires. Conflict arose on the peripheries of these civilizations. A spreading revolt most likely interrupted trading activities, consequently disrupting food supplies. As a result, these theocratic centers were either abandoned or conquered.
According to theories by archaeologist and historians, a combination of natural disasters and over population brought both the Mayans and the Teotihuacans to an end. The land could no longer provide the necessary resources to support the needs of such great ceremonial centers. Up until 650 A.D. these classic societies remained generally peaceful and non-expansionist.
Between 650 and 675 B.C. warlike groups invaded, burned and plundered Teotihuacan. The fall of this urban center was followed by the collapse of Monte Alban and the great Mayan city of Chi-chen Itza in the Yucatan Peninsula. By 900 A.D. the golden pre-Columbian civilization had ended.
Some of the Mayan survivors migrated to other areas and founded new cities; others became assimilated into new conquering tribes. One of the most notorious were the Toltecs. They were centered around the city of Tula on the central plateau of Mexico.
The Toltecs were more military oriented tribes who began to organize their society more rigidly. They developed a very complex society based on warfare and military expansion, intensive agriculture and a tight network of government control. The Toltecs levied tribute on the agriculture surplus of their many subject tribes and widely practiced human sacrifices.
The Toltec civilization flourished from 1000 to 1300 A.D. before experiencing its demise and fall brought about by being in a state of constant warfare.
In the 12th century the Aztecs arrived from the north and settled in what is now Mexico City and surrounding areas. Initially they were subservient to other groups in the area, but by the 13th century, the Aztecs, also known as the Mexica, hadextended their empire over a large part of present day Mexico.
By the 15th century the Aztecs, now a warlike tribe that once had hired its warriors out to Tula’s mercenaries, had by this time restored order in the region. In a considerable short period of time, the Aztecs managed to create a dominant empire by conquering all other groups in the region. By the time the Spanish adventurers reached Tenochtitlan, the capital of the empire, they were surprised to find a civilization of imposing appearance comprised of over 450,000 people. The largest city the New World at that time was Florence, Italy, the capital city of the arts and culture of the Renaissance, then 200,000 people. The complexity and well engineered organization of the empire and the cultural knowledge of the Aztecs were greatly admired by the Spanish conquerors in later years. However, the richness of the new discovered land with its minerals, spices and raw goods was what Spain needed at the time to strengthen its position as the world’s greatest power.
The Aztec empire was formed by three large cities. The capital of the empire, Tenochtitlan; and two smaller cities, Tlacopan and Texcoco which dominated their confederacy. Their civilization was organized into clans with stratified and pyramidal internal social hierarchies. At the top were the warriors and priests. This higher group was tax exempt, with the exception of the military service owned by the warriors. It also dominated all high offices and was responsible for collecting the tributes from their many subordinate groups throughout the empire. The priest and warriors wore distinguishable insignia and dresses; they practiced polygamy, and monopolized the land and all educational systems.
Following beneath in the social hierarchy existed a class of free peasants and a mass of serfs. There was also a small group of non-Aztec merchants, who controlled all trade activities. They were known as Pochtecas. This group was settled in the twin city of Tlatelolco, next to the Empire’s capital.
The Aztecs believed in a hierarchy of different gods. The chief god, or Teotl in the Aztec language, was called Huitzilopochtli. He was the god of the sun and war. There were several other lesser deities. Among the most notorious was Quetzalcoatl (feathered snake), a serpent god who symbolized the arts and mortality. According to Aztec beliefs, Quetzalcoatl had been exiled; his return would one day symbolize the end of the Aztec civilization.
The Spanish conquest of Mexico began in 1517 with three armed expeditions launched from the island of Cuba. These expeditions were organized by Governor Diego de Velazquez de Cuellar. This conquest resulted in a new culture: the Mexican culture. These series of military expeditions were originally intended to establish a colony on the mainland from which mineral riches and a labor force could be supplied to replace the quickly depleted indigenous population of the West Indies.
The first expedition from Cuba in 1517, was under the command of Francisco Hernandez de Cordoba. It reached the Yucatan peninsula in 1517. The following year, the second expedition under the command of Juan Grijalva, explored the Mexican coast as far as the site of the present-day State of Veracruz. It was during this expedition that the Spaniards discovered of the magnificence and richness of the Aztec empire.
The third and most influential expedition, historically speaking, lasted less than three years and was led by a Spanish adventurer by the name of Hernan Cortez. It was one that would forever change the course of history in the Americas. Cortez landed in 1519, in what today is the State of Veracruz, with eleven ships, six hundred men, sixteen horses and a small number of light cannons. Shortly thereafter he founded the town of Veracruz and from there proceeded inland. On his way, many disgruntled Aztec subjects allied themselves with Cortez. This gave Cortez’s troops strength. He reached the capital of the Aztec empire, Tenochtitlan in November of 1519 and soon after he captured the Aztec emperor Montezuma II.
Historians attribute Cortez’s success in vanquishing the formidable imperial armies to superior technology and planning. Cortez posed as the god Quetzalcoatl (something which enabled him to reach the capital and capture the emperor without violence or force). He also made smart use of local Indian mercenaries who were familiar with the language and the territory.
Despite the Spaniard’s initial success, the Aztecs besieged their capital city Tenochtitlan on the night of June 30, 1520. This night is also know as the Night of Sadness. Cortez was defeated and forced to retreat causing many casualties among the Spanish and their Indian allies.
The following summer, Cortez and his Spanish troops, accompanied by thousands of Indian mercenaries, sacked and conquered Tenochtitlan. With their capital in ruins and the ruling emperor dead, the Aztecs finally collapsed. Cortez named his conquest New Spain.
The rise of New Spain
The Spanish crown rapidly sought to consolidate its new empire and control Cortez’s personal power. A royal court was established in 1528 and the first Viceroy, Antonio de Mendoza, took office in 1535. Cortez’s followers received grants of Indian villages from which they could collect tribute. These grants gave the colonists control over Indian labor and produce. Many clergy objected to these grants. One Spanish missionary in particular, Bartolome de las Casas, encouraged the Indians to revolt unsuccessfully against Spanish control and abuses in 1541.
In close alliance with the Roman Catholic Church, the Spanish crown sought to create a well ordered colony free of feudal privilege and religious dissent.
The friars capitalized on both the subject tribes widespread hatred of the Aztecs and the similarities between Catholicism and Indian folk religion to carry out mass conversions. In the Spaniard’s eyes, an Indian who accepted Christianity became theoretically humanized and therefore protected by Spanish law. The Church often built its shrines on sites where Indian idols once stood.
The Spanish crown and colonists controlled a vast wealth that came from several sources. However, silver mining remained the main “cash crop” for the society. Urban mining centers flourished in Zacatecas, Taxco, Fresnillo and later in Durango and Chihuahua. Large estates and ranches fed the mining centers. Other estates grew wheat, sugarcane and indigo for export. Colonial merchants distributed such goods as cotton, silk and dye that the Indians produced. However, Spain followed a policy of mercantilism which prohibited the colonists from manufacturing products which competed with goods shipped by or manufactured in Spain.
Period of decline
In the 17th century the economy of New Spain collapsed. Disease and overwork had combined to wipe out much of the Indian population. By 1700, little over 1 million of an estimated 11 million Indians survived in New Spain. In addition, the vast cattle and sheep herds destroyed farm land. The Spanish monopolized irrigation water and it became almost impossible for the Indian farmer to grow food. Without Indian labor the mines could no longer function. The population structure changed, retreating into rural estates called haciendas, which became self sufficient centers of political and economic power.
In the 18th century, a new Spanish dynasty re-organized the colonies. During the reign of the Bourbons, political boundaries were re-shuffled, the crown improved tax collection, reduced export and import duties, and appointed honest officials. As a result, the economy boomed. Mining production rose fourfold and agriculture and trade increased. Acapulco, on the Pacific Ocean, flourished as a center of trade with the Orient, and Veracruz, on the Gulf of Mexico, dominated the Caribbean and European trade. The colonists also developed the textile, rope, tobacco, china, and spice industries, which were all supported by locally produced raw materials.
Puebla, the center of woolen mills and pottery became a large colonial urban center. Guanajuato and Guadalajara also became centers of wealth and industry. Mexico City, the colony’s administrative center, which grew to a population of 250,000, was home to the Viceroy and held the largest university on the continent.
During the 1800’s New Spain enjoyed an enviable position. Mining, industry and agriculture thrived. It also possessed major centers of learning and urban administration. The population had grown to 7.5 million, of which 42% were of Indian descent, 18% were white and 38% were mestizo. The Viceroy’s power extended south to present day Panama and as far north as California.
However, this colonial system contained the seeds of its own destruction. Native born Criollos, people of European decent, born in New Spain, resented Spanish monopolization of political power and the economic system which favored the Spanish-born. At the same time, Spain’s authority in Europe declined as did it’s position as a world leader. As a result, the rural masses lacked land and had no purchasing power. In addition, New Spain’s territorial boundaries were too remote. No roads connected the frontier areas with the administrative centers and troops for defense were in short supply. These problems prompted the final break from Spain in 1820.
Independence to 1910
This hundred year period starts with the movement for Mexican Independence. This movement was directed against Colonial Officials and it came about at the convergence of two revolts. The first, was lead by two priests, “Miguel Hidalgo y Costilla” and “Jose Maria Morelos y Pavon”. On September 16, 1810 Miguel Hidalgo made a rousing speech, in the town of Dolores, to lead an Indian uprising calling for Independence from the Spanish crown. This speech became known as “the cry of sorrows”.
Hidalgo’s forces marched towards Mexico City under the banner of the Mexican Virgin of Guadalupe. At the same time, this first revolt was gaining support from the southern State of Guerrero. These guerrilla forces were being led by Jose Morelos, who later assumed leadership of the Independence Movement after Father Hidalgo was executed in 1811.The Spanish bureaucracy and rich Criollos defeated this rebellion and executed priest Morelos together with other leaders of the revolt in 1815.
The second revolt came about when the same group of wealthy Criollos, who feared that Spain dominated by Liberals at the time, would acquiesce to the revolutionaries’ demands for land redistribution. This second revolt was led by “General Agustin de Iturbide”. With further support from reactionary Spaniards, Iturbide was able to declare Mexico independent in 1821. As the result of this, in 1822, Iturbide was proclaimed Emperor Agustin I. His fiscally plagued empire would be overthrown a year later when unpaid troops would put an end to this short lived empire. Guadalupe Victoria became the first president of Mexico in 1823. He set up a republic and was responsible for beginning an era which ushered in chaos for the next 50 years.
The age of Santa Anna
Historians have called the years between 1823 and 1855 the age of Santa Anna. General Antonio Lopez Santa Anna was one of the leaders of the coup which had overthrown Iturbide years earlier. Santa Anna would become president of Mexico, several times. He became more a representative than a dominant figure.
During Santa Anna’s time, Mexico faced staggering problems which were probably beyond the ability of any individual or group to solve: The government was saddled with an internal debt of millions of pesos incurred by Spain and Iturbide, and military expenses greatly exceeded revenues. As a solution to this problem, the harassed government sought funds abroad, but foreign loans could only be obtained at heavy rates of interest and discount. However, once the money reached Mexico, government officials spent it on second-hand war material or stole it.
It was characteristic of this era to see the rise and fall of bankrupt governments. It was also during this era that two political groups competed for dominance: the Liberals and the Conservatives. The Liberals represented the regional power centers and free-trading interests. This group wanted to model the new Mexican nation after the United States. The Conservatives were supported by the army, Mexico City and other colonial administrative and manufacturing centers. Both parties would eventually turn to the wealth of the church to alleviate insurmountable fiscal problems.
Santa Anna during these years moved in and out of power, sometimes being a Liberal, and other times a conservative.
By the 1850’s these chaotic events led to disaster. Mining virtually stopped, agriculture declined and trade and industry suffered from expensive internal tariffs, foreign competition, banditry and political violence. Immigration was non-existent. Texas had declared its independence on March 2, 1836 and by 1846, Mexico was embroiled in a war with the United States. Soon into the war, the disunited Mexicans were routed. Mexico lost over half of its territory, including the areas of the present States of California, New Mexico and Northern Arizona. Santa Anna in exchange for his freedom signed the peace treaty of Guadalupe-Hidalgo with the United States.
Mexico was almost ruined: the national debt had reached astronomical proportions and the army had degenerated into banditry. Santa Anna returned to power in 1853 as “perpetual dictator” and sold Southern Arizona to the United States for ten million dollars.
In 1855 a brilliant group of liberals led by Melchor Ocampo, Ignacio Comonfort and Benito Juarez forced Santa Anna from power and ended his dominance in Mexican national life.
In order to restore the shattered economy, the liberals decreed that the Church had to sell most of its land and that Indian communal lands had to be distributed to individual peasants. These reforms did not create a rural middle class. However, the poor could not afford to purchase the newly available land.
In 1857, the liberals promulgated a new constitution. Government revenue rose but most of it went to meet the cost of a new civil war, the War of Reform (1858-1861). The conservatives sought foreign help and in 1862 Napoleon III of France sought to establish a Mexican empire under the Austrian prince, Maximilian of Hapsburg. The liberals, led by Juarez, resisted bitterly. Despite the support from French troops and Mexican conservatives, Maximilian could not consolidate his empire. The French withdrew in 1867, leaving the ill fated emperor and his wife to meet their deaths by execution. Juarez became president and initiated various reforms to modernize Mexico before dying in 1872.
The liberals made many mistakes but their accomplishments were many: they destroyed the excessive power of the army, the Church and other conservative elements. They enforced democratic principles with the federal constitution of 1857. Finally, the struggle against Maximilian created a sense of nationalism previously unknown in Mexico.
The age of General Porfirio Díaz
In 1867 General Porfirio Diaz seized power from Juarez’s liberal successors. General Diaz effectively governed Mexico until the Revolution of 1910, serving as president from 1877 to 1880 and from 1884 to 1911. It was during this age that a new Mexico emerged. Diaz established order and a workable government. Civil wars ceased and banditry disappeared from the countryside. Provincial governors obeyed laws emanating from Mexico City. The army became professionalized. The “Rurales”, a militarized police of several thousand, maintained order throughout the country. General Diaz and a group of wealthy intellectuals adopted French positivism as a national creed.
Foreign investment rushed in to take advantage of the new political and economic climates. This revived mining and created major oil fields. Exports and national income increased and new industries dotted the countryside. Formerly despised for its backwardness, Mexico became the model for much of the developing world.
Porfirian Mexico, like New Spain in the 1800’s, contained the seeds of its own destruction. The urban and rural masses remained impoverished. Mexicans of all classes hated the increasing foreign economic dominance. Finally a politically ambitious younger generation came to resent the 30 year dominance exercised by the Diaz clique.
The Revolution – 1910
The Revolution of 1910 and its collapse amazed the entire western world. The main direct cause of the revolt was due to Diaz’s monopoly of political power. Two major strikes in Mexico, one against the Cananea Copper Company in Sonora and the second at the Rio Blanco textile mills in Veracruz, created national political discontent. Consequent to these events, serious financial troubles disrupted the last years of the Diaz dictatorship.
In 1908, perhaps to refute charges about the autocratic nature of his rule, Diaz told a U.S. journalist that Mexico would be ready for free elections in 1910. Once published, the interview inspired various discontented sectors to begin organizing. The opposition eventually coalesced around a northern landowner, Francisco I. Madero, who had the time, resource and contacts to organize an effective political campaign. Madero’s slogan was ” Effective Suffrage and no Reelection”. However, Diaz rigged the election and Madero lead a revolt that spread rapidly throughout the nation. The Diaz military dictatorship collapsed and Diaz had to flee the country.
Madero advocated neither social reforms nor any other drastic changes. He succeeded in angering not only the radical proponents of land reform policies and economic nationalism but also the land owners, who opposed all change and disliked Madero’s weakness. With conservative support Victoriano Huerta overthrew Madero, who was later executed.
Mexico again became engulfed in ruinous violence. A civil war soon broke out between Huerta’s forces and Francisco (Pancho) Villa in the North and Emiliano Zapata in the South. Pancho Villa, an ex- bandit, organized the cowboys of the North, while Zapata, a small farmer of the South recruited an army of angry landless peasants. Huerta and his army were defeated and in 1914 a rich landowner, Venustiano Carranza who had supported Madero, assumed executive power.
In 1915 the U.S. government recognized Carranza as head of a de facto government, despite the guerrilla raids that continued until 1917 between Carranza’s forces and those of Villa and Zapata. However, Zapata was murdered in 1919, and Pancho Villa surrendered in 1920. The victors called a convention that legislated a new constitution in 1917. In 1920 Carranza tried to prevent General Alvaro Obregon from succeeding him as president, but Obregon led a military coup that overthrew Carranza in 1921.
The Northern Regime – 1940
The governments that ruled Mexico from 1921 to 1933 are known as the Northern Dynasty. The governments of Obregon, Calles, Portes Gil, Rubio and Rodriguez were all from the northern part of Mexico This regime sought to establish order while developing the economy and increasing the internal market by land reform and higher wages.
There was bitter opposition during this period from the clergy, landowners, foreign investors and ambitious generals within their own ranks. The government brutally crushed two military revolts and the Cristero rebellion of Mexico’s militant Catholics. The northerners achieved many of their objectives through executions which created political peace and formed a new political party, the PNR (National Revolutionary Party) which unified pro-government forces and destroyed opposition parties.
The land reforms of Calles and Portes Gil expanded the internal market and created peace in rural areas. Obregon brought organized labor into the government and improved wages. Economic productivity rose, mining resumed and the northern city of Monterrey became a center for steel production. Calles established friendly relations with the United States, however efforts to control the oil industry remained a serious concern.
Despite these reforms, large pockets of discontent remained in Mexico in the 1930’s. Combined with the great depression that began in 1929, the Mexican economic recovery came to a halt. The government and its labor allies had become corrupt. Intellectuals admired the U.S. President Roosevelt’s reforms and called for the same in Mexico.
General Lazaro Cardenas became president in 1934 and, although an ally of Calles, he ended the policies of the Northern Dynasty and revived the revolutionary fervor of 1910. His government exiled Calles, carried out a vast land reform, reorganized the labor movement, and nationalized foreign oil companies. Cardenas also established state managed collective farms as the basis of Mexican agriculture. In 1940 he stepped down in favor of his minister of war, the moderate general Manuel Avila Camacho
President Avila Camacho and his successor, Miguel Aleman Valdes, established the policies that Mexico has followed since Cardenas. The government has placed emphasis on industrial and economic growth. This policy has led to one of the world’s most impressive economic growth rates, but has also led to a vast unequal distribution of wealth. Income inequalities, inflation and government repression of labor led to a massive student strike in 1968, which the government of President Gustavo Diaz Ordaz brutally repressed. The 1968 strike signified the end of the period begun by Camacho.
The term of President Luis Echeverria Alvarez in the early 1970’s, succeeded Ordaz’s. His office was marked by economic instability and political unrest. His successor, President Jose Lopez Portillo, exploited newly found oil reserves and entered a period of economic prosperity. However, the decline of the world oil market in the early 1980’s, plunged Mexico into a serious economic crisis. When Miguel De La Madrid Hurtado assumed the presidency in 1982, Mexico’s economy was on the verge of collapse. The government imposed vast austerity measures and in 1985 signed with foreign creditors the first stage of a 14 year debt restructuring plan. In September 1985, the Mexican economy suffered an additional setback when earthquakes severely damaged the capital, killing and injuring thousands. Although inflation accelerated and the foreign debt grew, economic prospects brightened as oil prices began to bounce back in 1987.
In December 1988, Carlos Salinas De Gortari became president. During 1989 the government liberalized Mexico’s foreign investment regulations to allow foreign ownership of businesses. In 1990, Mexico began negotiations with the United States and Canada to bring about the North American Free Trade Agreement (NAFTA).The approval of the North American Free Trade Agreement and the new restructuring strategies for Mexico were supposed to make 1994 the year that would theoretically, transform the Mexican economy into one of the world’s most promising ones.
Current market trends
Mexico has made and is currently making impressive strides in promoting economic growth. Mexico’s strong and more diversified manufacturing base makes the Mexican economy more stable than it has previously been. Furthermore, the government is not faced with a large federal deficit as it was in the past. Its debt situation is better controlled and Mexican industry is generally exporting more value-added products than ever.
The administration of President Ernesto Zedillo Ponce de Leon (1994-2001) put in place an Economic Emergency Plan in the first quarter of 1995. It is a strong economic program in which the government is making steady progress in reasserting Mexico’s sound economic fundamentals, restoring stability to financial markets, and establishing a strong foundation for sustainable growth. This program has dramatically improved Mexico’s account balance and debt structure, and has also lead to a significant number of new investment opportunities and privatization in a number of key economic sectors, including secondary petrochemicals, basic infrastructure, telecommunications and natural gas.
Mexico is moving forward with strong initiatives to restructure and deregulate the economy, to stimulate creation and transfer of new technology, to strengthen industrial competitiveness and to increase domestic savings, all of which are geared towards improving Mexico’s investment climate and business confidence.
NAFTA has locked in fundamental economic reforms in Mexico and, these reforms are being widened and deepened. With the increase in commerce between United States, Canada and Mexico, the economic outlook has been dramatically improved.
This article is electronically reproduced with permission from the Mexico 2000 Business Directory.
For comprehensive information on Mexico’s history and important figures,
see Mexico Connect’s History Section.