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Famine in European History

Editor(s):Alfani, Guido
Ó Gráda, Cormac
Reviewer(s):Naumenko, Natalya

Published by EH.Net (January 2018)

Guido Alfani and Cormac Ó Gráda, editors, Famine in European History. New York: Cambridge University Press, 2017. xi + 325 pp. $30 (paperback), ISBN: 978-1-316-63183-6.

Reviewed for EH.Net by Natalya Naumenko, Department of Economics, Northwestern University.

 
This collection of essays undertakes to construct a comprehensive history of famine in Europe. Each of the authors is an expert on the history of famine in a particular country or group of countries. In the opening chapter, the editors introduce methodology and discuss the common factors that created famine conditions and their relative importance in the European context. The concluding chapter studies famines during World Wars I and II.

Throughout the book, a standard definition of famine is used: “Famine refers to a shortage of food or purchasing power that leads directly to excess mortality from starvation or hunger-induced disease” (p. 2). Famines occur when food is scarce. Scarcity, in turn, occurs when either food production or distribution is impaired (or both). Weather, crop diseases, changes in technology and climate all affect production. Market integration and specific public institutions providing relief affect distribution. Population pressure can increase the probability of famine (the number of famine episodes notably decreased after the Black Death epidemics). Finally, war is another important factor affecting both production (by destroying crops and reducing available labor) and distribution (via extortions and disruption of trade). The relative importance of production versus distribution changed over time — while some medieval famines can probably be attributed mostly to a shortage of the total amount of available food due to adverse shocks to production, with improvement in technology and market integration the factors affecting the distribution started playing a major role.

The country-specific chapters have a similar structure. Each chapter reports a time series of famines using best available data (relying on chronicles for earlier events, time series of burials and foodstuff prices for later events) usually from the thirteenth century and up to nineteenth century, although for some countries the time series of famines start as early as seventh century. Each chapter then attempts to analyze the scope and the severity of the famines, highlights some of the most important ones, and discusses the factors that led to the famines.

Although the reasons leading to famine are similar for all countries and are summarized in the introduction, some interesting country-specific factors are worth highlighting. For Italy the authors name population pressure combined with crop failure due to the weather or war as the main reasons leading to famine. Introduction of new crops (especially maize) during the eighteenth century finally increased food security but led to spread of pellagra disease. In Spain in addition to all the factors mentioned earlier epidemics could lead to famine by decreasing labor and consequently harvest. The famine research in France has been so extensive that it is difficult to distinguish between true crises affecting large areas and a high share of population and relatively localized ones. The increase in fiscal dues and the growth of cities to some extent offset the improvement in agricultural technology and therefore increased the probability of famines. In Germany, Switzerland, and Austria the lack of centralization increased the probability of famines — in case of local dearth, neighboring lords could shut grain trade exacerbating local food shortages.

The northern Low Countries, escaped from famine as early as late sixteenth century (with the exception is the crisis of 1845-1850 caused by potato blight) due to the central position of Amsterdam in the European grain trade. Episodes of famine in the southern Low Countries are mostly linked to war. Similarly, England escaped famine as early as eighteenth century due to change in weather conditions, improvements in food production technology, market integration, and, most importantly, the presence of well-developed relief system. In Ireland, chronicles document severe famines as early as seventh century. The two most notable recent crises are the famines of 1740-1741 and the famine of the 1840s. Both were triggered by severe external shocks — extremely cold weather and potato blight respectively. The 1840s crisis is outstanding both in its scale and its long-term impact on the population as it triggered mass emigration. Finally, despite the fact that the Nordic countries (Denmark, Sweden, Finland, Norway, and Iceland) are located in areas that are less suitable for agriculture and therefore more prone to crop failures due to poor weather, widespread famine was a rare occurrence there due to diversified agriculture and well-integrated markets.

In Eastern Europe (Russia and the Soviet Union) little quantitative information is available before the eighteenth century (characteristically, in the Russian language there is no distinction between dearth and famine), although some notable famines of sixteenth and seventeenth centuries are discussed. Most importantly, the nature of food difficulties was determined by specific geographic conditions: for strategic reasons the capital and major industrial centers were located in the grain-deficit North and food had to be extracted from grain surplus regions of the South. Thus, when markets disintegrated due to the war, the grain-deficit North suffered (as in 1918-1920), and when negative weather shock occurred, mortality increased where grain was produced (as in 1921-1922). According to Stephen Wheatcroft, the famine of 1927-1933 was triggered by severe drought, and 1941-1947 food shortages and famine were caused by the occupation of grain producing regions by the Germans, and by poor weather of 1946. Nevertheless, it remains an open question why unfavorable weather caused severe famines in the Soviet Union while in other European countries weather ceased to play a major role by the beginning of twentieth century.

The final chapter discusses the episodes of famines related to World War I and World War II. The unprecedented scale of these conflicts disrupted food production and distribution, negatively affecting both traditionally grain exporting and grain importing territories. In addition, famine relief efforts were hindered by the conflict, the population in the occupied territories suffered from over-extraction of foodstuffs, and many prisoner camps were inadequately supplied. These factors explain pockets of starvation occurring even in areas that had long been free of famine.

This book does not oversell, does not strike the reader with bold concepts, unorthodox perspectives, or loud slogans. It does exactly what it promises — delivers a comprehensive systematic history of famine based on rigorous data collection and careful analysis. The analysis in the introductory chapter provides an excellent summary of the complex phenomena that famines are and will take its deserved place in many economic history courses. And although famine is [hopefully] long gone in Europe, all factors discussed in the book are still relevant for less developed parts of the world.

 
Natalya Naumenko is completing her dissertation on famines in the Soviet Union at Northwestern University.

Copyright (c) 2018 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (January 2018). All EH.Net reviews are archived at http://www.eh.net/BookReview.

Subject(s):Historical Demography, including Migration
Military and War
Household, Family and Consumer History
Living Standards, Anthropometric History, Economic Anthropology
Geographic Area(s):Europe
Time Period(s):Medieval
16th Century
17th Century
18th Century
19th Century
20th Century: Pre WWII

Famines in European Economic History: The Last Great European Famines Reconsidered

Editor(s):Curran, Declan
Luciuk, Lubomyr
Newby, Andrew G.
Reviewer(s):Alfani, Guido

Published by EH.Net (June 2016)

Declan Curran, Lubomyr Luciuk and Andrew G. Newby, editors, Famines in European Economic History: The Last Great European Famines Reconsidered. New York: Routledge, 2015. xvii + 267 pp. $160 (hardcover), ISBN: 978-0-415-65681-8.

Reviewed for EH.Net by Guido Alfani, Dondena Centre for Research on Social Dynamics, Bocconi University.

In the recent historiography on famine, some episodes have tended to attract most of the attention. This is especially the case of the Great Irish Famine of 1845-50, which surely was a major event in the European history of the last two centuries — an event which however, as is often the case, can be understood fully only in comparison to others. This book, edited by Declan Curran, Lubomyr Luciuk and Andrew Newby, aims to provide us with this much-needed comparative perspective.

The book is organized in nine chapters (plus introduction), evenly divided between three of the main famines affecting Europe during the nineteenth and twentieth centuries. Apart from the Great Irish Famine, the book covers another relatively well-researched episode, the Holodomor (“Death by Starvation”) affecting Ukraine in 1932-33, as well as an important but not internationally well-known episode involving northern Europe and particularly Finland, the “Great Hunger Years” of 1867-68. All these famines were characterized by particularly high death tolls, which (according to the estimates summarized in the editors’ introduction) amounted to about 1 million in 1845-50 in Ireland, 100,000-150,000 in 1867-68 in Finland and 1.9 million in 1932-33 in Ukraine. Notice that these figures do not include victims caused by these famines outside the boundaries of the three specific geographic areas that the book focuses on (see below).

Overall, the authors of the chapters explore in considerable detail the political and cultural consequences of famines. In Ireland and Ukraine in particular, the “politicisation” of famine — i.e. the way in which the crisis is used in the political discourse — and its “appropriation in collective memory and national identity formation” (p. 3) is particular apparent, while the case of Finland is singled out as one in which famine underwent (to a degree at least) a process of collective forgetfulness. A particularly interesting aspect is that of “culpability,” which has also to be understood in the context of areas which were all peripheries in much broader empires. So, while in Ireland and in Ukraine a discourse with political undertones developed blaming respectively the British and the Russians, in Finland the political center was never indicated as the culprit for the catastrophe, presumably because in 1867-68 Finland was a largely self-governed and well-identified territorial entity within the Russian Empire.

There is much to like in this book, particularly because many chapters provide interesting new information which will surely be of great use to other scholars. The attention dedicated to the famine in Finland in 1867-68 is particularly welcome. However, the book as a whole also has a few shortcomings, which somewhat hinder its ambitious comparative aims. A first problem, is that it never provides a clear definition of what a famine is — a topic which was quite contentious until recently, but has probably been settled (at least temporarily) by Cormac Ó Gráda with his recent definition of famine as a “a shortage of food or purchasing power that leads directly to excess mortality from starvation or hunger-induced diseases.”[1] Quite obviously, all three episodes covered by Curran, Luciuk and Newby’s book fit into this definition (as they were characterized by mass mortality) — but the book is never entirely clear regarding the very important issue of causation. As Ó Gráda makes explicit, a famine can be due either to production problems (a shortage of food) or to distribution problems (a lack of purchasing power or “entitlement” to resources, à la Amartya Sen[2]). Quite obviously, this issue is also key to understanding correctly the debate about culpability of political authorities, which seems to be close to the heart of many of the authors of this book and consequently, a more detailed and encompassing discussion of famine causation would have been useful.

A second problem is that the book does not attempt to place the three specific episodes into an even broader perspective. First of all, the large literature on the continental European famines of the early modern period is almost entirely neglected. This matters because, as clearly shown by a very recent attempt at a comparison of European famines in the very long run (which admittedly the authors could not know about)[3], some reference to at least the main earlier episodes — like the famous “years of misery” of 1693-97 when famine ravaged most of the continent[4] (including Finland where the overall mortality might have been in the order of 25-33%, i.e. about three times the rate which can be estimated for 1867-68[5]) or the terrible famine of  the 1590s[6] — considerably puts a different complexion, in relative terms, on the European famines of the nineteenth and twentieth centuries. Additionally, the three famines covered by the book were not exclusive to Ireland, Finland and Ukraine but also affected other areas, which is an important aspect to consider when assessing both the issue of causation, and that of the use of famine in the political discourse. So for example, the so-called “Great Irish Famine” was only one component (although admittedly the main one and by far) of a much broader crisis associated to the failure of the potato crops caused by a fungal disease (phytophthera infestans), a crisis which also affected the Low Countries, northern Spain (Galicia) and parts of Germany[7] (this is only mentioned in passing in Curran’s chapter), while the Ukrainian famine of 1932-33 also affected (albeit less severely) other regions of the Soviet Union[8].

Notwithstanding these limitations, there is no doubt that Curran, Luciuk and Newby provide us with a very useful book, which advances our knowledge in many directions and especially regarding the political and cultural consequences of famine. It will be of considerable interest to all researchers working on modern famines.

Notes:
1. C. Ó Gráda, Famine: A Short History (Princeton University Press, 2009), p. 4.
2. A. Sen, Poverty and Famine: An Essay on Entitlement and Deprivation (Clarendon Press, 1981).
3. G. Alfani and C. Ó Gráda (eds.), Famine in European History (Cambridge University Press, forthcoming 2017).
4. M. Lachiver, Les années de misère: La famine au temps du Grand Roi, 1680-1720 (Fayard, 1991).
5. M. Lappalainen, “Death and Disease During the Great Finnish Famine 1695-1697,” Scandinavian Journal of History 39 (4), 2014: 425-47.
6. G. Alfani, Calamities and the Economy in Renaissance Italy: The Grand Tour of the Horsemen of the Apocalypse (Palgrave, 2013).
7. C. Ó Gráda, R. Paping and E. Vanhaute (eds.), When the Potato Failed. Causes and Effects of the Last European Subsistence Crisis, 1845-1850 (Brepols, 2007).
8. R.W Davies and S.G. Wheatcroft, The Years of Hunger: Soviet Agriculture, 1931-33 (Palgrave, 2004).

Guido Alfani is Associate Professor in Economic History at Bocconi University (Milan, Italy). He is the author of Calamities and the Economy in Renaissance Italy: The Grand Tour of the Horsemen of the Apocalypse (Palgrave 2013). guido.alfani@unibocconi.it

Copyright (c) 2016 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (June 2016). All EH.Net reviews are archived at http://eh.net/book-reviews/

Subject(s):Agriculture, Natural Resources, and Extractive Industries
Economywide Country Studies and Comparative History
Historical Demography, including Migration
Household, Family and Consumer History
Markets and Institutions
Geographic Area(s):Europe
Time Period(s):19th Century
20th Century: Pre WWII

Ireland’s Great Famine

Ireland’s Great Famine

Cormac Ó Gráda, University College Dublin

The proximate cause of the Great Irish Famine (1846-52) was the fungus phythophtera infestans (or potato blight), which reached Ireland in the fall of 1845. The fungus destroyed about one-third of that year’s crop, and nearly all that of 1846. After a season’s remission, it also ruined most of the 1848 harvest. These repeated attacks made the Irish famine more protracted than most. Partial failures of the potato crop were nothing new in Ireland before 1845, but damage on the scale wrought by the ecological shock of potato blight was utterly unprecedented (Solar 1989; Clarkson and Crawford 2001). However, the famine would not have been so lethal had dependence on the potato been less. Poverty had reduced the bottom one-third or so of the population to almost exclusive dependence on the potato for sustenance. For those in this category, the daily intake was enormous: 4 to 5 kilos (9 to 11 pounds) daily per adult male equivalent for most of the year. That, coupled with an inadequate policy response from the authorities, made the consequences of repeated failures devastating (Bourke 1993).

Ireland was a poor country in 1845, income per head being about half that in the rest of the United Kingdom. The half-century or so before the famine was a period of increasing impoverishment for the landless poor. With impoverishment came rising inequality. Increasing population pressure was only partly relieved by an increase in the emigration rate and a fall in the birth rate (Boyle and Ó Gráda 1986). Moreover, demographic adjustment was weakest in the western and southern areas most at risk. The nutritional content of the potato and widespread access to heating fuel in the form of turf eased somewhat the poverty of Ireland’s three million ‘potato people.’ They were healthier and lived longer than the poor in other parts of Europe at the time. However, their poverty meant that when the potato failed, there was no trading down to a cheap alternative food (Ó Gráda 1994). Nowhere else in Europe had the potato, like tobacco a gift from the New World, made such inroads into the diet of the poor. It bears noting that the potato also failed throughout Europe in the 1840s. This brought hardship in many places, and excess mortality in the Low Countries and in parts of Germany. Yet nowhere was Ireland’s cataclysm repeated (Solar 1997).

The first attack of potato blight inflicted considerable hardship on rural Ireland, though no significant excess mortality. The catastrophe of the Great Famine really dates from the fall of 1846, when the first deaths from starvation were recorded. At first there were food riots and protests, but they subsided as hope and anger gave way to despair (Eiriksson 1997). During the winter and spring of 1846-7 the carnage reached its peak, but the famine continued for another three years. Like all major famines, the Irish potato famine produced many instances of roadside deaths, of neglect of the very young and the elderly, of heroism and of anti-social behavior, of evictions, and of a rise in crimes against property. It was widely reported in the contemporary press at first, both in Ireland and abroad. It elicited a massive response in terms of private donations for a time, especially through the Catholic Church worldwide and the Society of Friends. Philanthropists in Britain were also moved by Irish suffering. That was before compassion fatigue set in. For narrative accounts of the tragedy see Edwards and Williams (1956), Woodham-Smith (1962), Ó Gráda (1999), and Donnelly (2001).

Public Action

The debate about relief measures for Ireland in the press and in parliament in the 1840s has quite a modern resonance (compare Drèze and Sen 1989). At first the government opted for reliance on the provision of employment through public works schemes, the cost of which was to be split between local taxpayers and the central government. At their height in the spring of 1847 the works employed seven hundred thousand people or one-in-twelve of the entire population. The works did not contain the famine, partly because they did not target the neediest, partly because the average wage paid was too low, and partly because they entailed exposing malnourished and poorly clothed people (mostly men) to the elements during the worst months of the year.

The publicly-financed soup kitchens which replaced the public works reached three million people daily at their peak in early 1847. Mortality seemed to fall while they operated, though doubts remain about the effectiveness of a diet of thin meal-based gruel on weakened stomachs. The drop in food prices during the summer of 1847 prompted the authorities to treat the famine henceforth as a manageable, local problem. The main burden of relieving the poor henceforth was placed on the workhouses established under the Irish Poor Law of 1838. In principal those requiring relief were supposed to pass ‘the workhouse test,’ i.e. refusal to enter the workhouse was deemed evidence of being able to support one’s self. In practice, most of the workhouses were ill-equipped to meet the demands placed upon them, and in the event about one-quarter of all excess famine mortality occurred within their walls. Local histories highlight mismanagement and the impossible burden placed on local taxpayers; and the high overall proportion of workhouse deaths due to contagious diseases is an indictment of this form of relief. The very high mortality in some workhouses in 1850 and 1851 is evidence of the long-lasting character of the famine in some western areas (Guinnane and Ó Gráda 2002; Ó Murchadha 1998).

Traditional accounts of the famine pit the more humane policies of Sir Robert Peel’s Tories against the dogmatic stance of Sir John Russell’s Whig administration, which succeeded them. Peel was forced out of office in July 1846 when his party split on the issue of the Corn Laws. The contrast between Peel and Russell oversimplifies. Though Peel was more familiar with Ireland’s problems of economic backwardness than Whig ideologues such as Charles Wood, the crisis confronting him in 1845-6 was mild compared to what was to follow. Moreover, Peel broadly supported the Whig line in opposition, and it was left to his former Tory colleagues to mount a parliamentary challenge against Russell and Wood. Assessment of the public policy response cannot ignore the apocalyptic character of the crisis that it faced. Nonetheless, the government’s obsession with parsimony and its determination to make the Irish pay for ‘their’ crisis cannot but have increased the death rate. The same goes for the insistence on linking relief with structural reform (e.g. by making the surrender of all landholdings over a quarter of an acre in size a strict condition for relief). At the height of the crisis the policy stance adopted by the Whigs was influenced by Malthusian providentialism, i.e. the conviction that the potato blight was a divinely ordained remedy for Irish overpopulation. Compassion on the part of the British elite was in short supply. The fear that too much kindness would entail a Malthusian lesson not learnt also conditioned both the nature and extent of intervention (Gray 1999).

The Irish famine killed about one million people, or one-eighth of the entire population. This made it a major famine, relatively speaking, by world-historical standards. In pre-1845 Ireland famines were by no means unknown — that caused by arctic weather conditions in 1740-41 killed a higher share of a much smaller population (Dickson 1998) — but those that struck during the half-century or so before the Great Famine were mini-famines by comparison. The excess death toll of one million is an informed guess, since in the absence of civil registration excess mortality cannot be calculated directly (Mokyr 1985; Boyle and Ó Gráda 1986). The record of deaths in the workhouses and other public institutions is nearly complete, but the recording of other deaths depended on the memory of survivors in households where deaths had taken place. In many homes, of course, death and emigration meant that there were no survivors. The estimate does not include averted births, nor does it allow for famine-related deaths in Britain and further afield (Neal 1997).

Mortality was regionally very uneven. No part of Ireland escaped entirely, but the toll ranged from one-quarter of the population of some western counties to negligible fractions in counties Down and Wexford on the east coast. The timing of mortality varied too, even in some of the worst hit areas. In west Cork, a notorious problem area, the worst was over by late 1847, but the deadly effects of the famine ranged in county Clare until 1850 or even 1851. Infectious diseases — especially typhoid fever, typhus and dysentery/diarrhea — rather than literal starvation were responsible for the bulk of mortality. While Karl Marx was almost right to claim that the Irish famine killed ‘poor devils only,’ many who were not abjectly poor and starving died of famine-related diseases. Medical progress, by shielding the rich from infection, has made subsequent famines even more class-specific. By and large, the higher the death toll, the higher the proportion of starvation deaths (Mokyr and Ó Gráda 2002). As in most famines, the elderly and the young were most likely to succumb, but women proved marginally more resilient than men.

The famine also resulted in migration on a massive scale. Again precise estimates are impossible. Though these migrants were also victims of the famine, their departure improved not only their own survival chances, but also those of the majority who remained in Ireland. True, the Atlantic crossing produced its own carnage, particularly in Quebec’s Grosse-Isle, but most of those who fled made it safely to the other side. There thus is a sense in which migration was a crude form of disaster relief, and that more spending on subsidized emigration would have reduced the aggregate famine death toll (Ó Gráda and O’Rourke 1997). Most of those who emigrated relied on their own resources; some landlords helped through direct subsidies or by relieving those who left of their unpaid rent bills. The landless poor simply could not afford to leave.

A Hierarchy of Suffering

Like all famines, the Irish famine produced its hierarchy of suffering. The rural poor, landless or near-landless, were most likely to perish, and the earliest victims were in that category. Farmers found their effective land endowment reduced, since their holdings could no longer yield the same quantity of potatoes as before. They also faced increased labor costs, forcing them to reduce their concentration on tillage. Landlords’ rental income plummeted by as much a third. Many clergymen, medical practitioners, and poor law officials died of infectious diseases. Pawnbrokers found their pledges being unredeemed as the crisis worsened. Least affected were those businesses and their work forces who relied on foreign markets for their raw materials and their sales. The relative impact of the famine on different occupational groups may be inferred from the 1841 and 1851 censuses. The overall decline in the labor force was 19.1 percent. There were 14.4 percent fewer farmers, and 24.2 percent fewer farm laborers. Not surprisingly, given their vulnerability, the number of physicians and surgeons dropped by 25.3 percent. The small number of coffin makers (eight in 1841, twenty-two in 1851) is a reminder that during the famine most coffins were not made by specialist coffin makers. It is difficult to identify any significant class of ‘winners’ in the 1840s, though the census indicates increases in the numbers of millers and bakers, of barristers and attorneys, and of bailiffs and rate collectors. The huge fall in the numbers of spinners and weavers was partly a consequence of the famine, partly due to other causes (Ó Gráda 1999: chapter 4; 2001).

Post-Famine Adjustment

The Great Irish Famine was not just a watershed in Irish history, but also a major event in global history, with far-reaching and enduring economic and political consequences. Individual memories of the famine, coupled with ‘collective memory’ of the event in later years, influenced the political culture of both Ireland and Irish-America — and probably still do (Cullen 1997; Donnelly 2000; Ó Gráda 2001). The famine brought the era of famines in Ireland to a brutal end. Serious failures of the potato in the early 1860s and late 1870s, also due to potato blight, brought privation in the west of the country, but no significant excess mortality. The famine also resulted in higher living standards for survivors. The bargaining power of labor was greater. Any negative impact on landlords’ income from a declining population was more than compensated for by the relative increase in the prices of land-intensive output and the prompter payment of rents due. Higher emigration was another by-product of the famine, as the huge outflow of the crisis years generated its own ‘friends and neighbors’ dynamic. Only in a few remote and tiny pockets in the west did population fill the vacuum left by the ‘Great Hunger,’ and then only very briefly (Guinnane 1997).

Whether or not the famine led to the decline of certain native industries by reducing the domestic market remains a moot point, worthy of further research (Whelan 1999). The long-run impact of the famine on the health of affected survivors is another unresearched topic (compare Lumey 1998). Finally, though the introduction of new potato varieties offered some respite against phythophtera infestans thereafter, no reliable defense would be found against it until the 1890s.

Note: This essay builds on my entry on the Great Irish Famine in Paul Demeny and Geoffrey McNicoll, editors, Encyclopedia of Population (New York: Macmillan, 2003).

Further Reading

Bourke, Austin. The Visitation of God? The Potato and the Great Irish Famine. Dublin: Lilliput, 1993.

Boyle, P.P. and C. Ó Gráda. “Fertility Trends, Excess Mortality, and the Great Irish Famine.” Demography 23 (1986): 543-62.

Clarkson, L.E. and E.M. Crawford. Feast and Famine: Food and Nutrition in Ireland 1500-1920. Oxford: Oxford University Press, 2001.

Cullen, L.M. ‘The Politics of the Famine and Famine Historiography,” Comhdháil an Chraoibhín 1996 (Roscommon, Ireland) 1997: 9-31.

Dickson, David. Arctic Ireland. Belfast: White Row Press, 1998.

Donnelly, James S. The Irish Potato Famine. London: Sutton Publishing, 2000.

Drèze, Jean and Amartya Sen. Hunger and Public Action, Oxford: Oxford University Press, 1989.

Edwards, R.D. and T.D. Williams. The Great Famine: Studies in Irish History, 1845-52. Dublin; Browne & Nolan, 1956 [new edition published by Lilliput Press, 1994].

Eiriksson, Andrés. “Food Supply and Food Riots.” In Famine 150: The Teagasc/UCD Lectures, edited by Cormac Ó Gráda, 67-93. Dublin: Teagasc, 1997.

Gray, Peter. Famine, Land, and Politics: British Government and Irish Society, 1843-50, Dublin: Irish Academic Press, 1999.

Guinnane, Timothy W. The Vanishing Irish: Households, Migration and the Rural Economy in Ireland, 1850-1914. Princeton: Princeton University Press, 1997.

Guinnane, Timothy W. and Cormac Ó Gráda. “Workhouse Mortality and the Great Irish Famine.” In Famine Demography, edited by Tim Dyson and Cormac Ó Gráda, 44-64. Oxford: Oxford University Press, 2002.

Lumey, L.H. “Reproductive Outcomes in Women Prenatally Exposed to Undernutrition from the Dutch Famine Birth Cohort.” Proceedings of the Nutrition Society 57 (1998): 129-35.

Mokyr, Joel. Why Ireland Starved: An Analytical and Quantitative History of the Irish Economy, 1800-1850. London: Allen & Unwin, 1985.

Mokyr, Joel and Cormac Ó Gráda. “What Do People Die of during Famines? The Great Irish Famine in Comparative Perspective.” European Review of Economic History 6, no. 3 (2002): 339-64.

Neal, Frank. Black ’47: Britain and the Famine Irish. London: Macmillan, 1998.

Ó Gráda, Cormac. Ireland: A New Economic History, 1780-1939. Oxford: Oxford University Press, 1994.

Ó Gráda, Cormac. Black ’47 and Beyond: The Great Irish Famine in History, Economy, and Memory. Princeton: Princeton University Press, 1999.

Ó Gráda, Cormac. “Famine, Trauma, and Memory. ” Béaloideas 69 (2001): 121-43.

Ó Gráda, Cormac and Kevin H. O’Rourke. “Mass Migration as Disaster Relief: Lessons from the Great Irish Famine.” European Review of Economic History 1, no. 1 (1997): 3-25.

Ó Murchadha, Ciarán. Sable Wings over the Sand: Ennis, County Clare, and Its Wider Community during the Great Famine. Ennis: Clasp Press, 1998.

Solar, Peter M. “The Great Famine Was No Ordinary Subsistence Crisis.” In Famine: The Irish Experience, 900-1900, edited by E.M. Crawford. Edinburgh: John Donald, 1989.

Solar, Peter M. 1997. “The Potato Famine in Europe.” In Famine 150: The Teagasc/UCD Lectures, edited by Cormac Ó Gráda, 113-27. Dublin: Teagasc, 1997.

Whelan, Karl. “Economic Geography and the Long-run Effects of the Great Irish Famine.” Economic and Social Review 30, no. 1 (1999): 1-20.

Woodham-Smith, Cecil. The Great Hunger: Ireland, 1845-49, London: Hamish Hamilton, 1962.

Citation: O Grada, Cormac. “Ireland’s Great Famine”. EH.Net Encyclopedia, edited by Robert Whaples. March 16, 2008. URL http://eh.net/encyclopedia/irelands-great-famine/

Fighting Famine in North China: State, Market, and Environmental Decline, 1690s-1990s

Author(s):Li, Lillian M.
Reviewer(s):Will, Pierre-Étienne W
, Pierre-Ét

Published by EH.NET (May 2008)

Lillian M. Li, Fighting Famine in North China: State, Market, and Environmental Decline, 1690s-1990s. Stanford, CA: Stanford University Press, 2007. xix + 520 pp. $75 (cloth), ISBN: 978-0-8047-5304-3.

Reviewed for EH.NET by Pierre-?tienne Will, Coll?ge de France, Paris.

In this long-awaited book Lillian Li offers us a masterful account of three centuries of environmental and socio-economic history in one of the core regions of China ? the Hai River drainage that more or less corresponds to present-day Hebei, the capital province since the Mongol period. Li’s achievement is especially noteworthy when we consider the multiplicity of variables she addresses with equal thoroughness and clarity and combines into a convincing narrative of ever-mounting problems and tensions: the climate and natural environment, models and techniques of agricultural production, hydraulic engineering, market organization and price movement, dynastic and bureaucratic institutions, political and military history, and more.

As its title indicates, famine and the attempts at fighting it are central to the book. Not that North China always was a “land of famine” (a phrase coined by Western philanthropists in the 1920s and the title of a famous book at the time); but avoiding famine and promoting agricultural production in a context of high rainfall variability and environmental instability were traditional tasks of the Chinese state, tasks at which the Manchu rulers of China proved particularly adept during the heyday of the Qing dynasty in the eighteenth century. Indeed, one of Li’s dominant themes ? not entirely new, to be sure, but treated here with especial sensitivity and attention to all conceivable factors ? is the dangers of success. Following a pattern that is found elsewhere in Chinese history, efficient river control and disaster relief during the middle decades of the eighteenth century encouraged population growth and land reclamation. This in turn led to a higher impact of natural disasters from the early nineteenth century on, at a time when the political and financial means of the state were rapidly diminishing, and eventually to the mega-famines of the late Qing and early Republican eras. The mega-famine of the 1959-61 Great Leap Forward is a special case, as it was caused not by environmental overload, government powerlessness or military disturbances, but by mad social engineering.

Such, then, is the narrative that Li unfolds in chapter after chapter, making important methodological points along the way. She starts with an historical account of the natural environment, stressing in particular that “what is important about the climate of the past or present is not that it directly causes particular social, economic, or social results, but rather the way in which politics, economy, and society have adapted to the weather and other environmental challenges” (p. 37). Much of the book is a development of that notion. Chapter 2 on river conservancy ? a particularly onerous task in Hebei ? is subtitled “Emperors as Engineers,” pointing less at the Qing rulers’ engineering interventions (only the Kangxi emperor [r. 1662-1722] claimed competence in that profession) than at their political and bureaucratic impact. Li proposes the intriguing notion of a “reign cycle” in floods, with exceptional disasters at the start of a new reign resulting from the gradual accumulation of negligence during the preceding period and triggering a fresh effort at bureaucratic mobilization and infrastructure building. This pattern well describes the situation through the beginning of the nineteenth century, and in some way it re-emerged under the “reign” of the powerful Zhili governor general, Li Hongzhang, during the last three decades of the same century. Still, if strong political leadership was vital, it was not enough to prevent such long-term environmental problems as increased silting and reckless land reclamation that was detrimental to drainage; and more and more it gave way to fragmented bureaucratic responsibilities that made any concerted action impossible: in Lillian Li’s phrase, “the rivers themselves became bureaucratized.”

The next chapter discusses the relation among population, land resources and agricultural techniques ? already a hot topic, incidentally, in the early eighteenth century, when the Kangxi emperor and his successor expressed much concern about population growth on a limited land base. Li offers the best educated estimates of Hebei population one can hope for given the present state of knowledge, as well as careful descriptions of crops, yields, techniques, cropping patterns, and so forth. The general picture ? here as in most chapters ? is one of overall downward trend after the eighteenth-century successes, even though Li refuses to speak of a “Malthusian tale”: coarse grains get more land at the expense of higher value-added crops like wheat and cotton, yields tend to diminish, no technological breakthroughs are in sight, the silting of rivers makes transportation more difficult and costly, available land per capita decreases, and so on.

Chapter 4 on prices is of strategic importance to the narrative as Li uses the massive price data produced by the Qing system of economic monitoring as well as that of its Republican inheritors as a backdrop to the ensuing chapters on disasters and famine relief. She tackles brilliantly the considerable methodological problems entailed by the data: several sorts of grain were monitored, the quality of the surveys was uneven, the pricing system resorted to different currencies with a volatile exchange rate (official figures were in silver weight but ordinary people used copper cash), statistics used the traditional lunar calendar, and finally, in order to make real sense the curves created by connecting the dots representing the data ? which have many gaps ? need to be subjected to various statistical procedures. As the administration monitored not only grain prices but also the weather, one major ambition of the book is to explore every possible correlation between the two. In the long term the secular rise of prices in imperial times appears surprisingly moderate despite steady demographic growth and increased pressure on natural resources. As far as the annual cycle is considered, the system seems to have been made more stable by its very complexity (“multicropping with different seasonalities,” p. 122); but massive state intervention in the form of organizing imports (the crucial role of Manchurian surpluses is stressed again and again), maintaining food reserves, and providing relief definitely was the major stabilizing factor. After all the region under scrutiny was the metropolitan province of a vast empire, therefore subject to special care on the part of the dynasty.

This theme is developed in the next few chapters, on “Provisioning Peking,” considerably qualifying the textbook image of a northern capital fed with southern “rice” transferred through the Grand Canal (Chapter 5); on the granary system, seen as both “solution and problem” and the object of much debate in official circles (Chapter 6); on markets and prices, with the interesting notion that the apparently strong integration of markets across the province in the eighteenth century was a “false integration,” state maintenance of the waterways and intervention on the market largely explaining the parallel behavior of prices (Chapter 7); and on famine relief during the high Qing (Chapter 8) and in the nineteenth century (Chapter 9). Even though Li draws generously on existing research (notably the work on storage policies and famine relief by R. Bin Wong, Helen Dunstan, and the undersigned), there is an abundance of new materials and, especially, original interpretations. Chapters 7 and 8 in particular provide a sense of texture and impact, and of change, by progressing painstakingly from one major disaster to the next and analyzing in great detail the way each unfolded, the impact on prices, the nature of official intervention, and the aftermath. To this reviewer the lesser-known part of the story ? the nineteenth-century devolution from the “classical” model of famine relief ? is of particular interest, with the reservation perhaps that there is too much adherence to the imperial discourse on corruption and abuses during the Daoguang reign (1821-50).

The last famines of the Qing (beginning with the great North China famine of 1876-79) make the transition to the modern era. Unlike similar earlier events they were considered as “national” events by the philanthropic sphere newly emerging around Shanghai, whose action was crucial even though, as Li shows, the state was far from being as absent as is often claimed. And they were “international” famines publicized overseas through diplomatic communication and missionary propaganda. Together with international (mainly missionary) organizations, Chinese philanthropies, which have been the object of recent research in China not mentioned here, continued to play a major role in the early Republican era. (The crucial impact of the Buddhist revival at the time might have been more clearly brought out.) This is when Hebei and North China become the “land of famine” (Chapter 10). The major disasters, described here with the same thoroughness as the earlier famines, were compounded by a series of military conflicts culminating with the Japanese invasion. They reveal several important shifts that were in large part due to the foreign presence in China. While the discourse on famine acquires nationalistic overtones and focuses on the need to eradicate its socio-economic causes, rather than restoring the existing balance between land and resources as in imperial times, the conditions for the management of relief change drastically with the advent of the railway and the development of Tianjin as a major port and industrial city. It is also during the early Republican decades that the ever-growing hydraulic problems of the Hai River basin start being addressed systematically and with the help of modern engineering, although the major work required had to wait until after 1949 to get accomplished.

The impact of such infrastructural change is analyzed with much subtlety in the important Chapter 11 on “Rural Crisis and Economic Change, 1900-1949.” To negotiate her way between the conflicting interpretations, then as now, of economic conditions in Republican China and their causes, Li takes us on a tour of selected districts, availing herself of the many well-informed local gazetteers published in the 1930s and showing that, indeed, the landscape was highly contrasted. Many places enjoyed new opportunities in terms of handicrafts (predominantly cotton goods), new commercial crops, employment outside the region, and so forth, and there was an improvement in living standards (further favored by a steady rise in prices through 1931) despite environmental change and general poverty. While admitting that this cannot be described as a fundamental economic “break-through” (p. 340), Li takes exception to such notions as “economic involution” (Philip Huang) or “high-level equilibrium trap” (Mark Elvin), which have been widely influential in the field of Chinese economic history: there was a process of development at work, but this was cut short by political and military turmoil.

The last chapter, “Food and Famine under Communist Rule,” which is perhaps less new, takes us to quite a different world. But disasters were still there, and at least one major famine, actually the worst in the whole of Chinese history ? the Great Leap famine. Li goes so far as to use the term “holocaust” (p. 359, following Jasper Becker’s Hungry Ghosts), probably not the best one in this case; but indisputably this mostly man-made event would deserve the appellation “incredible famine” (qihuang) much more than the 1876-79 famine for which it was coined. The period after 1980, called “post-revolutionary” by many and marked by the “unleashing” of the market (p. 371) and a quantity of scientific inputs in the improvement of agricultural production ? though the Chinese “green revolution” had already started in the 1960s ? leaves us with ambiguous perspectives: while it is true that “at the end of the [twentieth] century, prosperity for many people in China has allowed them to leave hunger behind” (p. 375), rapid urbanization and mounting problems with water availability and desertification, not to speak of price instabilities, remind us that this is not yet the end of history. Certainly Li’s monumental work is a must-read for present-day planners and decision-makers.

Pierre-?tienne Will is the author of Bureaucracy and Famine in Eighteenth-Century China, Stanford University Press, 1990 (original French edition 1980) and co-author with R. Bin Wong of Nourish the People: The State Civilian Granary System in China, 1650-1850, University of Michigan Center for Chinese Studies, 1991. He is currently researching famine and the role of philanthropy in Northwestern China during the 1920s and 1930s.

Subject(s):Urban and Regional History
Geographic Area(s):Asia
Time Period(s):20th Century: WWII and post-WWII

Fiction, Famine, and the Rise of Economics in Victorian Britain and Ireland

Author(s):Bigelow, Gordon
Reviewer(s):Peart, Sandra

Published by EH.NET (July 2004)

Gordon Bigelow, Fiction, Famine, and the Rise of Economics in Victorian Britain and Ireland. Cambridge: Cambridge University Press, 2003. x + 229 pp. $65 (hardcover), ISBN: 0-521-82848-1.

Reviewed for EH.NET by Sandra Peart, Department of Economics, Baldwin-Wallace College.

Gordon Bigelow’s Fiction, Famine, and the Rise of Economics in Victorian Britain and Ireland serves as a powerful reminder that economic ideas — then and now — are contextual, and that we fail fully to understand them when we neglect context. So, in Victorian England and Ireland, political economy emerged amidst social and literary responses to institutional, banking, and agricultural failures of the 1840s. Bigelow’s book demonstrates that there is much to be learned about economics from a survey of this commentary, his aim being “to understand the relationship between economics and other forms of social discourse and description in the nineteenth century” (p. 8).

Bigelow is an assistant professor of English at Rhodes College in Tennessee. His project is necessarily ambitious: he attempts to place the economic theory and methodology developed by Adam Smith through William Stanley Jevons in the context of major literary and philosophical discussions that took place during a period of roughly one hundred years. In the course of his investigation, Bigelow argues that political economy was entirely reoriented in the nineteenth century (p. 182). This comes as no surprise to economists who are familiar with the history of economic ideas and the “Marginal” or “Jevonian Revolution” that occurred with the near-simultaneous publication of Jevons’s Theory of Political Economy (1871), Carl Menger’s Grunds?tze (1871), and L?on Walras’s El?ments d’?conomie politiques (1870). For the most part, accounts of the transition by historians of economic thought have focused on the formal elements that entered into economics at the time.

Bigelow argues, instead, that neoclassical economics originated in the harsh and successful cultural criticism of classical (liberal) political economy (p. 4). Late in the century, Jevonian economics divorced itself from culture and politics (p. 3) and economic theory re-emerged as a “widely-accepted justification of capitalism” with the consumer at the centre of economic theory (pp. 2, 73). In the course of the transition, the “sea-change in the understanding of value that takes place between the work of Ricardo and that of Jevons, 1871, reveals a great deal about the cultural and political orientation of economic thought in the period” (p. 50).

To make his case, Bigelow begins with a wonderfully oriented investigation of Smithian economics. He rightly makes the case that Smith’s “theory of wealth and poverty developed out of his engagement with the philosophy of language” (p. 13). Human communication arose out of physical needs (p. 29), humans are characterized by a capacity for sympathy (p. 36), and humans trade both sentiment as well as goods (p. 44). To this, might be added the explicit case made by Smith in his Wealth of Nations for trade carried in language and governed by reciprocity (Smith 1776, p. 30). It might be noted, as well, that Smith’s position is in line with that of Archbishop Whately (see Whately 1831, p. 6), whom Bigelow distances from Smith on a number of issues. Bigelow rightly focuses on the significance of the debates concerning national character that ensued. Smith’s position on these matters, especially relative to that of Hume, is terribly important. Smith held to a doctrine (contra Hume) of human homogeneity, the street porter being the philosopher’s equivalent (see Peart and Levy 2005).

Since he makes his case in 229 pages — including 45 pages of notes, bibliography and index — there are, understandably, areas in Bigelow’s reconstruction that might be fleshed out. I would point to three. First, he might expand upon the romantic criticism of English classical political economy, wonderfully done as it is. Bigelow sketches the criticisms in Elizabeth Gaskell’s Mary Barton, Cranford, and North and South, and Charles Dickens’s Bleak House. But Thomas Carlyle’s 1849 essay and John Stuart Mill’s 1850 response to it — both in the center of the ten-year period in which Bigelow locates the “death” of Classical political economy — are entirely missing. Second, the role and influence of mid-nineteenth century biological and anthropological “science” receives no attention. Third, since the book points to a “sea-change” that culminates in the development of Jevonian exchange theory, Bigelow might examine Jevons’s works, including but not limited to The Theory of Political Economy, more fully.

Bigelow’s account focuses specifically on 1845-55, in which the seeds of the “sea-change” were sown in the debate between classical political economists and social and literary commentators (pp.74-75). Yet the picture is distorted if we leave Thomas Carlyle — and, for that matter, John Ruskin — largely out of the fray. For we fail to see what alternatives to capitalism were being defended by at least some of the critics of classical political economy. In his essay, Carlyle made the case that classical political economists were wrong to presume that all humans were potentially the same, that institutions, not inherent characteristics, explained observed variations in poverty and wealth. Some races, Carlyle argued against the economists like Smith and Mill, were inherently lazy and would fail to lead productive lives unless forced to do so (Carlyle 1849).

Most importantly, Carlyle’s target was not Malthus, but economists such as John Stuart Mill, who argued that it was institutions, not race, that explained why some nations were rich and others poor. Carlyle attacked Mill, not for supporting Malthus’s predictions about the consequences of population growth, but for supporting the emancipation of slaves. It was the fact that economics assumed that people were basically all the same, and all entitled to liberty, that led Carlyle to label economics “the dismal science.” (see www.econlib.org/library/Columns/LevyPeartdismal.html).

Bigelow rightly locates the context for the debate between classical political economy and its critics in the “Irish problem.” And here the issue of character versus institutions was of paramount importance. Bigelow suggests that classical political economy saw poverty as “atonement” for behavior (p. 2). This, he argues, was the political economy that “Coleridge, Carlyle, and Ruskin loved to hate” (p. 4). What is less clear is that, on the other side of this, the critics of classical political economy made the case that poverty was the result of innate human characteristics — the unwillingness to work under any circumstances. Carlyle’s argument was used by the critics of classical political economy, some of whom eschewed his polemical excesses but who nonetheless retained his basic assumptions of variability among human-folks, and inherent laziness of some. For example, the political economist and social commentator, W. R. Greg, attacked Mill for arguing that land reform would help solve the problem of poverty in Ireland:

“Make them peasant-proprietors,” says Mr. Mill. But Mr. Mill forgets that, till you change the character of the Irish cottier, peasant-proprietorship would work no miracles. He would fall behind the instalments of his purchase-money, and would be called upon to surrender his farm. He would often neglect it in idleness, ignorance, jollity and drink, get into debt, and have to sell his property to the newest owner of a great estate. … In two generations Ireland would again be England’s difficulty, come back upon her in an aggravated form. Mr. Mill never deigns to consider that an Irishman is an Irishman, and not an average human being — an idiomatic and idiosyncratic, not an abstract, man (Greg 1869, p. 78). In Greg’s view, the Irish would always be improvident and overly populous because they were impulsive and sexually debauched.

It is important to note that, along with the mathematical statistician, Francis Galton, Greg co-founded the British eugenics movement. In so doing, Greg began by attacking classical economics of the Malthusian sort. Malthus worried about the quantity of births, which, Greg argued, missed the real problem: it was not that too many births, but that too many Irish births, were occurring (Greg 1875). The caricature of the improvident Irishman was strenuously resisted by John Stuart Mill, who held that, contrary to this “vulgar” explanation for their poverty, the Irish were poor because of institutional failure:

Is it not, then, bitter satire on the mode in which opinions are formed on the most important problems of human nature and life, to find public instructors of the greatest pretension, imputing the backwardness of Irish industry, and the want of energy of the Irish people in improving their condition, to a peculiar indolence and insouciance in the Celtic race? Of all vulgar modes of escaping from the consideration of the effect of social and moral influences on the human mind, the most vulgar is that of attributing the diversities of conduct and character to inherent natural differences. What race would not be indolent and insouciant when things are so arranged, that they derive no advantage from forethought or exertion? … It speaks nothing against the capacities of industry in human beings, that they will not exert themselves without motive. No labourers work harder, in England or America, than the Irish; but not under a cottier system. (Mill 1848, p. 319)

Starting in the 1850s, leaders of the Anthropological Society of London devoted a great deal of attention to the problem of whether the Irish constituted a separate — and inferior — race, in which case their problems might be solved only by such drastic means as eugenics. In the popular press such as Punch, images of the supposedly impulsive and debauched Irish appeared frequently throughout these two decades (see www.econlib.org/library/Columns/LevyPeartdismal5.html), all serving to reinforce the argument that the Irish needed either looking after (paternalism), or something darker. An important part of the social fabric of this period, then, is the biological “science” which in some cases worked in concert with literary criticism. As Bigelow rightly notes, race and nationality were conflated. What, perhaps, remains underemphasized is the extent to which the negro and the Irish were intermixed in social and “scientific” commentary. As one indication of this conflation the President of the Anthropological Society of London in 1870 developed the racial category, “Africanoid Celt,” and an “Index of Nigrescence” to measure how close the Irish were to the negro (Beddoe 1870).

Bigelow’s project holds that the literary criticisms of markets in Dickens and Gaskell were, eventually, incorporated into a new economics which placed the consumer at the forefront and removed economic analysis from political or social concerns. He might well expand on this argument, the crux of his book. Even in his Theory of Political Economy Theory, Jevons makes it clear that man is a social, trading being. Bigelow rightly notes that race and gender are not removed from economic analysis with the insistence of marginalism. And, of course, Jevons wrote extensively about the very social phenomena that preoccupied the classical economists (Peart 2004).

Transitions are always a bit murky. Yet the key question which Bigelow’s important work forces us to examine in historical context, is clear: whether poverty is best explained in terms of choices within an institutional setting, or inherent human nature (pp. 69-70). On this, it seems clear that the classical economists differed from their critics. Classical political economy placed the (same, social) human at the center of analysis, and explained variations in observed outcomes in terms of history, luck and incentives. Their critics would add another explanation for observed poverty: human nature. I would place Jevons in this latter category, at least as far as the explanation for Irish poverty was concerned. Then, the question that emerged was how does the “expert” fix poverty if poverty is the result of inherent poor judgment, a purported failure of national or ethnic character? This opened up the door for a nasty set of eugenic policy recommendations that followed the transition to post-classical economics — restrictions on immigration flows (from so-called ethnic failures) and births among the “unfit” (Peart and Levy 2005). The importance of Bigelow’s project is that it gives us another lens through which to view the analytical underpinnings of such policies.

References:

Beddoe, John 1870. “Anthropology and Politics: Kelts and Saxons.” The Anthropological Review viii: 211-213.

[Carlyle, Thomas.] 1849. “Occasional Discourse on the Negro Question.” Fraser’s Magazine for Town and Country 40: 670-679.

[Greg, W. R.] 1869. “Realities of Irish Life.” Quarterly Review 126: 61-80.

Greg, W. R. 1875. Enigmas of Life. Boston: James R. Osgood and Company.

Levy, David M. and Sandra J. Peart. 2001-2002. “Secret History of the Dismal Science.” www.econlib.org

Mill, J. S. 1848. The Principles of Political Economy with Some of Their Applications to Social Philosophy. Volume 2 of Collected Works. Edited by J. M. Robson. University of Toronto Press, 1965

Peart, Sandra J. 2004. “Introduction”, in W. S. Jevons: Critical Responses, 4 volumes. Edited by Sandra J. Peart. London: Routledge, pp. 1-26.

Peart, Sandra J., and David M. Levy 2005. The ‘Vanity of the Philosopher': From Equality to Hierarchy in Post-Classical Economic Thought, forthcoming. Ann Arbor: University of Michigan Press.

Smith, Adam. 1776. An Inquiry into the Nature and Causes of the Wealth of Nations. Edited by W. B. Todd. Oxford: Clarendon Press, 1976.

Whately, Richard. 1831. Introductory Lectures on Political Economy. London: B. Fellowes.

Sandra Peart is professor of economics at Baldwin-Wallace College. She has published articles on the economics and methodology of W. S. Jevons and J.S. Mill, rationality and intertemporal choice, eugenics, and the transition to neoclassicism, in journals such as the Manchester School, the Canadian Journal of Economics, the American Journal of Economics and Sociology, the European Journal of Political Economy, the History of Political Economy, and the Journal of the History of Economic Thought. She edited W. S. Jevons: Critical Responses for Routledge (2004) and co-edited, with David Levy, The Political Economy of Slavery (2004), for Thoemmes Continuum. She is Vice-President of the History of Economics Society, and serves on the Editorial Board of JHET. Her book on the transition from Classical to Post-Classical economics, co-authored with David Levy, will be published by Michigan Press in 2005: The ‘Vanity of the Philosopher: From Equality to Hierarchy in Post-Classical Economics.

Subject(s):History of Economic Thought; Methodology
Geographic Area(s):Europe
Time Period(s):19th Century

Receiving Erin’s Children: Philadelphia, Liverpool, and the Irish Famine Migration, 1845-1855

Author(s):Gallman, F. Matthew
Reviewer(s):Cohn, Raymond L.

Published by EH.NET (August 2000)

F. Matthew Gallman, Receiving Erin’s Children: Philadelphia, Liverpool, and

the Irish Famine Migration, 1845-1855. Chapel Hill, NC: University of North

Carolina Press, 2000. xii + 306 pp. $19.95 (paper), ISBN: 0-8078-4845-X; $55

(cloth), ISBN: 0-8078-2534-4.

Reviewed for EH.NET by Raymond L. Cohn, Department of Economics, Illinois State

University.

Gallman (currently the Henry R. Luce Professor of the Civil War Era at

Gettysburg College) examines the responses of Liverpool and Philadelphia to new

and intensified urban problems that resulted from Irish immigration during the

period of the famine. For each city, he considers the responses of the public

and the Catholic Church, and explores how the migrants affected health,

sanitation, and crime. Thus, this book is a study in comparative urban history,

where the developments in the two cities are examined during a period in which

“new urban problems were magnified by the thousands of poor Irish Catholic

immigrants” (p. 14).

Gallman’s argument is that the responses in each city were determined by a

number of similar influences, but that the specific response in a particular

case also depended on three aspects of “national distinctiveness.” First,

government was structured differently in the two cities, with the central

government in Britain traditionally playing a larger role. Decisions in

Liverpool were frequently affected by Parliamentary actions whereas Congress

never influenced Philadelphia’s responses. Second, Americans tended to be more

committed to voluntarism and solved many of the problems caused by the influx

of migrants without resorting to government, even at the local level. Third,

the two cities faced different options concerning what to do with the migrants

and different economic abilities in helping them. Liverpool was often stuck

with many of the migrants, particularly the poorest ones. Philadelphia was able

to employ many of the migrants and could try to send the remainder out to the

frontier. In addition, Philadelphians seemed more able economically to provide

assistance to the migrants.

Gallman’s approach is analytical though he does not use economic theory or

provide numerical estimates. The six substantive chapters possess the same

general framework. Gallman discusses developments in each city before the

famine migration, examines developments in each city during the migration, and

draws conclusions concerning how the famine migration affected the situation.

The book is especially well grounded in original sources. Gallman has spent a

large amount of time going through contemporary newspapers and urban reports

along with the more recent literature.

Chapter 2 examines the public response to the migrants. In both cities, the

influx of poor migrants put a strain on public services in the face of public

pressure to keep taxes low and maintain economic stability. Gallman finds

Philadelphia helped the migrants more through voluntarism than did Liverpool.

In chapter 3, Gallman examines the issue of poor relief. In Liverpool,

non-government assistance was sparse, a situation in stark contrast to

Philadelphia where many private organizations greatly expanded their services.

Chapter 4 on medical care and chapter 5 on environmental reform examine the

issue of health. During the famine migration, a cholera epidemic occurred,

though it affected Philadelphia much less than Liverpool. In both cities, sick

immigrants were seen as a public charge. In Liverpool many were forced into

medical wards in public workhouses or almshouses, whereas Philadelphia’s

hospitals expanded their services and philanthropic organizations increased

their assistance. In both cities, efforts were made to limit the entry of the

afflicted, to quarantine them, and to clean up wastes and “nuisances.”

Chapter 6 on religion and chapter 7 on crime and policing examine the

repercussions of the famine migration. Even before the migration, religion was

an issue in schooling in both cities because the Protestant Bible was

traditionally taught. The famine migrants thus arrived in a heated situation in

both cities, though the main effect of their entry seems to have been that the

Catholic Church expanded its efforts to build parochial schools and churches.

The response was greater in Philadelphia, which is viewed as evidence of

greater American ability to respond. As to crime and policing in each city, the

entry of the famine migrants contributed to street violence and increased

arrest rates for minor crimes but did not have major effects on either the

level of serious crime or the development of the police forces. Overall,

Gallman argues that “the immigrants were adjusting to, rather than recasting,

the established patterns of the host culture” (p. 210).

The major criticism I have concerning Gallman’s book is his choice of cities to

compare. Though Gallman claims that Philadelphia and Liverpool were

sufficiently similar in terms of size, population growth, importance of the

Irish, and migration trends that the cities make an appropriate comparison on

which to draw conclusions concerning urban decision making, I am not convinced

this is the case. Most of the Irish viewed Liverpool as a city through which

they traveled on their way to the United States or elsewhere, rather than as a

final destination. The port that served the corresponding function in the

United States at the time of the famine was New York, not Philadelphia. Thus, a

much larger number of Irish arrived in Liverpool than in Philadelphia (so

potential effects were larger, such as with the amount of funds needed for poor

relief and the extent of the disease outbreaks) and a larger percentage of the

Irish arriving in Philadelphia were presumably planning to stay. The two cities

therefore experienced substantially different numbers of Irish immigrants who

were in different situations. Thus, it is possible that voluntarism would not

have taken on the same level of importance in Philadelphia that it did if the

city had been inundated with the much larger number of migrants who went

through Liverpool. While it is obvious that no set of cities would ever provide

a perfect comparison, and though it might not have changed his conclusions, I

believe Gallman would have better served comparing Liverpool and New York.

Criticisms aside, Gallman’s book is an important work in urban history. In

connection with his other work, he continues to provide support for the

argument that national and local history matters in affecting how a city reacts

to exogenous events.

Raymond Cohn primarily studies immigration to the United States during the

nineteenth century. He is the author of “Nativism and the End of the Mass

Migrations of the 1840s and 1850s,” which appeared in the June 2000 issue of

Journal of Economic History.

Subject(s):Historical Demography, including Migration
Geographic Area(s):General, International, or Comparative
Time Period(s):19th Century

Black ’47: Britain and the Famine Irish

Author(s):Neal, Frank
Reviewer(s):Weir, Ron

Published by EH.NET (March 2000)

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Frank Neal, Black ’47: Britain and the Famine Irish. London: Macmillan Press and New York: St Martin’s Press, 1998. xv + 292 pp. $69.95 (cloth), ISBN: 0-333-66595-3.

Reviewed for EH.NET by Ron Weir, Department of Economics, University of York.

During the 1980s there appeared to be developing a minor academic industry popularly known as ‘The Irish in ….’ It was concerned with describing the experiences of Irish immigrants in nineteenth century Britain and seemed destined to embrace every British city. In fact this research was never quite so all inclusive as its critics suggested and focussed pre dominantly on Dundee, Glasgow, Leeds, Liverpool, London, Manchester, Salford, and York. It could also be justified in terms of the quantitative dimensions of Irish immigration, particularly during the decade of the Great Famine. Between 1841 and 1851 the Irish-born percentage of the population of England and Wales rose from 1.8% to 2.9%, or from 291,000 to 520,000. In Scotland the proportionate increase was even greater, from 4.8% to 7.2%, or from 126,000 to 207,000. Nevertheless, the sheer volume of such single city studies did pose the question whether further research was likely to yield more than marginal gains to our existing knowledge of the Irish in Britain.

In Black ’47 Frank Neal, Professor of Economic and Social History at the University of Salford, proves conclusively that there is still a lot to be learned. That this is so, owes much to five features of his research. First, he adopts a very narrow time horizon, essentially the events of a single year, 1847. Secondly, he concentrates on a tightly focussed area, Lancashire, the county that exceeded all others in the number of Irish-born residents, and in particular on Liverpool, the main port of entry for famine refugees. Outside London, Liverpool had the greatest number of Irish-born within its boundaries and the greatest proportion of its population who were Irish-born. By comparing Liverpool with Glasgow, Manchester, and Salford, the four towns which accounted for 27% of all Irish-born in Britain in 1851, the sheer concentration of Irish immigration and the resulting problems are starkly revealed. Thirdly, he is aware that much previous research has been ‘going over old ground’ and responds by utilizing a wider range of primary source material, including county and church archives, newspaper reports, and personal testimony. Fourthly, he regards what might be described as the mechanisms of migration, that is the behavior of the shipping companies and the nature of the passage, as vital to understanding the condition of the refugees when they arrived in Britain. Finally, he has two clear objectives: to employ statistical evidence to establish ‘the parameters of sensible discussion’ and to evaluate the nature of individual experiences. The resulting analysis never loses sight of the individual yet offers a clear explanation of public policy and its consequences.

The book is also carefully structured. After an introductory review of recent work on the Famine, eight chapters take us through the nature of Irish settlement in urban Britain before the famine, the escape from Ireland, the arrival in Britain, the Irish fever (the typhus epidemic of 1847) – this is examined in separate chapters on Liverpool, and Glasgow and South Wales – survival and dispersal, removal, and the cost of famine immigration. Well before the influx of famine refugees, living conditions for the immigrant Irish were extraordinarily bad. At the bottom of the housing market with low incomes and intermittent employment, the Irish endured a wretched lifestyle and their presence was increasingly subject to unfavorable press comment. Yet at the same time their importance to the regional economy was recognized, not least because they were more mobile than English laborers subject to the laws of settlement. Whilst the volume of immigration swelled with the Famine, Neal argues convincingly that the ordinary workings of the labor market continued throughout 1845 to 1851. A perceptive analysis of the economics of shipping explains why. Human cargoes had always taken second place to goods and livestock, but as food exports from Ireland fell, competition between shipping companies intensified and fares were varied to suit whatever level the traffic would bear. The destitute found the fare either by selling their remaining assets or by assistance from ratepayers and landlords. In an unregulated market, terrible conditions were tolerated because ‘Irish paupers had no friends in high places’ and, unlike livestock, had no market value. On arrival the Irish had no legal claim to long term poor relief and were subject to the laws of removal. On the other hand, the poor law unions had a legal obligation to ensure that nobody died of starvation, malnutrition, or ‘the want of the necessaries of life.’ It is the resolution of this essential paradox which forms Neal’s core theme and he displays great skill in interpreting it at several different levels: ratepayers, Boards of Guardians, clergy, medical officials, and individual paupers. He also makes the first attempt to estimate the cost of famine immigration: for Liverpool in 1847 this amounted to #33,159 on a tax base of #929,645; for England and Wales as a whole perhaps #155,000 or 2% of all expenditure on the poor. Whilst coping with famine refugees did exert pressure on ratepayers, in what was a disastrous year for the economy, it was not a disaster for wealthier or business ratepayers, nor did the working class finance the payment of poor relief to the Irish. The extra rates burden amounted to 9s7d, roughly the equivalent of half a wee k’s wages for a laborer. However, as so often with refugees, it was perceptions rather than facts that counted; the belief that the Irish were diverting funds from Britain’s own poor damaged inter-communal relations.

Despite the harrowing nature of individual testimonies, Neal’s overall judgement of the performance of the poor law authorities during 1847 is that they fulfilled their responsibilities to the welfare of Irish famine refugees. They increased spending in proportion to the numbers seeking relief, they kept deaths from starvation to low levels (a maximum of 22 in Liverpool in 1847), they acted swiftly to deal with the much more serious problem of famine related diseases and, by doing so, averted a much greater crisis. Above all, they shouldered a burden whose ultimate duration was unknown – in Liverpool it was not till 1854 that Irish immigration dropped dramatically – and which ought properly to have been borne by national government rather than local ratepayers. Generous they were not, but the poor law was not generous to the British poor. Neal’s conclusion is that social class rather than ethnicity determined the response to the crisis.

Ron Weir, Provost of Derwent College, University of York, is on the editorial panel of the journal Irish Economic and Social History. His recent publications include The History of the Distillers Company 1877-1939 (Oxford University Press, 1995) and “The Scottish and Irish Unions: The Victorian View in Perspective,” in S. J. Connolly, editor, Kingdoms United? Great Britain and Ireland since 1500 (Dublin, Four Courts Press, 1999).

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Subject(s):Historical Demography, including Migration
Geographic Area(s):Europe
Time Period(s):19th Century

The Political History of American Food Aid: An Uneasy Benevolence

Author(s):Riley, Barry
Reviewer(s):Barrett, Christopher B.

Published by EH.Net (June 2018)

Barry Riley, The Political History of American Food Aid: An Uneasy Benevolence. New York: Oxford University Press, 2017. xxvii + 562 pp. $50 (hardcover), ISBN: 978-019-02-2887-3.

Reviewed for EH.Net by Christopher B. Barrett, School of Applied Economics and Management, Cornell University.

 
International food aid has long attracted attention from policymakers and scholars far out of proportion to its scale in the global economy. Concessional food shipments have always comprised a small share of international flows of food and a negligible increment of global food production and consumption. Yet a Google Scholar search on “food aid” and “economics” returns more than one million results. Since at least T.W. Schultz more than half a century ago, economists have written about food aid’s direct effects on the economic and nutritional well-being of recipients and, even more, on its indirect effects on outcomes as diverse as food markets and prices, agricultural producer incentives in donor and recipient countries, international trade flows, and conflict in recipient countries. In recent years, special attention has been paid to the political economy of food aid and to the distributional and efficiency effects of statutory restrictions placed on food aid donations by legislatures, especially by the United States Congress since the U.S. has long been, by far, the world’s largest food aid donor. The complex political processes behind those restrictions, however, indeed the motivations and machinations behind the very existence and scale of international food aid donations, has remained a bit of a black box.

Barry Riley has done a remarkable job filling that void. This new volume offers the definitive political history of U.S. food aid. Riley brings impeccable credentials to the task. Now retired after a long and distinguished career with various food aid agencies of the U.S. government and the World Bank, he wrote the volume while a Visiting Scholar at Stanford University. At a time when economists too commonly grab a secondary data set and quickly write about a complex topic without taking time to master essential policy details, Riley’s work stands out as firmly rooted in an immersive understanding of the topic’s finest details. And this comprehensive historical account is meticulously sourced with primary documents from government records, media accounts of the day, and even personal letters.

Riley lucidly explains how and why the U.S. became the world’s primary food aid donor. He tells the story of the constant tension between the humanitarian impulse to assist those imperiled by natural disasters or war and the conservative instinct to resist foreign entanglements and fiscal commitments beyond the nation’s borders. He skillfully explains the time-varying electoral pressures faced by elected officials confronted by agricultural and maritime interests seeking assistance in lean times and reaching for profits opportunistically. He documents both the cynical and the idealistic geopolitical aims various nineteenth and twentieth century U.S. politicians had in deploying American farm surpluses around the world. The central role of key leaders — especially Herbert Hoover, Lyndon Johnson, and Henry Kissinger — in bending others to their will comes through clearly. The case-specific drivers and outcomes of food aid donations are especially nicely illustrated in two chapters that go into particular depth on a single country: Chapter 13’s explanation of the Johnson administration’s management of food aid to India in the 1960s and Chapter 19’s analysis of the Reagan administration’s handling of the mid-1980s famine in Ethiopia.

Riley begins with late eighteenth-century Congressional debates when the framers of the Constitution and their colleagues were struggling to interpret what limits, if any, the new nation’s founding charter imposed on the federal government using scarce tax revenues to shower largesse on foreign populations. Those debates resumed periodically in response to a variety of foreign disasters of various sorts. Into the early years of the twentieth century, American food aid was episodic and modest in volume and impacts.

Riley then focuses attention on the first half of the twentieth century, when the ravages of two World Wars and the Great Depression, combined with rapid technological change in American agriculture, created a perfect storm of U.S. commodity surpluses, extended periods of depressed global demand, and acute humanitarian need. This period put the existential questions surrounding U.S. food aid to rest. Programs became permanent and expansive. That period begat the Agricultural Adjustment Acts of 1933 and 1938, which launched large-scale farm support programs that insinuated the federal government into commodity markets. This laid the foundation for 1954’s passage of the Agricultural Trade Development and Assistance Act, Public Law 480, which created the main U.S. food aid programs ever since. The program’s renaming in the Food for Peace Act of 1966 signaled the growing use of food aid as a foreign policy tool under the Kennedy, Johnson, Nixon, Ford, Carter, and Reagan administrations. The aims varied with the political leanings of the U.S. government of the day: to foster economic development and relieve world hunger, to reward foreign allies and punish those regimes that strayed too near the Soviet orbit, to advance human rights, or to promote American exports. Both Democratic and Republican administrations, however, proved overconfident in food aid’s ability to bend the world to American will.

As food aid’s ineffectiveness as a foreign policy tool and as the fiscal imperative of extracting the U.S. government from the business of propping up grain prices as a buyer of last resort both became clear, the scale of U.S. food aid relative to commercial exports and the domestic food economy has steadily declined since the 1970s. The dominant voices in recent food aid debates have thus been the international development and humanitarian organizations, as well as the agribusinesses — mainly processors, not farmers — and maritime interests that profit from Congressionally-imposed statutory restrictions on commodity and ocean freight procurement. In the twenty-first century, both Democratic and Republican administrations have consistently advocated for reforms to enhance the efficiency and timeliness of increasingly scarce humanitarian food aid. But the complex political economy that begat a permanent and briefly-generous U.S. food aid program now complicates the Congressional politics of reform. Without understanding the political history of U.S. food aid, it’s hard to make sense of the current policy debate.

In twenty-five years of studying food aid, I have probably read the vast majority of published studies on the topic. Rarely have I learned so much as from Riley’s impressive and beautifully written history. This volume is an indispensable reference for anyone studying or writing about U.S. food aid programs. U.S. food aid policy has always reflected a shifting balance among a range of objectives. Thus it has always been deeply political. The complexities of U.S. Congressional authorization and appropriations processes often make it difficult to identify the drivers of policy decisions. Thanks to Barry Riley’s lucid historical account, it is far easier for contemporary policy analysts to appreciate the history dependence of current economic policy.

 
Christopher B. Barrett is the Stephen B. and Janice G. Ashley Professor of Applied Economics at Cornell University. He has written extensively on the economics of food aid and food assistance programs and is co-author (with Daniel G. Maxwell) of Food Aid after Fifty Years: Recasting Its Role and co-editor (with Julia Steets and Andrea Binder) of Uniting on Food Assistance: The Case for Transatlantic Cooperation.

Copyright (c) 2018 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (June 2018). All EH.Net reviews are archived at http://www.eh.net/BookReview.

Subject(s):Agriculture, Natural Resources, and Extractive Industries
Government, Law and Regulation, Public Finance
Geographic Area(s):North America
Time Period(s):20th Century: Pre WWII
20th Century: WWII and post-WWII

Other People’s Money: How Banking Worked in the Early American Republic

Author(s):Murphy, Sharon Ann
Reviewer(s):Goodspeed, Tyler Beck

Published by EH.Net (January 2018)

Sharon Ann Murphy, Other People’s Money: How Banking Worked in the Early American Republic. Baltimore: Johns Hopkins University Press, 2017. xii + 192 pp. $20 (paperback), ISBN: 978-1-421-42175-9.

Reviewed for EH.Net by Tyler Beck Goodspeed, Council of Economic Advisers.

 

Covering, when all is said and done, over half a millennium of American monetary history in a readable, introductory text of under two hundred pages is no mean feat. Doing so while also satisfying specialists in a relatively niche field and period of financial history is an especially daunting task. In Other People’s Money: How Banking Worked in the Early American Republic, Sharon Ann Murphy (Department of History, Providence College) has managed to achieve both.

The Bank War between Jackson and Biddle — perhaps, as Murphy notes, many students’ only encounter with antebellum American banking — provides an appropriate opening to Murphy’s account, introducing the principal cast of characters and illustrating the extent to which issues of money and banking permeated early American society, as well as the gravity with which ordinary Americans accordingly considered monetary matters.

Having thus set the stage, Murphy then proceeds through a packed “how it worked” series. Starting with the arrival of Columbus, in chapter 1, “How Money Worked,” she races through commodity money, fiat money, inflation, debt, and financing the American Revolution, contextualizing the economic concepts within the specific historical setting. In chapter 2, “How Banks Worked,” Murphy similarly catalogs the various sources of credit in colonial America, the assets and liabilities — particularly private bank notes — of colonial and antebellum banks, the incentives to incorporate, and the (First) Bank of the United States.

In chapter 3, “How Panics Worked,” we are then provided an account of the causes and dynamics of banking panics of the antebellum period that is both concise and consistent with the latest academic research. We here learn also of bimetallism, the Second Bank of the United States, and both public and private responses to panics, including public liability insurance, free banking, and clearinghouses. Chapter 4, “Experiments in Money and Banking,” expands on some of these topics, describing in greater depth the motivations and public discourse behind the movement toward both free banking and regulation, acute anxieties about fractional reserve banking generally, as well as the growing diversity of formal banking institutions. The chapter culminates with a succinct but accurate discussion of the Panic of 1857, including mention of the role of bank branching in mitigating the severity of the crisis.

Finally, and, for this reader, most interestingly, chapter 5 offers a brief but again academically sound overview of the fiscal challenges faced by the Union and Confederate governments in financing the Civil War, and how responses to those challenges intertwined with money and banking. This is perhaps the most data-intensive of the chapters, though quantitative evidence is seamlessly woven into a predominantly qualitative account. The chapter concludes with a short summary of the contours of American banking in the wake of the Civil War and, in particular, the National Bank Act.

It is important to be clear what this book is, and what it is not. It is an excellent introduction to how money and banking worked, not only in the early American republic, but in the post-Civil War national banking era as well. As such, it will likely offer a valuable companion for students of American economic and financial history, and even of early American political history, as well as informed lay-readers. It is not, and does not purport to be, an academic monograph intended for research historians or economic historians. Accordingly, footnotes are kept to a minimum, which makes for a smoother read, though at the cost of ability to investigate further. Murphy does, however, provide an extensive summary of suggested further reading, which will again be helpful for undergraduate and graduate students just beginning to explore the subject.

On the whole, Murphy has written what this financial historian considers a sound and reliable introductory or companion text to early American banking that is both engaging and easy-to-read, and at the same time broadly consistent with recent economic research on the topics covered. While students of economic and financial history generally would likely find it a useful text, my sense is that it might be of particular use to those more on the history side of economic history, than on the economic side of economic history.

My one idiosyncratic lament, which in any event may lie outside the scope of the book, is that I felt myself yearning for a more provocative embedded theme. As Murphy correctly notes throughout, many of the issues of, for example, note issuance and deposit insurance and branching and regulation may seem banal to the contemporary reader, but were intensely debated at the time. While the author addresses the political nature of these issues and responses to them, a stronger sense of the political contingency of the development of American banking would, I think, plant important questions in students’ minds. The path to 1913, or 1933, or, for that matter, 2008, was not at all linear, and a better sense of the alternative possible histories of American banking, and what may or may not have amplified the relative fragility of American banking system, would have been welcome.

Regardless, it is a fine text, made all the better by a fitting nod to Supreme Court Justice Louis Brandeis’ 1914 book by the same title, and a fascinating epilogue on the changing faces of the $20 bill.

 
Tyler Beck Goodspeed is a Senior Economist at the Council of Economic Advisers. He recently published Legislating Instability: Adam Smith, Free Banking, and the Financial Crisis of 1772, and Famine and Finance: Credit and the Great Famine of Ireland.

Copyright (c) 2018 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (January 2018). All EH.Net reviews are archived at http://www.eh.net/BookReview.

Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):North America
Time Period(s):18th Century
19th Century

The Economic History of Mexico

The Economic History of Mexico

Richard Salvucci, Trinity University

 

Preface[1]

This article is a brief interpretive survey of some of the major features of the economic history of Mexico from pre-conquest to the present. I begin with the pre-capitalist economy of Mesoamerica. The colonial period is divided into the Habsburg and Bourbon regimes, although the focus is not really political: the emphasis is instead on the consequences of demographic and fiscal changes that colonialism brought.  Next I analyze the economic impact of independence and its accompanying conflict. A tentative effort to reconstruct secular patterns of growth in the nineteenth century follows, as well as an account of the effects of foreign intervention, war, and the so-called “dictatorship” of Porfirio Diaz.  I then examine the economic consequences of the Mexican Revolution down through the presidency of Lázaro Cárdenas, before considering the effects of the Great Depression and World War II. This is followed by an examination of the so-called Mexican Miracle, the period of import-substitution industrialization after World War II. The end of the “miracle” and the rise of economic instability in the 1970s and 1980s are discussed in some detail. I conclude with structural reforms in the 1990s, the North American Free Trade Agreement (NAFTA), and slow growth in Mexico since then. It is impossible to be comprehensive and the references appearing in the citations are highly selective and biased (where possible) in favor of English-language works, although Spanish is a must for getting beyond the basics. This is especially true in economic history, where some of the most innovative and revisionist work is being done, as it should be, by historians and economists in Mexico.[2]

 

Where (and What) is Mexico?

For most of its long history, Mexico’s boundaries have been shifting, albeit broadly stable. Colonial Mexico basically stretched from Guatemala, across what is now California and the Southwestern United States, and vaguely into the Pacific Northwest.  There matters stood for more than three centuries[3]. The big shock came at the end of the War of 1847 (“the Mexican-American War” in U.S. history). The Treaty of Guadalupe Hidalgo (1848) ended the war, but in so doing, ceded half of Mexico’s former territory to the United States—recall Texas had been lost in 1836. The northern boundary now ran on a line beginning with the Rio Grande to El Paso, and thence more or less west to the Pacific Ocean south of San Diego. With one major adjustment in 1853 (the Gadsden Purchase or Treaty of the Mesilla) and minor ones thereafter, because of the shifting of the Rio Grande, there it has remained.

Prior to the arrival of the Europeans, Mexico was a congeries of ethnic and city states whose own boundaries were unstable. Prior to the emergence of the most powerful of these states in the fifteenth century, the so-called Triple Alliance (popularly “Aztec Empire”), Mesoamerica consisted of cultural regions determined by political elites and spheres of influence that were dominated by large ceremonial centers such as La Venta, Teotihuacán, and Tula.

While such regions may have been dominant at different times, they were never “economically” independent of one another. At Teotihuacan, there were living quarters given over to Olmec residents from the Veracruz region, presumably merchants. Mesoamerica was connected, if not unified, by an ongoing trade in luxury goods and valuable stones such as jade, turquoise and precious feathers. This was not, however, trade driven primarily by factor endowments and relative costs. Climate and resource endowments did differ significantly over the widely diverse regions and microclimates of Mesoamerica. Yet trade was also political and ritualized in religious belief. For example, calling the shipment of turquoise from the (U.S.) Southwest to Central Mexico the outcome of market activity is an anachronism. In the very long run, such prehistorical exchange facilitated the later emergence of trade routes, roads, and more technologically advanced forms of transport. But arbitrage does not appear to have figured importantly in it.[4]

In sum, what we call “Mexico” in a modern sense is not of much use to the economic historian with an interest in the country before 1870, which is to say, the great bulk of its history. In these years, specificity of time and place, sometimes reaching to the village level, is an indispensable prerequisite for meaningful discussion. At the very least, it is usually advisable to be aware of substantial regional differences which reflect the ethnic and linguistic diversity of the country both before and after the arrival of the Europeans. There are fully ten language families in Mexico, and two of them, Nahuatl and Quiché, number over a million speakers each.[5]

 

Trade and Tribute before the Europeans

In the codices or deerskin folded paintings the Europeans examined (or actually commissioned), they soon became aware of a prominent form of Mesoamerican economic activity: tribute, or taxation in kind, or even labor services. In the absence of anything that served as money, tribute was forced exchange. Tribute has been interpreted as a means of redistribution in a nonmonetary economy. Social and political units formed a basis for assessment, and the goods collected included maize, beans, chile and cotton cloth. It was through the tribute the indigenous “empires” mobilized labor and resources. There is little or no evidence for the existence of labor or land markets to do so, for these were a European import, although marketplaces for goods existed in profusion.

To an extent, the preconquest reliance on barter economies and the absence of money largely accounts for the ubiquity of tribute. The absence of money is much more difficult to explain and was surely an obstacle to the growth of productivity in the indigenous economies.

The tribute was a near-universal attribute of Mesoamerican ceremonial centers and political empires. The city of Teotihuacan (ca. 600 CE, with a population of 125,000 or more) in central Mexico depended on tribute to support an upper stratum of priests and nobles while the tributary population itself lived at subsistence. Tlatelolco (ca 1520, with a population ranging from 50 to 100 thousand) drew maize, cotton, cacao, beans and precious feathers from a wide swath of territory that broadly extended from the Pacific to Gulf coasts that supported an upper stratum of priests, warriors, nobles, and merchants. It was this urban complex that sat atop the lagoons that filled the Valley of Mexico that so awed the arriving conquerors.

While the characterization of tribute as both a corvée and a tax in kind to support nonproductive populations is surely correct, its persistence in altered (i.e., monetized) form under colonial rule does suggest an important question. The tributary area of the Mexica (“Aztec” is a political term, not an ethnic one) broadly comprised a Pacific slope, a central valley, and a Gulf slope. These embrace a wide range of geographic features ranging from rugged volcanic highlands (and even higher snow-capped volcanoes) to marshy, humid coastal plains. Even today, travel through these regions is challenging. Lacking both the wheel and draught animals, the indigenous peoples relied on human transport, or, where possible, waterborne exchange. However we measure the costs of transportation, they were high. In the colonial period, they typically circumscribed the subsistence radius of markets to 25 to 35 miles. Under the circumstances, it is not easy to imagine that voluntary exchange, particularly between the coastal lowlands and the temperate to cold highlands and mountains, would be profitable for all but the most highly valued goods. In some parts of Mexico–as in the Andean region—linkages of family and kinship bound different regions together in a cult of reciprocal economic obligations. Yet absent such connections, it is not hard to imagine, for example, transporting woven cottons from the coastal lowlands to the population centers of the highlands could become a political obligation rather than a matter of profitable, voluntary exchange. The relatively ambiguous role of markets in both labor and goods that persisted into the nineteenth century may perhaps derive from just this combination of climatic and geographical characteristics. It is what made voluntary exchange under capitalistic markets such a puzzlingly problematic answer to the ordinary demands of economic activity.

 

[See the relief map below for the principal physical features of Mexico.]

image1

http://www.igeograf.unam.mx/sigg/publicaciones/atlas/anm-2007/muestra_mapa.php?cual_mapa=MG_I_1.jpg

[See the political map below for Mexican states and state capitals.]

image2

 

 

Used by permission of the University of Texas Libraries, The University of Texas at Austin.

 

“New Spain” or Colonial Mexico: The First Phase

Mexico was established by military conquest and civil war. In the process, a civilization with its own institutions and complex culture was profoundly modified and altered, if not precisely destroyed, by the European invaders. The catastrophic elements of conquest, including the sharp decline of the existing indigenous population, from perhaps 25 million to fewer than a million within a century due to warfare, disease, social disorganization and the imposition of demands for labor and resources should nevertheless not preclude some assessment, however tentative, of its economic level in 1519, when the Europeans arrived.[6]

Recent thinking suggests that Spain was far from poor when it began its overseas expansion. If this were so, the implications of the Europeans’ reactions to what they found on the mainland of Mexico (not, significantly in the Caribbean, and, especially, in Cuba, where they were first established) is important. We have several accounts of the conquest of Mexico by the European participants, of which Bernal Díaz del Castillo is the best known, but not the only one. The reaction of the Europeans was almost uniformly astonishment by the apparent material wealth of Tenochtitlan. The public buildings, spacious residences of the temple precinct, the causeways linking the island to the shore, and the fantastic array of goods available in the marketplace evoked comparisons to Venice, Constantinople, and other wealthy centers of European civilization. While it is true that this was a view of the indigenous elite, the beneficiaries of the wealth accumulated from numerous tributaries, it hardly suggests anything other than a kind of storied opulence. Of course, the peasant commoners lived at subsistence and enjoyed no such privileges, but then so did the peasants of the society from which Bernal Díaz, Cortés, Pedro de Alvarado and the other conquerors were drawn. It is hard to imagine that the average standard of living in Mexico was any lower than that of the Iberian Peninsula. The conquerors remarked on the physical size and apparent robust health of the people whom they met, and from this, scholars such as Woodrow Borah and Sherburne Cook concluded that the physical size of the Europeans and the Mexicans was about the same. Borah and Cook surmised that caloric intake per individual in Central Mexico was around 1,900 calories per day, which certainly seems comparable to European levels.[7]

Certainly, the technological differences with Europe hampered commercial exchange, such as the absence of the wheel for transportation, metallurgy that did not include iron, and the exclusive reliance on pictographic writing systems. Yet by the same token, Mesoamerican agricultural technology was richly diverse and especially oriented toward labor-intensive techniques, well suited to pre-conquest Mexico’s factor endowments. As Gene Wilken points out, Bernardino de Sahagún explained in his General History of the Things of New Spain that the Nahua farmer recognized two dozen soil types related to origin, source, color, texture, smell, consistency and organic content.  They were expert at soil management.[8] So it is possible not only to misspecify, but to mistake the technological “backwardness” of Mesoamerica relative to Europe, and historians routinely have.

The essentially political and clan-based nature of economic activity made the distribution of output somewhat different from standard neoclassical models. Although no one seriously maintains that indigenous civilization did not include private property and, in fact, property rights in humans, the distribution of product tended to emphasize average rather than marginal product. If responsibility for tribute was collective, it is logical to suppose that there was some element of redistribution and collective claim on output by the basic social groups of indigenous society, the clans or calpulli.[9] Whatever the case, it seems clear that viewing indigenous society and economy as strained by population growth to the point of collapse, as the so-called “Berkeley school” did in the 1950s, is no longer tenable. It is more likely that the tensions exploited by the Europeans to divide and conquer their native hosts and so erect a colonial state on pre-existing native entities were mainly political rather than socioeconomic. It was through the assistance of native allies such as the Tlaxcalans, as well as with the help of previously unknown diseases such as smallpox that ravaged the indigenous peoples, that the Europeans were able to place a weakened Tenochtitlan under siege and finally defeat it.

 

Colonialism and Economic Adjustment to Population Decline

With the subjection first of Tenochtitlan and Tlatelolco and then of other polities and peoples, a process that would ultimately stretch well into the nineteenth century and was never really completed, the Europeans turned their attention to making colonialism pay. The process had several components: the modification or introduction of institutions of rule and appropriation; the introduction of new flora and fauna that could be turned to economic use; the reorientation of a previously autarkic and precapitalist economy to the demands of trade and commercial exploitation; and the implementation of European fiscal sovereignty. These processes were complex, required much time, and were, in many cases, only partly successful. There is considerable speculation regarding how long it took before Spain (arguably a relevant term by the mid-sixteenth century) made colonialism pay. The best we can do is present a schematic view of what occurred. Regional variations were enormous: a “typical” outcome or institution of colonialism may well have been an outcome visible in central Mexico. Moreover, all generalizations are fragile, rest on limited quantitative evidence, and will no doubt be substantially modified eventually. The message is simple: proceed with caution.

The Europeans did not seek to take Mesoamerica as a tabula rasa. In some ways, they would have been happy to simply become the latest in a long line of ruling dynasties established by decapitating native elites and assuming control. The initial demand of the conquerors for access to native labor in the so-called encomienda was precisely that, with the actual task of governing be left to the surviving and collaborating elite: the principle of “indirect rule.”[10] There were two problems with this strategy: the natives resisted and the natives died. They died in such large numbers as to make the original strategy impracticable.

The number of people who lived in Mesoamerica has long been a subject of controversy, but there is no point in spelling it out once again. The numbers are unknowable and, in an economic sense, not really important. The population of Tenochtitlan has been variously estimated between 50 and 200 thousand individuals, depending on the instruments of estimation.  As previously mentioned, some estimates of the Central Mexican population range as high as 25 million on the eve of the European conquest, and virtually no serious student accepts the small population estimates based on the work of Angel Rosenblatt. The point is that labor was abundant relative to land, and that the small surpluses of a large tributary population must have supported the opulent elite that Bernal Díaz and his companions described.

By 1620, or thereabouts, the indigenous population had fallen to less than a million according to Cook and Borah. This is not just the quantitative speculation of modern historical demographers. Contemporaries such as Jerónimo de Mendieta in his Historia eclesiástica Indiana (1596) spoke of towns formerly densely populated now witness to “the palaces of those former Lords ruined or on the verge of. The homes of the commoners mostly empty, roads and streets deserted, churches empty on feast days, the few Indians who populate the towns in Spanish farms and factories.” Mendieta was an eyewitness to the catastrophic toll that European microbes and warfare took on the native population. There was a smallpox epidemic in 1519-20 when 5 to 8 million died. The epidemic of hemorrhagic fever in 1545 to 1548 was one of the worst demographic catastrophes in human history, killing 5 to 15 million people. And then again in 1576 to 1578, when 2 to 2.5 million people died, we have clear evidence that land prices in the Valley of Mexico (Coyoacán, a village outside Mexico City, as the reconstructed Tenochtitlán was called) collapsed. The death toll was staggering. Lesser outbreaks were registered in 1559, 1566, 1587, 1592, 1601, 1604, 1606, 1613, 1624, and 1642. The larger point is that the intensive use of native labor, such as the encomienda, had to come to an end, whatever its legal status had become by virtue of the New Laws (1542). The encomienda or the simple exploitation of massive numbers of indigenous workers was no longer possible. There were too few “Indians” by the end of the sixteenth century.[11]

As a result, the institutions and methods of economic appropriation were forced to change. The Europeans introduced pastoral agriculture – the herding of cattle and sheep – and the use of now abundant land and scarce labor in the form of the hacienda while the remaining natives were brought together in “villages” whose origins were not essentially pre- but post-conquest, the so-called congregaciones, at the same time that the titles to now-vacant lands were created, regularized and “composed.”[12] (Land titles were a European innovation as well). Sheep and cattle, which the Europeans introduced, became part of the new institutional backbone of the colony. The natives would continue to rely on maize for the better part of their subsistence, but the Europeans introduced wheat, olives (oil), grapes (wine) and even chickens, which the natives rapidly adopted. On the whole, the results of these alterations were complex. Some scholars argue that the native diet improved even in the face of their diminishing numbers, a consequence of increased land per person and of greater variety of foodstuffs, and that the agricultural potential of the colony now called New Spain was enhanced. By the beginning of the seventeenth century, the combined indigenous, European immigrant, and new mixed blood populations could largely survive on the basis of their own production. The introduction of sheep lead to the introduction and manufacture of woolens in what were called obrajes or manufactories in Puebla, Querétaro, and Coyoacán. The native peoples continued to produce cottons (a domestic crop) under the stimulus of European organization, lending, and marketing. Extensive pastoralism, the cultivation of cereals and even the incorporation of native labor then characterized the emergence of the great estates or haciendas, which became a characteristic rural institution through the twentieth century, when the Mexican Revolution put an end to many of them. Thus the colony of New Spain continued to feed, clothe and house itself independent of metropolitan Spain’s direction. Certainly, Mexico before the Conquest was self-sufficient. The extent to which the immigrant and American Spaniard or creole population depended on imports of wine, oil and other foodstuffs and textiles in the decades immediately following the conquest is much less clear.

At the same time, other profound changes accompanied the introduction of Europeans, their crops and their diseases into what they termed the “kingdom” (not colony, for constitutional reasons) of New Spain.[13] Prior to the conquest, land and labor had been commoditized, but not to any significant extent, although there was a distinction recognized between possession and ownership.  Scholars who have closely examined the emergence of land markets after the conquest—mainly in the Valley of Mexico—are virtually unanimous in this conclusion. To the extent that markets in labor and commodities had emerged, it took until the 1630s (and later elsewhere in New Spain) for the development to reach maturity. Even older mechanisms of allocation of labor by administrative means (repartimiento) or by outright coercion persisted. Purely economic incentives in the form of money wages and prices never seemed adequate to the job of mobilizing resources and those with access to political power were reluctant to pay a competitive wage. In New Spain, the use of some sort of political power or rent-seeking nearly always accompanied labor recruitment. It was, quite simply, an attempt to evade the implications of relative scarcity, and renders the entire notion of “capitalism” as a driving economic force in colonial Mexico quite inexact.

 

Why the Settlers Resisted the Implications of Scarce Labor

The reasons behind this development are complex and varied. The evidence we have for the Valley of Mexico demonstrates that the relative price of labor rose while the relative price of land fell even when nominal movements of one or the other remained fairly limited. For instance, the table constructed below demonstrates that from 1570-75 through 1591-1606, the price of unskilled labor in the Valley of Mexico nearly tripled while the price of land in the Valley (Coyoacán) fell by nearly two thirds. On the whole, the price of labor relative to land increased by nearly 800 percent. The evolution of relative prices would have inevitably worked against the demanders of labor (Europeans and increasingly, creoles or Americans of largely European ancestry) and in favor of the supplier (native labor, or people of mixed race generically termed mestizo). This was not of course what the Europeans had in mind and by capture of legal institutions (local magistrates, in particularly), frequently sought to substitute compulsion for what would have been costly “free labor.” What has been termed the “depression” of the seventeenth century may well represent one of the consequences of this evolution: an abundance of land, a scarcity of labor, and the attempt of the new rulers to adjust to changing relative prices. There were repeated royal prohibitions on the use of forced indigenous labor in both public and private works, and thus a reduction in the supply of labor. All highly speculative, no doubt, but the adjustment came during the central decades of the seventeenth century, when New Spain increasingly produced its own woolens and cottons, and largely assumed the tasks of providing itself with foodstuffs and was thus required to save and invest more.  No doubt, the new rulers felt the strain of trying to do more with less.[14]

 

Years Land Price Index Labor Price Index (Labor/Land) Index
1570-1575 100 100 100
1576-1590 50 143 286
1591-1606 33 286 867

 

Source: Calculated from Rebecca Horn, Postconquest Coyoacan: Nahua-Spanish Relations in Central Mexico, 1519-1650 (Stanford: Stanford University Press, 1997), p. 208 and José Ignacio Urquiola Permisan, “Salarios y precios en la industria manufacturer textile de la lana en Nueva España, 1570-1635,” in Virginia García Acosta, (ed.), Los precios de alimentos y manufacturas novohispanos (México, DF: CIESAS, 1995), p. 206.

 

The overall role of Mexico within the Hapsburg Empire was in flux as well. Nothing signals the change as much as the emergence of silver mining as the principal source of Mexican exportables in the second half of the sixteenth century. While Mexico would soon be eclipsed by Peru as the most productive center of silver mining—at least until the eighteenth century—the discovery of significant silver mines in Zacatecas in the 1540s transformed the economy of the Spanish empire and the character of New Spain’s as well.

 

 

 

Silver Mining

While silver mining and smelting was practiced before the conquest, it was never a focal point of indigenous activity. But for the Europeans, Mexico was largely about silver mining. From the mid- sixteenth century onward, it was explicitly understood by the viceroys that they were to do all in their power to “favor the mines,” as one memorable royal instruction enjoined. Again, there has been much controversy of the precise amounts of silver that Mexico sent to the Iberian Peninsula. What we do know certainly is that Mexico (and the Spanish Empire) became the leading source of silver, monetary reserves, and thus, of high-powered money. Over the course of the colonial period, most sources agree that Mexico provided nearly 2 billion pesos (dollars) or roughly 1.6 billion troy ounces to the world economy. The graph below provides a picture of the remissions of all Mexican silver to both Spain and to the Philippines taken from the work of John TePaske.[15]

page16

Since the population of Mexico under Spanish rule was at most 6 million people by the end of the colonial period, the kingdom’s silver output could only be considered astronomical.

This production has to be considered in both its domestic and international dimensions. From a domestic perspective, the mines were what a later generation of economists would call “growth poles.” They were markets in which inputs were transformed into tradable outputs at a much higher rate of productivity (because of mining’s relatively advanced technology) than Mexico’s other activities. Silver thus became Mexico’s principal exportable good, and remained so well into the late nineteenth century.  The residual claimants on silver production were many and varied.  There were, of course the silver miners themselves in Mexico and their merchant financiers and suppliers. They ranged from some of the wealthiest people in the world at the time, such as the Count of Regla (1710-1781), who donated warships to Spain in the eighteenth century, to individual natives in Zacatecas smelting their own stocks of silver ore.[16] While the conditions of labor in Mexico’s silver mines were almost uniformly bad, the compensation ranged from above market wages paid to free labor in the prosperous larger mines  of the Bajío and the North to the use of forced village  labor drafts in more marginal (and presumably less profitable) sites such as Taxco. In the Iberian Peninsula, income from American silver mines ultimately supported not only a class of merchant entrepreneurs in the large port cities, but virtually the core of the Spanish political nation, including monarchs, royal officials, churchmen, the military and more. And finally, silver flowed to those who valued it most highly throughout the world. It is generally estimated that 40 percent of Spain’s American (not just Mexican, but Peruvian as well) silver production ended up in hoards in China.

Within New Spain, mining centers such as Guanajuato, San Luis Potosí, and Zacatecas became places where economic growth took place rapidly, in which labor markets more readily evolved, and in which the standard of living became obviously higher than in neighboring regions. Mining centers tended to crowd out growth elsewhere because the rate of return for successful mines exceeded what could be gotten in commerce, agriculture and manufacturing. Because silver was the numeraire for Mexican prices—Mexico was effectively on a silver standard—variations in silver production could and did have substantial effects on real economic activity elsewhere in New Spain. There is considerable evidence that silver mining saddled Mexico with an early case of “Dutch disease” in which irreducible costs imposed by the silver standard ultimately rendered manufacturing and the production of other tradable goods in New Spain uncompetitive. For this reason, the expansion of Mexican silver production in the years after 1750 was never unambiguously accompanied by overall, as opposed to localized prosperity. Silver mining tended to absorb a disproportional quantity of resources and to keep New Spain’s price level high, even when the business cycle slowed down—a fact that was to impress visitors to Mexico well into the nineteenth century. Mexican silver accounted for well over three-quarters of exports by value into the nineteenth century as well. The estimates vary widely, for silver was by no means the only, or even the most important source of revenue to the Crown, but by the end of the colonial era, the Kingdom of New Spain probably accounted for 25 percent of the Crown’s imperial income.[17] That is why reformist proposals circulating in governing circles in Madrid in the late eighteenth century fixed on Mexico. If there was any threat to the American Empire, royal officials thought that Mexico, and increasingly, Cuba, were worth holding on to. From a fiscal standpoint, Mexico had become just that important.[18]

 

“New Spain”: The Second Phase                of the Bourbon “Reforms”

In 1700, the last of the Spanish Hapsburgs died and a disputed succession followed. The ensuring conflict, known as the War of Spanish Succession, came to an end in 1714. The grandson of French king Louis XIV came to the Spanish throne as King Philip V. The dynasty he represented was known as the Bourbons. For the next century of so, they were to determine the fortunes of New Spain. Traditionally, the Bourbons, especially the later ones, have been associated with an effort to “renationalize” the Spanish empire in America after it had been thoroughly penetrated by French, Dutch, and lastly, British commercial interests.[19]

There were at least two areas in which the Bourbon dynasty, “reformist” or no, affected the Mexican economy. One of them dealt with raising revenue and the other was the international position of the imperial economy, specifically, the volume and value of trade. A series of statistics calculated by Richard Garner shows that the share of Mexican output or estimated GDP taken by taxes grew by 167 percent between 1700 and 1800. The number of taxes collected by the Royal Treasury increased from 34 to 112 between 1760 and 1810. This increase, sometimes labelled as a Bourbon “reconquest” of Mexico after a century and a half of drift under the Hapsburgs, occurred because of Spain’s need to finance increasingly frequent and costly wars of empire in the eighteenth century. An entire array of new taxes and fiscal placemen came to Mexico. They affected (and alienated) everyone, from the wealthiest merchant to the humblest villager. If they did nothing else, the Bourbons proved to be expert tax collectors.[20]

The second and equally consequential change in imperial management lay in the revision and “deregulation” of New Spain’s international trade, or the evolution from a “fleet” system to a regime of independent sailings, and then, finally, of voyages to and from a far larger variety of metropolitan and colonial ports. From the mid-sixteenth century onwards, ocean-going trade between Spain and the Americas was, in theory, at least, closely regulated and supervised. Ships in convoy (flota) sailed together annually under license from the monarchy and returned together as well. Since so much silver specie was carried, the system made sense, even if the flotas made a tempting target and the problem of contraband was immense. The point of departure was Seville and later, Cadiz. Under pressure from other outports in the late eighteenth century, the system was finally relaxed. As a consequence, the volume and value of trade to Mexico increased as the price of importables fell. Import-competing industries in Mexico, especially textiles, suffered under competition and established merchants complained that the new system of trade was too loose. But to no avail. There is no measure of the barter terms of trade for the eighteenth century, but anecdotal evidence suggests they improved for Mexico. Nevertheless, it is doubtful that these gains could have come anywhere close to offsetting the financial cost of Spain’s “reconquest” of Mexico.[21]

On the other hand, the few accounts of per capita real income growth in the eighteenth century that exist suggest little more than stagnation, the result of population growth and a rising price level. Admittedly, looking for modern economic growth in Mexico in the eighteenth century is an anachronism, although there is at least anecdotal evidence of technological change in silver mining, especially in the use of gunpowder for blasting and excavating, and of some productivity increase in silver mining. So even though the share of international trade outside of goods such as cochineal and silver was quite small, at the margin, changes in the trade regime were important. There is also some indication that asset income rose and labor income fell, which fueled growing social tensions in New Spain. In the last analysis, the growing fiscal pressure of the Spanish empire came when the standard of living for most people in Mexico—the native and mixed blood population—was stagnating. During periodic subsistence crisis, especially those propagated by drought and epidemic disease, and mostly in the 1780s, living standards fell. Many historians think of late colonial Mexico as something of a powder keg waiting to explode. When it did, in 1810, the explosion was the result of a political crisis at home and a dynastic failure abroad. What New Spain had negotiated during the Wars of Spanish Succession—regime change– provide impossible to surmount during the Napoleonic Wars (1794-1815). This may well be the most sensitive indicator of how economic conditions changed in New Spain under the heavy, not to say clumsy hand, of the Bourbon “reforms.”[22]

 

The War for Independence, the Insurgency, and Their Legacy

The abdication of the Bourbon monarchy to Napoleon Bonaparte in 1808 produced a series of events that ultimately resulted in the independence of New Spain. The rupture was accompanied by a violent peasant rebellion headed by the clerics Miguel Hidalgo and José Morelos that, one way or another, carried off 10 percent of the population between 1810 and 1820. Internal commerce was largely paralyzed. Silver mining essentially collapsed between 1810 and 1812 and a full recovery of mining output was delayed until the 1840s. The mines located in zones of heavy combat, such as Guanajuato and Querétaro, were abandoned by fleeing workers. Thus neglected, they quickly flooded.

At the same time, the fiscal and human costs of this period, the Insurgency, were even greater.[23] The heavy borrowings in which the Bourbons engaged to finance their military alliances left Mexico with a considerable legacy of internal debt, estimated at £16 million at Independence. The damage to the fiscal, bureaucratic and administrative structure of New Spain in the face of the continuing threat of Spanish reinvasion (Spain did not recognize the Independence of Mexico (1821)) in the 1820s drove the independent governments into foreign borrowing on the London market to the tune of £6.4 million in order to finance continuing heavy military outlays. With a reduced fiscal capacity, in part the legacy of the Insurgency and in part the deliberate effort of Mexican elites to resist any repetition Bourbon-style taxation, Mexico defaulted on its foreign debt in 1827. For the next sixty years, through a serpentine history of moratoria, restructuring and repudiation (1867), it took until 1884 for the government to regain access to international capital markets, at what cost can only be imagined. Private sector borrowing and lending continued, although to what extent is currently unknown. What is clear is that the total (internal plus external) indebtedness of Mexico relative to late colonial GDP was somewhere in the range of 47 to 56 percent.[24]

This was, perhaps, not an insubstantial amount for a country whose mechanisms of public finance were in what could be mildly termed chaotic condition in the 1820s and 1830s as the form, philosophy, and mechanics of government oscillated from federalist to centralist and back into the 1850s.  Leaving aside simple questions of uncertainty, there is the very real matter that the national government—whatever the state of private wealth—lacked the capacity to service debt because national and regional elites denied it the means to do so. This issue would bedevil successive regimes into the late nineteenth century, and, indeed, into the twentieth.[25]

At the same time, the demographic effects of the Insurgency exacted a cost in terms of lost output from the 1810s through the 1840s. Gaping holes in the labor force emerged, especially in the fertile agricultural plains of the Bajío that created further obstacles to the growth of output. It is simply impossible to generalize about the fortunes of the Mexican economy in this period because of the dramatic regional variations in the Republic’s economy. A rough estimate of output per head in the late colonial period was perhaps 40 pesos (dollars).[26] After a sharp contraction in the 1810s, income remained in that neighborhood well into the 1840s, at least until the eve of the war with the United States in 1846. By the time United States troops crossed the Rio Grande, a recovery had been under way, but the war arrested it. Further political turmoil and civil war in the 1850s and 1860s represented setbacks as well. In this way, a half century or so of potential economic growth was sacrificed from the 1810s through the 1870s. This was not an uncommon experience in Latin America in the nineteenth century, and the period has even been called The Stage of the Great Delay.[27] Whatever the exact rate of real per capita income growth was, it is hard to imagine it ever exceeded two percent, if indeed it reached much more than half that.

 

Agricultural Recovery and War

On the other hand, it is clear that there was a recovery in agriculture in the central regions of the country, most notably in the staple maize crop and in wheat. The famines of the late colonial era, especially of 1785-86, when massive numbers perished, were not repeated. There were years of scarcity and periodic corresponding outbreaks of epidemic disease—the cholera epidemic of 1832 affected Mexico as it did so many other places—but by and large, the dramatic human wastage of the colonial period ceased, and the death rate does appear to have begun to fall. Very good series on wheat deliveries and retail sales taxes for the city of Puebla southeast of Mexico City show a similarly strong recovery in the 1830s and early 1840s, punctuated only by the cholera epidemic whose effects were felt everywhere.[28]

Ironically, while the Panic of 1837 appears to have at least hit the financial economy in Mexico hard with a dramatic fall in public borrowing (and private lending), especially in the capital,[29] an incipient recovery of the real economy was ended by war with the United States. It is not possible to put numbers on the cost of the war to Mexico, which lasted intermittently from 1846 to 1848, but the loss of what had been the Southwest under Mexico is most often emphasized. This may or may not be accurate. Certainly, the loss of California, where gold was discovered in January 1848, weighs heavily on the historical imaginations of modern Mexicans. There is also the sense that the indemnity paid by the United States–$15 million—was wholly inadequate, which seems at least understandable when one considers that Andrew Jackson offered $5 million to purchase Texas alone in 1829.

It has been estimated that the agricultural output of the Mexican “cession” as it was called in 1900, was nearly $64 million, and that the value of livestock in the territory was over $100 million. The value of gold and silver produced was about $35 million. Whether it is reasonable to employ the numbers in estimating the present value of output relative to the indemnity paid is at least debatable as a counterfactual, unless one chooses to regard this as the annuitized value on a perpetuity “purchased” from Mexico at gunpoint, which seems more like robbery than exchange.  In the long run, the loss may have been staggering, but in the short run, much less so. The northern territories Mexico lost had really yielded very little up until the War. In fact, the balance of costs and revenues to the Mexican government may well have been negative.[30]

Whatever the case, the decades following the war with the United States until the beginning of the administration of Porfirio Díaz (1876) are typically regarded as a step backward. The reasons are several. In 1850, the government essentially went broke. While it is true that its financial position had disintegrated since the mid-1830s, 1850 marked a turning point. The entire indemnity payment from the United States was consumed in debt service, but this made no appreciable dent in the outstanding principal, which hovered around 50 million pesos (dollars).  The limits of debt sustainability had been reached: governing was turned into a wild search for resources, which proved fruitless. Mexico continued to sell of parts of its territory, such as the Treaty of the Mesilla (1853), or Gadsden Purchase, whose proceeds largely ended up in the hands of domestic financiers rather than foreign creditors’.[31] Political divisions, if anything, terrible before the war with the United States, turned catastrophic. A series of internal revolts, uprisings and military pronouncements segued into yet another violent civil war between liberals and conservatives—now a formal party—the so-called Three Years’ War (1856-58). In 1862, frustrated by Mexico’s suspension of foreign debt service, Great Britain, Spain and France seized Veracruz. A Hapsburg prince, Maximilian, was installed as Mexico’s second “emperor.” (Agustín de Iturbide was the first). While only the French actively prosecuted the war within Mexico, and while they never controlled more than a very small part of the country, the disruption was substantial. By 1867, with Maximillian deposed and the French army withdrawn, the country required serious reconstruction. [32]

 

Juárez, Díaz and the Porfiriato: authoritarian development.

To be sure, the origins of authoritarian development in nineteenth century Mexico were not with Porfirio Díaz, as is often asserted. Their beginnings actually went back several decades earlier, to the last presidency of Santa Anna, generally known as the Dictatorship (1853-54). But Santa Anna was overthrown too quickly, and now for the last time, for much to have actually occurred. A ministry for development (Fomento) had been created, but the Liberal revolution of Ayutla swept Santa Anna and his clique away for good. Serious reform seems to have begun around 1870, when the Finance Minister was Matías Romero. Romero was intent on providing Mexico with a modern Treasury, and on ending the hand-to- mouth financing that had mostly characterized the country’s government since Independence, or at least since the mid-1830s. So it is appropriate to pick up with the story here. Where did Mexico stand in 1870?[33]

The most revealing data that we have on the state of economic development come from various anthropometric and cost of living studies by Amilcar Challu, Aurora Gómez Galvarriato, and Moramay López Alonso.[34] Their research overlaps in part, and gives a fascinating picture of Mexico in the long run, from 1735 to 1940. For the moment, let us look at the period leading up to 1867, when the French withdrew from Mexico. If we look at the heights of the “literate” population, Challu’s research suggests that the standard of living stagnated between 1750 and 1840. If we look at the “illiterate” population, there was a consistent decline until 1850. Since the share of the illiterate population was clearly larger, we might infer that living standards for most Mexicans declined after 1750, however we interpret other quantitative and anecdotal evidence.

López Alonso confines her work to the period after the 1840s. From 1850 through 1890, her work generally corroborates Challu’s. The period after the Mexican War was clearly a difficult one for most Mexicans, and the challenge that both Juárez and Díaz faced was a macroeconomy in frank contraction after 1850. The regimes after 1867 were faced with stagnation.

The real wage study of by Amilcar Challu and Aurora Gómez Galvarriato, when combined with the existing anthropometric work, offers a pretty clear correlation between movements in real wages (down) and height (falling). [35]

It would then appear growth from the 1850s through the 1870s was slow—if there was any at all—and perhaps inferior to what had come between the 1820s and the 1840s. Given the growth of import substitution during the Napoleonic Wars, roughly 1790-1810, coupled with the commercial opening brought by the Bourbons’   post-1789 extension of “free trade” to Mexico, we might well see a pattern of mixed performance (1790-1810), sharp contraction (the 1810s), rebound and recovery, with a sharp financial shocks coming in the mid-1820s and mid -1830s (1820s-1840s), and stagnation once more (1850s-1870s). Real per capita output oscillated, sometimes sharply, around an underlying growth rate of perhaps one percent; changes in the distribution of income and wealth are more or less impossible to identify consistently, because studies conflict.

Far less speculative is that the foundations for modern economic growth were laid down in Mexico during the era of Benito Juárez. Its key elements were the creation of a secular, bourgeois state and secular institutions embedded in the Constitution of 1857. The titanic ideological struggles between liberals and conservatives were ultimately resolved in favor of a liberal, but nevertheless centralizing form of government under Porfirio Diáz. This was the beginning of the end of the Ancien Regime. Under Juárez, corporate lands of the Church and native villages were privatized in favor of individual holdings and their former owners compensated in bonds. This was effectively the largest transfer of land title since the late sixteenth century (not including the war with the United States) and it cemented the idea of individual property rights. With the expulsion of the French and the outright repudiation of the French debt, the Treasury was reorganized along more modern lines. The country got additional breathing room by the suspension of debt service to Great Britain until the terms of the 1825 loans were renegotiated under the Dublán Convention (1884). Equally, if not more important, Mexico now entered the railroad age in 1876, nearly forty years after the first tracks were laid in Cuba in 1837. The educational system was expanded in an attempt to create at least a core of literate citizens who could adopt the tools of modern finance and technology. Literacy still remained in the neighborhood of 20 percent, and life expectancy at birth scarcely reached 40 years of age, if that. Yet by the end of the Restored Republic (1876), Mexico had turned a corner. There would be regressions, but the nineteenth century had finally arrived, aptly if brutally signified by Juárez’ execution of Maximilian in Querétaro in 1867.[36]

Porfirian Mexico

Yet when Díaz came to power, Mexico was, in many ways, much as it had been a century earlier. It was a rural, agrarian nation whose primary agricultural output per person was maize, followed by wheat and beans. These were produced on haciendas and ranchos in Jalisco, Guanajuato, Michoacán, Mexico, Puebla as well as Oaxaca, Veracruz, Aguascalientes, Chihuahua and Sonora. Cotton, which with great difficulty had begun to supply a mechanized factory regime (first in spinning, then weaving) was produced in Oaxaca, Yucatán, Guerrero and Chiapas as well as in parts of Durango and Coahuila. Domestic production of raw cotton rarely sufficed to supply factories in Michoacán, Querétaro, Puebla and Veracruz, so imports from the Southern United States were common. For the most part, the indigenous population lived on maize, beans, and chile, producing its own subsistence on small, scattered plots known as milpas. Perhaps 75 percent of the population was rural, with the remainder to be found in cities like Mexico, Guadalajara, San Luis Potosí, and later, Monterrey. Population growth in the Southern and Eastern parts of the country had been relatively slow in the nineteenth century. The North and the center North grew more rapidly.  The Center of the country, less so. Immigration from abroad had been of no consequence.[37]

It is a commonplace to see the presidency of Porfirio Díaz (1876-1910) as a critical juncture in Mexican history, and this would be no less true of economic or commercial history as well. By 1910, when the Díaz government fell and Mexico descended into two decades of revolution, the first one extremely violent, the face of the country had been changed for good. The nature and effect of these changes remain not only controversial, but essential for understanding the subsequent evolution of the country, so we should pause here to consider some of their essential features.

While mining and especially, silver mining, had long held a privileged place in the economy, the nineteenth century had witnessed a number of significant changes. Until about 1889, the coinage of gold, silver, and copper—a very rough proxy for production given how much silver had been illegally exported—continued on a steadily upward track. In 1822, coinage was about 10 million pesos. By 1846, it had reached roughly 15 million pesos. There was something of a structural break after the war with the United States (its origins are unclear), and coinage continued upward to about 25 million pesos in 1888. Then, the falling international price of silver, brought on by large increases in supply elsewhere, drove the trend after 1889 sharply downward. By 1909-10, coinage had collapsed to levels previously unrecorded since the 1820s, although in 1904 and 1905, it had skyrocketed to nearly 45 million pesos.[38]

It comes as no surprise that these variations in production corresponded to sharp changes in international relative prices. For example, the market price of silver declined sharply relative to lead, which in turn encountered a large increase in Mexican production and a diversification into other metals including zinc, antinomy, and copper. Mexico left the silver standard (for international transactions, but continued to use silver domestically) in 1905, which contributed to the eclipse of this one crucial industry, which would never again have the status it had when Díaz became president in 1876, when precious metals represented 75 percent of Mexican exports by value. By the time he had decamped in exile to Paris, precious metals accounted for less than half of all exports.

The reason for this relative decline was the diversification of agricultural exports that had been slowly occurring since the 1870s. Coffee, cotton, sugar, sisal and vanilla were the principal crops, and some regions of the country such as Yucatán (henequen) and Durango and Tamaulipas (cotton) supplied new export crops.

 

Railroads and Infrastructure

None of be of this would have occurred without the massive changes in land tenure that had begun in the 1850s, but most of all, without the construction of railroads financed by the migration of foreign capital to Mexico under Díaz. At one level, it is a well-known story of social savings, which were substantial in Mexico because the terrain was difficult and the alternative modes of carriage few. One way or another, transportation has always been viewed as an “obstacle” to Mexican economic development. That must be true at some level, although recent studies (especially by Sandra Kuntz) have raised important qualifications. Railroads may not have been gateways to foreign dependency, as historians once argued, but there were limits to their ability to effect economic change, even internally. They tended to enlarge the internal market for some commodities more than others. The peculiarities of rate-making produced other distortions, while markets for some commodities were inevitably concentrated in major cities or transshipment points which afforded some monopoly power to distributors even as a national market in basic commodities became more of a reality. Yet, in general, the changes were far reaching.[39]

Conventional figures confirm conventional wisdom. When Díaz assumed the presidency, there were 660 km (410 miles) of track. In 1910, there were 19,280 km (about 12,000 miles). Seven major lines linked the cities of Mexico, Veracruz, Acapulco, Juárez, Laredo, Puebla, Oaxaca. Monterrey and Tampico in 1892. The lines were built by foreign capital (e.g., the Central Mexicano was built by the Atchison, Topeka and Santa Fe), which is why resolving the long-standing questions of foreign debt service were critical. Large government subsidies on the order of 3,500 to 8,000 pesos per km were granted, and financing the subsidies amounted to over 30 million pesos by 1890. While the railroads were successful in creating more of a national market, especially in the North, their finances were badly affected by the depreciation of the silver peso, given that foreign liabilities had to be liquidated in gold.

As a result, the government nationalized the railroads in 1903. At the same time, it undertook an enormous effort to construct infrastructure such as drainage and ports, virtually all of which were financed by British capital and managed by “Don Porfirio’s contactor,” Sir Weetman Pearson.  Between railroads, ports, drainage works and irrigation facilities, the Mexican government borrowed 157 million pesos to finance costs.[40]

The expansion of the railroads, the build-out of infrastructure and the expansion of trade would have normally increased output per capita. Any data we have prior to 1930 are problematic, and before 1895, strictly speaking, we have no official measures of output per capita at all. Most scholars shy away from using levels of GDP in any form, other than for illustrative purposes.  Aside from the usual problems attending national income accounting, Mexico presents a few exceptional challenges. In peasant families, where women were entrusted with converting maize into tortilla, no small job, the omission of their value added from GDP must constitute a sizeable defect in measured output. Moreover, as the commercial radius of Mexican agriculture expanded rapidly as railroads, roads, and later, highways spread extensively, growth rates represented increased commercialization rather than increased growth. We have no idea how important this phenomenon was, but it is worth keeping in mind when we look at very rapid growth rates after 1940.

There are various measures of cumulative growth during the Porfiriato. By and large, the figure from 1900 through 1910 is around 23 percent, which is certainly higher than rates achieved during the nineteenth century, but nothing like what was recorded after 1940. In light of declining real wages, one can only assume that the bulk of “progress” flowed to the recipients of property income. This may well have represented a reversal of trends in the nineteenth century, when some argue that property income contracted in the wake of the Insurgency[41].

There was also significant industrialization in Mexico during the Porfiriato. Some industry, especially textiles, had its origins in the 1840s, but its size, scale and location altered dramatically by the end of the nineteenth century. For example, the cotton textile industry saw the number of workers, spindles and looms more than double from the late 1870s to the first decade of the nineteenth century. Brewing and its associated industry, glassmaking, became well established in Monterrey during the 1890s. The country’s first iron and steel mill, Fundidora Monterrey, was established there as well in 1903. Other industries, such as papermaking and cigarettes followed suit. By the end of the Porfiriato, over 10 percent of Mexico’s output was certainly industrial.[42]

 

From Revolution to “Miracle”

The Mexican Revolution (1910-1940) began as a political upheaval provoked by a crisis in the presidential succession when Porfirio Díaz refused to leave office in the wake of electoral defeat after signaling his willingness to do so in a famous pubic interview of 1908.[43] It was also the result of an agrarian uprising and the insistent demand of Mexico’s growing industrial proletariat for a share of political power. Finally, there was a small (fewer than 10 percent of all households) but upwardly mobile urban middle class created by economic development under Díaz whose access to political power had been effectively blocked by the regime’s mechanics of political control. Precisely how “revolutionary” were the results of the armed revolt—which persisted largely through the 1910s and peaked in a civil war in 1914-1915—has long been contentious, but is only tangentially relevant as a matter of economic history. The Mexican Revolution was no Bolshevik movement (of course, it predated Bolshevism by seven years) but it was not a purely bourgeois constitutional movement either, although it did contain substantial elements of both.

From a macroeconomic standpoint, it has become fashionable to argue that the Revolution had few, if any, profound economic consequences. It seems as if the principal reason was that revolutionary factions were interested in appropriating rather than destroying the means of production. For example, the production of crude oil peaked in Mexico in 1915—at the height of the Revolution—because crude oil could be used as a source of income to the group controlling the wells in Veracruz state. This was a powerful consideration.[44]

Yet in another sense, the conclusion that the Revolution had slight economic effects is not only facile, but obviously wrong. As the demographic historian Robert McCaa showed, the excess mortality occasioned by the Revolution was larger than any similar event in Mexican history other than the conquest in the sixteenth century. There has been no attempt made to measure the output lost by the demographic wastage (including births that never occurred), yet even the effect on the population cohort born between 1910 and 1920 is plain to see in later demographic studies.  [45]

There is also a subtler question that some scholars have raised. The Revolution increased labor mobility and the labor supply by abolishing constraints on the rural population such as debt peonage and even outright slavery. Moreover, the Revolution, by encouraging and ultimately setting into motion a massive redistribution of previously privatized land, contributed to an enlarged supply of that factor of production as well. The true impact of these developments was realized in the 1940s and 1950s, when rapid economic growth began, the so-called Mexican Miracle, which was characterized by rates of real growth of as much as 6 percent per year (1955-1966). Whatever the connection between the Revolution and the Miracle, it will require a serious examination on empirical grounds and not simply a dogmatic dismissal of what is now regarded as unfashionable development thinking: import substitution and inward-oriented growth.[46]

The other major consequence of the Revolution, the agrarian reform and the creation of the ejido, or land granted by the Mexican state to rural population under the authority provided it by the revolutionary Constitution on 1917 took considerable time to coalesce, and were arguably not even high on one of the Revolution’s principal instigators, Francisco Madero’s, list of priorities. The redistribution of land to the peasantry in the form of possession if not ownership – a kind of return to real or fictitious preconquest and colonial forms of land tenure – did peak during the avowedly reformist, and even modestly radical presidency of Lázaro Cárdenas (1934-1940) after making only halting progress under his predecessors since the 1920s. From 1940 to 1965, the cultivated area in Mexico grew at 3.7 percent per year and the rise in productivity in basic food crops was 2.8 percent per year.

Nevertheless, the long-run effects of the agrarian reform and land redistribution have been predictably controversial. Under the presidency of Carlos Salinas (1988-1994) the reform was officially declared over, with no further land redistribution to be undertaken and the legal status of the ejido definitively changed. The principal criticism of the ejido was that, in the long run, it encouraged inefficiently small landholding per farmer and, by virtue of its limitations on property rights, made agricultural credit difficult for peasants to obtain.[47]

There is no doubt these are justifiable criticisms, but they have to be placed in context. Cárdenas’ predecessors in office, Alvaro Obregón (1924-1928) and Plutarco Elías Calles (1928-1932) may well have preferred a more commercial model of agriculture with larger, irrigated holdings. But it is worth recalling that one of the original agrarian leaders of the Revolution, Emiliano Zapata, had an uneasy relationship with Madero, who saw the Revolution in mostly political terms, from the start and quickly rejected Madero’s leadership in favor of restoring peasant lands in his native state of Morelos.  Cárdenas, who was in the midst of several major maneuvers that would require widespread popular support—such as the expropriation of foreign oil companies operating in Mexico in March 1938—was undoubtedly sensitive to the need to mobilize the peasantry on his behalf. The agrarian reform of his presidency, which surpassed that of any other, needs to be considered in those terms as well as in terms of economic efficiency.[48]

Cárdenas’ presidency also coincided with the continuation of the Great Depression. Like other countries in Latin America, Mexico was hard hit by the Great Depression, at least through the early 1930s.  All sorts of consumer goods became scarcer, and the depreciation of the peso raised the relative price of imports. As had happened previously in Mexican history (1790-1810, during the Napoleonic Wars and the disruption of the Atlantic trade), in the medium term domestic industry was nevertheless given a stimulus and import substitution, the subsequent core of Mexico’s industrialization program after World War II, was given a decisive boost. On the other hand, Mexico also experienced the forced “repatriation” of people of Mexican descent, mostly from California, of whom 60 percent were United States citizens. The effects of this movement—the emigration of the Revolution in reverse—has never been properly analyzed. The general consensus is that World War II helped Mexico to prosper. Demand for labor and materials from the United States, to which Mexico was allied, raised real wages and incomes, and thus boosted aggregate demand. From 1939 through 1946, real output in Mexico grew by approximately 50 percent. The growth in population accelerated as well as the country began to move into the later stages of the demographic transition, with a falling death rate, while birth rates remained high.[49]

 

From Miracle to Meltdown: 1950-1982  

The history of import substitution manufacturing did not begin with postwar Mexico, but few countries (especially in Latin America) became as identified with the policy in the 1950s, and with what Mexicans termed the emergence of “stabilizing development.” There was never anything resembling a formal policy announcement, although Raúl Prebisch’s 1949 manifesto, “The Economic Development of Latin America and its Principal Problems” might be regarded as supplying one. Prebisch’s argument, that a directed change in the composition of imports toward capital goods to facilitate domestic industrialization was, in essence, the basis of the policy that Mexico followed. Mexico stabilized the nominal exchange rate at 12.5 pesos to the dollar in 1954, but further movement in the real exchange rate (until the 1970s) were unimportant. The substantive bias of import substitution in Mexico was a high effective rate of protection to both capital and consumer goods. Jaime Ros has calculated these rates in 1960 ranged between 47 and 85 percent, and between 33 and 109 percent in 1980. The result, in the short to intermediate run, was very rapid rates of economic growth, averaging 6.5 percent in 1950 through 1973. Other than Brazil, which also followed an import substitution regime, no country in Latin America experienced higher rates of growth. Mexico’s was substantially above the regional average. [50]

[See the historical graph of population growth in Mexico through 2000 below]

page39

Source: Essentially, Estadísticas Históricas de México (various editions since 1999; the most recent is 2014)

http://dgcnesyp.inegi.org.mx/ehm/ehm.htm (Accessed July 20, 2016)

 

But there were unexpected results as well. The contribution of labor to GDP growth was 14 percent. Capital’s contribution was 53 percent, and the remainder, total factor productivity (TFP) 28 percent.[51] As a consequence, while Mexico’s growth occurred through the accumulation of capital, the distribution of income became extremely skewed. The ratio of the top 10 percent of household income to the bottom 40 percent was 7 in 1960, and 6 in 1968. Even supporters of Mexico’s development program, such as Carlos Tello, conceded that it probable that it was the organized peasants and workers experienced an effective improvement of their relative position. The fruits of the Revolution were unevenly distributed, even among the working class.[52]

By “organized” one means such groups as the most important labor union in the country, the CTM (Confederation of Mexican Workers) or the nationally recognized peasant union, the CNC, both of which formed two of the three organized sectors of the official government party, the PRI, or Party of the Institutional Revolution that was organized in 1946. The CTM in particular was instrumental in supporting the official policy of import substitution, and thus benefited from government wage setting and political support. The leaders of these organizations became important political figures in their own right. One, Fidel Velázquez, as both a federal senator and the head of the CTM from 1941 to his death in 1997. The incorporation of these labor and peasant groups into the political system offered the government both a means of control and a guarantee of electoral support. They became pillars of what the Peruvian writer Mario Vargas Llosa famously called “the perfect dictatorship” of the PRI from 1946 to 2000, during which the PRI held a monopoly of the presidency and the important offices of state. In a sense, import substitution was the economic ideology of the PRI.[53]

Labor and economic development during the years of rapid growth is, like many others, a debated subject. While some have found strong wage growth, others, looking mostly at Mexico City, have found declining real wages. Beyond that, there is the question of informality and a segmented labor market. Were workers in the CTM the real beneficiaries of economic growth, while others in the informal sector (defined as receiving no social security payments, meaning roughly two-thirds of Mexican workers) did far less well? Obviously, the attraction of a segmented labor market model can address one obvious puzzle: why would industry substitute capital for labor, as it obviously did, if real wages were not rising? Postulating an informal sector that absorbed the rapid influx of rural migrants and thus held nominal wages steady while organized labor in the CTM got the benefit of higher negotiated wages, but in so doing, limited their employment is an attractive hypothesis, but would not command universal agreement. Nothing has been resolved, at least for the period of the “Miracle.” After Mexico entered a prolonged series of economic crises in the 1980s—here labelled as “meltdown”—the discussion must change, because many hold that the key to relative political stability and the failure of open unemployment to rise sharply can be explained by falling real wages.

The fiscal basis on which the years of the Miracle were constructed was conventional, not to say conservative.[54] A stable nominal exchange rate, balanced budgets, limited public borrowing, and a predictable monetary policy were all predicated on the notion that the private sector would react positively to favorable incentives. By and large, it did. Until the late 1960s, foreign borrowing was considered inconsequential, even if there was some concern on the horizon that it was starting to rise. No one foresaw serious macroeconomic instability. It is worth consulting a brief memorandum from Secretary of State Dean Rusk to President Lyndon Johnson (Washington, December 11, 1968) –to get some insight into how informed contemporaries viewed Mexico. The instability that existed was seen as a consequence of heavy-handedness on the part of the PRI and overreaction in the security forces. Informed observers did not view Mexico’s embrace of import-substitution industrialization as a train wreck waiting to happen. Historical actors are rarely so prescient.[55]

 

Slowing of the Miracle and Echeverría

The most obvious problems in Mexico were political. They stemmed from the increasing awareness that the limits of the “institutional revolution” had been reached, particularly regarding the growing democratic demands of the urban middle classes. The economic problem, which was far from obvious, was that import substitution had concentrated income in the upper 10 per cent of the population, so that domestic demand had begun to stagnate. Initially at least, public sector borrowing could support a variety of consumption subsidies to the population, and there were also efforts to transfer resources out of agriculture via domestic prices for staples such as maize. Yet Mexico’s population was also growing at the rate of nearly 3 percent per year, so that the long term prospects for any of these measures were cloudy.

At the same time, growing political pressures on the PRI, mostly dramatically manifest in the army’s violent repression of student demonstrators at Tlatelolco in 1968 just prior to the Olympics, had convinced some elements in the PRI, people like Carlos Madrazo, to argue for more radical change. The emergence of an incipient guerilla movement in the state of Guerrero had much the same effect. The new president, Luis Echeverría (1970-76), openly pushed for changes in the distribution of income and wealth, incited agrarian discontent for political purposes, dramatically increased government spending and borrowing, and alienated what had typically been a complaisant, if not especially friendly private sector.

The country’s macroeconomic performance began to deteriorate dramatically. Inflation, normally in the range of about 5 percent, rose into the low 20 percent range in the early 1970s. The public sector deficit, fueled by increasing social spending, rose from 2 to 7 percent of GDP. Money supply growth now averaged about 14 percent per year. Real GDP growth had begun to slip after 1968 and in the early 1970s, in deteriorated more, if unevenly. There had been clear convergence of regional economies in Mexico between 1930 and 1980 because of changing patterns of industrialization in the northern and central regions of the country.  After 1980, that process stalled and regional inequality again widened. [56]

While there is a tendency to blame Luis Echeverria for all or most of these developments, this forgets that his administration coincided with the First OPEC oil shock (1973) and rapidly deteriorating external conditions. Mexico had, as yet, not discovered the oil reserves (1978) that were to provide a temporary respite from economic adjustment after the shock of the peso devaluation of 1976—the first change in its value in over 20 years. At the same time, external demand fell, principally transmitted from the United States, Mexico’s largest trading partner, where the economy had fallen into recession in late 1973. Yet it seems reasonable to conclude that the difficult international environment, while important in bring Mexico’s “miracle” period to a close, was not helped by Echeverría’s propensity for demagoguery, of the loss of fiscal discipline that had long characterized government policy, at least since the 1950s. The only question to be resolved was to what sort of conclusion the period would come. The answer, unfortunately, was disastrous.[57]

 

Meltdown: The Debt Crisis, the Lost Decade and After

In contemporary parlance, Mexico had passed from “stabilizing” to “shared” development under Echeverría. But the devaluation of 1976 from 12.5 to 20.5 pesos to the dollar suggested that something had gone awry. One might suppose that some adjustment in course, especially in public spending and borrowing, would have occurred. But precisely the opposite occurred. Between 1976 and 1979, nominal federal spending doubled. The budget deficit increased by a factor of 15. The reason for this odd performance was the discovery of crude oil in the Gulf of Mexico, perhaps unsurprising in light of the spiking prices of the 1970s (the oil shocks of 1973-74, 1978-79), but nevertheless of considerable magnitude. In 1975, Mexico’s proven reserves were 6 billion barrels of oil. By 1978, they had increased to 40 billion. President López Portillo set himself to the task of “administering abundance” and Mexican analysts confidently predicted crude oil at $100 a barrel (when it stood at $37 in current prices in 1980). The scope of the miscalculation was catastrophic. At the same time, encouraged by bank loan pushing and effectively negative real rates of interest, Mexico borrowed abroad. Consumption subsidies, while vital in the face of slowing import substitution, were also costly, and when supported by foreign borrowing, unsustainable, but foreign indebtedness doubled between 1976 and 1979, and even further thereafter.

Matters came to a head in 1982. By then, Mexico’s foreign indebtedness was estimated at over $80 billion dollars, an increase from less than $20 billion in 1975. Real interest rates had begun to rise in the United States in mid-1981, and with Mexican borrowing tied to international rates, debt service rapidly increased. Oil revenue, which had come to constitute the great bulk of foreign exchange, followed international crude prices downward, driven in large part by a recession that had begun in the United States in mid-1981. Within six months, Mexico, too, had fallen into recession. Real per capital output was to decline by 8 percent in 1982.  Forced to sharply devalue, the real exchange rate fell by 50 percent in 1982 and inflation approached 100 percent. By the late summer, Finance Minister Jesus Silva Herzog admitted that the country could not meet an upcoming payment obligation, and was forced to turn to the US Federal Reserve, to the IMF, and to a committee of bank creditors for assistance. In late August, in a remarkable display of intemperance, President López Portillo nationalized the banking system. By December 20, 1982, Mexico’s incoming President, Miguel de la Madrid (1982-88) appeared, beleaguered, on the cover of Time Magazine framed by the caption, “We are in an Emergency.”  It was, as the saying goes, a perfect storm, and with it, the Debt Crisis and the “Lost Decade” in Mexico had begun. It would be years before anything resembling stability, let alone prosperity, was restored. Even then, what growth there was a pale imitation of what had occurred during the decades of the “Miracle.”

 

The 1980s

The 1980s were a difficult decade.[58]  After 1981, annual real per capita growth would not reach 4 percent again until 1989, and in 1986, it fell by 6 percent. In 1987, inflation reached 159 percent. The nominal exchange rate fell by 139 percent in 1986-1987. By the standards of the years of stabilizing development, the record of the 1980s was disastrous. To complete the devastation, on September 19, 1985, the worst earthquake in Mexican history, 7.8 on the Richter Scale, devastated large parts of central Mexico City and killed 5 thousand (some estimates run as high as 25 thousand), many of whom were simply buried in mass graves. It was as if a plague of biblical proportions had struck the country.

Massive indebtedness produced a dramatic decline in the standard of living as structural adjustment occurred. Servicing the debt required the production of an export surplus in non-oil exports, which in turn, required a reduction in domestic consumption. In an effort to surmount the crisis, the government implemented an agreement between organized labor, the private sector, and agricultural producers called the Economic Solidarity Pact (PSE). The PSE combined an incomes policy with fiscal austerity, trade and financial liberalization, generally tight monetary policy, and debt renegotiation and reduction. The centerpiece of the “remaking” of the previously inward orientation of the domestic economy was the North American Free Trade Agreement (NAFTA, 1993) linking Mexico, the United States, and Canada. While average tariff rates in Mexico had fallen from 34 percent in 1985 to 4 percent in 1992—even before NAFTA was signed—the agreement was generally seen as creating the institutional and legal framework whereby the reforms of Miguel de la Madrid and Carlos Salinas (1988-1994) would be preserved. Most economists thought its effects would be relatively larger in Mexico than in the United States, which generally appears to have been the case. Nevertheless, NAFTA has been predictably controversial, as trade agreements are wont to be. The political furor (and, in some places, euphoria) surrounding the agreement have faded, but never entirely disappeared. In the United States in particular, NAFTA is blamed for deindustrialization, although pressure on manufacturing, like trade liberalization itself, was underway long before NAFTA was negotiated. In Mexico, there has been much hand wringing over the fate of agriculture and small maize producers in particular. While none of this is likely to cease, it is nevertheless the case that there has been a large increase in the volume of trade between the NAFTA partners. To dismiss this is, quite plainly, misguided, even where sensitive and well organized political constituencies are concerned. But the legacy of NAFTA, like most everything in Mexican economic history, remains unsettled.  As a result, the agreement was subject to a controversial renegotiation in 2018, largely fueled by protectionist sentiment in the Trump administration. While the intent was to increase costs in the Mexican automobile industry so as to price labor in the United Stats back into the industry, the long
term effect of the measure—not to say its ratification—remains to be seen.

 

Post Crisis: No Miracles

Still, while some prosperity was restored to Mexico by the reforms of the 1980s and 1990s, the general macroeconomic results have been disappointing, not to say mediocre. The average real compensation per person in manufacturing in 2008 was virtually unchanged from 1993 according to the Instituto Nacional De Estadística  Geografía e Informática, and there is little reason to think the compensation has improved at all since then. It is generally conceded that per capita GDP growth has probably averaged not much more than 1 percent a year. Real GDP growth since NAFTA according to the OECD has rarely reached 5 percent and since 2010, it has been well below that.

 

 

Source: http://www.worldbank.org/en/country/mexico (Accessed July 21, 2016). The vertical scale cuts the horizontal axis at 1982

 

For virtually everyone in Mexico, the question is why, and the answers proposed include virtually any plausible factor: the breakdown of the political system after the PRI’s historic loss of presidential power in 2000; the rise of China as a competitor to Mexico in international markets; the explosive spread of narcoviolence in recent years, albeit concentrated in the states of Sonora, Sinaloa, Tamaulipas, Nuevo León and Veracruz; the results of NAFTA itself; the failure of the political system to undertake further structural economic reforms and privatizations after the initial changes of the 1980s, especially regarding the national oil monopoly, Petroleos Mexicanos (PEMEX); the failure of the border industrialization program (maquiladoras) to develop substantive backward linkages to the rest of the economy. This is by no means an exhaustive list of the candidates for poor economic performance. The choice of a cause tends to reflect the ideology of the critic.[59]

Yet it seems that, at the end of the day, the reason why post-NAFTA Mexico has failed to grow comes down to something much more fundamental: a fear of growing, embedded in the belief that the collapse of the 1980s and early 1990s (including the devastating “Tequila Crisis” of 1994-1995, which resulted in a another enormous devaluation of the peso after an initial attempt to contain the crisis was bungled)  was so traumatic and costly as to render event modest efforts to promote growth, let alone the dirigisme of times past, as essentially unwarranted. The central bank, the Banco de México (Banxico) rules out the promotion of economic growth as part of its remit—even as a theoretical proposition, let alone as a goal of macroeconomic policy– and concerns itself only with price stability. The language of its formulation is striking. “During the 1970s, there was a debate as to whether it was possible to stimulate economic growth via monetary policy.  As a result, some governments and central banks tried to reduce unemployment through expansive monetary policy.  Both economic theory and the experience of economies that tried this prescription demonstrated that it lacked validity. Thus, it became clear that monetary policy could not actively and directly stimulate economic activity and employment. For that reason, modern central banks have as their primary goal the promotion of price stability” (translation mine). Banxico is not the Fed: there is no dual mandate in Mexico.[60]  This may well change during the new presidential administration of Andrés Manuel López Obrador (known colloquially in Mexico as AMLO).

The Mexican banking system has scarcely made things easier. Private credit stands at only about a third of GDP. In recent years, the increase in private sector savings has been largely channeled to government bonds, but until quite recently, public sector deficits were very small, which is to say, fiscal policy has not been expansionary. If monetary and fiscal policy are both relatively tight, if private credit is not easy to come by, and if growth is typically presumed to be an inevitable concomitant to economic stability for which no actor (other than the private sector) is deemed responsible, it should come as no surprise that economic growth over the past two decades has been lackluster.  In the long run, aggregate supply determines real GDP, but in the short run, nominal demand matters: there is no point in creating productive capacity to satisfy demand that does not exist. And, unlike during the period of the Miracle and Stabilizing Development, attention to demand since 1982 has been limited, not to say off the table completely. It may be understandable, but Mexico’s fiscal and monetary authorities seem to suffer from what could be termed, “Fear of Growth.” For better or worse, the results are now on display. After its current (2016) return to a relatively austere budget, it remains to be seen how the economic and political system in contemporary Mexico handles slow economic growth.

The response of the Mexican public to a generation of stagnation in living standards, as well as to rising insecurity and the perception of widespread public corruption, was the victory of AMLO in the presidential election of July 2018.

AMLO had previously run for President with a different party. After two unsuccessful attempts, he started a new one, called MORENA. He then proceeded to win 53 percent of the vote, virtually obliterating the opposition parties, the incumbent PRI, and the PAN. MORENA also won majorities in both houses of Congress. To most observers, this signified that AMLO would be a potentially strong president, assuming his congressional party remained loyal to him. His somewhat checkered “leftist” past guaranteed that not everyone was thrilled at the prospect of a strong AMLO presidency.

Expectations for AMLO’s presidency are thus high, perhaps unrealistically so. While his initial budget has been generally well received by the financial markets, there is little question as to where AMLO’s priorities lie. He has advocated increases in spending on infrastructure, has moved to restore the real minimum wage to its level in 1994, and pledged to revitalize domestic agriculture. Whether these and a number of other reforms that AMLO has somewhat paradoxically labelled “Republican Austerity” will restore the country to its pre-1982 growth path now constitutes one of the most watched economic experiments in Latin America. [61]

[1] I am grateful to Ivan Escamilla and Robert Whaples for their careful readings and thoughtful criticisms.

[2] The standard reference work is Sandra Kuntz Ficker, (ed), Historia económica general de México. De la Colonia a nuestros días (México, DF: El Colegio de Mexico, 2010).

[3] Oscar Martinez, Troublesome Border (rev. ed., University of Arizona Press: Tucson, AZ, 2006) is the most helpful general account in English.

[4] There are literally dozens of general accounts of the pre-conquest world. A good starting point is Richard E.W. Adams, Prehistoric Mesoamerica (3d ed., University of Oklahoma Press: Norman, OK, 2005). More advanced is Richard E.W. Adams and Murdo J. Macleod, The Cambridge History of the Mesoamerican Peoples: Mesoamerica. (2 parts, New York: Cambridge University Press, 2000).

[5] Nora C. England and Roberto Zavala Maldonado, “Mesoamerican Languages” Oxford Bibliographies http://www.oxfordbibliographies.com/view/document/obo-9780199772810/obo-9780199772810-0080.xml

(Accessed July 10, 2016)

[6] For an introduction to the nearly endless controversy over the pre- and post-contact population of the Americas, see William M. Denevan (ed.), The Native Population of the Americas in 1492 (2d rev ed., Madison: University of Wisconsin Press, 1992).

[7] Sherburne F Cook and Woodrow Borah, Essays in Population History: Mexico and California (Berkeley, CA: University of California Press, 1979), p. 159.

[8]Gene C. Wilken, Good Farmers Traditional Agricultural Resource Management in Mexico and Central America (Berkeley: University of California Press, 1987), p. 24.

[9] Bernard Ortiz de Montellano, Aztec Medicine Health and Nutrition (New Brunswick, NJ: Rutgers University Press, 1990).

[10] Bernardo García Martínez, “Encomenderos españoles y British residents: El sistema de dominio indirecto desde la perspectiva novohispana”, in Historia Mexicana, LX: 4 [140] (abr-jun 2011), pp. 1915-1978.

[11] These epidemics are extensively and exceedingly well documented. One of the most recent examinations is Rodofo Acuna-Soto, David W. Stahle, Matthew D. Therrell , Richard D. Griffin,  and Malcolm K. Cleaveland, “When Half of the Population Died: The Epidemic of Hemorrhagic Fevers of 1576 in Mexico,” FEMS Microbiology Letters 240 (2004) 1–5. (http:// femsle.oxfordjournals.org/content/femsle/240/1/1.full.pdf, accessed July 10, 2016.) See in particular the exceptional map and table on pp. 2-3.

[12] See in particular, Bernardo García Martínez. Los pueblos de la Sierrael poder y el espacio entre los indios del norte de Puebla hasta 1700 (Mexico, DF: El Colegio de México, 1987) and Elinor G.K. Melville, A Plague of Sheep: Environmental Consequences of the Conquest of Mexico (New York: Cambridge University Press, 1997).

[13] J. H. Elliott, “A Europe of Composite Monarchies,” Past & Present 137 (The Cultural and Political Construction of Europe): 48–71; Guadalupe Jiménez Codinach, “De Alta Lealtad: Ignacio Allende y los sucesos de 1808-1811,” in Marta Terán and José Antonio Serrano Ortega, eds., Las guerras de independencia en la América Española (La Piedad, Michoacán, MX: El Colegio de Michoacán, 2002), p. 68.

[14] Richard Salvucci, “Capitalism and Dependency in Latin America,” in Larry Neal and Jeffrey G. Williamson, eds., The Cambridge History of Capitalism (2 vols.), New York: Cambridge University Press, 2014), 1: pp. 403-408.

[15] Source: TePaske Page, http://www.insidemydesk.com/hdd.html (Accessed July 19, 2016)

[16]  Edith Boorstein Couturier, The Silver King: The Remarkable Life of the Count of Regla in Colonial Mexico (Albuquerque, NM: University of New Mexico Press, 2003).  Dana Velasco Murillo, Urban Indians in a Silver City: Zacatecas, Mexico, 1546-1810 (Stanford, CA: Stanford University Press, 2015), p. 43. The standard work on the subject is David Brading, Miners and Merchants in Bourbon Mexico, 1763-1810 (New York: Cambridge University Press, 1971) But also see Robert Haskett, “Our Suffering with the Taxco Tribute: Involuntary Mine Labor and Indigenous Society in Central New Spain,” Hispanic American Historical Review, 71:3 (1991), pp. 447-475. For silver in China see http://afe.easia.columbia.edu/chinawh/web/s5/s5_4.html (accessed July 13, 2016). For the rents of empire question, see Michael Costeloe, Response to Revolution: Imperial Spain and the Spanish American Revolutions, 1810-1840 (New York: Cambridge University Press, 1986).

[17] This is an estimate. David Ringrose concluded that in the 1780s, the colonies accounted for 45 percent of Crown income, and one would suppose that Mexico would account for at least about half of that. See David R. Ringrose, Spain, Europe and the ‘Spanish Miracle’, 1700-1900 (New York: Cambridge University Press, 1996), p. 93; Mauricio Drelichman, “The Curse of Moctezuma: American Silver and the Dutch Disease,” Explorations in Economic History 42:3 (2005), pp. 349-380.

[18] José Antonio Escudero, El supuesto memorial del Conde de Aranda sobre la Independencia de América) México, DF: Universidad Nacional Autónoma de México, 2014) (http://bibliohistorico.juridicas.unam.mx/libros/libro.htm?l=3637, accessed July 13, 2016)

[19] Allan J. Kuethe and Kenneth J. Andrien, The Spanish Atlantic World in the Eighteenth Century. War and the Bourbon Reforms, 1713-1796 (New York: Cambridge University Press, 2014) is the most recent account of this period.

[20] Richard J. Salvucci, “Economic Growth and Change in Bourbon Mexico: A Review Essay,” The Americas, 51:2 (1994), pp. 219-231; William B Taylor, Magistrates of the Sacred: Priests and Parishioners in Eighteenth Century Mexico (Palo Alto: Stanford University Press, 1996), p. 24; Luis Jáuregui, La Real Hacienda de Nueva España. Su Administración en la Época de los Intendentes, 1786-1821 (México, DF: UNAM, 1999), p. 157.

[21] Jeremy Baskes, Staying AfloatRisk and Uncertainty in Spanish Atlantic World Trade, 1760-1820 (Stanford, CA: Stanford University Press, 2013); Xabier Lamikiz, Trade and Trust in the Eighteenth-century Atlantic World: Spanish Merchants and their Overseas Networks (Suffolk, UK: The Boydell Press., 2013). The starting point of all these studies is Clarence Haring, Trade and Navigation between Spain and the Indies in the Time of the Hapsburgs (Cambridge, MA: Harvard University Press, 1918).

[22] The best, and indeed, virtually unique starting point for considering these changes in their broadest dimensions   are the joint works of Stanley and Barbara Stein: Silver, Trade, and War (2003); Apogee of Empire (2004), and Edge of Crisis (2010), All were published by Johns Hopkins University Press and do for the Spanish Empire what Laurence Henry Gipson did for the First British Empire.

[23] The key work is María Eugenia Romero Sotelo, Minería y Guerra. La economía de Nueva España, 1810-1821 (México, DF: UNAM, 1997)

[24] Calculated from José María Luis Mora, Crédito Público ([1837] México, DF: Miguel Angel Porrúa, 1986), pp. 413-460. Also see Richard J. Salvucci, Politics, Markets, and Mexico’s “London Debt,” 1823-1887 (NY: Cambridge University Press, 2009).

[25] Jesús Hernández Jaimes, La Formación de la Hacienda Pública Mexicana y las Tensiones Centro -Periferia, 1821-1835  (México, DF: El Colegio de México, 2013). Javier Torres Medina, Centralismo y Reorganización. La Hacienda Pública Durante la Primera República Central de México, 1835-1842 (México, DF: Instituto Mora, 2013). The only treatment in English is Michael P. Costeloe, The Central Republic in Mexico, 1835-1846 (New York: Cambridge University Press, 1993).

[26] An agricultural worker who worked full time, 6 days a week, for the entire year (a strong assumption), in Central Mexico could have expected cash income of perhaps 24 pesos. If food, such as beans and tortilla were added, the whole pay might reach 30. The figure of 40 pesos comes from considerably richer agricultural lands around the city of Querétaro, and includes as an average income from nonagricultural employment as well, which was higher.  Measuring Worth would put the relative historic standard of living value in 2010 prices at $1.040, with the caveat that this is relative to a bundle of goods purchased in the United States. (https://www.measuringworth.com/uscompare/relativevalue.php).

[27]The phrase comes from Guido di Tella and Manuel Zymelman. See Colin Lewis, “Explaining Economic Decline: A review of recent debates in the economic and social history literature on the Argentine,” European Review of Latin American and Caribbean Studies, 64 (1998), pp. 49-68.

[28] Francisco Téllez Guerrero, De reales y granos. Las finanzas y el abasto de la Puebla de los Angeles, 1820-1840 (Puebla, MX: CIHS, 1986). Pp. 47-79.

[29]This is based on an analysis of government lending contracts. See Rosa María Meyer and Richard Salvucci, “The Panic of 1837 in Mexico: Evidence from Government Contracts” (in progress).

[30] There is an interesting summary of this data in U.S Govt., 57th Cong., 1 st sess., House, Monthly Summary of Commerce and Finance of the United States (September 1901) (Washington, DC: GPO, 1901), pp. 984-986.

[31] Salvucci, Politics and Markets, pp. 201-221.

[32] Miguel Galindo y Galindo, La Gran Década Nacional o Relación Histórica de la Guerra de Reforma, Intervención Extranjera, y gobierno del archiduque Maximiliano, 1857-1867 ([1902], 3 vols., México, DF: Fondo de Cultura Económica, 1987).

[33] Carmen Vázquez Mantecón, Santa Anna y la encrucijada del Estado. La dictadura, 1853-1855 (México, DF: Fondo de Cultura Económica, 1986).

[34] Moramay López-Alonso, Measuring Up: A History of Living Standards in Mexico, 1850-1950 (Stanford, CA: Stanford University Press, 2012);  Amilcar Challú and Auroro Gómez Galvarriato, “Mexico’s Real Wages in the Age of the Great Divergence, 1730-1930,” Revista de Historia Económica 33:1 (2015), pp. 123-152; Amílcar E. Challú, “The Great Decline: Biological Well-Being and Living Standards in Mexico, 1730-1840,” in Ricardo Salvatore, John H. Coatsworth, and Amilcar E. Challú, Living Standards in Latin American History: Height, Welfare, and Development, 1750-2000 (Cambridge, MA: Harvard University Press, 2010), pp. 23-67.

[35]See Challú and Gómez Galvarriato, “Real Wages,” Figure 5, p. 101.

[36] Luis González et al, La economía mexicana durante la época de Juárez (México, DF: 1976).

[37] Teresa Rojas Rabiela and Ignacio Gutiérrez Ruvalcaba, Cien ventanas a los países de antaño: fotografías del campo mexicano de hace un siglo) (México, DF: CONACYT, 2013), pp. 18-65.

[38] Alma Parra, “La Plata en la Estructura Económica Mexicana al Inicio del Siglo XX,” El Mercado de Valores 49:11 (1999), p. 14.

[39] Sandra Kuntz Ficker, Empresa Extranjera y Mercado Interno: El Ferrocarril Central Mexicano (1880-1907) (México, DF: El Colegio de México, 1995).

[40] Priscilla Connolly, El Contratista de Don Porfirio. Obras públicas, deuda y desarrollo desigual (México, DF: Fondo de Cultura Económica, 1997).

[41] Most notably John Tutino, From Insurrection to Revolution in Mexico: Social Bases of Agrarian Violence, 1750-1940 (Princeton, NJ: Princeton University Press, 1986). p. 229. My growth figures are based on the INEGI, Estadísticas Historicas de México, 2014) (http://dgcnesyp.inegi.org.mx/cgi-win/ehm2014.exe/CI080010, Accessed July 15, 2016).

[42] Stephen H. Haber, Industry and Underdevelopment: The Industrialization of Mexico, 1890-1940 (Stanford, CA: Stanford University Press, 1989); Aurora Gómez-Galvarriato, Industry and Revolution: Social and Economic Change in the Orizaba Valley (Cambridge, MA: Harvard University Press, 2013).

[43] There are literally dozens of accounts of the Revolution. The usual starting point, in English, is Alan Knight, The Mexican Revolution (reprint ed., 2 vols., Lincoln, NE: 1990).

[44] This argument has been made most insistently in Armando Razo and Stephen Haber, “The Rate of Growth of Productivity in Mexico, 1850-1933: Evidence from the Cotton Textile Industry,” Journal of Latin American Studies 30:3 (1998), pp. 481-517.

[45]Robert McCaa, “Missing Millions: The Demographic Cost of the Mexican revolution,” Mexican Studies/Estudios Mexicanos 19:2 (Summer 2003): 367-400; Virgilio Partida-Bush, “Demographic Transition, Demographic Bonus, and Ageing in Mexico, “ Proceedings of the United Nations Expert Group Meeting on Social and Economic Implications of Changing Population Age Structures. (http://www.un.org/esa/population/meetings/Proceedings_EGM_Mex_2005/partida.pdf) (Accessed July 15, 2016), pp. 287-290.

[46] An implication of the studies of Alan Knight, and of Clark Reynolds, The Mexican Economy: Twentieth Century Structure and Growth (New Haven, CT: Yale University Press, 1971).

[47] An interesting summary of revisionist thinking on the nature and history of the ejido appears in Emilio Kuri, “La invención del ejido, Nexos, January 2015.

[48]Alan Knight, “Cardenismo: Juggernaut or Jalopy?” Journal of Latin American Studies, 26:1 (1994), pp. 73-107.

[49] Stephen Haber, “The Political Economy of Industrialization,” in Victor Bulmer-Thomas, John Coatsworth, and Roberto Cortes-Conde, eds., The Cambridge Economic History of Latin America (2 vols., New York: Cambridge University Press, 2006), 2:  537-584.

[50]Again, there are dozens of studies of the Mexican economy in this period. Ros’ figures come from “Mexico’s Trade and Industrialization Experience Since 1960: A Reconsideration of Past Policies and Assessment of Current Reforms,” Kellogg Institute (Working Paper 186, January 1993). For a more general study, see Juan Carlos Moreno-Brid and Jaime Ros, Development and Growth in the Me3xican Economy. A Historical Perspective (New York: Oxford University Press, 2009). A recent Spanish language treatment is Enrique Cárdenas Sánchez, El largo curso de la economía mexicana. De 1780 a nuestros días (México, DF: Fondo de Cultura Económica, 2015). A view from a different perspective is Carlos Tello, Estado y desarrollo económico. México 1920-2006 (México, DF, UNAM, 2007).

[51]André A. Hoffman, Long Run Economic Development in Latin America in a Comparative Perspective: Proximate and Ultimate Causes (Santiago, Chile: CEPAL, 2001), p. 19.

[52]Tello, Estado y desarrollo, pp. 501-505.

[53] Mario Vargas Llosa, “Mexico: The Perfect Dictatorship,” New Perspectives Quarterly 8 (1991), pp. 23-24.

[54] Rafael Izquierdo, Política Hacendario del Desarrollo Estabilizador, 1958-1970 (México, DF: Fondo de Cultura Económica, 1995. The term stabilizing development was itself termed by Izquierdo as a government minister.

[55]See Foreign Relations of the United States, 1964-1968. Mexico and Central America http://2001-2009.state.gov/r/pa/ho/frus/johnsonlb/xxxi/36313.htm (Accessed July 15, 2016).

[56] José Aguilar Retureta, “The GDP Per Capita of the Mexican Regions (1895:1930): New Estimates, Revista de Historia Económica, 33: 3 (2015), pp. 387-423.

[57] For a contemporary account with a sense of the immediacy of the end of the Echeverría regime, see “Así se devaluó el peso,” Proceso, November 13, 1976.

[58] The standard account is Stephen Haber, Herbert Klein, Noel Maurer, and Kevin Middlebrook, Mexico since 1980 (New York: Cambridge University Press, 2008). A particularly astute economic account is Nora Lustig, Mexico: The Remaking of an Economy (2d ed., Washington, DC: The Brookings Institution, 1998).  But also Louise E. Walker, Waking from the Dream. Mexico’s Middle Classes After 1968 (Stanford, CA: Stanford University Press, 2013).

[59] See, for example, Jaime Ros Bosch, Algunas tesis equivocadas sobre el estancamiento económico de México (México, DF: El Colegio de México, 2013).

[60] La Banca Central y la Importancia de la Estabilidad Económica  June 16, 2008.  (http://www.banxico.org.mx/politica-monetaria-e-inflacion/material-de-referencia/intermedio/politica-monetaria/%7B3C1A08B1-FD93-0931-44F8-96F5950FC926%7D.pdf, Accessed July 15, 2016.). Also see Brian Winter, “This Man is Brilliant: So Why Doesn’t Mexico’s Economy Grow Faster?” Americas Quarterly (http://americasquarterly.org/content/man-brilliant-so-why-doesnt-mexicos-economy-grow-faster) (Accessed July 21, 2016)

[61]   For AMLO in his own words, see his A New Hope For Mexico: Saying No to Corruption, Violence, and Trump’s Wall. Translated by Natascha Uhlman (New York: O/R Books, 2018).

Citation: Salvucci, Richard . “Mexico: Economic History” EH.Net Encyclopedia, edited by Robert Whaples. December 27, 2018. URL http://eh.net/encyclopedia/the-economic-history-of-mexico/