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British Lions and Mexican Eagles
Business, Politics, and Empire in the Career of Weetman Pearson in Mexico, 1889–1919
By Paul Garner
STANFORD UNIVERSITY PRESS
Copyright © 2011 Board of Trustees of the Leland Stanford Junior University
All right reserved.
ISBN: 978-0-8047-7445-1
Chapter One
Weetman Pearson in Historical and Historiographical Context
British-Mexican Relations, Informal Empire, Mexican National Development, and the Rise of Global Business in the Late Nineteenth Century
"If the Mexican Republic is prepared to conform to the usages common between civilised nations, this country will be the first to welcome her re-appearance among them. It may prove beneficial to England. It must perforce be an immense boon to Mexico." —The Times, London, 14/08/1884.
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This chapter explores the historical and historiographical context of the emergence and consolidation of the global business empire of Weetman Pearson in Mexico after 1889. It begins with an overview of the historiography of British capital, trade, entrepreneurial endeavour, and "informal empire" in the nineteenth-century Atlantic World, and its impact on national development in Latin America and, specifically, on Mexico. It also reflects on the relationship between the globalisation of international business and imperial expansion in the latter half of the nineteenth century, in order to place the strategies adopted by multinational companies (such as Pearson's firm S. Pearson and Son) into context.
Even a cursory examination of the frameworks of interpretation hitherto adopted to explain the impact of Latin America's external relations on the region's development reveals a fundamental schism. Throughout most of the second half of the twentieth century, the explanation of Latin American economic "underperformance" and "underdevelopment" was to be found in the negative impact on the region of the structure and function of the international economy favoured by the nationalist/de pen den cy schools of interpretation, and broadly shared by those imperial historians who sympathised with the view that Latin America formed part of Britain's informal empire. These more negative interpretations contrasted with the liberal/developmentalist interpretation of progressive state-and nation-building peddled and promoted by contemporary political and social elites of Latin America in the late nineteenth century as they sought to entice and to harness foreign expertise, technology, and capital in the execution of their strategy. By the late twentieth century, the historiographical wheel appeared to have turned almost full circle, and these more positive (and now more empirically based) interpretations of the role of overseas investors and entrepreneurs in host economies have been revived and revamped, and now themselves form part of a powerful critique of the nationalist/de pen den cy paradigm.
The chapter also provides an overview of British-Mexican relations since independence in order to set the context for Pearson's arrival in Mexico in 1889. It examines the consequences of Mexico's per sis tent confrontation with British bondholders over the course of the century, and the rupture of formal relations in 1867 following British support for France's abortive imperial adventure in Mexico (1862– 67). Particular attention is paid to the resumption of diplomatic relations (1884) and the settlement of the "English Debt" (1886), and the new opportunities for British business in Mexico created as a consequence. It was this favourable conjuncture which provided the context for Weetman Pearson's first public works contract from the Mexican government in 1889.
INFORMAL EMPIRE AND GLOBAL BUSINESS
Throughout most of the twentieth century, especially during the latter half when nationalist and structuralist historiography dominated the academy on both sides of the Atlantic, it was generally supposed that British commercial preeminence in the nineteenth-century Atlantic, and the evolution of Britain's "informal empire" in Latin America (pace Robinson and Gallagher), was an adequate explanation in itself of British business success. The thesis is familiar. Most textbooks and general histories on Latin American history written before (and some after) the 1990s described a region enslaved by a process of neo colonial exploitation and distorted development which resulted in a serious loss of economic and political sovereignty. As the predominant maritime power in the nineteenth-century Atlantic World, and as an advocate of free trade, low tariffs, and "sound money" in a distinctly asymmetric and "divergent" global economic environment, British complicity in the perpetuation of Latin American underdevelopment has always been central to the thesis.
The double orthodoxies of de pen den cy and informal imperialism have, of course, never had the field entirely to themselves, and have come under sustained attack. Initially—and, perhaps, predictably—there was a defensive response from empiricist British economic historians who argued not only that export specialisation followed naturally from comparative advantage rather than imperial coercion, but also that the British government consistently refused to intervene to protect the interests of British businessmen or bondholders. More recently, economic historians in the United States who are advocates of the empirical "growth-economics" school of economic history have attempted to deliver the coup de grace to de pen den cy analysis by dismissing it as untestable, unscientific, and counterfactual.
At the same time, the exponential growth of the business history of Latin America in the United States, Britain, and, most recently, Latin America itself during the past two de cades has provided detailed analysis of the fate of individual enterprises and entrepreneurs whose fortunes were not always exclusively determined by the structures imposed by formal or informal Western imperialism. As Geoffrey Jones has recently argued, business enterprises were, in fact, the "key to globalization." During the period under study, which Jones calls "first globalization" between 1850 and 1929, business enterprise put in place a global banking and trading infrastructure and global transportation and communication networks (railways, shipping, cable, and telegraph). In search of the raw materials and foodstuffs in demand in the industrialised and urbanised West, unprecedented levels of foreign direct investment relative to the size of the world economy were channelled into developing countries. In these ventures global business in this period enjoyed a number of advantages and benefited from a very favourable set of circumstances: in terms of political economy, overseas entrepreneurs were assisted by the policies enacted by colonial and noncolonial governments on the periphery of the world economy (in the latter case, the in de pen dent states of Latin America) to create a more business-friendly environment—including exemption from taxation—to improve their institutional and legislative environment, and to develop their economic and social infrastructure, with the fundamental goal of protecting their economic and political sovereignty. At the same time, overseas entrepreneurs faced little (or no) competition from local entrepreneurs, who had limited expertise and limited access to technology or capital. Nevertheless, as Jones makes clear, overseas entrepreneurs faced considerable logistical obstacles in the execution of their projects and enterprises, which could only be overcome with technology, organisational and managerial skills, flexibility, and adaptation to different legal, market, political, and cultural contexts. For example:
Finding oil when exploration techniques were primitive: transporting oil from where it was found to where it could be shipped to consumers; building bridges and railroads in inhospitable and physically-dangerous terrains; turning malaria-infested tropical lands into banana plantations, were all massive technological, financial, and organizational tasks.
The businesses which succeeded in developing countries in this period, therefore, combined political, financial, and cultural awareness with organisational and managerial skills in order to overcome major logistical problems. These were precisely the challenges faced by Weetman Pearson in Mexico, and the talents he would exploit to solve them. He would also be the beneficiary, as explained further below, of a particular configuration of circumstances in the 1880s which would give him distinct advantages over his potential rivals. But it is precisely the importance of individual agency and business acumen which is crucial to explaining Pearson's success. Pearson shared, and more important, understood many of the values and preoccupations of the Porfirian political elite. In particular he fully understood their commitment to a project of state-and nation-building which he fully endorsed. He also understood their fears of becoming over-dependent on capital and investment emanating from the United States, and the opportunities this created for Europe an entrepreneurs. In addition, Pearson would offer his ser vices in a number of ways as both official and unofficial agent of the Mexican government in the implementation of its developmentalist strategy—because he saw that it was clearly in his interests to do so. In short, Pearson possessed the technological expertise, the business acumen, the commitment, the confidence, the empathy, the personal skills, the political sensitivity—and even the nationality—which suited the needs of the Porfirian political elite in the 1880s. His relationship with the Porfirian elite was, in short, based less upon cultural or class affinity than on hard-headed (and perhaps even cold-blooded) calculation of the business opportunities available, and the profits to be made. He was, therefore, pursuing far more personal goals than those of grand (or even subconscious) imperial design. He was not, therefore, to paraphrase Jones, merely a "free rider" on the coattails of British imperialism.
GENTLEMANLY CAPITALISM AND MEXICAN NATIONAL DEVELOPMENT
An important and refreshing contribution to the debate on the impact of British imperial expansion on the development of host economies across the globe was made in the 1990s by Peter Cain and Anthony Hopkins's British Imperialism. In the case of British contact with Latin America in the late nineteenth century, Cain and Hopkins generally found themselves in sympathy with the structuralist or dependentista camp, but their interpretation was more nuanced. They examined the specific cases of Argentina, Brazil, and Chile in the nineteenth century—countries where, by 1914, 85 percent of British trade with Latin America and 69 percent of British investment were concentrated. While the authors recognised the positive contribution made by overseas trade investment to the development of an economic infrastructure and to the construction of statehood and nationhood in late nineteenth-century Latin America, they nevertheless concluded that British control of trade and finance in these countries was such that it "infringed" national sovereignty. Britain therefore exercised an "honorary dominion"—a slightly diluted version, it seems, of "informal imperialism"—in these countries during the second half of the century.
Significantly, Cain and Hopkins refused to "lump" British– Latin American relations into a single structural paradigm, emphasising instead, as Latin American historians have always known, that Latin America in the nineteenth century did not constitute—and never has constituted—an undifferentiated market for British trade and investment. Even more significantly in the context of this study, Mexico was absent from Cain and Hopkins's imperial paradigm. Although Mexico's absence was never explained or accounted for, it was a significant omission, since the evidence suggests that Mexico does not fit the paradigm very well. In fact, it might be argued that it fails to fit it at all. According to Cain and Hopkins, in order to "qualify" for the status of subjection to British imperialism, host economies had to be "heavily dependent upon British trade and credit" and "obliged to accommodate to British political and economic liberalism." This was clearly not the case of Mexico at any time in the nineteenth century, and especially not during the high tide of British imperial power after 1850. This was for two fundamental reasons. The first was Mexico's enforced isolation from sources of capital and credit in European financial markets from the 1830s until the late 1880s; the second was the development after 1867 of ever-closer economic ties with the neighbouring United States.
Aside from Britain's brief support for France's abortive imperial "incursion into the sovereignty" of Mexico in 1862, discussed further below, there is precious little evidence to suggest that that Britain was ever successfully able to use either what Cain and Hopkins define as its "structural" power (financial or military/naval power) or its less formal "relational" power (pressure, coercion, intimidation) to force the Mexican political elite to conform to the interests of the City of London, still less to "copy aspects of British constitutional procedures," and certainly not to "adopt the cultural values of Britain's gentlemanly elite."
As shall be argued below, and in subsequent chapters, despite the demonstrable Anglophilia of some of the members of the social elite of late nineteenth-century Mexico, the latter were generally more impressed by French than British culture. More significantly still, they were even more interested in discussing the nature of Mexico's own emerging national culture and identity, and the path that the development of the nation should take. The most influential group within the Mexican political elite was committed to a strategy of national infrastructural development and industrialisation as fundamental components of a project of state-and nation-building. In pursuit of that strategy, it is certainly true that Mexico adopted a series of measures to place (to quote Cain and Hopkins) "monetary and fiscal policy on a sound footing" in this period, in order to be able to raise funds for infrastructural projects in London and other Europe an financial markets. But this was certainly not exclusively because the City of London or the British Foreign Office determined that they should do so. In pursuit of the elusive goal of national development, the Porfirian regime in Mexico sought to respond to new economic opportunities and to capitalise upon the structural and technological changes taking place in the international economy in the last de cades of the nineteenth century. In other words, the agency for the structural changes in the Mexican economy in the period under study was as much domestic as it was global.
One of the most influential, and at the same time most controversial aspects of Cain and Hopkins's hypothesis has been their use of the term "gentlemanly capitalism" to describe the set of behavioural patterns and cultural and moral values which linked landed interests, the political establishment, and the City of London to constitute the beating heart of imperial expansion. Crucial in this context is the pervasive influence of a behavioural code which underpinned what they describe as the "gentlemanly ethos," and which operated on the basis of the "doux" values of order, duty and loyalty, honour, and obligation in the business transactions of the City, and in the political interactions and encounters in the corridors of Whitehall and Westminster.
The notion of "gentlemanly capitalism," and the argument that a "gentlemanly ethos" pervaded the minds, conditioned the attitudes, and determined the actions of Britain's social and political elite, is clearly relevant to a study such as this, which aims to comprehend and explain the modus operandi of one of Britain's most successful overseas entrepreneurs, who had himself been assimilated into the ranks of the nobility, in a period in which British imperial power, influence, and prestige were at their height.
(Continues...)
Excerpted from British Lions and Mexican Eagles by Paul Garner Copyright © 2011 by Board of Trustees of the Leland Stanford Junior University. Excerpted by permission of STANFORD UNIVERSITY PRESS. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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