Previous to the year 1893 it had never happened in the history of Mexico that the nation's income exceeded its expenditure. The country had always spent more than it earned, and year after year its budget showed heavy deficits, with an ever-menacing condition resulting thereon. But that unfortunate state belongs now to past history, and since the weathering of the storm of the silver crisis of 1894 Mexico has had no relapse, and the budget has shown an unbroken and increasing balance in favour of the Treasury. This satisfactory financial condition is partly consequent upon the general world-march of commerce and the era of progress which has dawned for the Spanish-American world generally. It was time that such should occur! But, apart from these general causes, or rather closely allied thereto, as regards Mexico, has been the efficient political administration which the country has enjoyed, and the able financial control of its resources and revenue. The name of the presiding genius of the financial department of Mexico's administration has become well known in financial circles connected with Mexico—Señor Limautour—and this chapter would be incomplete if it were not recorded. As Secretary of Hacienda, or Department of Finance, this cautious and able statesman has been the instrument for his country's financial progress, for the stability of Mexico's internal government has, of course, impulsed the advent of foreign capital into the country, in the form of investments in railway, mining, and industrial enterprise.
Mexico's credit and prosperity thus satisfactorily established, the country is enabled to move with a certain spirit of independence as regards its foreign financial transactions. The last year or so have shown a marked tendency on the part of the Government to consider their position as regards foreign capitalists, and to act to the end of obtaining greater benefits for the nation from the exploitation of the country's resources, which has principally been carried on by foreign capital. No one who views the matter disinterestedly will see cause for complaint in this attitude. It is a poor philosophy which would permit the mines, fields, and railways of a country to be drained of their wealth only for the benefit of foreigners. On the other hand, of course, railways and mines would never have been opened up without foreign capital, and the distinction between national philosophy, and ingratitude, must always be an important consideration for Spanish-American countries.
Mexico, however, does not discourage foreign capital, but only seeks a proper control of her natural wealth. In earlier years the country was the happy hunting-ground of hordes of concession hunters, speculators, and financial jugglers, whose main object was to get something for nothing, and sell it for a round sum in Europe or America, and they were often successful. At that time Mexico wanted her railways built at any cost, but the situation has changed now, although not in a way to discourage reputable investors. This tendency to restriction has shown itself mainly in two directions: that of the recent consolidation of the railway systems, whose integrity was menaced by the attempted operations of certain American trusts and financial groups; and, later, by commercial conditions unfavourable to traffic returns. This brought about the decision of the State to acquire a controlling interest and voice in the ownership of the main railway lines, and this has been carried out by means of the purchase of stock in two of these lines, the Mexican National and Mexican Central Railways. These railways are two great arteries of travel, as elsewhere described, connecting the City of Mexico with the United States. This action of the Mexican Government, which is somewhat of a novel procedure, and an attempt to carry out the problem of State co-operation with private enterprise, is conceded to be advantageous to the interests of the two combined companies to a large extent, whilst it secures to the country the working of the lines in the interest of the country, and eliminates the possible element of "rate-war" competition. On the other hand, it is to be recollected that State ownership and working of railways is generally disastrous, especially in North or South America, where State enterprise tends to become a corrupt political machine. But it is far from probable that this condition will be brought about in this instance, and the operation will serve rather as an object lesson.
Another restrictive tendency is shown in the bringing forward, recently, of a Bill for the enacting of a law that mining property should only be acquirable by citizens of the Republic, and this, although it has been shelved, is likely to be brought forward in future years. Such matters are inevitable in the course of time, and the policy of inducing foreign capital to enter a new country, which is absolutely necessary to its well-being, has naturally to undergo some modification when such a country reaches a certain stage of development.
The present stable condition of Mexican Government finance is shown by the budget statements for the fiscal year 1908-1909, as presented by the Minister of Finance. The figures are as follows, in round numbers:—
| Mex. Dols. | |
| Estimated normal revenue | 103,385,000 |
| Estimated normal expenditure | 103,204,000 |
| 181,000 | |
| ======= |
As before stated, an annual surplus has been forthcoming since the year 1895, with some fluctuations. Out of these increasing surpluses large sums have been spent upon important public works, which have been elements for the commercial development of the country and its growing trade. In addition to this, foreign loans have been contracted for the completion of such public works. The loan of 1905, for the sum of 40 million dollars gold, was placed with bankers of London, New York, Berlin, and Amsterdam, the bonds being purchased at 89 per cent. of their nominal value, free of commission, carrying only 4 per cent. interest. It is interesting to compare this operation with Mexico's first loan, consummated in London in 1823, for 16 million pesos, which was bought by the contracting firm at 50 per cent. But it is to be recollected that the Holy Alliance was at work then, and that the belief was rampant that Spain would recover her lost colonies![40]
40 See [page 125].
If the position of Mexico's treasury is satisfactory, that of the general business of the nation is also upon an excellent footing, as shown by the returns for imports and exports. Those for the financial year ending June, 1907, are as follows:—
| £ | |
| Total imports | 23,336,300 |
| Total exports | 24,801,800 |
| Balance in favour of exports | £1,465,500 |
| ======= |