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The Roosevelt Gambit

320 pages
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Historical notes about "The Roosevelt Gambit"

Events in "Old Mexico", overtook that country in 1910.

President Porfirio Diaz of Mexico used to say, "Poor Mexico, so far from God, so close to the U.S.A."

General Porfirio Diaz came to power in Mexico as a result of a very successful and relatively short-lived revolt in 1876. The revolt had the financial backing of everyone who counted in the state of Texas. Diaz had been a hero with Juarez in the overthrow of the French Emperor Maximilian; therefore, he had the respect of the population, in the beginning.

As El Presidente, he remained in control of Mexico, until 1910. This period of some thirty-four years, became known as the "Porfiriato". The Porfiriato was characterized by a time of unprecedented growth and prosperity in Mexico. Unfortunately, to be a primary recipient of all that prosperity it was necessary to be a little bit rich when it started or at least well connected or well educated - a subset of humans in short supply among the Mexican population in that day. During the Porfiriato, roads and schools were built and even a "middle class" began to develop.

The Porfiriato was fueled by financial investments from the industrialized nations of the World. The United States, Great Britain, France and to a lesser extent Germany, were pumping massive private investments into Mexico to develop natural resources such as oil, copper, gold and silver; as well as creating huge agricultural estates, whose products were exported overseas.

Out of every dollar that United States investors had invested outside the United States, sixty-five cents of that dollar was invested in Mexico. These investments were primarily centered in the northern tier of the Mexican states of Chihuahua, Sonora, Neuvo Leon and Coahiula.

These are a few examples to demonstrate the extent of involvement by United States companies and private citizens in Mexico: The Continental Rubber Company owned 375,000 acres of guayule (used to make low cost rubber) haciendas and controlled the entire industry. Continental Rubber, which had title to over 2,000,000 acres, was owned by John D. Rockefeller, Jr., Bernard Baruch, Senator Nelson A. Aldrich and Daniel Guggenheim; and it was financed by the National City Bank of New York.

Edwin J. Marshall owned the Palomas Land Company across from Columbus, New Mexico, which at 2,500,000 acres was the largest fenced property in North America (Marshall was the Democratic Bigshot who delivered California for Wilson in 1916, winning the Presidency for Wilson, a second time). Marshall also owned the controlling interest in the Sinaloa Land and Water Company, owner of over 3,000,000 acres in the state of Sinaloa.

Colonel E. M. House of Texas owned silver mines, cattle haciendas and vast cotton interests in the lush Rio Grande Valley, on both the Texas and Mexican sides. Col. House, one might remember, was the ex-officio (Minister without portfolio) representative and de facto Secretary of State for President Wilson.

As a matter of fact, the members of Presidents Wilson’s cabinet who hailed from Texas deeply affected every facet of the governments' actions towards Mexico. Which actions were most certainly explained by their private interests in Mexican affairs.

The government of Mexico deeded to Mr. F. S. Pear, over 3,500,000 acres as an incentive and right of way for the construction of the Northwestern Railroad in the state of Chihuahua. William Randolph Hearst of the newspaper publishing empire, owned over 4,000,000 acres in the state of Chihuahua and the Baja California Peninsula (Hearst is the newspaper owner who telegraphed one of his reporters in Cuba, just before the Spanish-American War, “You supply the pictures, I‘ll supply the War,” which they both did).

The vast majority of this land was acquired by pursuing legal claims against the interests of the campesinos or peasants who lived on the land. They had worked the land for more generations than the Hearst family had been in North America. But the campesinos couldn’t afford attorneys to fight for their rights, so they lost the land.

In fact, the first time most of them ever heard the name of Hearst, was when the hated Federales came to evict them; an act which often resulted in bloodshed. Of course Mr. Hearst was safe, drinking chocolate over one thousand miles away.

The Anaconda companies, Phelps Dodge, Greene Cananea Copper Company and President Wilson’s good friend Cleveland Dodge, owned outright or controlled 81% of all the Mexican copper production, which constituted over 60% of the entire worlds annual production. These events were occurring at a time when the industrialized countries of the World were installing copper electric lines and copper telephone lines at a frenetic pace.

United States citizens (including the Mormon Church) and a virtual “who’s who” of industrial “lions” owned over 25% of the actual land mass of Mexico. And many of the truly great fortunes in America owe more than a "nod" to profits secured from these Mexican holdings.

These large agricultural combinations displaced huge numbers of peasants, who had no legal proof of ownership to the lands they had been farming for generations. This was accomplished by the use of "legal" grants purchased from the Profirian government.

United States industrialists owned over 80% of the railroads in Mexico and most of the railroads ran N-S. This facilitated digging the wealth of Mexico out of the ground and sending it directly north, as more grist for the mills of the large industrial combines in the United States.

One might re-call this was a time in the United States of anti-corporate activity, of Sherman Anti-Trust actions, of Ida Tarbell and the “muckrakers”. Large corporations in the United States, for the first time, were facing concentrated action against their excesses. Mexico had become very attractive because of a climate uniquely attuned and favorable for foreign investment. In most cases, the Mexican workers were virtual slaves to the foreign enterprises; often being paid in “script” that could only be spent in the “company store”.

These ventures were in turn financed by United States entrepreneurs (or Robber Barons) whose vast wealth was garnered from the railroads, steel, mining, oil, and the huge cash funds of the insurance companies. Combines such as J. Pierpont Morgan & Co. and Kuhn, Loeb & Co., of New York benefited greatly from their Mexican businesses.

Kuhn, Loeb & Co was large and powerful, by any standard (they put together the first multi-billion loan in 1915-16---in house). As we shall see, they could make loans large enough to affect world history.

Near Tampico, in the state of Tamaulipas, Mexico found itself sitting on one of the most massive oil deposits ever discovered, up to that time, in the World. The vast majority of massive discovery was controlled by three companies; Standard Oil, Texas Oil Co. and British Petroleum. British Petroleum, largely owned by Lord Balfour, Foreign Minister for Great Britan, (95% of the “bunker C” oil used by the British Navy came from Tampico, Mexico), was the British Fleet supplier for all POL (Petroleum, Oil & Lubricants) products.

These companies exhibited a tendency shared by virtually all outside interests in Mexico; they rarely used Mexican workers for anything other than the most menial and low paying jobs. Almost universally, these companies imported their own specialists and foremen, never attempting to develop or train Mexican workers.

Each company paid bribes to Diaz or his representatives, the infamous "Mordida". They also paid one or two of the aristocratic/hacendado families to look after their interests in Mexico. It was a situation that came to a head around 1910, when Francisco I. Madero attempted to run for president against Diaz and was jailed for his efforts.

Madero, along with almost 6,000 of his supporters, was jailed. He subsequently was released on bail and fled to the United States, where he sought asylum in San Antonio, Texas. While in Texas, Madero was given much aid and support by these same powerful people who had been exploiting Mexico under President Diaz (they were just hedging their bets).

How had these concerns been generated? It was because President Diaz, in an effort to placate growing unrest from both the middle and lower classes and to demonstrate his “Mexicaness”, had nationalized the railroads. He made nominal payments for the seized property in greatly devalued Mexican pesos.

This resulted in huge losses for the American investors, who owned most of the stock in these ventures. This caused great concern amongst all foreign investors. They would not sit passively by and suffer such losses without taking action.

Remember this was the day and age when the President of the United States (T. R. Roosevelt) had engineered a coup that split Panama, then a province of Columbia, into a separate state, just so that the Panama Canal could be built. President Roosevelt felt perfectly justified in interfering with the internal affairs of Columbia; after all, Columbia had refused what he considered to be a perfectly acceptable offer, for what later became Panama.

Compounding the problems of Mexico was the United States depression and recession of 1907. When the United States caught a cold, Mexico came down with pneumonia.

This state of affairs placed Mexico in a very unusual position, it had to import corn for its tortillas, in spite of being among the foremost agricultural export countries in the World. These large foreign owned agri-businesses were not growing food crops. They were growing cash crops that could be sold in the world market. What did they care about some insignificant compesinos dying of starvation in a foreign country; if they weren’t concerned about children in their own country working 14 hour days, 6 days a week.


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