Trade Routes

by Linda K. Salvucci from The United States and Mexico at War

The history of commerce between early national Mexico and the United States remains largely untold due to the lack of good serial data. Mexican export and import figures are neither consistent nor comprehensive; on the U.S. side, overland exports from the United States to Mexico went unrecorded until 1893. Maritime trade statistics, collected by the U.S. Treasury from 1824 onward, reveal that Mexico traded silver-mostly specie and some bullion-for manufactured cloth, for wheat flour coming through New Orleans, and for raw cotton for the Mexican textile industry, which tariffs enacted by Mexico in 1829, 1837, and 1842-1843 attempted to protect. Still, before 1838, finished cotton accounted for between 30 and 40 percent of domestic U.S. exports to Mexico. Moreover, before 1841, reexports constituted at least half of all U.S. exports to Mexico by value every year. Such quantitative evidence suggests what other qualitative information confirms: before the Texas Revolution (1835-1836), the composition of U.S. exports and reexports to Mexico reflected mostly economic factors and commercial restrictions. After that, political and diplomatic calculations came into play, as the United States and Great Britain competed more directly for influence in Mexico.

Their respective patterns of trade, which had earlier paralleled each other, falling and rising together, began to move in opposite directions, exhibiting reversed peaks and troughs.

English goods reached Mexico through Texas; this is one reason Texas dominated the political economy of trade between 1825 and 1848. At first, Tejanos were supposed to buy and sell from Mexican army quartermasters at set prices. However, to encourage settlement of the northern frontier, Mexico granted Texas settlers a seven-year exemption from tariffs in 1823. Attempts to collect duties in the early 1830s exacerbated political tensions, leading one economic historian to label the U.S.-Mexican War as an "irrepressible" conflict. Texas had no coastal customs house until 1830, but it is clear that Texas cotton was shipped to New Orleans on U.S. vessels. British merchant companies also gave U.S. traders serious competition in California.

In many ways, the most legendary trade between the United States and Mexico involved individual traders along the Santa Fe Trail. The New Mexico-Chihuahua trade remained active until 1846, as incalculable quantities of silver and mules flowed from the northern provinces to Missouri. Mexican and U.S. scholars differ over the degree of commercial and cultural influence exerted by U.S. traders over New Mexico's inhabitants. But the reorientation of the region away from Mexico and toward the United States was evident, leading a present-day authority on the Southwest, David Weber, to conclude: "The Mexican era saw the pobladores break loose from the grasp of Spanish mercantilism only to be embraced by American capitalism."

For the United States, overall trade flows to and from Mexico were small, but their effects could be significant. Regional markets, particularly in Texas, were probably much affected by the overland trade in cattle, horses, and mules. Before the Panic of 1837 in the United States, substantial flows of Mexican silver helped drive up U.S. prices. Wealthy Mexicans also purchased bonds of the individual states of the United States and lost money when these states suspended payment during the panic.

After the U.S.-Mexican War, Mexico's trade with the United States grew more rapidly than its trade with Europe, so that over the rest of the century the United States accounted for an increasing share of Mexico's foreign commerce. The willingness of a nascent generation of Mexican liberals to back away from protectionism and to countenance freer trade also accounted for this shift. These Mexicans, ever wary of U.S. commercial and military power, believed that opening markets to the United States would prevent further loss of territory. The rapid growth of the U.S. economy after 1840 both enlarged the U.S. market for Mexican goods and made the United States an even larger supplier of finished goods to Mexico. But it was not until the 1880s that the integration of the two economies really accelerated. The completion of rail links between the two countries was critical in this regard, as was the now openly favorable policy of the regime of Mexican dictator Porfirio Diaz toward foreign investment.

It is customary to state that trade follows the flag, that diplomacy opens the way for more intensive commercial relations. Before the war with the United States, Mexicans generally believed that the principle was reversed, and that Yankee traders were generally followed by U.S. armies. It was not until the later part of the nineteenth century that the more usual pattern held, for only then was a strengthened Mexican state really in a position to control access to its territory and, hence, to its markets.