THE FINANCIAL ORGANIZATION OF THE REVOLUTION
Interested observers among the Americans and foreigners were wondering
how the Constitutionalists could keep up a revolution against an
organized military dictatorship like Huerta which had millions at
its disposal; and strange to relate instead of getting weaker the
revolutionists grew stronger and better organized; they seemed to have
money to buy arms and ammunition, to run their local governments and
even to send representatives to the United States, and Paris, London,
Madrid and Barcelona, as well as social and political investigators
into America and Europe. The Huerta Government was as surprised as
the foreigners; they were certain that after a year of fighting, the
backbone of the revolution would be broken, but instead, the offensive
became so dangerous that General Huerta invited American intervention
so as to save himself as well as his partisans from complete political
annihilation.
The Huerta agents in America accused the Constitutionalists of having
borrowed money from great trusts or syndicates, and a New York paper
published stolen letters to prove that Carranza had succeeded in
getting loans from corporations. The letters served no other purpose
than to advertise the lawyer who had been in the service of the Madero
revolution, but as far as the source of financial support, it was as
mysterious as ever.
“How can they fight, eat and dress without money?” was asked. “How can
they get the fighting material across the border when it is patrolled
by American soldiers?” Everybody asked the question and nobody could
answer it satisfactorily. But the suspicion was in the air that the
revolutionists with their agents in the United States had received
millions at a high rate and bartered in return for it oil, mining and
railroad concessions. The senatorial investigation which had labored
for months and published its results in a voluminous report did not
prove that Madero had financed the revolution of 1910 with the help
of American money. The money used by Gustavo Madero to finance his
brother’s revolution seemed so small that the senators looked for
greater sums borrowed from the United States to convince them in their
suspicion that all Central American revolutions were started in Wall
Street. But they forgot that Madero’s revolution was not initialed in
New York’s financial centre, and that no great movement can succeed
unless the lower or middle class fight for it.
The fact is clear that no Mexican political leader or military chief
could afford to be linked in any shape or manner with any foreign
corporation, as that would have discredited him forever in the eyes of
his countrymen.
As a convincing example illustrating this assertion, the Madero
revolutionary loan can be referred to. When Francisco I. Madero came
into power his brother, Gustavo, put in a bill for 750,000 pesos
($375,000) for expenses incurred by him during the revolution. As no
vouchers or explanations were offered as to the origin of the money,
accusations were made against Gustavo Madero that he had borrowed
money at a high rate of interest from an American oil company and
given in exchange valuable oil concessions to the detriment of a
British oil company. After Gustavo’s death it was discovered that he
had misappropriated $375,000 from the funds of a railroad company,
organized in Mexico and financed in Paris to build a railroad from
Camacho to Gomez Farias, and instead of using the money for railroad
construction he had sunk it to buy arms and ammunition for his
brother’s revolution. By his desperate and bold action, Gustavo Madero
had risked his reputation and liberty and was saved in the nick of time
from extradition proceedings by the success of the revolution.
Later, instead of telling the truth, Gustavo Madero kept silent and in
Mexico his enemies went so far as to accuse him of having practically
delivered his brother’s government into the hands of a Yankee
corporation. Those accusations cast a shadow on the whole Madero
régime and were a great handicap to its success.
Carranza, who is an older man of political and financial experience,
realized from the beginning that he could not borrow money from
American or foreign companies and decided to rely entirely on the
resources of his own country. Impoverished as Mexico was by two
successive revolutions, the work was slower and entailed great loss of
lives and foreign property. Nevertheless, Carranza reasoned that if
Mexico could not organize a revolution without foreign help it might
as well give up the task and bend under the yoke of the dictator. The
faith of Carranza in the resources of his country proved that he was
right.
It demonstrated first, that Mexico would go to any length rather than
submit to the murderous régime of Huerta; secondly by forcing his
adherents to organize local governments in every conquered state and
city for the purpose of contribution and order, Carranza facilitated
and accelerated the final political reconstruction of the government
when his troops should enter Mexico City, and third and last he would
create for himself and his supporters an impregnable position from the
foreign as well as the Mexican enemies of his cause.
Carranza is fifty-five years old, young enough to take the field
personally and wise enough not to walk into pitfalls and mistakes
excusable but not pardonable in a younger man. The blunders of the
Madero régime were not lost upon him. Two of the most grievous mistakes
committed by the Madero revolutionist leaders were the acceptance of
foreign financial assistance and a compromise with the power which was
being overthrown.
As revolutions cost money and none was forthcoming or could be had
after the murder of President Madero and Vice-president Suarez,
Carranza convened the state legislation of Coahuila demanding from
it the refusal of allegiance asked by General Huerta, and a vote to
turn over to him the money of the state treasury for revolutionary
purposes. Then he rode with a few followers on horseback through the
federal lines across the mountains of the States of Durango and Sinaloa
into Sonora, a State not connected directly by rail with Mexico City.
Being more free there from molestation by federal soldiers than the
other border States he helped to organize the government and made
his headquarters for a while in Hermosillo, Sonora. The seizure of
the border towns of Nogales and Agua Prieta opened the way to the
importation of arms and ammunition and to the receipts of the custom
houses. As the revolutionary troops on the border States captured more
custom houses, as happened in Juarez, Ciudad P. Diaz, Nuevo Laredo,
Matamoros and finally the seaport of Tampico, the revenues increased as
well as the facilities for the importation of foodstuffs, clothing and
ammunition.
Carranza and his sub-chiefs had five different methods of acquiring
financial support in northern Mexico.
1. The interior war tax, which was paid by Mexican and foreign
commercial mining and industrial firms doing business in the northern
States, besides the taxes paid by the “haciendados” or land owners,
farmers.
2. Custom house duties at all the border towns on imports and exports,
that is to say on foodstuffs, cattle, ore, metal, clothing, etc., which
were paid in gold as arms and ammunition bought by the rebels had to be
paid in gold.
3. Forced loans from the enemies of the Constitutionalists.
4. Voluntary loans by the friends of the revolution such as rich
Mexican landowners, capitalists and miners.
5. The creation of an interior debt by the issue of paper money to be
circulated in all the territory under the power of the revolution and
the prohibition to circulate the bills issued by the Banco Nacional of
Mexico City on February 18th, 1913, at the order of General Huerta.
In a pamphlet of recent date there will be found the decrees and other
transactions of the Constitutionalist army. The official publication
born in Chihuahua, 1914, prints the date of each one of the decrees
permitting the printing of paper money. The first issue of paper money
was emitted for 5,000,000 pesos on the 26th of April, 1913, the second
one for fifteen millions on February 28th, 1913, and the third one for
ten millions on February 12th, 1914, for bills of five, ten, fifty and
hundred pesos denominations. As the circulation of those three issues
tended to raise prices in general by paralyzing the transactions with
fractional money, Carranza authorized three more issues of paper money.
One for two hundred thousand, the second for eight hundred thousand and
the third for one million, for five and ten cents denominations, on the
26th of April, 28th of December, 1913, and on February 12th, 1914.
Up to May, 1914, altogether thirty-two million pesos in paper money
were issued to cover the expenses of the revolution.
The governors and military chiefs were empowered to do the same in
the States under their jurisdiction: Generals Villa and Chao in the
State of Chihuahua, Governor Riveros in Sinaloa, General Caballeros in
Tamaulipas and Villareal in Nuevo Leon.
When it is considered that the Constitutionalists had almost 100,000
men under arms, the Madero revolution by comparison will seem an
amateurish and insignificant affair.
General Obregon was supposed to have 20,000, General Villa another
20,000, General Gonzalez 22,000, General Carrera 20,000, General
Natera and the Arrietas 6,000, without counting the Zapatistas with
over 20,000 men.
On an average and in fairly round figures the revolution cost about
$200,000 a week or $800,000 a month. For a revolution which has lasted
over a year and three months the performance is quite wonderful and
shows remarkable organizing qualities in Carranza and the amazing
vitality of Mexico.
When General Huerta waded through Madero’s blood into the dictator’s
chair he was able to get over fifty million dollars in gold from
American and French bankers, besides voluntary and enforced
contributions from the Catholic clergy, foreign corporations and
commercial and industrial concerns with headquarters in Mexico City and
unwilling loans from Mexican haciendados. Huerta had all the power of
the government concentrated in Mexico City in his hands, the support of
all the foreign powers with the exception of the United States, and in
spite of all he failed.
American bankers who had hastily but unwisely loaned several millions
to General Huerta in the forlorn hope that he could prove a second
Diaz to subdue Mexico, lost faith in the dictator’s ability and sent
an agent to offer six million dollars to Carranza if he would promise
to guarantee Huerta’s loans. It goes without saying that the offer was
rejected.
Another committee of American bankers sent an emissary to Mexico City
to offer General Huerta three million dollars if he would only resign
and get out. In the first case the aforementioned banker learned to his
surprise that the revolutionary chief was a man of principles and could
not be bought; the mistake would have been avoided if the American
financier had read the answer of Carranza to Felix Diaz and General
Huerta offering him a huge bribe to retract his challenge against the
dictatorship. In the second instance they offered Huerta three millions
when he had decided to throw up the sponge, and instead of accelerating
his exit from Mexico, only retarded it long enough for Huerta to pocket
their money.
In both cases the American bankers have shown a fundamental lack of
knowledge of the Mexican situation and of Mexican ways.
The Mexican revolution was essentially a Mexican affair and even a
superficial review of Mexican history would have revealed a great
similarity between it and the Three Years’ War. It took the name of
Constitutionalist Revolution from the Constitution of 1857, for which
the Liberals of that period were fighting as against the clerical
dictatorship.
Even if General Huerta had been able to borrow 150 million dollars
in Paris as he expected to do, he would have been defeated in the
end; it would have taken longer to destroy his power, but the result
would have been the same. It would pay American bankers to seek the
advice of unbiased observers, men who are in sympathy with Mexican
aims and ambitions, who have a thorough knowledge of the people and
their history, and not from agents or individuals who are interested
concessionaires and foreigners or Americans who in spite of their long
residence in the country are as ignorant of Mexican conditions as on
the first day of their arrival in Mexico.