The Making of a Market: Credit, Henequen, and Notaries in Yucatán, 1850–1900

Chapter 2: The Local Becomes Global: From Caste War to Henequen Boom

Of all the bread-eating Americans, probably only a few have ever heard of henequen. Yet without henequen we could hardly harvest our grain crops, and consequently without henequen we could hardly get bread. —Gregory Mason, staff correspondent to Outlook in Mexico, 1916 The growth of Yucatán’s economy and mortgage market did not happen in a vacuum. The nineteenth-century transformation of Yucatán was born out of local and global changes: the local adjustments to national independence and the revolution in the global commodity markets. The outcome in Yucatán of these twin developments was the growth of largescale export agriculture, expanded education and cultural venues, paved and drained streets, hospitals, trains and trams, and an active, productive, commercial economy connected to global markets. By the end of the nineteenth century, Yucatán’s achievements reflected the Mexican ideals of a modern and progressive society that could compare itself favorably with what it considered its European counterparts. Yucatán had indeed come very far, transforming itself from a small, inward-looking, subsistence economy into an export-oriented plantation economy with global connections. It was not a commercially relevant province of the colonial Spanish Empire, but by the end of the nineteenth century, it was one of the fastest growing economies in Mexico. It collected enough local tax income to finance the infrastructure developments that made it so modern, and it was connected by a combination of naval and railroad routes to important trading centers in Havana, Louisiana, New York, and Mexico City. As would be expected, the transformation in Yucatán’s local economy was accompanied by a growing demand for credit, which happened mostly Chapter Two The Local Becomes Global From Caste War to Henequen Boom from caste war to henequen boom 17 in the private mortgage market. In 1895 notaries recorded almost nine hundred thousand pesos in mortgage loans in Mérida compared to the nearly six hundred thousand of outstanding mortgages of the two Yucatecan banks that year (see table 2.1). The nine hundred thousand pesos in mortgages that the notaries recorded were roughly equivalent at the time to seven hundred thousand U.S. dollars, an amount that understates the real value of the notarial credit contracts because it does not account for the maturity of the loans. The maturity of mortgage loans in notarial contracts was on average between two and ten years. The standard length of a bank loan in the 1890s, on the other hand, was six months. Together, the two Yucatecan banks held nearly six hundred thousand pesos in outstanding long-term loans in 1895, with the bulk of their lending going to short-term trade credit and commercial paper. Notaries did not deal in this sort of short-term credit. Taking this into consideration, table 2.1 illustrates the rise in the amount of credit lent through the offices of the Mérida notaries—a likely response to the growth in the henequen economy . Mérida had approximately 50,000 inhabitants at the end of the century , and the entire northwest region of the state accounted for about 120,000; at best, 1 in 1,000 Yucatecans were borrowing at the end of the century—in this case, a consequence of the socioeconomic inequality in the region. Even though few studies exist to which we can compare this market and the city in which it existed, there are two main reasons why this particular mortgage market would be small. The first reason is that mortgages are long-term loans, and even in the most overheated of economies, most borrowers rarely need (or can) borrow long-term more than a few times in Table 2.1 Loans through notaries and banks, Mérida (pesos) Mortgages through Mortgages through Other loans through notaries banks banks 1850 74,159 (68) — — 1860 84,004 (68) — — 1870 126,211 (133) — — 1875 157,787 (58) — — 1880 268,752 (102) — — 1885 130,077 (61) — — 1890 907,054 (129) 199,120 1,051,709 1895 892,051 (111) 591,327 2,389,469 Source: Protocolos notariales, AGEY and ANEY; ‘‘Balance promedio de bancos.’’ Note: The number of contracts in notarial records are shown in parentheses. 18 TH E M A K ING OF A M A R K ET their life.1 Second, the size of the Yucatán population does not accurately reflect the extent of the potential credit market...