believe that this is a factor in the case, as a similar difference is noticed
among animals. A plough drawn by one horse in this country would, in
Mexico, require two or three horses to accomplish the same work in simi-
lar soil; and this shows that the difference in working strength may
be due, at least in part and in some places, to natural causes or climatic
influences.
LowWages Mean High Cost of P roduciion. — It is now time to show that
the low wages paid in Mexico do not always produce cheap commodities,
and could not therefore, by competition, lower the compensation of
labor, or the cost of similar articles manufactured in the United States.
We pay in Mexico, in some cases, wages amounting to about a sixth
of what is paid here for similar work, and yet production in Mexico,
with such low wages, is a great deal more costly than the production
of similar articles in the United States, with probably the highest wages
in the world.
It is true that v/ages are one of the principal factors in the cost of
production of all kinds of merchandise, but they are not the only, and,
in many cases, not even the principal one. The question of wages is
Xow Maocs /IDean t)igb Cost ot IproDuction. 523
very complex, and it seems that, in comparing the wages of this country
with those paid in Mexico, two important factors are generally over-
looked: first, the amount of commodities produced in each country by
the same unit of work, either because of the greater capacity or the
greater physical strength of the laborer, or through the use of machinery,
which increases the amount of production and cheapens it enormous-
ly; and, second, the cost of living in each country, and, as a conse-
quence of the same, the purchasing power of the currency in each.
When these two factors are taken into account it will be found that the
high wages paid here are often no higher for the work performed,
perhaps in some cases even lower, than those paid in Mexico and in
other countries; and only in that way can we explain how this country,
Avith its high wages, can produce many articles — as, for instance,
watches and clocks — which compete successfully with those made in
Switzerland, where wages are comparatively low.
The cost of ])roduction, too, depends on other circumstances, vary-
ing in different countries, all of which must be considered in order to
arrive at a proper understanding of the subject. I should need more
space than I can reasonably use in this article to mention all the causes
which affect wages, and to shov/ how far they influence the cost of
production; and I shall only present some practical and suggestive
examples taken from the tables of the cost of living which I will pres-
ently insert, to show that some commodities produced in this country.
with high wages, cost less, and therefore are sold at a lower price, than
similar articles produced in Mexico with low wages.
One of the best illustrations of the correctness of this statement is
afforded by the working of the mines in both countries. Although the
wages of miners in Mexico are probably one-third or one-fourth of
those paid in the United States, the production of silver costs much
less here than there. Mr. Thomas H. Carter, a very competent judge,
stated, during the first session of the Fifty-first Congress, that miners'
wages here were $^ a day, while he fixes at 50 cents per day the wages
of the Mexican miners. I do not think his statement correct so far as
Mexican mining wages are concerned, as miners there can earn larger
wages than field hands. That our production of silver is more costly than
it is here is shown by the fact that mines similar to those which we
abandon because it does not pay for us to work them, either on ac-
count of the low grade of silver which they yield, or for other reasons,
arc operated in the United States with profit. This is in a great
measure because in the United States machinery is largely used in
mines, which diminishes the cost of production and increases its
amount; but this very fact shows that wages are not the only factor
affecting the cost of production, and also that with high wages it is
possible, and even easy, to produce at a less cost than with low wages.
524 Xabor an^ TKHaoes in /IDcjico.
Cotton culture is another example. I am aware that the cotton-
growers of the United States hold that what they call their cotton belt
has peculiar conditions for the production of their staple, which in
their opinion do not exist in any other portion of the world, and they
believe, therefore, that nobody can compete with them in this regard.
^Vithout any intention on my part to depreciate the advantages of the
cotton belt of this country, I am yet of the opinion that there are in
Mexico lands as well adapted to the production of cotton as the best
in this country, and in some other regions perhaps even better; yet,
notwithstanding these advantages and although our wages are low,
cotton is produced at less cost in this country, and is sold with profit
by the planters for one-half the price that it commands in Mexico. So
great is the difference in the price of this staple in the two countries
that notwithstanding an import duty on cotton of seven cents per kilo-
gram, gross weight, or nearly four cents per pound, which is equivalent
to fifty per cent, ad valorem, we import from this country almost one-
half of the cotton used in our home manufactures. I do not overlook
the fact that cotton is raised here by negro labor, which is considerably
cheaper than white labor; but, even assuming that wages in this case
be the same in both countries, the difference in cost is so great that
labor is not the only factor in the expense of production.
Something similar happens with sugar. Here it is produced with
high wages, and — although the culture of the sugar-cane in Louisiana
is an artificial one, since frosts prevail there, since the cane has to be
planted every year or two, and the ground tilled at considerable ex-
pense several times a year, so that such culture is an artificial one — yet
the Louisiana planters sell their sugar in New York with profit at from
six to seven cents per pound, while in the City of Mexico and other
places in my country it commands twice and even three times that price.
The same is the case w-ith tobacco. Although the climate and soil
are very likely better fitted for its culture in Mexico than in this
country, tobacco costs there, on an average, 24^ cents per pound,
while it is sold here at 8^ cents per pound.
I shall not speak of the products of the cold climate, such as wheat,
barley, oats, etc., because the climate and soil of this country are
naturally adapted for such culture, while for tropical products the con-
ditions are decidedly in favor of Mexico; but despite the fact that we
also have cold regions in Mexico, and notwithstanding the difference
in wages, wheat is worth there twice as much as here, and there is
about the same difference in the price of corn.
It is much the same with manufactured articles, like common
printing-paper, which in the United States is worth about three cents a
pound and in Mexico fifteen cents, although we have abundant raw
material and water-power for its manufacture. To encourage the
Xow Mages /IDean Iblob Cost ot production. 525
making of paper, we established an import duty on foreign unsized
and half-sized paper of ten cents per kilogram, or over five cents per
pound, equivalent to almost one hundred per cent, ad valorem, which
was reduced by our present tariff to five cents per kilogram for the un-
sized, keeping the duty of ten cents on the half-sized i)aper; and not-
withstanding this, we import printing-paper from this country, where
the wages are so high compared with ours. Something similar happens
with cotton and cotton prints, the former being worth five cents per
yard in this country and from ten to fifteen cents per 7'(ira of thirty-
three English inches in Mexico, and the latter, which are sold here at
eight cents per yard, being worth in Mexico about twenty cents per yard.
The same exactly happens with almost everything else produced in
Mexico as compared with this country. I have built houses in both
countries, and by personal experience I can assure that substantially the
same house will cost in the United States about one-third of what it
costs in Mexico, notwithstanding that the wages of bricklayers, car-
penters, and other mechanics employed in building a house are very
much lower there than they are here.'
It is a well-known principle that the fewer the hands employed in
the manufacturing of a commodity, the less will be the cost of such
commodity. If in manufacturing a commodity a skilled man can do
in a factory the work requiring five men in another, the former factory
will need a much smaller building to accommodate its operatives than the
latter, and that implies a large saving of expense, not only in constructing
its buildings, in heating, lighting, cleaning, and repairing them, but also
in insurance, taxes, etc., the difference being so great that the smaller
building can afford to produce the same commodity at a much lower rate
than the larger building, independently of the amount paid in wages.
' These facts, in my opinion, support Mr. John Richards's theory on wages, as laid
down in his book, T/w Law of Wages, the Rate and Atnoiiiit, in which he asserts that
wages are controlled by certain principles uniform all over the world, and that wages
could not be high or low from any other cause than the efticiency of workmen, the im-
plements they employ, and what they produce. He naturally makes a distinction
between the amount of wages and the rate of wages, showing that the amount does
not depend upon the rate. By amount of wages he designates that part of the cost of
commodities which is paid for labor. By rate of wages he designates the rate per day,
week, or month, paid to workmen for their services. He appears to prove that a
high tariff and dear material do not produce high wages, as is the general belief, and
that the labor cost of products is less in this than in any other country. He sets
forth the following principles :
First. — All manufactured articles of every kind are made up of three elements or
components, namely : material, wages, and expenses.
Second. — All staple articles of manufacture, such as enter into the world's trade,
must have a nearly uniform value or international value.
Third. — The amount of wages entering into the cost of manufactured commodities
is also nearly uniform, irrespective of the rate of wages paid fiir their production.
520 Xabor anC> Maaes in /IDcinco.
I believe that the preceding facts show beyond all doubt that unless
there is a material change in the present conditions of Mexico, there need
be no fear of competition in the United States from Mexican manufac-
tures or agricultural or mining products obtained by us with cheap labor.
One reason why Mexican products were so high was that before
they reached the markets they had to pay the local duty called alca-
bala, levied in coming into the cities. Unfortunately, the internal
commerce of Mexico was not free, as in the United States, where such
freedom has contributed very much, in my opinion, to the marvellous
prosperity of the people. Our Constitution of 1857 prescribed the
abolition, from the first of July, 1858, of the interior duties and custom-
houses throughout the country, but it was not until recently that this
measure could be carried out. Since the first of July, 1895, com-
merce in Mexico is as free as in the United States, the interior duties
and custom-houses having been abolished.
V Use of Modern Ifnplemetits and Machinery by Mexicans. — 1 have
often heard the remark made by public men of the United States, also
contained in Mr. Foster's report of October 9, 1878, to Mr. Carlisle
Mason, President of the Manufacturers' Association of Chicago, that
the Mexicans were generally opposed to the use of agricultural imple-
ments, and I considered this an error arising from v/ant of sufficient
knowledge of the Mexican laborer.' As the Mexican people have not
Fourth. — The rate of wages depends mainly upon what workmen produce, varying
with efficiency of labor and cost of material and exi)ense.
Mr. Richards asserts that prices are subject to general principles which tend to
make them uniform, and that it would not be possible to have high wages in a country
while others paid low ones, because labor from the latter countries would flow to the
former and establish the proper level, and he further states that if the rate of wages is
lower in some countries, it is because workmen produce there less than in others.
Long before I read INIr. Richards's book, I had come to adopt views similar to his,
although they did not occur to me exactly in the same manner in which he presents
them in his book.
' Mr. Foster's report was communicated to Mr. Evarts, Secretary of State of the
United States, on October 9, 1878, and published among "Papers relating to For-
eign Relations of the United States, Transmitted to Congress with the Annual Message
of the President of December 2, 1878," pp. 636-654. This report, which in my opin-
ion contains several serious mistakes concerning Mexico, compelled me to write, as
Secretary of the Treasury of that country, an official and full answer to the same,
dated January 15, 1879, addressed to our Department of State, for the purpose of rec-
tifying Mr. Foster's mistakes, and explaining points which were not made sufficiently
clear in his report. My answer, entitled " Report of the Secretary of Finance of the
United States of Mexico of the 15th of January, 1879, on the Actual Condition of
Mexico, and the Increase of Commerce with the United States, Rectifying the Report
of the lion. John W. Foster, Envoy Extraordinary and Minister Plenipotentiary of
the United States in Mexico, the 9th of October. 1878, to Mr. Carlisle Mason, Presi-
dent of the Manufacturers' Association of the City of Chicago, in the State of Illinois,
of the United States of America," was published in English in New York in 1890, in
a book in quarto of 325 pages, and was freely circulated in this country.
XUse of /iDacbinerv? b^ ^ejicans. 527
used machinery or implements for hundreds of years, not only because
most of them have been invented or applied only recently, but because
the cheapness of labor there made them unnecessary in many cases, it is
natural that they should not have shown a preference for their use. Some
have, besides, the fear, natural in ignorant men, that the use of ma-
chinery might diminish the number of hands employed on the farms or
in industries, and that therefore a great many of them might be left with-
out employment. But this is a natural feeling, prevailing not only in
Mexico, but in every other country. Whenever the Mexican people
have seen, however, that the use of machinery or implements diminishes
their labor, not only without destroying, but, on the contrary, rather
increasing their wages, they have shown themselves as willing to use
them as any people in the world, and so far as their ability to handle
them is concerned, they are second to none. A proof of this is the
fact that we have now in Mexico quite a large number of cotton and
woollen mills and other manufacturing plants using improved machin-
ery and worked entirely by Mexican hands. A Mexican laborer may
not be so expert as one from this country in attending to several looms
at the same time, but he is quite competent to attend to a few, and in
the course of time his ability will be developed, and he will be able to
do whatever anyone else can do.
One of the reasons why agricultural machinery has not been more
used in Mexico is a very simple one, which I know by personal ex-
perience, as I myself was engaged in agricultural pursuits for some
years. I believe it is a fact well known to farmers and also to manu-
facturers in this country that agricultural machines and implements
have to vary according to the conditions of the soil, that is, not only
in accordance with the heaviness or lightness of the soil, but with the
topographical position of the ground. It must be considered whether
it is level, undulating, or hilly; whether stumps remain in the ground
or whether it has been cultivated for some time, and so is entirely free
from them; whether stones are or are not mixed with the vegetable
earth; and implements which work well in soil possessing certain con-
ditions, may be utterly useless in other ground having different condi-
tions, requiring perhaps only some slight changes to adapt them to a
different soil. When an order is sent to the United States for agricul-
tural implements or machinery, sufficient care is not taken to explain
the conditions of the ground, and the manufacturer may send — and
does so frequently — articles which are utterly useless when they arrive
at their destination. I myself found that my invoices of machinery
and agricultural implements were often entirely useless, doubtless be-
cause they were not adapted to the condition of the soil to which they
were applied.
Another objection to the extensive use of agricultural machinery
I
528 Xabor anC) THaages in /IDejico.
and implements in Mexico — which is also serious, but easily overcome
— is that not everywhere are there shops to repair them or replace broken
pieces; therefore, when a spring, a screw, or any other part of a
machine, no matter how insignificant it may be, is broken or out of
order, the whole machine is thrown away because it is no longer of any
use, so causing the loss of a large amount of money; and when these
reasons are taken into consideration, and especially when the lack of
acquaintance of the Mexican laborers with such machines and imple-
ments and the lowness of their wages are considered, it will not appear
surprising that they are not much used in that country. But the field
there is a very large one, and one whose importance increases every
day, and I have no doubt that the time will come, especially if due care
is taken by manufacturers in this country to understand the special
needs of each locality in supplying them with machines and implements
manufactured in this country, when that trade will be very valuable,
and it is already becoming so.
It will be seen that these difficulties could not be appreciated by a
tourist who only spends a few days or weeks in Mexico, and comes
back saying that the Mexicans are utterly incompetent and unwilling
to handle agricultural machinery and implements, or implements of
any kind; or by United States representatives living in cities where
they have no opportunity to come into close contact with the farming
element, and only report what they may hear and occasionally see in
their excursions from those cities.
Mexican Wages and Silver. — The impression generally prevails in
this country that Mexican wages are reduced to one-half of their old
amount in consequence of the depreciation of silver, reasoning that if
wages were twenty-five cents a day, for instance, when silver was on a
par with gold at the ratio of i6 to i, now that it has declined about
one hundred per cent., wages of twenty-five cents in silver are equiva-
lent to about twelve and a half cents in gold, and that wages not hav-
ing increased in the same proportion that silver has depreciated, the re-
sult must be that they have been reduced to one-half. This is a
mistaken conclusion.' In an article which I published in the North
' This assertion is confirmed by the following statement in Mr. Crittenden's re-
port on the currency, prices and condition of labor in Mexico, dated September ist,
1S96, and sent to the State Department and published in the Special Consular Report,
vol. xiii., Part I, already referred to :
" Wages of unskilled labor has been almost unaffected by the premium on gold.
The great stimulation of all enterprises, the building of thousands of miles of rail-
roads, the establishment of numerous factories, and the bringing under cultivation of
thousands of acres of land, has given employment to a vast number of men. This, of
course, has had its effect in raising wages and bettering the condition of the laboring
classes, at the same time reducing the revolutionary spirit that heretofore had great
sway in this country. It has been a most difficult matter to make this roving class of
w
/IDejican Mages m\t> Silver. 529
American Review, of June, 1895, I explained the results of the silver
standard in Mexico, and showed that the purchasing power of the silver
dollar remains there the same as it was when silver was on a par with
gold, in so far as Mexican commodities and services are concerned,
and that prices have only increased somewhat for imported articles,
or for such Mexican products as have their prices regulated in foreign
markets. 1 refer, therefore, the reader to that article, which will be
found in this volume, and here I will only say that within the bound-
aries of Mexico there has been no such thing as a depreciation in silver,
as silver has maintained its old level with regard to commodities. It
purchases as much now as it did before its decline in value relative
to gold began. It pays for as much labor as before, and in the
hands of the laborer it purchases as much of the necessaries of life. It
is only in connection with imports that the premium on gold or the
decline in silver has caused an advance in price.' But the laboring
population purchase little that is imported, and so whether imported
goods cost more or not is of little or no consequence to persons of that
class. In many cases even the price of imported articles has not
enhanced, notwithstanding the depreciation of silver.'
people, by whom this country is largely populated, think and believe that prosperity
and plenty only come with peace; now that they understand, with but few exceptions
they are thoroughly contented."
' Mr. Crittenden says on the subject in the report just quoted as follows :
" Their value has in no way been affected by the rise and fall of silver. As to
imported luxuries and fineries, they are, when the difference in the price of silver is
taken into consideration, more expensive now than in 1873. The increased railroad
facilities and cheapness of transportation have been more than offset by increased du-
ties, stamp tax, rent, and clerk hire. However, the consumption and use of imported
articles is limited almost entirely to the rich and travelled natives and foreigners.
Finally, it can be generally proven that the cost of living and wearing apparel of the
native was as low, and in many cases lower, in 1873 than at the present time."
'^ This assertion appears fully corroborated by the following interview of ex-Con-
sul Crittenden, published by the Star, Kansas City, Mo., May 2, 1895 :
" People who go from Kansas City to Old Mexico almost invariably buy supplies
of clothing there and come back to tell how much cheaper goods can be bought in the
City of Mexico than in any American city. This has occurred so often that Consul-
General Crittenden, who is at home on a brief leave of absence, was asked yesterday
for an explanation :
" ' Such a condition exists,' he said, ' but the explanation is yet to be found. The
Mexican dollar is worth about fifty-two cents in American money, but I can buy just
as good gloves for $1.50, Mexican money, in Old Mexico, as I can buy anywhere in
America for $1.50, American money. On one of my trips here I wore a very good
suit of clothes, made to order in a very satisfactory manner, which cost me just $12
in the Mexican capital. You can get an elegant suit of clothes made to order there,
in the best style, for $35, Mexican money. Shoes that cost $5 a pair here, bring
$3 a pair there, no matter whether they were made in Paris or in Mexico. A very
530 Xabor an& Mages in iTDcjico.
Very many believe that the low rate of wages in Mexico is due to
the depreciation of silver, and those professing this opinion are very
much mistaken, because when, thirty years ago, silver was at a par and
even at a premium with gold at the ratio of i6 to i, the wages in Mex-
ico were lower than they are now, and the Mexican laborer was not so
well off as he is to-day.
To make a proper investigation about the condition of the Mexican
laborers in connection with the money standard, it would be necessary
to extend that investigation to gold countries such as Spain, Italy, Ger-