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Economy and Taxation in the 19th Century

In the nineteenth century, most people were engaged in agriculture. They farmed to feed and clothe themselves; in other words, they engaged in subsistence agriculture. Most people did not own land. The land was owned by a few, such as hacendados or the Roman Catholic Church, or collectively in the case of village ownership. Most were peasants although a more inclusive term is campesino, a person who lives in the countryside.

Rural or country people tend to be suspicious of outsiders and to fear change. Until very modern times, their lives were governed by the vagaries of nature and the seasons. Life was hard. They worked almost constantly.

Going to church was one of the few respites they got from work. It was also a place where men and women could get to know each other, a process so important for mating. It was also a place to gather goods and gossip. Church officials, usually the best educated people around, thus played social and political roles in rural life as well as playing a religious role. Priests had special powers for they officiated at the miracle of the eucharist, the turning of the wine and bread into the literal body and blood of God. Given these factors, the Church [the Roman Catholic Church] was the dominant institution in the countryside.

The village market day was also important. Here people could gather to exchange goods (the use of money was rare) and news and gossip. Here, two, men and women might get to see each other. Village markets operated when necessary. They didn't exist every day or every week.

Because they worked so many hours and had almost nothing in the way of material goods, they had little time and few means to get to know anyone other than a few families. Often, they would not know anyone in a neighboring village, even one ten miles away. If there were a geographical feature, such as mountains, between one village and another, then the villages had no contact with one another. Remember how isolated people were. How people had loyalty to their patria chica (literally, little country). Remember, too, that not all Mexicans spoke Spanish. They spoke another language.

We know many general things about the average Mexican but we don't know much of anything. They were illiterate and, therefore, left almost no written records. History cannot not be known without written records. Unless they got involved with owning property or the legal system in some other way, there would be almost no record of them except for whatever baptismal, marital, and death records kept by the Church. We do know about some crop massive failures because these came to the attention of higher authorities.

We do know quite a bit about the export economy. Exports were of two basic kinds: agricultural and mineral. Mexico exported silver and gold, lots and lots of it. It also exported cotton. There were some other mineral and agricultural exports. Most of these exports went to Europe. The country lacked capital, communications networks, and technology to develop the export business. Besides, the upper class was able to meet its needs without much economic expansion. Societies were run for the benefit of the upper classes.

Ownership of what was valuable was concentrated in a few hands. By 1850, perhaps 34% of the land was owned by the Church.

Taxation. Government revenues were based on import and export duties. National governments depended on taxation of international trade which meant they were unable to control their revenues. They were unable to control international trade. It also meant that they could not increase revenue when needed. What it did mean was that they were not levying direct taxes on the wealthy and influential (who controlled the government and were deferred to by the government). The tax system did what the upper classes wanted.

A further consequence was dependency upon foreign creditors to supply the capital needed for basic governmental operations. Governments borrowed to meet their needs, desires, and deficits. Because of the amount of risk and the desire for profits, lenders charged high rates and discounted the loans. Governments had difficulty making the payments. When these difficulties occurred, the rates and discounts got higher. Sometimes, a country would only get 40-50% of what it borrowed.

Governments also used "forced loans" on their citizens. One reason to get into political power was to force others to loan money.