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The State and the Electric-Power Industry in Mexico, 1895–1965*

Published online by Cambridge University Press:  24 July 2012

Miguel S. Wionczek
Miguel S. Wionczek
Affiliation:
Adviser, Centro de Estudios Monetarios Latinoamericanos
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Abstract

Increased state participation in the economy has been a basic trend in twentieth-century Latin America. In the process, however, once-protected private interests may fall—as in this case-study from Mexico.

Type
Articles
Information
Business History Review , Volume 39 , Issue 4 , Winter 1965 , pp. 527 - 556
Copyright
Copyright © The President and Fellows of Harvard College 1965

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References

1 For background, see Rippy, J. Fred, Latin America and the Industrial Age (New York, 1944), pp. 208–217Google Scholar; and Carson, James S., “The Power Industry,” in Industrialization of Latin America, ed. by Hughlett, Lloyd J. (New York, 1946), pp. 319–45.Google Scholar For U.S. investment data, see Ulmer, Melville J., Capital in Transportation, Communications, and Public Utilities: Its Formation and Financing (Princeton, 1960), p. 548.Google Scholar Mexican figures are my own estimates.

2 This essay is implicitly restricted to the hydroelectric power industry because through out the history of Mexico, thermal plants were of marginal importance in view of scarcity of coal. Except in the 1940's, when a limited number of thermal plants using petroleum fuel was constructed for servicing some major urban areas, thermal power has been limited to small plants built by industrial enterprises for their own use. In all such cases no issue of the relations between the State and the electric-power industry has obviously ever occurred and consequently the author has left this subject untouched as beyond the scope of his main subject.

3 Based upon estimates in the forthcoming volume on economic conditions during the Diaz era, in the series Historia moderna de México, edited by Daniel Cosío Villegas.

4 Spender, J. A., Weetman Pearson, First Viscount Cowdray, 1856–1927 (London, 1930).Google Scholar

5 Fred Rippy, J., British Investments in Latin America:, 1822–1949 (Minneapolis, 1959), p. 47.Google Scholar

6 Over the long stretch of time (especially in the inter-war period), in which the issue of “low” prices for export-oriented mining and other activities versus “high” prices for domestically owned industrial enterprises and electricity used for household consumption, was an explosive political issue, no data have been disclosed by the private power companies about their rate structure. Since rates were not effectively controlled by tibe State before 1938 and the setting of rates was considered the private matter of the power companies, they did not consider it mandatory to disclose the details of the rate-fixing process. Consequently, no meaningful comparisons can be made with contemporaneous rates in the United States or other countries without additional painstaking research in the companies' records unavailable to outsiders. The companies' secrecy in this and other respects was one of the major points of friction between the State and the consumers, on the one hand, and the companies, on the other, for about one-quarter of a century. It is estimated that in the late 1920's and the early 1930's the disparity between prices on electric power paid by large mining and industrial consumers and those charged to commercial establishments, small industrial plants, and domestic consumers, ranged from 1 to 15, to 1 to 25. In the 1950's it was about 1 to 5.

7 Comisión Nacional de Fuerza Motriz: su organización, labores y tendencias (a pamphlet published by that official commission, México, 1924), p. 21.

8 CNFM was set up as a permanent advisory body functioning as an agency at the two ministries, Agricultura y Fomento and Industria y Comercio, and was composed of public officials.

9 Comisión Nacional de Fuerza Motriz, op. cit., p. 33.

10 Before the 1910 Revolution, more than half of the total energy sold was being used by mining and industrial enterprises which were owned in many cases by the same groups that controlled public utilities, and about one-third by public-lighting services, the rest being consumed by commerce and households. The growing Mexican-owned textile industry took, by the mid-1920's, an increasing share of the consumption of electric energy for industry, including mining, purposes.

11 Article 73 limited Congress' authority in economic matters to mining, commerce, credit institutions, general means of communications, postal services, and water resources. Consequently, the only legal faculty in respect to the electric-power industry which the federal government had was that of issuing concessions for the use of water resources for the generation of electricity. Since the early 1920's, Mexican técnicos had insisted that because of the importance of electric power for economic development the scope of Article 73 should be extended by explicit inclusion of that industry among activities regulated by the State. The implementation of the National Electric Code of 1926 and the legislation of 1929 strengthening State control over national water resources ran into serious difficulties because the power companies claimed that both laws were unconstitutional. The Constitution was not amended accordingly until late 1933 because of domestic religious strife and external difficulties faced by Mexico under Calles, who held effective political power in the country from 1925 to early 1935, although his presidential period ended in 1928.

12 Details of the Roosevelt power and utilities program pursued during his Governorship of the State of New York and his strong criticisms of the U. S. private power companies' behavior, expressed during his 1932 presidential campaign (in speeches like the one made in Portland, Oregon on September 21 of that year), were reported extensively by the Mexican press and followed closely by técnicos.

13 Interview granted to Padilla, Ezequiel and published in El Economista (Mexico City), August 10, 1933.Google Scholar

14 Plan Sexenal del Partido Nacional Revolucionario, 1934–1939, quoted in Mata, Rodolfo Ortega, Problemas económicos de la industria eléctrica (México, 1939), pp. 135–36.Google Scholar

15 The first labor union in the electric industry was organized in 1914 at the height of the Revolutionary strife and by the mid-1920's the electrical workers were compactly organized in Sindicato Mexicano de Electricistas (SME). Until the early 1930's, the union was aloof from other labor organizations and denied its support to politically inspired labor activities during the Calles administration. From 1932 on, however, SME became one of the most agressive labor unions in the country and went on long strikes against the power companies on the occasion of subsequent revisions of the collective work contracts and thus provoked Calles' open enmity. In mid-1935, during the conflict between President Cárdenas and ex-President Calles, which terminated in the expulsion of the latter from the country, SME threw its weight together with oil workers and with the rest of organized labor behind Cárdenas and was rewarded with the President's benevolent attitude during the rest of his administration. In the 1940's, a split in the SME ranks and the appearance of Comisión Federal de Electricidad, whose labor is organized in the separate Sindicato de Trabajadores Electricistas de la República Mexicana (STERM), established the present pattern dividing the electrical workers into three separate unions.

16 “Ley que crea la Comisión Federal de Electricidad,” Diario Oficial, August 24, 1937.

17 Wolfangel, “The History and Development of Private Electric Power Interests in Mexico,” p. 80.

18 Oscar R. Enriquez, “Informe preliminar sobre la movilización de obras e instalaciones eléctricas existentes en México' (Mimeographed report, Secretaria de Economía Nacional, November 1946).

19 Comité para el Estudio de la Industria Eléctrica Mexicana (CEE/MEX), Desarrollo de la industria eléctrica mexicana (mimeo, México, 1957).

20 Wolfangel, op. cit., p. 68.

21 Bratter, Herbert, “Latin American Utilities' Nationalization Proceeds Inexorably,” Public Utilities Fortnightly (July 7, 1960), pp. 1–15.Google Scholar

22 In a speech in his capacity as new chairman of the board of the former MEXLIGHT on September 27, 1960, published in full in the Mexico City press the next day, Ortiz Medina cited increased demand for service and the lack of plans by the private companies to expand and a desire to end public-private controversies within the industry.

23 Jorge Davo Lozano, “Problemas conexos a la nacionalización de la industria eléctrica de México,” Excelsior, September 8, 1960.

24 In early 1965 another considerable rate increase was introduced without any publicity whatsoever.