The French Have Landed on the Shores of Santa Rosalía, or,


How the Second Industrial Revolution, Porfirian "Progress" and the Rothschilds Brought Baja California Sur into the "Modern" World

Dennis Kortheuer

University of California, Irvine
[with apologies for HTML conversion glitches from R. Head]

On 7 June 1885 the government of Mexico signed a contract with a company formed earlier that year in Paris to exploit mining deposits in Mexico. The contract established a colony which included a set of mining claims in the Santa Agueda region in the Federal territory of Baja California.1 A controlling interest in the company was owned by the Paris branch of the Rothschild banking family.2 Development occurred rapidly. Within three years the company had invested six million dollars in the site, building a smelting plant, a temporary dock, and housing for French engineers and other management personnel, as well as additional infrastructure.3 By 1890 the population of the mining colony totalled three thousand sixty five people.4

From its first year Compagnie Du Boleo, as it was named in French (Boleo, ball, was the name given locally for the nodules of copper found in the area some twenty years earlier which led to copper mining there) produced a great majority of Mexicoís copper.5 By the end of the companyís first decade it was earning a healthy profit for its owners in France.6 By the turn of the century -- when the company was eclipsed in its position as Mexicoís chief copper producer by the Cananea mine in northern Sonora -- the mining town (actually three different camps and Santa Rosalía) contained over six thousand people, a railroad that covered 35 kilometers, a steel church brought in pieces around Cape Horn, four schools, a hospital, several hotels, an almost completed permanent dock (built chiefly using the slag from the smelting operation), a bakery, a company store, cantinas, brothels, pawn shops, cigar stores, all of the accoutrements one might expect in a booming company town.7 How and why did all of this happen when it happened? This paper is an exploration of the forces and conditions with which the people involved worked to create this French-owned mine and company town in an isolated frontier of late nineteenth century Mexico. In it I argue that the desire of the French branch of the Rothschild bank to control the world trade in a metal with new importance was acted upon at a moment in history when the Mexican government was creating new ways to encourage just such investment in its mineral deposits. The conjuncture of a new importance for an old metal, brought on by the second industrial revolutionís harnessing of electricity, policies of a Mexican government exercising new powers of centralization, and the worldís foremost banking familyís search for new fields in which to plant its capital created nineteenth century Mexicoís greatest copper mine.

A Nineteenth century political economist once wrote that "Men make their own history, but they do not make it just as they please; they do not make it under circumstances chosen by themselves, but under circumstances directly encountered, given and transmitted from the past."8 What were these circumstances directly encountered in the case of the mine and town of Santa Rosalía? Locally, copper had been discovered in 1868 and while mining had been successful on a small scale during the seventies, a combination of a fall in the world price for copper and higher costs caused by the need to further develop veins from which the easy pickings had been picked meant that a large infusion of capital was necessary, an infusion those involved at the time could not provide. At the same time, the Mexican government was involved in an attempt to "develop" the nation. National leadership sought to increase economic income, develop a cheap and reliable proletariat and incorporate the distant frontiers more closely into the nation. Internationally, the harnessing of electrical energy which helped to bring about the phenomenon known as the Second Industrial Revolution created a new market for copper which was apparently insatiable at the same time as being extremely volatile. Additionally, this was a period when capitalists in the more developed capital markets of the world, chiefly northern Europe and the United States, were looking for new areas in which to invest their ever increasing profits. The Rothschild family banking firm, with branches in five European capitals was, like many capitalists at the end of the century (and always for that matter, isnít this the "nature" of capitalism?), looking for new ways to invest and increase its capital. The mining of industrial metals interested the Rothschilds, but only if they saw a chance of controlling the world market. Copper presented just such an opportunity in the last decades of the nineteenth century. Let us look more closely at each of these circumstances and how they interacted.

Santa Agueda: out of the desert

The region in which the El Boleo mine and the town of Santa Rosalía would grow up together was known, until the time of the contract with the French company, as Santa Agueda. It lies on the east side of the peninsula of Baja California just above the twenty seventh parallel, almost directly across the Sea of Cortez from the city of Guaymas on the mainland in the state of Sonora.

While the fourth largest state (actually a Federal territory) in Mexico at 144,092 square kilometers, Baja California was throughout the nineteenth century the most sparsely populated. In 1857 the peninsula was recorded as containing 12,585 inhabitants.9 In 1883, two years before the signing of the mining contract for El Boleo, the population of the territory of Baja California was 30,208, while Mexico contained 10,435,351 people.10 The population density for Baja in 1877 was recorded as 0.15, per square kilometer; in 1895, 0.27 and in 1900, 0.32.11 In 1886, at the arrival of the French company and after over ten years of small scale mining, the area of Santa Agueda contained a population of 250.12 Most of the population of the territory was concentrated in the northern and southern tips, near the United States border and in the south where the territorial capital of La Paz lies, and on the cape (Cabo San Lucas) which had been a fueling and watering stop for shipping since the colonial period.13

Before the discovery of copper in 1868 the area where the mine and town were to be built was desolate. The only inhabited part of the region was the rancho of Santa Agueda, twelve kilometers to the southwest of the future site of Santa Rosalía. The closest towns were Mulegé, a town of 800 inhabitants, some sixty eight kilometers to the south, and San Ignacio with 600 inhabitants, seventy seven kilometers by road to the west. Both towns were sites of Jesuit missions established during the colonial period.14 Santa Aguedaís desolation was to be transformed with the discovery of a desirable commodity under its soil.

In 1868 José Rosa Villavicencio, a farmer in the Santa Agueda region, searching for a way across the mountains to the port of Santa Maria, noticed a number of small irregular blue and green balls on the ground in and around the Santa Rosalía canyon. He showed these fragments to some people he knew in Guaymas and they began to work the copper veins soon after. By 1873 there were thirty three mines registered in the area, most of them copper mines.15 The mining was practiced in a haphazard way, by numerous small operations, the work done almost exclusively by Yaqui Indians brought over from Sonora.16 The French engineers who reported a decade later on the conditions of the area and its future promise to the stock holders in Paris estimated that between 40,000 and 60,000 tons of ore with a minimum fineness of 20 to 25 percent, had been shipped to Hamburg and London between 1872 and 1885.17 Only ore of such a high grade was worth shipping to the refineries in Europe. By 1885 there were also some twenty thousand tons of eight percent ore piled in mounds near the beach, ore which the new company would include in its equations since it planned to build a smelting plant on site which could work this ore and other lower grade ore and refine it to a purity that would make it cost efficient to ship it to Europe.18 With the most rudimentary of technology the small concerns which had worked these holdings for over a decade before the arrival of the Paris company reported profits of up to thirty five pesos per ton.19

Mining in the Santa Agueda area was hard work and making a profit from it even more difficult. The outcroppings on the surface were soon exhausted and it became more difficult and more expensive to gather sufficient amounts of high grade ore to make operations profitable. By the end of 1874 most of the mines had been abandoned because of these facts.20 In 1885 there were two companies left.21 These companies had bought up their neighboring smaller concerns and attempted to work the veins themselves. They soon realized that in order to do so profitably a large influx of capital was necessary, one larger than they could put together themselves. But from where would this capital come?

Enter the French: capital looking for a place to go

As the author of the most recent of the numerous biographies and histories of the Rothschild family notes, "All banks have histories, though not all have their histories researched and written; only the Rothschilds, however, have a mythology."22 Between 1815 and 1914 the Rothschild bank, an international firm with branches (each headed by a male Rothschild) in Frankfurt, Vienna, London, Naples, and Paris, was the biggest bank in the world. The twentieth century, Niall Ferguson writes, has no equivalent, the largest of todayís international banking corporations doesnít enjoy the supremacy enjoyed by the Rothschilds in their day.23 The Rothschild fortune came primarily from lending to governments, or speculating in existing government bonds, and it is this kind of investment activity for which they are most famous. The Rothschilds were, however, also major industrial investors.

When the development of railway systems transformed transportation in Europe in the 1830s and 1840s the Rothschilds were the leading financial backers of rail lines. By the 1860s James de Rothschild, the founder and head of the French branch, controlled a railway network that extended from France to Belgium, Spain, Germany, Switzerland, Austria, and Italy.24 Ferguson argues that:

it is not too much to say that the decision of the London and Paris houses to develop what can justifiably be described as a mining empire was the most important change in their mode of operation since their decisions to become involved in railway finances in the 1830s. . . . Like the railways before them, the mines offered higher rates of return than state bonds; while as assets they were less liable to lose their value...."25

Under the leadership of its founding brother, James, the Paris branch of the Rothschild banking family focused primarily on government loans and public finance.26 Uneasiness about industrial commitments did not mean that the house, like many private bankers of the time, did not have a long-standing interest in international commerce, particularly trade in both precious and non-ferrous metals. The underlying strategy appears to have been to focus on selected commodity markets with few buyers and sellers, where opportunities for profitable manipulation would be most likely. They even had earlier experience with copper. The Paris Rothschild bank had dominated the French copper market until 1838 as the sales representatives there of the Demidovs of Russia.27 They also had previous experience with controlling a world monopoly of an important nonprecious mineral. The Rothschilds had acquired the Spanish mercury mines at Almadén. (Mercury was crucial at the time for refining silver.) Through their control of the mines there and the westís other large mercury mine at the time in Idria, Austria the Rothschilds controlled the worldís mercury market beginning in 1830. Their control did not end until 1848 when the discovery of rich deposits in New Almaden, California reduced the price considerably and broke their monopoly.28 The family was also involved in processing metals. By the mid eighteen sixties the bank owned and operated two refineries in France.29

In the eighteen seventies the Paris Rothschilds faced serious long term challenges as a viable enterprise. Competition from joint-stock deposit banks began to undermine their position in the government loan business while international commerce suffered in the 1870s due to falling prices, increased competition, and shifting markets. In an attempt to shore up one of its less rewarding interests in 1872 the Paris partners hired a skilled metallurgist, Jules Aron, as a consulting engineer. He was able to return to marginal profitability a plant they operated at Le Havre, refining Spanish lead-silver, by investing 250,000 francs to modernize its technology.30

The mining industry in Spain and elsewhere presented enticing opportunities at the time with mine owners and founders short of capital and mines and stocks of metal potentially good security for both loans and partnership arrangements. The houseís declining position in public finance and a gradual recouping of some earlier investments in Italian and Spanish railroads meant there was plenty of capital available for new ventures that appeared promising. The first move in this direction was in founding the Peñarroya Mining and Metallurgical Company in 1880. Peñarroya was the undisputed leader in the Spanish lead industry, and along with United States companies was one of the most important producers in the world. Mineral investments in Spain also brought together the two Parisian banking houses which would soon found the Boleo Company. Belmez, a major Spanish coal producer, was headed by another Parisian haute bank, Mirabaud et cie. The Belmez firm was founded in 1881 with the House of Rothschild taking 40 percent of the capital stock.31 In addition to their partnership in Belmez, the Mirabauds were also involved in Peñarroya with the Rothschilds.

The second Rothschild venture of this kind in non-ferrous metallurgy was Le Société de Nickel, formed in early 1880 by John Higginson to develop the nickel deposits of New Caledonia in the Pacific. Lacking adequate liquid capital to develop production he turned to the Rothschilds for development funds. During the 1880s they purchased about twenty five percent of the stock, most of this from Higginson himself.32 Thus we see that during the 1880s a pattern emerged. The French Rothschilds had already gotten their feet wet in mineral production, already were working with their future partners in the venture in El Boleo, and stepped in at least once where capital was needed by others who possessed promising mineral deposits but lacked the capital to exploit them. From the Paris side the stage was set.

The initiative in the Boleo venture was taken by the Mirabaud Bank with the aid of the Rothschilds. After careful studies suggested high potential for the mineral zone the Rothschilds subscribed 37.5% of Boleoís initial 1885 twelve million franc capital and received for this a substantial portion of the foundersí parts.33 Word of the Boleo holdings had been circulated through some French miners working and living in the United States, one of whom had visited and inspected the area, and made its way back to Paris, the Rothschilds, and their partners in other mining ventures, the Mirabauds. A group of engineers, one of whom worked for the Rothschilds at the Spanish copper mine Rio Tinto (and who would become the first general manager of the enterprise) also visited the area and filed a report dated 15 December 1884.34

The Compagnie Du Boleo was formed in Paris on 16 May 1885. The statutes state that the company was formed with the object of purchasing and exploiting the copper mines of Boleo, in the district of Santa Agueda, municipality of Mulegé in Baja California, Mexico.35 The initial capital of the company consisted of twelve million francs, divided into 24,000 shares of 500 francs each.36 On 7 July of the same year the Mexican government, represented by Cárlos Pacheco, Secretary of State and Office of Development, signed a contract with Manuel Tinoco and Cárlos Eisenmann, as representatives of the mining companies of Elhuyar and Sontag and Guillermo Eisenmann and Eustaquio Valle respectively, for the establishment of a mining colony in the mining region of Santa Agueda, to be transferred to the French limited liability company "El Boleo."37 The contract exempted the newly formed company from all taxes, federal and local, except for stamp taxes, on all funds destined for the company. It also suspended all import taxes on the materials that would be needed to build the mine and the town, and all other supplies that would be necessary for the survival of the colonists.38 Additionally, the contract exempted for a period of fifty years from all export taxes all products of the company, copper or other, and the import of all coal or other fuel destined for use by the company. 39

The company was obliged by the contract to establish a colony on the site, within the first year and without any cost to the Government, of at least 16 foreign and 50 Mexican families. Each was to be provided with a lot of land at least 2,500 square meters, and with a house.40 The company was also required to establish, within the first year, a steam ship, of at least 50 tons, that would make (during the term of the contract) at least two round trip voyages per month between what would become known as Santa Rosalía and the port of Guaymas, with stops in Mulegé, the capital town of the region. The ship would fly the Mexican flag and carry mail for free and for a fifty percent discount on the fare carry troops and employees of the government traveling on public service.41 The company was additionally required to establish within a year a smelter for the refining of the metals that it extracted.42 The land transferred totaled 20,627 hectares and the company paid 75 centavos per hectare, or 15,470 pesos for it.43 In addition, the company was to deposit within eight days of the date of the contract fifteen thousand pesos as a guarantee against the annual costs and salaries of the customs and captain of the port.44

While this contract with the Mexican government placed specific requirements on the newly formed company it also provided the company with numerous enticements. With a clear understanding of the potential for longer term profits the French bankers were more than willing to invest large amounts of cash up front, cash which otherwise was not available to the holders of the mining claims and which all those involved understood was necessary for the profitable development of the claim.45 The most costly of the requirements made of the company, the building of a smelter within a year, was understood by the company as a prerequisite for making any profit from the mines and was thus anticipated by the stock holders before it was ever made a requirement by the Mexican government. This type of agreement between the government and foreign capitalists, while not new in Mexico, was enjoying renewed interest on the part of those trying to find new ways to encourage foreign investment.

The Porfiriato: "Development from Outside"

The period of Mexican history known as the Porfiriato extended from 1876 until 1911. The name itself is taken from Porfirio Díaz, the man who was president of the republic during the entire period, with the exception of a four year interegnum during the years 1880 to 1884. The Porfiriato was a period of renewed attempts at state building and economic development for the nation. Expansion of the economy was extremely important to Díaz. Creation of the necessary conditions and incentives for such expansion was a priority. As Clifton Kroeber has written, "To him and his supporters it was the creation of wealth that was urgent. All the other fine things -- an educated populace, a democratic polity, and a commonwealth as civilized as those of Europe -- would follow inevitably from the appearance of enough prosperity, enough wealth."46

Beginning in the 1870s Mexico became more fully integrated into the world economy. This was accompanied by similar changes in the political sphere. Transformation of the economy required changes in the countryís political organization. The engine driving the process of political and economic transformation of the 1870s was an inflow of capital from Europe and the United States.47 As Stephen H. Haber writes, "Indeed the two phenomena were organically linked; without creating change in the political sphere, the transformation of the economy could have gone only so far."48

During his first term, 1876 - 1880, Díaz met often with both Mexican and foreign entrepreneurs, actively encouraging their plans for trade and investment in Mexico and interceding for them with government agencies.49 The importance of foreign investment to growth had long been recognized, and after 1876 a new emphasis was placed on it. Stimulating foreign investment was never the only goal of Mexicoís development program and many policies were also directed toward native capitalists. But with Díazís active support, development policies helped to stimulate an influx of foreign capital. From 1876 to 1890 foreign investorsí interest in Mexico escalated steadily as the Díaz and González governmentsí successes with development programs were publicized in the capital markets of the world.50 These development policies were so successful that one Mexican scholar of the period calls the Porfiriato a classic case of dependent capitalism in expansion, or "development from outside."51 Mining, seen as the driving force behind Mexicoís economy since the colonial period at least in terms of foreign exchange, was recognized as an important avenue for necessary development.

Mining in Mexico: The Economic Engine that Could

While railroads enjoyed the heaviest amount of foreign interest and investment during the early decades of the Porfiriato, mining came in second. Mining, of course, had always been an important engine of Mexicoís economy. Mexicoís silver had been a major driving force for Spainís economy during the colonial period. During the first decades of independence no less central a Mexican leader than Lucas Alamán had worked actively to encourage the development of Mexicoís silver mines.

Carlos Pacheco, minister of development in the 1880s, was the dominant figure in the formation of development policy during that decade. He showed a deep passion for mining. He appointed commissions to investigate mining zones and prepare detailed reports on their potential, which the ministry would then attempt to distribute. In 1883 Pacheco commissioned a book on the importance of mining to Mexico which argued that expansion in agriculture and commerce would come from increased mining activity. It also argued that mining would stimulate immigration, by providing jobs which would be the best means of attracting colonists.52 Part of the problem for mining was the federal system of government. Until the 1880s the Federal Constitution allowed each state to control its own mining with its own laws. There was no national standard, no centralized mining law. This lack of what capitalists of the time considered a "rational" mining code in Mexico contributed to a lack of enthusiasm to invest.

In 1883 Pacheco created a commission which proposed modifying the Constitution to allow the Federal government to make all laws regulating mining. As part of a move to concentrate more power in the central government the Constitution was thus amended and in March 1884 Pacheco presented to the Chamber of Deputies a draft of a federal mining code. Passed on November 22 1884, the new code declared all previous mining legislation void and thus became the nationís only mining law. This gave the national government much more latitude for encouraging foreign investment in mining, which was sorely needed. The new law took a step toward abandoning the traditional Spanish concept that mineral wealth belonged to the state by declaring that coal and other mineral fuels as well as nonmetallic minerals belonged to the owner of the surface.53 Put into effect in 1885, it also made it possible for foreigners to acquire mining rights in frontier and coastal zones.54 Both of these aspects of the new mining law contributed to conditions that foreign capitalists found more favorable for investing as they more closely conformed to liberal ideas of ownership.

In 1885 Pacheco sent a circular to local officials requesting information on the causes of the current decadence in the mining industry and recommendations for stimulating its development. Responses attributed miningís problems to the same causes that it was felt had retarded Mexicoís economic development for generations; social instability, inadequate transportation, but most frequently, insufficient capital.55 The national government combined the more liberal mining laws with liberal concessions on duties to entice foreign investment. In October 1886 a contract allowed concessionaires to take over all abandoned mines in a region in the northern state of Sonora and exempted them from taxes and import duties for twenty years. In return, the concessionaires pledged to invest 500,000 pesos within five years and employ no less than seventy miners at all times and deposit a thirty thousand peso bond as guarantee they would meet all their obligations. Four other such contracts were signed before a special mining law of June 1887 was passed.56 These conditions should sound familiar, as they are similar to those found in the contract with Compagnie du Boléo. The move toward liberalization began to open up investment in and development of Mexican mining. While interest in Mexican mines on the part of foreign capitalists had traditionally been limited to the precious metals, chiefly silver, technological changes which began to take effect in mid century and build to a crescendo after that made another metal newly attractive.

Copper: The Red Metal

Copper possesses an ancient and noble history. Because of its malleability, ductility, and availability in easy to use form copper was the first metal to be used in any quantity.57 Its extraction from sulfides is not difficult, making it easy to acquire and use.58 Copperís use in weapons, tools, and utensils, first in its native state and later as an alloy with tin, marked the advance from the Stone Age to the Bronze Age. Copper was important enough to be fought over. In ancient times the island of Cyprus was the reason for war between Egypt and Rome and the other powers of the Mediterranean because of its extensive copper deposits.59 In mesoamerica copper was used by the pre-Columbian civilizations both for ornaments and tools and is included in Aztec tribute records.60

The Second Industrial Revolution: Copper Lights Up

Copper played an important role in the discovery and development of electrical power and its uses from the very beginning. The modern copper industry took off at mid 19th century. Rapid expansion went hand in hand with the Electrical Age, or the Second Industrial Revolution, which created new demands for the ore but also facilitated an expanded supply by permitting new refining techniques. In a few short decades electricity would revolutionize multiple aspects of human existence. World production of copper rose from an annual rate of about 50,000 tons in the 1870s to over 500,000 tons at the turn of the century.61

Demand for copper grew exponentially. One of the first useful applications of electricity was for the purpose of signaling. In 1837 Cooke and Wheatstone installed -- in an open section of the London and North-Western Railway between Euston and Chalk Farm -- the first electric telegraph put into commercial use. In 1846 the first commercial telegraph company was formed; by 1868 three such companies owned between them at least 16,000 miles of line.62 After two failed attempts a successful transatlantic cable was finally laid in 1865. Over 365 tons of copper were required for manufacture of the conductor of this cable alone.63 The 1870s brought Alexander Graham Bell and Thomas Edison and the telephone and incandescent lamp. Obviously the demand for copper was rapidly increasing.

The Volatile Copper Market: Instability, Attempted Control

The price of copper as a commodity on the world market, a market centered during the period in London, was volatile enough to cause concern among the major producers and consumers of the metal. This concern led to responsive actions including attempts to corner the world market, both by producers and consumers.

Orris C. Herfindahl, in his study of copper costs and prices, argues that the price of copper relative to wholesale prices of other goods has been stable over the longer periods between 1870 and 1957. That of course does not mean there was no volatility in the short term. From 1870 to 1914, Herfindahl notes, much of the fluctuation of price over the shorter periods was related to business cycles and to periods of collusion.64 Gaudalupe Nava Oteo notes that an excessive supply, caused by the opening of new sources, the increase in production at older ones, and technical improvements in mining and metallurgy during the period contributed to a lowering of copper prices.65 One indicator of the volatility of the world price for copper is the state of the market in 1885, the year El Boleo began operations. According to one source, the copper market was "at its worst" in 1885. Between 1860 and 1870 speculators had forced the price of copper up to 110 pounds sterling per ton. This led to overproduction and when the bubble burst the price collapsed to sixty pounds sterling per ton in 1880.66 Not surprisingly, the general condition of international markets also affected copperís price. The metalís price fell during the international crisis of 1883 - 84, followed by a strong recuperation in 1886.67

While the price of copper experienced instabilities and was at a low point in 1885, annual world production of copper in the six years leading up to the creation of the Compagnie du Boléo in that year increased by almost fifty percent. World production in 1879 was 149,156 tons and in 1885 reached 211,556 tons.68 Nava Oteo notes that the variations in the market price of copper depended greatly on the struggle between large international consortia disputing the domination of the world market. In addition, the countries which consumed most of the copper would occasionally stop buying with the hope of attaining "a more natural level of prices".69

Both rapid introduction of increased amounts of copper on the market by individual mines and attempts to control the market by regional production groups had depressing effects on the commodityís price. David Avery notes that during the 1880s increased production in the US contributed, along with depressions in trade, to fluctuations in the price of copper.70 By 1885 - 1887 the output and overseas sales of copper from the Anaconda mine in the US, the largest single producer at the time, increased to the extent that European mine owners, including the Rothschilds, became nervous that the large US exports were depressing world copper prices.71 An early attempt to corner the copper market from the production side occurred in 1886 when the Lake Pool producers in the US launched a price war, which drove the price down to ten cents a pound, half the average price of the previous decade.72

The greatest attempt to control the price of copper from the side of consumers was the French copper syndicate of 1887 - 1889, in which the French Rothschilds played a role.

The Rothschilds attempt to control the world copper market

The increase in demand for copper caused by the harnessing of electricity coincided with the Rothschild bankís increasing involvement in the red metal. The decision to invest in the mine in Santa Agueda was only the beginning of a strategy to attempt to corner the volatile and growing international copper market.

Between the years 1887 and 1889 a French syndicate, led by Hyacinthe Secrétan, the head of the Société Industrielle et Commerciale des Métaux (the largest manufacturer of brass and copper products in France), attempted to corner the world copper market. In October 1887 it formed a consortium backed by the Paris Rothschilds and others to provide advances and guarantees of up to £2,800,000 to allow him to try to corner the world market in copper.73 While the details of the corner are beyond the scope of this paper it is important to point out that the Rothschilds were involved, at least initially. It is likely that they had withdrawn their support after a short time.74 The fact that the corner took place during the first years of production at El Boleo should not be taken as coincidence. It was also at this time that, thanks to the vast profits the syndicate made during the first years of the monopoly, members of the corner bought shares in the mining companies whose copper they were buying.75 By 1888 the London and Paris Rothschilds had acquired a controlling interest in the Spanish Rio Tinto mines, which at the time produced more than ten percent of total world copper production.76 From the early 1890s on the Rothschilds began appointing nominees to the board and seem to have kept a controlling interest at least until 1954.77

The Rothschilds also involved themselves in US copper production in the last decades of the century. In 1883 the United States became the worldís largest copper producer, when output exceeded that of Chile. In 1884, the year before the El Boleo contract, an agent of the Paris Rothschilds sought to purchase the giant Anaconda copper mine but was turned down. By 1885 - 1887 (note again the dates, the early years of the Boleo company) Anacondaís production and overseas sales grew so large that European mine owners, including the Rothschilds, became nervous. Large US exports were depressing world copper prices.78

This then was the year that Secrétan and his partners, including initially the Rothschilds, attempted their corner. This strategy, frequently tried during this period of instability for capitalists, was an attempt to stabilize the market, and not coincidently, insure greater profit.

While the short lived Secrétan corner failed in 1889 the Rothschilds continued to attempt to control the world copper market. In 1892 the French Rothschilds again began negotiations to buy the Anaconda mine. In mid-October 1895 the Rothschilds, French and British, bought one quarter of the stock in Anaconda for 7.5 million dollars.79

By the late 1890s the Rothschilds probably had control over the sale of about forty percent of the worldís copper production. During that decade Anaconda was the premier copper producer in the world and therefore an important link in that control. The Rothschild role in Anaconda was however brief. By 1899 Amalgamated Copper acquired majority stock in the Anaconda Copper Company and the Rothschilds seem to have had no role any longer in the company.80

Taken in the international context of the Secrétan corner and attempts to control two of the largest copper producers in the world, Rio Tinto and Anaconda, the Rothschild interest in an undeveloped but promising copper mine in the frontier of northern Mexico becomes a piece of a larger, global strategy. Not that the copper produced at El Boleo was an insignificant amount. In 1898, for example, El Boleo was rated ninth in world copper production. Mexicoís share of world production also increased tremendously during this period. In 1882 Mexico was in last place among the worldís copper producing nations. By 1901 Mexico rose to second place.81 The 1890s was also the decade in which El Boleo produced more than fifty percent of Mexicoís copper.

Conclusions: Circumstances and Opportunities Taken

By examining the various circumstances and motivations which led to a particular event or process we can better understand cause and effect in history. While those who controlled vast amounts of capital in the last decades of the nineteenth century were able to effect much (so much that the period is thought of as a high mark of imperialism and led to such reactions as the creation of antitrust legislation in the United States and such upheavals as the Mexican and Russian revolutions and the First World War) they were limited in what they could do by the circumstances in which they had to act.

The Paris Rothschilds, the lead capitalists in my story, would have gained little by investing in Mexican copper a few short years earlier. There was insufficient world demand for the copper they might have produced and the Mexican government was as yet in no position to help them with concessions and a more liberal mining code. It was only the new demand for the red metal created by the harnessing of electricity and its requirement of copper, coupled with the Mexican governmentís newly emerging centralization and programs to encourage foreign investment, especially in the mining industry, coupled with the earlier discovery of copper in the region, which created conditions amenable to the infusion of Rothschild money there.

This also was the time when the Rothschilds themselves were looking for new avenues in which to invest their capital because of changes in the banking world in Europe and the amount of capital they had available. The Rothschilds had already moved into mining and metallurgy and had previous successful experience with copper, if only as an importer. The circumstances appeared ripe for investing in a promising mining region in the desert of Northern Mexico.

The Rothschildís decision to invest in Santa Rosalía, Mexico can be understood as an early move in a strategy to attempt to control world copper production, and thereby its price and their own profits. Such an understanding suggests a new thread to the story of how international capitalism reached the peripheries. Late nineteenth century capitalistsí fears of instabilities in commodities markets drove those who could into strategies of control, strategies that were quite contrary to the free market ideas capitalists are "supposed" to believe in. These strategies did not have to succeed in their original intent to lead to consequential change. While the Rothschilds never did succeed in their attempt to control world copper production, the El Boleo mine created "under circumstances directly encountered, given and transmitted from the past" demonstrated by its success the way for similar endeavors. The Mexican government continued to liberalize its mining laws, other foreign capitalists invested in Mexicoís copper industry, and Baja California won itself a new place both in Mexico and in the world.


1 Published copy of contract, Archivo Histórico Pablo L. Martínez. La Paz, Baja California Sur (hereafter AHPLM), box 197 1886 enero Ramo fomento, dated 17 december, 1885. The original signing date is elsewhere stated as 7 June, see AHPLM, caja 269, marzo 4, 1895, gobernacion, exp. 29

2 For a breakdown of ownership of shares of the company see, Isabelle Dumielle - Chancelier, "La compagnie du boléo, 1885 - 1954" (Ph. D. diss., Université de Paris I. Panthéon - Sorbonne U. F. R díHistoire de líAmerique Latine, Paris, 1993), 95.

3 Engineering and Mining Journal, Vol. XLVII no. 10, March 9, 1889: 243. (Hereafter, EMJ)

4 AHPLM, caja 225 nov. 29, 1890.

5 For example; in 1887 El Boleo produced 1,982 tons of a national total of 2,084, four years later national production was 5,209 tons of which Boleo produced 4,167. Guadalupe Nava Oteo, "La Minería," in Historia Moderna de Mexico: El Porfiriato, La Vida Economica, ed. Daniel Cosío Villegas (Mexico: Editorial Hermes, 1965), 194. In 1894 El Boleo produced 10,371 tons while "other" production in Mexico equaled 1,400. In 1895 Boleo produced 10,450 tons, the rest of Mexico, 1,170 tons. EMJ, Vol. LXVIII, no. 7, (Aug. 12, 1899).

6 The company began to report a profit in 1892 but did not pay a dividend to its shareholders until 1896 EMJ, Vol. LV, no. 24, (June 17th, 1893): 568; EMJ, Vol. LXII, no. 24, (June 12, 1897). "Assemblée générale ordinaire du 30 Mai 1896" Centre des Achives du Monde du Travail, Archives Nationales, Roubaix France, (hereafter CAMT), 65 AQ L 2061.

7 For the railroad, see John A. Kirchner, Baja California Railways, (Los Angeles: Dawsonís Book Shop, 1988), 189. He writes that the Boleo rail system at its largest covered some 45 kilometers around World War I. 1898 was the last year that El Boleo produced more than half of Mexicoís copper. Figures for that year were 9,436 tons for El Boleo, 6,232 tons for the rest of Mexico. EMJ, vol. LXVII, no. 7, (Aug. 12, 1899): 182.

8 Karl Marx, The 18th Brumaire of Louis Bonaparte, (New York: International Publishers, 1963), 15.

9 Jorge Luis Amao Manríquez, Baja California Sur, de 1879 a nuestros dias, p. 687.

10 Memoria de fomento, 1883 - 1885, (Mexico, 1885), 130.

11 Secretaria de Economia, Direccion General, Estadisticas Sociales del Porfiriato, 1877 - 1910, (Mexico: Talleres Graficos de la nacion, 1956), 68. For contrast, the population density for the Federal District for the same dates was; 226.03, 317.87, and 361.31.

12 boletin del ministerio de fomento de la republica mexicana, tomo x, num. 124 (March 4, 1886): 495

13 Pierre Bariand, J. C. Boulliard, and Isabelle Chancelier - Dumielle, trans. Winifred Guershon. "Boléo Baja California, Mexico," The Mineralogical Record, (Jan - Feb. 1998): 8.

14 Juan Manuel Romero Gil, El Boleo, Santa Rosalía B.C.S. Un Pueblo que se negó a morir 1885 - 1954 (Hermosillo, Sonora, México: Universidad de Sonora Editorial Unísono, 1991), 113.

15 Edith J. González Cruz, "La Compañia El Boleo su Impacto Social, Económico y Político en la Municipalidad de Mulegé (1885 - 1918)" (Tesis Maestra, Universidad Autónoma de Baja California Sur, 1997), 16.

16 The story, or romance, of the discovery of the copper nodules, called "boleos," has been repeated in almost all accounts of what would become the Boleo company and Santa Rosalía since before their beginning. I take it here from the study of the region performed for the French company considering investing in it, G. de La Bouglise, E.; Cumenge, Étude sur le District Cuprifère Du Boleo, (Paris: Imprimerie et librairie centrales des chemins de fer, 1885), 13 - 14. CAMT, 132 AQ 110. (The authors call the mining operations they observed "primative.") The discovery tale was originally in Manuel Tinoco, "Noticia de las minas de cobre en actual explotación en el distrito mineral de Santa Agueda, Municipalidad de Mulegé" Minero Mexicano, Tomo 2 (1874). As Tinoco was himself one of the earliest operators of mines there the story may have some veracity, but in the present authorís interview with officials of the company which now owns the mining claims the officials doubted this story. I repeat the story here not because of any accuracy of the account but because it has always been the accepted myth of the discovery and is therefore an important part of the lore of Santa Rosalía. For details on the operations of the small companies which worked the Santa Agueda mineral region before 1885 see González Cruz, 19 - 35.

17 Bouglise and Cumenge point out that the statistics are questionable as the ores frequently arrived at their European destinations unnoticed as being specifically from the Santa Agueda region. Bouglise and Cumenge, 14.

18 Marvin D. Bernstein, The Mexican Mining Industry 1890 - 1950, (Albany, N. Y: State University of New York, 1965), 24.

19 Bernstein, 24.

20 González Cruz, 19.

21 Romero Gil refers to the two companies as those of Tinoco and Eustanquil Valle, and Eisenmann and Müller, 55. Dumielle - Chancelier refers to a company of Eisenmann and Valle, La Compagnie du Boléo, 1885 - 1954, 120.

22 Niall Ferguson, The Worldís Banker The History of the House of Rothschild (London: Weidenfeld and Nicolson, 1998), 1.

23 Ferguson, 3.

24 Ferguson, 3 - 7.

25 Ferguson, 876.

26 John McKay, "The House of Rothschild (Paris) as a multinational industrial enterprise: 1875 - 1914," in Multinational enterprise in historical perspective ed. Alice Teichova, Maurice Levy - Leboyer, and Helga Nussbaum (Cambridge: Cambridge University Press, 1986), 75.

27 McKay, 75.

28 Ferguson, 7. For discussion of the Almadén mine and Rothschild control of the mine and world mercury supplies for the period see, Ferguson, 383, 432 and, María Cristina Urrutia de Stebelski, and Guadalupe Nava Oteo, "La Minería (1821-1880)" in Mexico en el siglo XIX, (1821 - 1910) Historia económica y de la estructura social, ed. Ciro Cardoso (México, D.F.: Editorial Nueva Imagen, 1980), 126; Newton R. Gilmore, "British Mining Ventures In Early National Mexico" (Ph. D. diss., University of California, Berkeley, 1956), 153 - 154; Herbert R. Lottman, The French Rothschilds: The Great Banking Dynasty Through Two Turbulent Centuries (New York: Crown Publishers, Inc., 1995), 29, 74.

29 McKay, 76.

30 McKay, 76 - 77.

31 McKay, 76-78.

32 McKay, 78 - 79.

33 McKay, 79. Dumielle - Chancelier, "La compagnie du boléo," 97. For a breakdown of the original owners and their shares see pp. 93 - 97. Founders parts, or shares, paid a higher return to their investors.

34 Bouglise, and Cumenge. For an account of the earlier visitors and their connection to the French capitalists see p. 14 of their report and the EMJ vol. XL, no. 22, Nov. 28, 1885: 367 for a letter from one of these earlier visitors, A. Derré and his account of the visit and its result. The date of theBouglise and Cumenge report, 15 december 1884, differs from the publication date but is the date of signature of the authors on the last page of the report. The report was initially presented in house, as it were, and only a bit later published, probably to be used to sell shares in the new company. Cumenge would become the first managing director of El Boleo and be quite involved in the lore of the company and its early years. A type of copper discovered for the first time there is named after him.

35 "Statuts de la Compagnie Du Boleo," CAMT, 132 AQ 113. This copy of the statutes actually dates from 1926 and includes modifications dated 1909, 1921, and 1926. In addition to the Boleo mines the company also stated that it might exploit other holdings in Mexico or other states as it saw fit.

36 "Statuts," 5.

37 Published copy of the contract, along with a decree from President Díaz, dated December 17 1885, AHPLM, box 187, 1886, ramo fomento.

38 Contract, article 6, parts. I and II.

39 Contract, article 6, part III. The company did export at least one other product, probably more as a byproduct of other needs than as planned production. For fiscal 1897/98 export figures included 55 tons of leather hides, AHPLM, caja 266B, enero 15, 1899, gobernacion exp. 154.

40 Contract, Article 5.

41 Contract, Article 8.

42 Contract, Article 13.

43 Romero Gil, 56.

44 Contract, Article 11.

45 The report from Bouglise and Cumenge stated that there was enough extractable copper ore of high enough quality to support a large scale operation there, under specific conditions which they elaborated in their report, for fifty years. The report laid out very specific plans and a proposed budget for such development. Bouglise and Cumenge, passim.

46 Clifton Kroeber, Man Land, and Water: Mexicoís Farmlands Irrigation Policies, 1885 - 1911. (Berkeley: University of California Press, 1983), 29 quoted in, Stephen H. Haber, Industry and Underdevelopment (Stanford: Stanford University Press, 1989), 22.

47 Haber, 12.

48 Haber, 20.

49 Kennett S. Cott, "Porfirian Investment Policies 1876 - 1910" (Ph. D. diss., University of New Mexico, Albuquerque, 1978), 55 - 56.

50 Cott, 272

51 Cardoso, Mexico en el siglo XIX, 267.

52 Cott, 93 - 97.

53 Cott, 95 - 97. Bernstein, 18. "In one stroke the Mexican government completely unified all its mining legislation." Bernstein, p. 19.

54 Guadalupe Nava Oteo, "La Minería," in Historia Moderna de México: El Porfiriato, La Vida Economica, v. 7, ed. Daniel Cosío Villegas (México: Editorial Hermes, 1965), 266.

55 Cott, 234.

56 Cott, 235. Cott does not mention what these other concessions were. It is possilbe that the contract for El Boleo, which as we have seen included these types of concessions, could have been one of them.

57 Yvonne Levy, Copper: Red Metal in Flux (San Francisco: Federal Reserve Bank of San Francisco, 1968), 5.

58 Robert Bowen and Ananda Gunatilaka, Copper: Its Geology and Economics (New York: John Wiley and Sons, 1977), 1.

59 Levy, 5.

60 Elinore M. Barrett, The Mexican Colonial Copper Industry, (Albuquerque: University of New Mexico Press, 1987), 11.

61 Levy, 5.

62 Copper Development Association, Copper Through the Ages (Millbank, London: Thames House, 1934), 41.

63 Copper Development Association, 42.

64 Orris C. Herfindahl, Copper Costs and Prices: 1870 - 1957 (Baltimore: Johns Hopkins Press, 1959), 202.

65 Nava Oteo, 207 - 208.

66 Pierre Bariand, J. C. Boulliard, Isabelle Chancelier - Dumielle, trans. Winifred Guershon "Boléo Baja California, Mexico," special edition, The Mineralogical Record (Tucson, Arizona: Mineralogical Record, jan - feb. 1998): 11.

67 Fernando Rosenzweig, "El Comercio Exterior," Historia Moderna de México: El Porfiriato, La Vida Economica, v. 7, ed. Daniel Cosío Villegas (México: Editorial Hermes, 1965), 686.

68 El Progreso Minero, tomo 1 num. 22, junio 4, 1885: 348. Note that these figures are either for a fiscal year ending before June or the figures for 1885 are either projections or for half the year.

Nava Oteo, 207 - 208. I will leave for another time any discussion of what a "natural" level of prices would mean.

69 David Avery, Not on Queen Victoriaís Birthday: The Story of The Rio Tinto Mines (St. James Place, London: Collins, 1974), 154.

70 Mira Wilkins, The History of Foreign Investment in the United States to 1914, (Cambridge, Mass.: Harvard University Press, 1989), 265.

71 Levy, 8.

72 David Avery, Not on Queen Victoriaís Birthday: The Story of the Rio Tinto Mines (London: Collins, 1974), 154 - 155. M. A. Abrams, "The French Copper Syndicate, 1887 - 1889," Journal of Economic and Business History 32, vo. 4, (1931), 413. Abrams identifies Secrétan as Eugéne Secrétan.

73 Mira Wilkins writes that in February 1889 the French Rothschilds cancelled their contract with Secrétan. Mira Wilkins, The History of Foreign Investment in the United States to 1914 (Cambridge, Massachusetts: Harvard University Press, 1989), 265 - 266.

74 Avery, 155.

75 Ferguson, 878 - 879.

76 Avery, 156. It is interesting, though perhaps only coincidental, to note that 1954 is also the year that the French company sold El Boleo, which was no longer profitable, to the Mexican government.

77 Wilkins, 265.

78 Wilkins, 266.

79 Wilkins, 264 - 267. She suggests that the reason they withdrew from Anaconda was that reports suggested that its resources were near exhaustion, p. 274.

80 Harold D. Huycke, Jr., To Santa Rosalia: Further and Back (Newport News, Va.: Mariners Musuem, 1970), 40. Guadalupe Nava Oteo, Historia moderna, 194.

81 In 1895 the Rothschilds, French and British, bought one quarter of the stock in Anaconda for 7.5 million dollars.

By the late 1890s the Rothschilds probably had control over the sale of about forty percent of the worldís copper production. During that decade Anaconda was the premier copper producer in the world and therefore an important link in that control. The Rothschild role in Anaconda was however brief. By 1899 Amalgamated Copper acquired majority stock in the Anaconda Copper Company and the Rothschilds seem to have had no role any longer in the company. [note truncated RCH]