Second Mexican Empire

Role of France

Napoleon III had more ambitious goals than the recovery of France's debts. Heavily influenced by his wife Empress Eugenie, he was intent on reviving the Mexican monarchy. Prior to 1861 any interference in the affairs of Mexico by European powers would have been viewed as a challenge to the U.S., and no one wanted to provoke a conflict with them. In 1861 the U.S. was embroiled in its own conflict, the American Civil War, which made the U.S. government in Washington, D.C., powerless to intervene. Encouraged by Empress Eugenie, who saw herself as the champion of the Catholic Church in Mexico, Napoleon III took advantage of the situation.

Napoleon III saw the opportunity to make France the great modernizing influence in the Western Hemisphere, as well as enabling the country to capture the South American markets. To give him further encouragement, there was his half brother, the duc de Morny, who was the largest holder of Mexican bonds.

Chronology

Railways

One of the main challenges encountered by the Emperor was the lack of sufficient infrastructure to link the different parts of the realm. The main goal was connecting the port of Veracruz and the capital in Mexico City. In 1857, Don Antonio Escandón secured the right to build a line from the port of Veracruz to Mexico City and on to the Pacific Ocean. Revolution and political instability stifled progress on the financing or construction of the line until 1864, when, under the regime of Emperor Maximilian, the Imperial Mexican Railway Company began construction of the line. Political upheaval continued to stifle progress, and the initial segment from Veracruz to Mexico City was inaugurated nine years later on January 1, 1873 by President Sebastián Lerdo de Tejada.

In 1857 the original proprietors of the government concession, the Masso Brothers, inaugurated on the 4th of July the train service from Tlatelolco, in México City, to the nearby town of Guadalupe Hidalgo.^[6] Eventually they ran out of funds and decided to sell it to Manuel Escandón and Antonio Escandón.^[7] The Escandón Brothers continued working and the project, and Antonio Escandón visited the United States and England in the last months of the year. In the first country, he hired Andrew Talcott, and in the latter, he sold company stock. Exploration of a route from Orizaba to Maltrata was performed by engineers Andrew H. Talcott and Pascual Almazán.

During the French intervention, part of the railways were destroyed. The only option available was the establishment of a pact between the French Army, and the two companies of the Escandón Brothers. The French Army was to provide a subsidy to the companies of 120 000 francs a month for the works, and the companies were to establish service from Veracruz to Soledad para by May, actually concluding on August 15, 1862, concluding 41 kilometres of tracks. Next they reached the Camarón station, with a length of 62 kilometres. By October 16, 1864 they reached Paso del Macho with a length of 76 kilometres.^[8]

On September 19, 1864, the Imperial Mexican Railway Company (Compañía Limitada del Ferrocarril Imperial Mexicano) was Incorporated in London to complete the earlier projects and continued construction on this line. Escandón ceded his privileges to the new company. Smith, Knight and Co. was later contracted in 1864 by the Imperial Mexican Railway to continue work on the line from Mexico City to Veracruz.^[9] William Elliot was employed as Chief Assistant for three years on the construction of about 70 miles of the heaviest portion of the Mexican Railway, after which he returned to England. He had several years of experience building railways in England, India, and Brazil. In this last country, he held the position of Engineer-in-Chief of the Province of São Paulo.^[10]

Maximiliano I hired engineer M Lyons for the construction of the line from La Soledad to Monte del Chiquihuite, later on joining the line from Veracruz to Paso del Macho.^[11] Works were begun in Maltrata, at the same time that the works from Veracruz and Mexico City kept moving forward. By the end of the Empire in June 1867, 76 kilometers from Veracruz to Paso del Macho were functional (part of the concession to Lyons) and the line from Mexico City reached Apizaco with 139 km.^[12]

Banking

Before 1864, there was no banking in Mexico. Credits were obtained from religious orders and merchant guilds. During the French Intervention, the branch of a British bank was opened. The London Bank of Mexico and South America Ltd began operations with a capital of two and a half million pesos. It belonged to the Baring Brothers Group, and had its head office in the corner of the Capuchinas and Lerdo Streets in Downtown Mexico City.^[13]

Foreign Trade

At the beginning of the American Civil War, the city of Matamoros was simply a sleepy little border town across the Rio Grande from Brownsville.^[14] It had, for several years, been considered a port, but it had relatively few ships arriving. Previous to the war, accounts mention that not over six ships entered the port each year.^[15] Nevertheless, in about four years, Matamoros, due to its proximity to Texas, was to assume state as a port, and multiply its inhabitants in number. Following is a quote from a Union General in 1885 describing the importance of the port in Matamoros:

Matamoros is to the rebellion west of the Mississippi what New York is to the United States—its great commercial and financial center, feeding and clothing the rebellion, arming and equipping, furnishing it materials of war and a specie basis of circulation that has almost displaced Confederate paper...The entire Confederate Government is greatly sustained by resources from this port.^[16]

The cotton trade brought together in Bagdad, Tamaulipas and Matamoros over 20,000 speculators from the Union and the Confederacy, England, France, and Germany.^[17] Bagdad had grown from a small, seashore town to a "full-pledge town."^[18] The English-speaking population in the area by 1864 was so great that Matamoros even had a newspaper printed in English—it was called the Matamoros Morning Call.^[19] In addition, the port exported cotton to England and France, where millions of people needed it for their daily livelihood,^[20] and it was possible to receive fifty cents per pound in gold for cotton, when it cost about three cents in the Confederacy, "and much more money was received for it laid down in New York and European ports."^[21] Other sources mention that the port of Matamoros traded with London, Havana, Belize, and New Orleans.^[22][23] The Matamoros and New York City trade agreement, however, continued throughout the war and until 1864, and it was considered "heavy and profitable."^[24]

By 1865, Matamoros was described as a prosperous town of 30,000 people,^[25] and Lew Wallace informed General Ulysses S. Grant that neither Baltimore or New Orleans could compare itself to the growing commercial activity of Matamoros.^[15] Nevertheless, after the collapse of the Confederacy, "gloom, despondency, and despair" became evident in Matamoros—markets shut down, business almost ceased to exist, and ships were rarely seen.^[26] "For Sale" signs began to sprout up everywhere, and Matamoros returned to its role of a sleepy little border town across the Rio Grande.^[27]

The conclusion of the American Civil War brought a severe crisis to the now abandoned Port of Bagdad, a crisis that until this day the port has never recovered from.^[28] In addition, a tremendous hurricane in 1889 destroyed the desolated port. This same hurricane was one of the many hurricanes during the period of devastating hurricanes of 1870 to 1889, which reduced the population of Matamoros to nearly half its size, mounting with it another upsetting economic downturn.^[29][30]