Contenido

Particularmente en el caso mexicano, el llamado crac del 29 no fue el detonante para su depresión. En realidad, este suceso comenzaba a mostrar señales de vida desde 1925 principalmente por la disminución en las exportaciones como lo fue el petróleo, el cual fue causado por el descubrimiento y explotación de nuevos pozos en Venezuela. Las consecuencias del crac y de las distintas políticas gubernamentales tuvieron un alcance internacional debido a la interdependencia financiera existente. En el caso particular de México, la relación era sumamente estrecha. Cualquier modificación en el mercado estadounidense afecta directamente al mexicano.

La exportación de minerales representaba una suma importancia al ser el sesenta por ciento del total, modificando de manera significativa la balanza comercial. Además, el flujo de capitales provenientes de Estados Unidos disminuyó en gran medida siendo la entrada de dinero más importante del país. Otro sector afectado fue el de la minería. Tanto la producción como la cantidad de trabajadores disminuyeron a más de la mitad en dicha época. Cayó la demanda estadounidense por las materias primas y bienes manufacturados. En contraste, el gobierno de Herbert Hoover validó severas restricciones comerciales al establecer altos precios de aranceles y otras leyes de índole proteccionista. Por otro lado, a pesar de la gran interdependencia entre los dos países mencionados, la economía mexicana se encontraba en un estado de vulnerabilidad. Desde la crisis interna de 1925, la producción caía de manera significativa. Los acuerdos mexicanos relacionados con el intercambio se redujeron un cuatro por ciento entre los años de 1926 y 1929, a pesar de la gran demanda de minerales para exportación.

Otro de los sectores afectados fue el de la agricultura con la presencia de malas cosechas en 1929. Finalmente, el sector con mayores consecuencias fue el financiero debido al aumento de los precios de los préstamos. Se creó una distorsión negativa al ver que los precios de productos nacionales no iban en caída.[3]​.

Economic structure of Mexico at the beginning of the 1930s

In the 1920s, three fundamental elements began to be taken into account for the study of the structure of the economy. One of them is the characterization of economic groups within the national economy that interact with each other. The second element, from the sensory point of view, analyzes the structure of the economy; This element focuses on the balance of payments, on relative productivities and their participation in product and growth. Finally, the third element that is taken into account is the study of the external sector that influenced the transmission of the problem within the country in the enclave sector.[4]​.

Basic Economic Groups.

The four basic economic groups that make up the Mexican economy are: the external, the urban, the semi-rural and the rural. These date back to long before the 1930s. The external sector essentially included agricultural activities, mining and the oil industry, mainly for export. These activities were called “enclaves”, since they were carried out by a minimum number of workers and their production was mostly for export and the owners were foreigners. The industries in charge of this were enclaves since they had limited links with the rest of the economy. Furthermore, this sector responded to the costs of extracting natural resources and growing crops for export and to the conditions of the international market.

The rural sector constituted the largest population concentration group in the country with 66.5% living in communities of 2,500 inhabitants during the 1930s. This sector absorbed 68% of the population for work forces. The group had no contact with the rest of the economy, since it focused on agriculture and production for self-consumption. This sector depended on climatic conditions and agrarian reform programs that helped its prosperity, as well as on other groups.

In the semi-rural sector, there were communities of between 2,500 and 15,000 people. 30% of the population belonged to this group in 1930. Most of the individuals carried out semi-commercial agricultural activities, acquired other goods manufactured domestically or industrially, and also provided some communication and commerce services. This is why it was called the transition sector.

The urban sector represented a minority in the Mexican population, it only represented 17.5% of the total population, and this group was the most important within the market for the industrial sectors and those that provided some service.

The external sector directly influenced the country's economy. The demand for labor within said industry changed according to the production it generated. The external sector also had an important collection of tax revenues, for example: taxes paid by industries, when there was a boom within the extractive sector, in government spending and aggregate demand, the same thing happened. When the industry encountered difficulties, either due to a lack of external demand or low tax revenue, government spending and aggregate demand decreased in the same way. Finally, the external sector affected the behavior of the industrial sector since it required both capital and foreign raw materials. The urban group was the most affected by both the decisions made by the government and the fluctuations of the external sector.

Through the flow of currency and fiscal links, a great impact was had on the modern sector. There were two types of relationships between sectors. The first involved links between producer and consumer. The rural sector is isolated from the economy and the external sector was producing small portions of its production for industrial use or self-consumption. The semi-rural sector produced for its own consumption and the surpluses were marketed in the different cities. The second talks about how the urban sector offered industrial goods, services to other sectors and for their own consumption.[5]​.

Sectoral structure

The population is dispersed within the communities, for example, 66% live in rural communities with a maximum of 2,500 inhabitants and 17.5% live in cities with more than 15,000 inhabitants. This reduced the market and increased transportation and transaction costs. Another limitation of the market for industrial goods and services was the low agricultural productivity that existed. On the other hand, it could be observed that the Mexican economy was segmented both in labor force and in sensory distribution of income, showing great differences between the less productive sector (rural) and the industrial and services sector. 52% of goods acquired abroad were imports into Mexico of services and merchandise and 42% of their value was sent abroad as remittances. 95% of exports were in merchandise such as gold and silver. The mining and oil industries were responsible for 80% of the transfers, this reflects that Mexico was exporting substantial quantities of goods and could only import goods for a fraction of this amount (57.4%).

Thanks to the above, variations in the level of exports were not related to purchasing power. This relationship depends on the relative distribution of profits, wages and raw materials used in export industries and the prices of imports. It should be noted that only 2.2% of all imports were covered by new long-term foreign investment. This figure shows that most of the foreign investment was financed by reinvestment of profits and with internal resources.

With respect to export products, gold and silver deposits and coins reached 16% of the exported value in the period between 1925 and 1928, oil and its derivatives obtained 28%, while 29% was made up of other mineral products. Another important group of export products was unprocessed agricultural products, which reached 24%.

Between 1925 and 1928, consumer goods and tobacco represented 13% of total imports, while durable goods only represented 21%. Capital goods were the most imported product with 28%, followed by raw materials with 26% and the rest represented unclassified goods. This reflects that the economy was struggling to domestically produce goods that required relatively simple technology, such as some processed foods and non-durable consumer goods. Even with these efforts, Mexico still did not produce capital goods and strictly depended on other markets to supply this sector. This is reflected in its commercial dependence on the United States in the 1920s since they bought 66% of Mexican exported products and sold 69% of their imports to Mexico.[4]​.

The Enclaves

Enclaves are the forward and backward links, this reflects the demand that specific industries generated for domestic inputs and the benefit of domestically producing certain goods, such as oil and minerals, so that other industries could use them as inputs. To know if a link is an enclave, the return value of exports must be measured, which is only measured in comparative terms.

There are three key characteristics of the 1930s enclave. First, it was estimated that about 85% of the export sector belonged to foreigners: oil, minerals and agricultural products. Of this percentage, around 97% of industries were owned by foreigners and made up 97% of all exports. Second, these industries were very limited in their forward links, since 81% of their production was destined for the external market, which was practically all oil production, and many of these products were reimported after being processed abroad. The third characteristic refers to the return value of exports. It is defined as the part of the value of exports that remains within the country and takes into consideration the nationality of the owner, the amount spent on taxes, workers, transportation, national raw materials, etc. This allows us to measure what effect external fluctuations had on the volume and value of exports and on domestic aggregate demand.

In addition, the return value can also give insight into the transmission mechanism of external economic shocks. Only in the case of oil it was said that 15% of gross production was allocated to paying taxes. The return value of exports in 1926 was two-thirds, compared to 58% in 1940 after the oil expropriation. Oil shows a very low return value, 39% in 1926. Mining had a return value twice that of the oil industry, that percentage reached 99%. Other activities returned with a value of between 82% and 87%, the corresponding proportion of the industry in foreign hands varied from 12% to 86%. The greater the proportion of national inputs in gross production, the return value of exports will be even greater.[4]​.

El canal por el cual fue inyectada la Gran Depresión a México fue a través del comercio exterior, particularmente en las exportaciones de metales, así como también del petróleo. El desplome de la actividad económica en E.U consecuencia del colapso de Wall Street en el año 1929, trajo consigo que nuestro socio comercial redujera sus importaciones y sus insumos de forma drástica, tal que para 1932 México únicamente vende 2 terceras partes de petróleo y metales de las que vendía en 1929. Antes de 1929, ya la economía de México comenzaba a mostrar síntomas de estancamiento y caos, pero también de una reorganización.[6]​.

En México no se dio una quiebra de bancos de manera generalizada después de la crisis monetaria. El entonces secretario de Hacienda y Crédito Público, Luis Montes de Oca, prefirió una política de mantener al precio que fuera, el balance fiscal, así como también una estabilidad en el tipo de cambio. En consecuencia, se llevó a cabo una política que incrementaron los impuestos, recortaron personal en el gobierno y a quienes conservaron su empleo se les disminuían los salarios. Lejos de resultar beneficiosas, estas medidas grabaron los efectos del choque, puesto que los despidos de personal y los salarios se trasladaron a directamente una demanda agregada menor y esto a su vez trajo como consecuencia una reducción de la propia actividad económica junto con los ingresos fiscales.

Gross domestic product

During the 1920s, Mexico could be considered an incredibly rural country, this trend continued until the early 1940s, however, this reason may explain why sectors and regions were seriously affected. This is clearly focused on the fall in raw material prices, as well as demand. The consequences of the Great Depression in the Republic were very delicate. On the one hand, between the years 1929 and 1932, real GDP fell by around 17.6%, which represented an annual drop of 47% during this period, while on the other, restrictive fiscal and monetary policies did nothing more than increase the recessionary effects, which in turn caused a fall in exports. In our country Luis Montes de Oca was a defender of an orthodox policy, as was Alberto Pani, who had the task of not only defending but also advancing alternative politics.[3]​.

The discussion about the effect that the Great Depression brought on Mexico continues to be debated given the arrival of new positions over time. The Mexican Revolution along with the Great Depression contributed to the course of Mexico's economy in subsequent years. Both periods must be analyzed together to achieve a greater understanding of history. The most accepted version establishes a minimal impact of the United States on the Mexican economy given its partial autonomy with short-term effects. This argument is supported due to the rural condition that the country experienced in the 1920s, which was the case until approximately the end of the 1940s. There was isolation from the world economy due to the results implied by the Mexican Revolution.

Due to the two aforementioned arguments, it is argued that the majority of people dedicated to the countryside went unnoticed by the crisis thanks to their own production and extremely restricted market relations. Despite this, some sectors and specific regions did perceive it due to the decline in the price of raw materials and demand. Compared to other Latin American countries, Mexico could be perceived as having better economic development and a better outlook due to the implementation of the monetary policy known as “Keynesian before Keynes.”

Despite there being a version of the reduced effects of the crisis, there are various sectors that could establish the opposite from their own experience.

For example, farmers dedicated to cotton production in Mexicali were pressured by the winter crisis of 1931. They had relatively small salaries paid in silver. Day by day they lost purchasing power due to the lost value of the peso against the dollar, making it extremely difficult to cover their basic needs. During this same year, the estimated population in Mexico was just over 16 million inhabitants, considering this figure it is alarming that the unemployed population was 287 thousand.[3] So you can see the two points of view on the impact that the Great Depression had in Mexico on specific sectors, some going unnoticed while the others could not even satisfy basic needs.[4]​.

Agriculture

Within the sectors of the population in the 1930s, agricultural workers constituted approximately 66.5% of the country's total population. This was primarily dedicated to agriculture, it did not have any contact with the rest of the productive chain since its life took place exclusively in the countryside, and part of the production was destined for subsistence.

Despite covering the vast majority of workers, the agricultural sector only produced 22% of national income. Compared to the rest of the activities that represented only 30% of workers, they produced around 78% of income. This meant that the productivity of the countryside at that time was very low compared to other sectors. The low productivity of this sector and the insecurity regarding property discouraged the investment that existed on the part of the government, which in turn generated great rejection by the farmers.[3]​.

As a consequence of the Great Depression within this sector, the elements that had the greatest impact were those that had the external market as their main market. On the other hand, agriculture has always depended its results largely on the climate. Cotton is an example of the products that were hit hardest during the crisis period. On the other hand, cotton, coffee, henequen and tomatoes were products that represented close to 60% of the total value of exports between the period from 1925 to 1933. Just to be able to measure the great drop in exports, during the 1920s within the cotton industry, exports were more than 17 thousand tons per year while by 1932 this figure was reduced to only 5 thousand, but as the year progressed, the figures were only worsening, thus reaching just under 2.6 thousand.[3]​.

The panorama changed as soon as the anti-crisis measures were issued, since thanks to the devaluation of the peso the price of imports had increased. This not only gave way to replacing imports with national products, the industry also became more profitable due to the large amount of fixed capital that came into operation again, which in turn generated an increase in industrial productivity. Such was the increase in their performance, that a large part of the peasants became part of the labor sector, where salaries were higher.[7]​.

The railways

The imminent decline in product marketing during that time had a direct effect on railroad service. A decline was observed in exports, mainly of minerals and raw materials. The first symbolized a third of all the merchandise that was moved between 1929 and 1930. The other excess part of the cargo was divided into different sectors such as agriculture, forestry, oil, cement, and the processing industry.

As the years went by, railway service was in decline for both the transportation of goods and people. In 1932, from 14.3 tons that were transported in previous years, it reached 9.2 million, the same situation that was observed with passengers when they walked through the almost empty cars.

Given the situation, railway companies fell into financial crisis, as was the situation with National Railways. Despite being affected by the crisis, they had had enormous debts for years due to technical and organizational difficulties, as well as a lack of sufficient capital for financing. This led to a huge staff cut and salary reduction, making reductions of approximately 30% of the workers.

On the other hand, this decline in freight volume within the railways also showed inefficiency and speculation indices that had not been taken into account previously. The primary products used for export (cotton, coffee and sugar) were first moved to collection centers and then ended up in consumption centers. Therefore, the bill for what was transported by rail was higher than the harvest that had previously been earmarked for marketing. Therefore, it can be concluded that the aforementioned phenomenon gave rise to the reorganization of the runs and the organization of the railway service.[3]​.

To counteract the effects that the crisis had had in Mexico, the government of then-president Pascual Ortiz Rubio launched various plans. In 1931, the Calles Plan was carried out, which consisted of demonetizing gold for internal circulation, in addition to establishing the silver peso as a unit of the national monetary system. Likewise, it was determined that the Bank of Mexico was the only issuer of banknotes; this institution was also given the power of economic control by the Mexican state, leaving aside private banks. The failure of this plan was closely linked to the little support it had in the industrial sector, and its impacts were negative.10.

The Mexican economy was able to recover relatively quickly from the disadvantages of the Great Depression. In 1932, approximately before the end of the first half of the year, the business cycle bottomed out and the economy began to grow rapidly in the following decade. Such behavior contrasts sharply with the experience of the United States and other developed countries. countries, it took longer and the economic recovery began, but the situation in Mexico is very similar to the situation in several Latin American countries, mainly Brazil, Colombia and Argentina and others such as Australia and Sweden. The recovery of the Mexican economy has been driven by two main factors, on the one hand, the expected increase in the value of exports, mainly the increase in the price of silver and various mineral products, and the development of new oil deposits. This leads to an increase in the level of aggregate demand, just as the crisis reduced it. Furthermore, the greater import capacities that allowed the obtaining of raw materials allowed for rapid population growth due to unused capacity.[8]​.

The second and most important factor that contributed to the rapid economic recovery was the government's expansive monetary, fiscal, and exchange rate policies from the end of 1931 to 1933. These policies increased aggregate demand and production levels that, taking into account the installed capacity not used in 1935, exceeded the levels of 1929. For this recovery to be possible, certain economic institutions will have to undergo profound transformations throughout the period, especially to have the necessary economic policy instruments. That is, the Great Depression stimulated a series of changes in the institutions themselves and in other assets in the same market; for example, the crisis generated a shortage of money and the public once again accepted the banks. A Mexican bill that never happened almost 20 years ago.[8]​.

El comportamiento económico durante la recuperación fue desigual entre los diferentes sectores de la economía. Por ejemplo, en la década de 1930, el sector agrícola creció en un promedio de sólo 1,6% anual. Por un lado, los términos de intercambio internos, es decir, los precios en el sector urbano moderno y los precios en el área rural, favorecen a los primeros, reduciendo la transferencia de diversos recursos al sector. de la década de 1930, especialmente en la primera mitad, los términos de intercambio internos Un aumento del 73,1%. Este deterioro reduce el incentivo para la inversión y la producción agrícola y, a pesar de la ausencia de dificultades políticas rurales, solo se apartaron 5,3 millones de hectáreas debido a la política de asignación acelerada de tierras del gobierno en la década de 1930 entre 1916 y 1928, en comparación con 1929 y 1940.[8]​.

El crecimiento agrícola fue lento ya que el aumento de la tierra cultivable logró compensar la producción de los principales cultivos, que aumentó un 5,9% en la década de 1930. El sector industrial creció a una media del 6,1 % anual entre 1932 y 1940, por lo que en realidad fue el motor del crecimiento económico en la década de 1930, con el sector industrial aportando el 38 % de la economía nacional. crecimiento en esos años En la producción bruta, si bien su peso relativo es sólo del 16,7% de la producción total, su participación entre los vip ascendió al 18,2% a fines de la década. Así como los precios relativos locales cambiaron a favor de los sectores económicos modernos, la devaluación nominal del peso plata en un 64% entre 1929 y 1933 también cambió los precios relativos de los productos importados con respecto a la producción nacional. La relación disminuirá a medida que los bienes de producción nacional desplacen las importaciones, donde tanto los bienes de consumo duraderos como los no duraderos están experimentando un fuerte proceso de sustitución de importaciones, ya que sus relaciones disminuyen en casi un 55,9% a 9,3% desde 21,1% en 1929.[8]​.

Monetary Policy

In 1932, with the new president Abelardo Rodríguez, changes were made to the economic policies established in the last six-year term, which were known for following a “classical” model. A reform was made to the monetary law (Plan Calles) that was enacted in March of the same year, where the authorities decided to counteract the downward trend of the Mexican economy by promoting expansionary monetary policies that caused the peso to float freely. “Four years later the central bank began to engage in inflationary financing through government budget deficits, essentially with the objective of maintaining a high level of aggregate demand.”[5]​ The policies mentioned above were influenced by the model applied in the United States called “New Deal”, which took its foundations from economic measures established in Kant's economic model.

Another factor that contributed to the recovery from these ravages of the Great Depression were the dramatic changes in economic policy after 1932, the first of which was the orthodox approach of increasing the money supply and allowing a budget deficit. Because of this, the government refused to continue defending the exchange rate and the peso depreciated rapidly over the next two years. As imports become more expensive and the peso appreciates, the total volume increases, thus tending to be replaced by national production, while exports become more competitive and profitable.[8]​.

The measures implemented in 1933 revolved around three primary actions: one, to cover the debts that the Mexican government had "...through the extraordinary minting of silver in response to the plans of the United States government to increase its reserves...".[7]​ Second, to give the Bank of Mexico the unification of the issuance of banknotes, as they had proposed in the Calles Plan. Third, expansionist policies that would allow increased spending on infrastructure.[7]​.

The money supply increased by 72.3% between 1931 and 1934, while the price increased by 12.3% between 1932 and 1934. Meanwhile, between 1932 and 1963, the real budget deficit was about 1.2 percent of GDP. Alberto Pani decided to fight deflation by not falling into inflation during the first four months and had silver coins minted without publicly showing the use of Mexican banknotes since March 1932 to pay government officials to increase the currency. At the end of 1933, the silver mintage was 88.6 million pesos, while paper money was issued at 52.7 million. In addition, the Bank of Mexico reduced the discount rate and reserve requirements a few weeks after the effective monetary reform of 1931-1933.[8]​.

Fiscal Policy

The macroeconomic effects take place from 1920 to 1940, these are marked by two periods. In the first, it is considered that fiscal policy was essentially orthodox, in the sense that it always pursued a balanced budget, and that it prevailed from the second half of the 1920s until around 1936. From then on, budget deficits were accepted for the sake of economic growth and income redistribution, such that the government became rather unorthodox in this sense. Naturally, the duration of these two periods is closely related to the development of monetary policy and the central bank.

Clear examples of these two periods abound. Between 1926-1927 there was a substantial drop in tax revenues and a reduction in oil and mineral exports. Then because of the Great Depression, the government had to take extreme measures to balance the budget. Through the issuance of internal debt, especially monetary obligations, the economic development process of 1936 could be encouraged with the implementation of road construction, improvements in irrigation systems and railroads. President Plutarco Elías Calles, with the aim of promoting economic reconstruction and the construction of infrastructure, spent more than he had, which caused great repercussions on the Mexican economy. The additional expenditures made by the government were financed by internal savings, overdue debts and even unpaid salaries of bureaucrats. In 1927, Luis Montes de Oca, the new finance minister, was more successful than his predecessor in decreasing the level of spending. By the end of 1929, government expenditures had decreased from 325 million in 1926 to 276 million pesos. On the other hand, taxes were increased, particularly on the brewing industry. This tax, together with the recovery of the economy, allowed the increase in tax revenues to finance a decreasing level of expenses until 1929.

With the onset of the Great Depression, the flow of government revenue slowly declined despite the government's efforts to raise taxes. Expenses were substantially reduced in 1931 in the middle of the year, and because income had declined so much, a deficit of 80 million was observed. The government was able to reduce expenses by 60 million and the extraordinary tax of 1%, which covered the remaining 20 million. In 1932 the budget was balanced and the real level of income and expenses was 34.2% and 28.9% below those obtained in 1925. In 1932 the overdue debts had increased again and in 1933 there was a real fiscal deficit; Both were covered with the profits of the seigniory that resulted from the extraordinary minting of silver and the corresponding issuance of banknotes of those years.

Due to the low levels of the international price of silver in the early 1930s, the intrinsic value of the peso was below its monetary value. That is, the silver content of a peso made it actually worth only 34 centavos in 1932, which meant that the peso was 66% below its monetary value. In 1933, the intrinsic value of the peso increased to 47 centavos as a result of both the increase in the price of silver and the continued devaluation of the exchange rate. By law, the income obtained from seigniory profits had to be added to the silver reserves of the Bank of Mexico, with which the issuance of banknotes had to be supported and, consequently, finance the fiscal deficit.

Commercial policy

Taxes from international trade were important in income in the 20th century. Between 1925 and 1940 taxes continued to be of utmost importance even though fluctuating taxes had a share of 30% to 45% as did taxes on international trade.

To counteract the constant fluctuation of the trade tax rate in 1930, the committee involved in the study of rates and subsidies implemented a change in trade tax collection measures. It was agreed to implement a new rate to ensure that tax collection and more products were included in the market, and thus make operations more manageable. Thanks to this legislation, import tariffs increased, from 1929 to 1930 they increased from 22% to 29.1%.[5]​.

The undocumented Mexican population residing in the United States during the years of the Great Depression was significant. Their presence was seen in each of the counties, but this was alarming. Day after day, people with Mexican nationality who lived on American soil struggled to find employment. It was extremely difficult to be recruited by North American companies. For example, mines closed their operations only to native employees. Given this, any job that was lost by a Mexican or some other minority had to be taken as soon as possible by American workers. Protectionist policies were on the rise. In the event that there was a minimal possibility of participating for a job, Mexicans not only had to comply with the papers referring to their nationality, they also had to show those that clarified compliance with taxes.

The above is taken from the perspective of the United States side, but parallel effects also emerged on the Mexican side. Mexicans living in places near the Rio Grande threatened to break the chains of food consumption coming from the other side. However, at the end of 1931, a consensus was reached on the schedules of international bridges capable of connecting Ciudad Juárez with the United States. A step that was used every day by thousands of people to go about their daily activities. The repatriation brought with it opposite effects on the side of Mexico. Most of the city's defects were attributed to the so-called "commuters", that is, to people who lived on the Mexican side but worked in the United States. A kind of lack of sense of belonging arose among the inhabitants because it was thought that all the effort committed every day by Mexicans was going to benefit only the Americans. Now they not only had difficulties working in the United States, but they also had problems with their own family or friends. They were no longer fully accepted anywhere.

On the other hand, it was common for US immigration officials to deny the flow of Mexicans. Extreme measures were taken to the point of ensuring that they suffered from venereal diseases. Actions that were later suppressed due to the threat by the mayor of Ciudad Juárez regarding the elimination of consumption patterns of merchandise from the United States. That is why during the years of the Great Depression there was a huge flow of repatriates. This return culminated when the resources of their families were insufficient and unable to meet the needs of all members. The arrival of returnees created a kind of family tension because the families' perspectives on the future were completely different. Some had a focus linked to material aspirations, while the others sought to increase their productivity in the field.

Finally, another aspect that was affected by this event was the fate of the land acquired by Mexicans in the United States. By almost completely losing the possibility of employment in North American companies, land and houses that had been the result of much effort were lost, either due to lack of payments or for sale below their real value. The frustration of the emigrants grew more and more. Therefore, it can be concluded that the crisis caused not only economic effects, but also social and cultural effects for both sides of the border.[3]​.

Marichal, C. (2010) New history of the great financial crises. A global perspective. 1873-2008. Mexico, Debate, pp. 85-135.

Gómez A. (2002) The economic policy of the new regime. Alberto J. Pani 1923-1927, 1931-1933. Mexico, UNAM, pp.381-412.

• - Migration from Mexico in the 20th century: https://web.archive.org/web/20161203061117/https://eldivagador.com/2016/02/03/100-anos-de-migracion-en-mexico-de-la-revolucion-mexicana-a-la-gran-depresion-1910-1940/.

• - Documentary about the great depression: https://www.youtube.com/watch?v=MCEAIJBu6XQ.

• - The financial crisis and its impact on Mexico: https://view.officeapps.live.com/op/view.aspx?src=http://www.fesmex.org/common/Documentos/Ponencias/Paper%20Crisis%20Finan%20e%20Impacto%20en%20Mex%20FaustoHdez.doc.

• - Blog about the Great Depression in Mexico: https://web.archive.org/web/20161203125037/http://www.anecdot.mx/blog/2014/03/la-gran-depresion-en-mexico/.

• - Blog the history of Wall Street: http://eugenioduarte.com/2016/03/25/la-fascinante-historia-de-wall-street-y-el-nacimiento-de-la-bolsa-de-valores-de-nueva-york/.

• - Schwartz, R. (1996). The great Mexican depression, structural evils and worse. Recovered from https://web.archive.org/web/20161203124138/http://archivo.estepais.com/inicio/historicos/64/6_ensayo_depresion_ramy.pdf.

• -: Águila, M. (1949). The Great Depression in Mexico. 2016, Economy and work in Mexican mining Website: https://web.archive.org/web/20161203123631/http://148.206.107.15/biblioteca_digital/capitulos/13-292ycc.pdf.

• - ,: Cárdenas, E. (1987). Mexican industrialization during the Great Depression. México, D.F.: Colegio de México, Center for Economic Studies, 1987.

• - Morales, J. How did the Great Depression affect Mexican politics? 1929-1934 (1st ed.). Retrieved from http://www.academia.edu/2606906/_De_qu%C3%A9_manera_la_Gran_Depresi%C3%B3n_afect%C3%B3_la_pol%C3%ADtica_mexicana_1929-1934.

Contenido

Particularmente en el caso mexicano, el llamado crac del 29 no fue el detonante para su depresión. En realidad, este suceso comenzaba a mostrar señales de vida desde 1925 principalmente por la disminución en las exportaciones como lo fue el petróleo, el cual fue causado por el descubrimiento y explotación de nuevos pozos en Venezuela. Las consecuencias del crac y de las distintas políticas gubernamentales tuvieron un alcance internacional debido a la interdependencia financiera existente. En el caso particular de México, la relación era sumamente estrecha. Cualquier modificación en el mercado estadounidense afecta directamente al mexicano.

La exportación de minerales representaba una suma importancia al ser el sesenta por ciento del total, modificando de manera significativa la balanza comercial. Además, el flujo de capitales provenientes de Estados Unidos disminuyó en gran medida siendo la entrada de dinero más importante del país. Otro sector afectado fue el de la minería. Tanto la producción como la cantidad de trabajadores disminuyeron a más de la mitad en dicha época. Cayó la demanda estadounidense por las materias primas y bienes manufacturados. En contraste, el gobierno de Herbert Hoover validó severas restricciones comerciales al establecer altos precios de aranceles y otras leyes de índole proteccionista. Por otro lado, a pesar de la gran interdependencia entre los dos países mencionados, la economía mexicana se encontraba en un estado de vulnerabilidad. Desde la crisis interna de 1925, la producción caía de manera significativa. Los acuerdos mexicanos relacionados con el intercambio se redujeron un cuatro por ciento entre los años de 1926 y 1929, a pesar de la gran demanda de minerales para exportación.

Otro de los sectores afectados fue el de la agricultura con la presencia de malas cosechas en 1929. Finalmente, el sector con mayores consecuencias fue el financiero debido al aumento de los precios de los préstamos. Se creó una distorsión negativa al ver que los precios de productos nacionales no iban en caída.[3]​.

Economic structure of Mexico at the beginning of the 1930s

In the 1920s, three fundamental elements began to be taken into account for the study of the structure of the economy. One of them is the characterization of economic groups within the national economy that interact with each other. The second element, from the sensory point of view, analyzes the structure of the economy; This element focuses on the balance of payments, on relative productivities and their participation in product and growth. Finally, the third element that is taken into account is the study of the external sector that influenced the transmission of the problem within the country in the enclave sector.[4]​.

Basic Economic Groups.

The four basic economic groups that make up the Mexican economy are: the external, the urban, the semi-rural and the rural. These date back to long before the 1930s. The external sector essentially included agricultural activities, mining and the oil industry, mainly for export. These activities were called “enclaves”, since they were carried out by a minimum number of workers and their production was mostly for export and the owners were foreigners. The industries in charge of this were enclaves since they had limited links with the rest of the economy. Furthermore, this sector responded to the costs of extracting natural resources and growing crops for export and to the conditions of the international market.

The rural sector constituted the largest population concentration group in the country with 66.5% living in communities of 2,500 inhabitants during the 1930s. This sector absorbed 68% of the population for work forces. The group had no contact with the rest of the economy, since it focused on agriculture and production for self-consumption. This sector depended on climatic conditions and agrarian reform programs that helped its prosperity, as well as on other groups.

In the semi-rural sector, there were communities of between 2,500 and 15,000 people. 30% of the population belonged to this group in 1930. Most of the individuals carried out semi-commercial agricultural activities, acquired other goods manufactured domestically or industrially, and also provided some communication and commerce services. This is why it was called the transition sector.

The urban sector represented a minority in the Mexican population, it only represented 17.5% of the total population, and this group was the most important within the market for the industrial sectors and those that provided some service.

The external sector directly influenced the country's economy. The demand for labor within said industry changed according to the production it generated. The external sector also had an important collection of tax revenues, for example: taxes paid by industries, when there was a boom within the extractive sector, in government spending and aggregate demand, the same thing happened. When the industry encountered difficulties, either due to a lack of external demand or low tax revenue, government spending and aggregate demand decreased in the same way. Finally, the external sector affected the behavior of the industrial sector since it required both capital and foreign raw materials. The urban group was the most affected by both the decisions made by the government and the fluctuations of the external sector.

Through the flow of currency and fiscal links, a great impact was had on the modern sector. There were two types of relationships between sectors. The first involved links between producer and consumer. The rural sector is isolated from the economy and the external sector was producing small portions of its production for industrial use or self-consumption. The semi-rural sector produced for its own consumption and the surpluses were marketed in the different cities. The second talks about how the urban sector offered industrial goods, services to other sectors and for their own consumption.[5]​.

Sectoral structure

The population is dispersed within the communities, for example, 66% live in rural communities with a maximum of 2,500 inhabitants and 17.5% live in cities with more than 15,000 inhabitants. This reduced the market and increased transportation and transaction costs. Another limitation of the market for industrial goods and services was the low agricultural productivity that existed. On the other hand, it could be observed that the Mexican economy was segmented both in labor force and in sensory distribution of income, showing great differences between the less productive sector (rural) and the industrial and services sector. 52% of goods acquired abroad were imports into Mexico of services and merchandise and 42% of their value was sent abroad as remittances. 95% of exports were in merchandise such as gold and silver. The mining and oil industries were responsible for 80% of the transfers, this reflects that Mexico was exporting substantial quantities of goods and could only import goods for a fraction of this amount (57.4%).

Thanks to the above, variations in the level of exports were not related to purchasing power. This relationship depends on the relative distribution of profits, wages and raw materials used in export industries and the prices of imports. It should be noted that only 2.2% of all imports were covered by new long-term foreign investment. This figure shows that most of the foreign investment was financed by reinvestment of profits and with internal resources.

With respect to export products, gold and silver deposits and coins reached 16% of the exported value in the period between 1925 and 1928, oil and its derivatives obtained 28%, while 29% was made up of other mineral products. Another important group of export products was unprocessed agricultural products, which reached 24%.

Between 1925 and 1928, consumer goods and tobacco represented 13% of total imports, while durable goods only represented 21%. Capital goods were the most imported product with 28%, followed by raw materials with 26% and the rest represented unclassified goods. This reflects that the economy was struggling to domestically produce goods that required relatively simple technology, such as some processed foods and non-durable consumer goods. Even with these efforts, Mexico still did not produce capital goods and strictly depended on other markets to supply this sector. This is reflected in its commercial dependence on the United States in the 1920s since they bought 66% of Mexican exported products and sold 69% of their imports to Mexico.[4]​.

The Enclaves

Enclaves are the forward and backward links, this reflects the demand that specific industries generated for domestic inputs and the benefit of domestically producing certain goods, such as oil and minerals, so that other industries could use them as inputs. To know if a link is an enclave, the return value of exports must be measured, which is only measured in comparative terms.

There are three key characteristics of the 1930s enclave. First, it was estimated that about 85% of the export sector belonged to foreigners: oil, minerals and agricultural products. Of this percentage, around 97% of industries were owned by foreigners and made up 97% of all exports. Second, these industries were very limited in their forward links, since 81% of their production was destined for the external market, which was practically all oil production, and many of these products were reimported after being processed abroad. The third characteristic refers to the return value of exports. It is defined as the part of the value of exports that remains within the country and takes into consideration the nationality of the owner, the amount spent on taxes, workers, transportation, national raw materials, etc. This allows us to measure what effect external fluctuations had on the volume and value of exports and on domestic aggregate demand.

In addition, the return value can also give insight into the transmission mechanism of external economic shocks. Only in the case of oil it was said that 15% of gross production was allocated to paying taxes. The return value of exports in 1926 was two-thirds, compared to 58% in 1940 after the oil expropriation. Oil shows a very low return value, 39% in 1926. Mining had a return value twice that of the oil industry, that percentage reached 99%. Other activities returned with a value of between 82% and 87%, the corresponding proportion of the industry in foreign hands varied from 12% to 86%. The greater the proportion of national inputs in gross production, the return value of exports will be even greater.[4]​.

El canal por el cual fue inyectada la Gran Depresión a México fue a través del comercio exterior, particularmente en las exportaciones de metales, así como también del petróleo. El desplome de la actividad económica en E.U consecuencia del colapso de Wall Street en el año 1929, trajo consigo que nuestro socio comercial redujera sus importaciones y sus insumos de forma drástica, tal que para 1932 México únicamente vende 2 terceras partes de petróleo y metales de las que vendía en 1929. Antes de 1929, ya la economía de México comenzaba a mostrar síntomas de estancamiento y caos, pero también de una reorganización.[6]​.

En México no se dio una quiebra de bancos de manera generalizada después de la crisis monetaria. El entonces secretario de Hacienda y Crédito Público, Luis Montes de Oca, prefirió una política de mantener al precio que fuera, el balance fiscal, así como también una estabilidad en el tipo de cambio. En consecuencia, se llevó a cabo una política que incrementaron los impuestos, recortaron personal en el gobierno y a quienes conservaron su empleo se les disminuían los salarios. Lejos de resultar beneficiosas, estas medidas grabaron los efectos del choque, puesto que los despidos de personal y los salarios se trasladaron a directamente una demanda agregada menor y esto a su vez trajo como consecuencia una reducción de la propia actividad económica junto con los ingresos fiscales.

Gross domestic product

During the 1920s, Mexico could be considered an incredibly rural country, this trend continued until the early 1940s, however, this reason may explain why sectors and regions were seriously affected. This is clearly focused on the fall in raw material prices, as well as demand. The consequences of the Great Depression in the Republic were very delicate. On the one hand, between the years 1929 and 1932, real GDP fell by around 17.6%, which represented an annual drop of 47% during this period, while on the other, restrictive fiscal and monetary policies did nothing more than increase the recessionary effects, which in turn caused a fall in exports. In our country Luis Montes de Oca was a defender of an orthodox policy, as was Alberto Pani, who had the task of not only defending but also advancing alternative politics.[3]​.

The discussion about the effect that the Great Depression brought on Mexico continues to be debated given the arrival of new positions over time. The Mexican Revolution along with the Great Depression contributed to the course of Mexico's economy in subsequent years. Both periods must be analyzed together to achieve a greater understanding of history. The most accepted version establishes a minimal impact of the United States on the Mexican economy given its partial autonomy with short-term effects. This argument is supported due to the rural condition that the country experienced in the 1920s, which was the case until approximately the end of the 1940s. There was isolation from the world economy due to the results implied by the Mexican Revolution.

Due to the two aforementioned arguments, it is argued that the majority of people dedicated to the countryside went unnoticed by the crisis thanks to their own production and extremely restricted market relations. Despite this, some sectors and specific regions did perceive it due to the decline in the price of raw materials and demand. Compared to other Latin American countries, Mexico could be perceived as having better economic development and a better outlook due to the implementation of the monetary policy known as “Keynesian before Keynes.”

Despite there being a version of the reduced effects of the crisis, there are various sectors that could establish the opposite from their own experience.

For example, farmers dedicated to cotton production in Mexicali were pressured by the winter crisis of 1931. They had relatively small salaries paid in silver. Day by day they lost purchasing power due to the lost value of the peso against the dollar, making it extremely difficult to cover their basic needs. During this same year, the estimated population in Mexico was just over 16 million inhabitants, considering this figure it is alarming that the unemployed population was 287 thousand.[3] So you can see the two points of view on the impact that the Great Depression had in Mexico on specific sectors, some going unnoticed while the others could not even satisfy basic needs.[4]​.

Agriculture

Within the sectors of the population in the 1930s, agricultural workers constituted approximately 66.5% of the country's total population. This was primarily dedicated to agriculture, it did not have any contact with the rest of the productive chain since its life took place exclusively in the countryside, and part of the production was destined for subsistence.

Despite covering the vast majority of workers, the agricultural sector only produced 22% of national income. Compared to the rest of the activities that represented only 30% of workers, they produced around 78% of income. This meant that the productivity of the countryside at that time was very low compared to other sectors. The low productivity of this sector and the insecurity regarding property discouraged the investment that existed on the part of the government, which in turn generated great rejection by the farmers.[3]​.

As a consequence of the Great Depression within this sector, the elements that had the greatest impact were those that had the external market as their main market. On the other hand, agriculture has always depended its results largely on the climate. Cotton is an example of the products that were hit hardest during the crisis period. On the other hand, cotton, coffee, henequen and tomatoes were products that represented close to 60% of the total value of exports between the period from 1925 to 1933. Just to be able to measure the great drop in exports, during the 1920s within the cotton industry, exports were more than 17 thousand tons per year while by 1932 this figure was reduced to only 5 thousand, but as the year progressed, the figures were only worsening, thus reaching just under 2.6 thousand.[3]​.

The panorama changed as soon as the anti-crisis measures were issued, since thanks to the devaluation of the peso the price of imports had increased. This not only gave way to replacing imports with national products, the industry also became more profitable due to the large amount of fixed capital that came into operation again, which in turn generated an increase in industrial productivity. Such was the increase in their performance, that a large part of the peasants became part of the labor sector, where salaries were higher.[7]​.

The railways

The imminent decline in product marketing during that time had a direct effect on railroad service. A decline was observed in exports, mainly of minerals and raw materials. The first symbolized a third of all the merchandise that was moved between 1929 and 1930. The other excess part of the cargo was divided into different sectors such as agriculture, forestry, oil, cement, and the processing industry.

As the years went by, railway service was in decline for both the transportation of goods and people. In 1932, from 14.3 tons that were transported in previous years, it reached 9.2 million, the same situation that was observed with passengers when they walked through the almost empty cars.

Given the situation, railway companies fell into financial crisis, as was the situation with National Railways. Despite being affected by the crisis, they had had enormous debts for years due to technical and organizational difficulties, as well as a lack of sufficient capital for financing. This led to a huge staff cut and salary reduction, making reductions of approximately 30% of the workers.

On the other hand, this decline in freight volume within the railways also showed inefficiency and speculation indices that had not been taken into account previously. The primary products used for export (cotton, coffee and sugar) were first moved to collection centers and then ended up in consumption centers. Therefore, the bill for what was transported by rail was higher than the harvest that had previously been earmarked for marketing. Therefore, it can be concluded that the aforementioned phenomenon gave rise to the reorganization of the runs and the organization of the railway service.[3]​.

To counteract the effects that the crisis had had in Mexico, the government of then-president Pascual Ortiz Rubio launched various plans. In 1931, the Calles Plan was carried out, which consisted of demonetizing gold for internal circulation, in addition to establishing the silver peso as a unit of the national monetary system. Likewise, it was determined that the Bank of Mexico was the only issuer of banknotes; this institution was also given the power of economic control by the Mexican state, leaving aside private banks. The failure of this plan was closely linked to the little support it had in the industrial sector, and its impacts were negative.10.

The Mexican economy was able to recover relatively quickly from the disadvantages of the Great Depression. In 1932, approximately before the end of the first half of the year, the business cycle bottomed out and the economy began to grow rapidly in the following decade. Such behavior contrasts sharply with the experience of the United States and other developed countries. countries, it took longer and the economic recovery began, but the situation in Mexico is very similar to the situation in several Latin American countries, mainly Brazil, Colombia and Argentina and others such as Australia and Sweden. The recovery of the Mexican economy has been driven by two main factors, on the one hand, the expected increase in the value of exports, mainly the increase in the price of silver and various mineral products, and the development of new oil deposits. This leads to an increase in the level of aggregate demand, just as the crisis reduced it. Furthermore, the greater import capacities that allowed the obtaining of raw materials allowed for rapid population growth due to unused capacity.[8]​.

The second and most important factor that contributed to the rapid economic recovery was the government's expansive monetary, fiscal, and exchange rate policies from the end of 1931 to 1933. These policies increased aggregate demand and production levels that, taking into account the installed capacity not used in 1935, exceeded the levels of 1929. For this recovery to be possible, certain economic institutions will have to undergo profound transformations throughout the period, especially to have the necessary economic policy instruments. That is, the Great Depression stimulated a series of changes in the institutions themselves and in other assets in the same market; for example, the crisis generated a shortage of money and the public once again accepted the banks. A Mexican bill that never happened almost 20 years ago.[8]​.

El comportamiento económico durante la recuperación fue desigual entre los diferentes sectores de la economía. Por ejemplo, en la década de 1930, el sector agrícola creció en un promedio de sólo 1,6% anual. Por un lado, los términos de intercambio internos, es decir, los precios en el sector urbano moderno y los precios en el área rural, favorecen a los primeros, reduciendo la transferencia de diversos recursos al sector. de la década de 1930, especialmente en la primera mitad, los términos de intercambio internos Un aumento del 73,1%. Este deterioro reduce el incentivo para la inversión y la producción agrícola y, a pesar de la ausencia de dificultades políticas rurales, solo se apartaron 5,3 millones de hectáreas debido a la política de asignación acelerada de tierras del gobierno en la década de 1930 entre 1916 y 1928, en comparación con 1929 y 1940.[8]​.

El crecimiento agrícola fue lento ya que el aumento de la tierra cultivable logró compensar la producción de los principales cultivos, que aumentó un 5,9% en la década de 1930. El sector industrial creció a una media del 6,1 % anual entre 1932 y 1940, por lo que en realidad fue el motor del crecimiento económico en la década de 1930, con el sector industrial aportando el 38 % de la economía nacional. crecimiento en esos años En la producción bruta, si bien su peso relativo es sólo del 16,7% de la producción total, su participación entre los vip ascendió al 18,2% a fines de la década. Así como los precios relativos locales cambiaron a favor de los sectores económicos modernos, la devaluación nominal del peso plata en un 64% entre 1929 y 1933 también cambió los precios relativos de los productos importados con respecto a la producción nacional. La relación disminuirá a medida que los bienes de producción nacional desplacen las importaciones, donde tanto los bienes de consumo duraderos como los no duraderos están experimentando un fuerte proceso de sustitución de importaciones, ya que sus relaciones disminuyen en casi un 55,9% a 9,3% desde 21,1% en 1929.[8]​.

Monetary Policy

In 1932, with the new president Abelardo Rodríguez, changes were made to the economic policies established in the last six-year term, which were known for following a “classical” model. A reform was made to the monetary law (Plan Calles) that was enacted in March of the same year, where the authorities decided to counteract the downward trend of the Mexican economy by promoting expansionary monetary policies that caused the peso to float freely. “Four years later the central bank began to engage in inflationary financing through government budget deficits, essentially with the objective of maintaining a high level of aggregate demand.”[5]​ The policies mentioned above were influenced by the model applied in the United States called “New Deal”, which took its foundations from economic measures established in Kant's economic model.

Another factor that contributed to the recovery from these ravages of the Great Depression were the dramatic changes in economic policy after 1932, the first of which was the orthodox approach of increasing the money supply and allowing a budget deficit. Because of this, the government refused to continue defending the exchange rate and the peso depreciated rapidly over the next two years. As imports become more expensive and the peso appreciates, the total volume increases, thus tending to be replaced by national production, while exports become more competitive and profitable.[8]​.

The measures implemented in 1933 revolved around three primary actions: one, to cover the debts that the Mexican government had "...through the extraordinary minting of silver in response to the plans of the United States government to increase its reserves...".[7]​ Second, to give the Bank of Mexico the unification of the issuance of banknotes, as they had proposed in the Calles Plan. Third, expansionist policies that would allow increased spending on infrastructure.[7]​.

The money supply increased by 72.3% between 1931 and 1934, while the price increased by 12.3% between 1932 and 1934. Meanwhile, between 1932 and 1963, the real budget deficit was about 1.2 percent of GDP. Alberto Pani decided to fight deflation by not falling into inflation during the first four months and had silver coins minted without publicly showing the use of Mexican banknotes since March 1932 to pay government officials to increase the currency. At the end of 1933, the silver mintage was 88.6 million pesos, while paper money was issued at 52.7 million. In addition, the Bank of Mexico reduced the discount rate and reserve requirements a few weeks after the effective monetary reform of 1931-1933.[8]​.

Fiscal Policy

The macroeconomic effects take place from 1920 to 1940, these are marked by two periods. In the first, it is considered that fiscal policy was essentially orthodox, in the sense that it always pursued a balanced budget, and that it prevailed from the second half of the 1920s until around 1936. From then on, budget deficits were accepted for the sake of economic growth and income redistribution, such that the government became rather unorthodox in this sense. Naturally, the duration of these two periods is closely related to the development of monetary policy and the central bank.

Clear examples of these two periods abound. Between 1926-1927 there was a substantial drop in tax revenues and a reduction in oil and mineral exports. Then because of the Great Depression, the government had to take extreme measures to balance the budget. Through the issuance of internal debt, especially monetary obligations, the economic development process of 1936 could be encouraged with the implementation of road construction, improvements in irrigation systems and railroads. President Plutarco Elías Calles, with the aim of promoting economic reconstruction and the construction of infrastructure, spent more than he had, which caused great repercussions on the Mexican economy. The additional expenditures made by the government were financed by internal savings, overdue debts and even unpaid salaries of bureaucrats. In 1927, Luis Montes de Oca, the new finance minister, was more successful than his predecessor in decreasing the level of spending. By the end of 1929, government expenditures had decreased from 325 million in 1926 to 276 million pesos. On the other hand, taxes were increased, particularly on the brewing industry. This tax, together with the recovery of the economy, allowed the increase in tax revenues to finance a decreasing level of expenses until 1929.

With the onset of the Great Depression, the flow of government revenue slowly declined despite the government's efforts to raise taxes. Expenses were substantially reduced in 1931 in the middle of the year, and because income had declined so much, a deficit of 80 million was observed. The government was able to reduce expenses by 60 million and the extraordinary tax of 1%, which covered the remaining 20 million. In 1932 the budget was balanced and the real level of income and expenses was 34.2% and 28.9% below those obtained in 1925. In 1932 the overdue debts had increased again and in 1933 there was a real fiscal deficit; Both were covered with the profits of the seigniory that resulted from the extraordinary minting of silver and the corresponding issuance of banknotes of those years.

Due to the low levels of the international price of silver in the early 1930s, the intrinsic value of the peso was below its monetary value. That is, the silver content of a peso made it actually worth only 34 centavos in 1932, which meant that the peso was 66% below its monetary value. In 1933, the intrinsic value of the peso increased to 47 centavos as a result of both the increase in the price of silver and the continued devaluation of the exchange rate. By law, the income obtained from seigniory profits had to be added to the silver reserves of the Bank of Mexico, with which the issuance of banknotes had to be supported and, consequently, finance the fiscal deficit.

Commercial policy

Taxes from international trade were important in income in the 20th century. Between 1925 and 1940 taxes continued to be of utmost importance even though fluctuating taxes had a share of 30% to 45% as did taxes on international trade.

To counteract the constant fluctuation of the trade tax rate in 1930, the committee involved in the study of rates and subsidies implemented a change in trade tax collection measures. It was agreed to implement a new rate to ensure that tax collection and more products were included in the market, and thus make operations more manageable. Thanks to this legislation, import tariffs increased, from 1929 to 1930 they increased from 22% to 29.1%.[5]​.

The undocumented Mexican population residing in the United States during the years of the Great Depression was significant. Their presence was seen in each of the counties, but this was alarming. Day after day, people with Mexican nationality who lived on American soil struggled to find employment. It was extremely difficult to be recruited by North American companies. For example, mines closed their operations only to native employees. Given this, any job that was lost by a Mexican or some other minority had to be taken as soon as possible by American workers. Protectionist policies were on the rise. In the event that there was a minimal possibility of participating for a job, Mexicans not only had to comply with the papers referring to their nationality, they also had to show those that clarified compliance with taxes.

The above is taken from the perspective of the United States side, but parallel effects also emerged on the Mexican side. Mexicans living in places near the Rio Grande threatened to break the chains of food consumption coming from the other side. However, at the end of 1931, a consensus was reached on the schedules of international bridges capable of connecting Ciudad Juárez with the United States. A step that was used every day by thousands of people to go about their daily activities. The repatriation brought with it opposite effects on the side of Mexico. Most of the city's defects were attributed to the so-called "commuters", that is, to people who lived on the Mexican side but worked in the United States. A kind of lack of sense of belonging arose among the inhabitants because it was thought that all the effort committed every day by Mexicans was going to benefit only the Americans. Now they not only had difficulties working in the United States, but they also had problems with their own family or friends. They were no longer fully accepted anywhere.

On the other hand, it was common for US immigration officials to deny the flow of Mexicans. Extreme measures were taken to the point of ensuring that they suffered from venereal diseases. Actions that were later suppressed due to the threat by the mayor of Ciudad Juárez regarding the elimination of consumption patterns of merchandise from the United States. That is why during the years of the Great Depression there was a huge flow of repatriates. This return culminated when the resources of their families were insufficient and unable to meet the needs of all members. The arrival of returnees created a kind of family tension because the families' perspectives on the future were completely different. Some had a focus linked to material aspirations, while the others sought to increase their productivity in the field.

Finally, another aspect that was affected by this event was the fate of the land acquired by Mexicans in the United States. By almost completely losing the possibility of employment in North American companies, land and houses that had been the result of much effort were lost, either due to lack of payments or for sale below their real value. The frustration of the emigrants grew more and more. Therefore, it can be concluded that the crisis caused not only economic effects, but also social and cultural effects for both sides of the border.[3]​.

Marichal, C. (2010) New history of the great financial crises. A global perspective. 1873-2008. Mexico, Debate, pp. 85-135.

Gómez A. (2002) The economic policy of the new regime. Alberto J. Pani 1923-1927, 1931-1933. Mexico, UNAM, pp.381-412.

• - Migration from Mexico in the 20th century: https://web.archive.org/web/20161203061117/https://eldivagador.com/2016/02/03/100-anos-de-migracion-en-mexico-de-la-revolucion-mexicana-a-la-gran-depresion-1910-1940/.

• - Documentary about the great depression: https://www.youtube.com/watch?v=MCEAIJBu6XQ.

• - The financial crisis and its impact on Mexico: https://view.officeapps.live.com/op/view.aspx?src=http://www.fesmex.org/common/Documentos/Ponencias/Paper%20Crisis%20Finan%20e%20Impacto%20en%20Mex%20FaustoHdez.doc.

• - Blog about the Great Depression in Mexico: https://web.archive.org/web/20161203125037/http://www.anecdot.mx/blog/2014/03/la-gran-depresion-en-mexico/.

• - Blog the history of Wall Street: http://eugenioduarte.com/2016/03/25/la-fascinante-historia-de-wall-street-y-el-nacimiento-de-la-bolsa-de-valores-de-nueva-york/.

• - Schwartz, R. (1996). The great Mexican depression, structural evils and worse. Recovered from https://web.archive.org/web/20161203124138/http://archivo.estepais.com/inicio/historicos/64/6_ensayo_depresion_ramy.pdf.

• -: Águila, M. (1949). The Great Depression in Mexico. 2016, Economy and work in Mexican mining Website: https://web.archive.org/web/20161203123631/http://148.206.107.15/biblioteca_digital/capitulos/13-292ycc.pdf.

• - ,: Cárdenas, E. (1987). Mexican industrialization during the Great Depression. México, D.F.: Colegio de México, Center for Economic Studies, 1987.

• - Morales, J. How did the Great Depression affect Mexican politics? 1929-1934 (1st ed.). Retrieved from http://www.academia.edu/2606906/_De_qu%C3%A9_manera_la_Gran_Depresi%C3%B3n_afect%C3%B3_la_pol%C3%ADtica_mexicana_1929-1934.