page_title: Economic history of Mexico
section_title: Early republic to 1855
hierarchical_section_title: Economic history of Mexico / From the era of independence to the Liberal Reform, 1800–1855 / Early republic to 1855
context_page_description: Mexico's economic history has been characterized since the colonial era by resource extraction, agriculture, and a relatively underdeveloped industrial sector. Economic elites in the colonial period were predominantly Spanish born, active as transatlantic merchants and silver mine owners and diversifying their investments with the landed estates. The largest sector of the population was indigenous subsistence farmers, who lived mainly in the center and south.
  New Spain was envisioned by the Spanish crown as a supplier of wealth to Iberia, which huge silver mines accomplished. A colonial economy to supply foodstuffs and products from ranching as well as a domestic textile industry meant that the economy supplied much of its own needs. Crown economic policy rattled American-born elites’ loyalty to Spain when in 1804 it instituted a policy to make mortgage holders pay immediately the principal on their loans, threatening the economic position of cash-strapped land owners. Independence in Mexico in 1821 was economically difficult for the country, with the loss of its supply of mercury from Spain in silver mines.
context_section_description: The early post-independence period in Mexican was organized as a federal republic under the Constitution of 1824. The Mexican state was a weak institution, with regional struggles between those favoring federalism and a weak central government versus those favoring a strong central government with states subordinate to it. The weakness of the state contrasts with the strength of Roman Catholic Church in Mexico, which was the exclusive religious institution with spiritual power, but it was also a major holder of real estate and source of credit for Mexican elites. The Mexican military was also a stronger institution than the state, and intervened in politics on a regular basis. Local militias also continued to exist, with the potential for both enforcing order and creating disorder.
  The new republic's situation did not promote economic growth and development.  The British established a network of merchant houses in the major cities.  However, according to Hilarie J. Heath, the results were bleak:
  Trade was stagnant, imports did not pay, contraband drove prices down, debts private and public went unpaid, merchants suffered all manner of injustices and operated at the mercy of weak and corruptible governments, commercial houses skirted bankruptcy.
  The early republic has often been called the "Age of Santa Anna," a military hero, participant in the coup ousting emperor Augustín I during Mexico's brief post-independence monarchy. He was president of Mexico on multiple occasions, seeming to prefer having the job rather than doing the job. Mexico in this period was characterized by the collapse of silver exports, political instability, and foreign invasions and conflicts that lost Mexico a huge area of its North.
  The social hierarchy in Mexico was modified in the early independence era, such that racial distinctions were eliminated and the formal bars to non-whites' upward mobility were eliminated. When the Mexican republic was established in 1824, noble titles were eliminated, however, special privileges (fueros) of two corporate groups, churchmen and the military, remained in force so that there were differential legal rights and access to courts. Elite Mexicans dominated the agrarian sector, owning large estates. With the Roman Catholic Church still the only religion and its economic power as a source of credit for elites, conservative landowners and the Church held tremendous economic power. The largest percentage of the Mexican population was engaged in subsistence agriculture and many were only marginally engaged in market activities. Foreigners dominated commerce and trade.
  It was contended by Mexican liberals that the Roman Catholic Church was an obstacle to Mexico's development through its economic activities. The Church was the beneficiary of the tithe, a ten percent tax on agricultural production, until its abolition in 1833. Church properties and Indian villages produced a significant proportion of agricultural output and were outside tithe collection, while private agriculturalists' costs were higher due to the tithe. It has been argued that an impact of the tithe was in fact to keep more land in the hands of the Church and Indian villages. As for the uses the Church put this ten percent of the agrarian output subject to it, it has been argued that rather being spent on "unproductive" activities that the Church had a greater liquidity that could be translated into credit for enterprises.
  In the first half of the nineteenth century, obstacles to industrialization were largely internal, while in the second half largely external. Internal impediments to industrialization were due to Mexico's difficult topography and lack of secure and efficient transportation, remedied in the late nineteenth century by railroad construction. But the problems of entrepreneurship in the colonial period carried forward into the post-independence period. Internal tariffs, licensing for enterprises, special taxes, lack of legislation to promote joint-stock companies that protected investors, lack of enforcement to collect loans or enforce 
caption: Mexico City Metropolitan Cathedral. The Catholic Church was a major economic force during the colonial era and early nineteenth century.
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