Railroads

Latin American leaders of the mid- to late nineteenth century, committed to modernization through technological advance, welcomed the advent of the railroad. Along with the promise of progress and national integration, however, there developed a host of challenges and problems associated with a new industry vast in both scale and impact. Financing, structure and management, developmental questions, and relations with labor and consumers were among the concerns that had to be addressed.

The railroad era dawned in Mexico in 1837 when work began on the Mexico City-Veracruz line. By 1860 only short segments totaling about 93 miles had been constructed. During the rule of the emperor Maximilian (1864–1866), concession rights were controlled by the London-registered Imperial Mexican Railway Company. Construction directed by British engineers progressed over tremendously difficult terrain but was forced to a halt in 1866 because costs had nearly bankrupted the company. A subsidy provided by the government of Benito Juárez allowed work to resume on the line, renamed the Ferrocarril Mexicano, and service was inaugurated in 1873. Other lines were built in rapid succession and by 1911 Mexico had 15,000 miles of track.

The province of Buenos Aires early in 1854 enacted Argentina's first railroad legislation, which created the provincially owned Western Railroad. By 1914 the Argentine rail network had grown to 20,857 miles, with about 70 percent under British ownership. Four large British-owned lines, the Buenos Aires Great Southern, the Buenos Aires Western, the Buenos Aires and Pacific, and the Central Argentine controlled about half of the network, with the remainder in the hands of smaller British, French, or government-owned lines.

Brazil's early railroads were largely the achievement of Irineu Evangelista de Sousa (Viscount de Mauá). The first, inaugurated in 1854, ran just nine miles from Rio de Janeiro to the foot of the escarpment just below Petrópolis. Its purpose was to facilitate passenger travel between the winter and summer capitals of the empire. The first major line, the Companhia Paulista de Estradas de Ferro, incorporated in São Paulo in 1868, served the coffee export economy. These and most other lines in Brazil were linked to English capital, directors, engineers, and equipment. By 1900 Brazil could count 9,517 miles of track.

Chile's most important railroads were owned by the state. The early lines were built in the populous northern Central Valley. One, the Ferrocarril de Santiago a Valparaíso, was completed in 1863, and another, the Ferrocarril del Sur, was completed in 1875 after twenty years of construction.

Peru began the construction of its railway system in 1869 when contracts were signed between the government and the North American entrepreneur Henry Meiggs. The two most important systems were the Central Railway of Peru, Ltd., and the Southern Railway of Peru, Ltd., both of which linked the coast with the interior. By 1920 the republic had 1,718 miles of track.

Colombia's need to transport coffee stimulated a modest extension of that nation's rudimentary rail system in the early nineteenth century. In 1885 there were only 126 miles in use; this gradually grew to 2,026 miles in 1934, a relatively unimpressive network relative to much of the rest of Latin America.

In the 1850s and 1860s Latin American railroads were backed by a combination of domestic private and government funding, with additional modest amounts coming from abroad. Denationalization of rail networks occurred in the 1870s and 1880s, once the profitability of the lines, the stability of host governments, and concomitant risk reduction convinced investors of the safety of their capital. Latin American governments pragmatically divested themselves of railroads, having provided the initial pump-priming investment and guaranteeing themselves certain levels of profitability. Foreign investment bore the costs of further expansion and modernization. Denationalization did not result in loss of control by host governments. Legislation in all countries, enacted from the 1870s to the turn of the century, articulated regulations concerning personnel, train schedules, rights of way, acquisition of new equipment, extension of networks, rates, and capitalization.

With the growth of nationalism in Latin America in the twentieth century, foreign-owned or managed railroads were returned to state control. In Mexico the government, through the purchase of the majority of shares in the lines, effectively controlled the foreign-owned railroads by 1911. British managers were kept in positions of responsibility until 1937, when the administration of Lázaro Cárdenas completed the process of nationalization. In Peru, although the state owned the railways, from 1890 the lines were operated by the London-based Peruvian Corporation under a lease agreement. Colombia nationalized its railroads in the 1930s and Argentina followed in 1947.

There was much diversity among lines in the management of railroads. For every well-run company, such as the Buenos Aires Great Southern, there was the poor leadership of the Ferrocarril Mexicano or the Central Railway of Peru. Successful companies grew confident with assured markets and traffic. Once Latin American governments, in the closing decades of the nineteenth century, made the decision to push hard for modernization and the development of their infrastructures, railroad management responded aggressively to new opportunities.

Zonal amalgamation, pooling agreements, developmental rates policies, and vertical diversification of the industry were typical managerial responses to an auspicious business climate. Managers reduced rates for long-distance hauls to promote increased economic activity; bureaucracies were streamlined; and, in Argentina, agricultural experiment stations were established by the railroads to improve crop yields and livestock quality. Companies in 1910 jointly invested in the exploitation of Argentine oil fields, with an eye to substituting cheap petroleum for expensive Welsh coal.

Mergers and amalgamation improved efficiency and helped local economies. Between 1901 and 1914 the Argentine Great Western merged with the Trasandino and the Buenos Aires and Pacific railways. As a result, the Great Western was able to build new branch lines, double the track of its main line, and expand station facilities. Merging with the Pacific gave the Great Western access to needed rolling stock and working capital. The subsequent economic boom in the province of Mendoza was underwritten by the improved capability of the railway to serve the province.

The railroads made pooling agreements to prevent ruinous rate-cutting competition. In Mexico in 1909 the British-owned Ferrocarril Mexicano agreed with the government-owned Ferrocarriles Nacionales de Mexico to pool all freight and passenger traffic between Veracruz and Mexico City and not to compete for traffic. Critics contended that such agreements conspired to maintain high prices for moving freight. In Chile, where all trunk lines were state owned, it was the government that directed the construction and operation of the railroads and set artificially low rates for freight, which by 1911 had resulted in perennial deficits. At times, in Argentina and Brazil, governments stimulated conservative foreign railroad management to extend their networks with threats of state competition through the construction of parallel lines.

Railroads were in many cases the largest employers of Latin American industrial workers, from the unskilled laborer, which included Chinese coolies in Chile, Peru, and Mexico, to the highly qualified engine drivers and machine-shop personnel. The labor policies of Latin American railroads were shaped by many factors, including the emergence of independent unions beginning in the 1880s, management responses to labor unrest and workers' demands, and the impact of those demands on the policies of Latin American governments. Labor policies involved far more than matters of an economic character. Rather, social, economic, political, and cultural elements interacted in a complex manner.

As a rule, management's relations with labor were highly paternalistic regardless of the ownership of the railroad. Chilean managers treated laborers in much the same way that rural laborers were treated and control over their lives was stringent. On British lines paternalism was used to foster staff loyalty and thwart unionization. Benefits and services were offered to workers on an individual basis in exchange for their loyalty to the company. By the 1930s and 1940s Latin American governments such as Argentina under Juan Perón, Brazil under Getúlio Vargas, and Mexico under Lázaro Cárdenas, had won the support of the rail workers.

By the 1990s the use of railroads in countries such as Argentina and Peru was declining. Instead, riders turned more to bus routes.

See alsoCoffee Industry; Economic Development; Engineering; Mauá, Visconde de.

BIBLIOGRAPHY

Richard Graham, Britain and the Onset of Modernization in Brazil, 1850–1914 (1968).

Eduardo A. Zalduendo, Libras y rieles: Las inversions británicas para el desarrollo de los ferrocarriles en Argentina, Brazíl, Canadá e India durante el siglo XIX (1975).

John H. Coatsworth, Growth Against Development: The Economic Impact of Railroads in Porfirian Mexico (1981).

Colin M. Lewis, British Railways in Argentina, 1857–1914: A Case Study of Foreign Investment (1983).

Arthur Schmidt, The Social and Economic Effect of the Railroad in Puebla and Veracruz, Mexico, 1867–1911 (1987).

Additional Bibliography

Kogan, Jorge H. Rieles con futuro: Desafios para los ferrocarriles de América del Sur. Caracas: Corporación Andina de Fomento, 2004.

Rowe, D. Trevor. The Railways of South America. London: Locomotives International, 2001.

Thomson, Ian. Integración en el sector transporte en el Cono Sur: Los ferrocariles y su contribución al comercio inter-nacional. Buenos Aires: Banco Interamericano de Desarrollo, Instituto para la Integración de América Latina y el Caribe, 1997.

                                       Paul B. Goodwin Jr.