YIELDS OF 7 TO 10% on public utility stocks, 8 to 12% on mortgage bonds, and 18 to 24% on short term commercial loans immediately suggest great risk to American investors and financial analysts. To Mexicans, on the other hand, they are at best only reasonable and conservative returns-barely sufficient to induce them to invest. There are sound reasons why such yields can be obtained with comparative safety in Mexico. To understand the reasons, one must look to the institutional structure of Mexico and to the psychology of the Mexican government official. The Mexican is an extremely proud individual with strong national patriotism. To the north, he sees a Colossus-alien in language, law, religion, and culture -which by force of arms took from him the territory that now comprises such rich and rapidly growing states as Texas, California, Colorado, New Mexico and Arizona. If he speaks English (as many men of his class do) the United States Marine Hymn conveys a quite different message from that of an American. He admires the wealth and power of the United States while criticizing the institutions and traditions that generated them. He has been brought up in and conditioned to accept as normal and proper a State in which Government intervention and regulation is extensive. He lives in a society where the population is exploding rapidlymuch of it in poverty, by U. S. standards. Though opposition parties exist, for all practical purposes, PRI (the Party of Revolutionary Institutions) is the only important party. Its leaders are committed to their heritage of revolutionary slogans and their traditional belief that Government must own, or control, many aspects of the economy. Consequently, the emotional set of the educated Mexican is toward greater nationalism. He is also strongly inclined to regard landed property as the only safe investment and to invest his surplus funds in land and more land. These elements tend to inhibit the rapid generation of capital in private hands, though a middle class is now developing. Americans who know little of Mexico firsthand have an impression of the Alamo, the Mexican War, and perhaps of Pancho Villa and the shelling of Tampico and Vera Cruz, as well as a vague memory of the expropriations of the oil, railroad, and mineral holdings of American companies and individuals. Such impressions, and a knowledge that every so often the peso is devalued, do not incline individuals to invest in Mexico, despite high yields.
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Sep 1, 1984
Dorothy H Bower + 2
