Mexican War - Business in United States of America
The Event: Military confrontation between Mexico and the United States over the annexation of Texas to the United States in 1845
Place: Mexico, Texas (Lone Star Republic), California (Bear Flag Republic), and New Mexico
Significance: The Mexican War resulted in Mexico ceding an area from Texas to California to the United States, extending the country to the Pacific Coast and immensely increasing its territorial assets and economic potential. The acquisition benefited the gold, silver, iron, copper, cattle, farming, banking, real estate, railroad, and telegraph industries, decisively advancing U.S. industrialization and financial strength.
The Mexican War ended with the signing of the Treaty of Guadalupe Hidalgo on February 2, 1848. Mexico ceded California, Nevada, Utah, and parts of Arizona, Colorado, New Mexico, and Wyoming to the United States. With this transfer, Mexico lost half a million square miles, almost half its territory. For the United States, the Mexican cession would prove an economic bonanza of extraordinary proportions and the catalyst for the United States becoming a world economic power.
In August, 1848, gold was discovered in California. Tens of thousands of people flocked to the region in the following decade. San Francisco changed from a village into a maritime metropolis of intense commercial and financial activity equivalent to billions of dollars in modern currency. California immediately became so wealthy and populated that the U.S. Congress granted it statehood in 1850. Subsequent to the discovery of gold in California, some of the largest stores of silver in the world were uncovered in Nevada and Colorado. The capital accumulated from gold and silver reserves gave the United States a unique advantage as a developing country by allowing it to finance its own growth. Innovations in mining industry techniques benefited not only precious metal enterprises but also those dealing in iron, copper, and semiprecious stones.
Mining brought many other businesses to San Francisco. In 1853 Levi Strauss, a young German immigrant, arrived in the city, intending to help clothe the miners. Within a generation, he had developed an industry around blue jeans with distinctive rivets and stitching that would become a symbol of American style.
The San Francisco-based Bank of California opened in 1864 and immediately became one of the richest banks in the country, financing extensive commercial, manufacturing, and real estate enterprises.
Along the East Coast, the need to transport goods to the gold fields stimulated business development. The long route by sea, around the southern tip of South America, required fast ships. Shipbuilding industries accelerated their production of clippers, the fastest vessels on the sea. In 1840, the Cunard Line introduced transoceanic steamship travel, which eventually replaced clipper transport.
Companies providing rapid overland transportation also emerged. Wells Fargo (founded in 1852) developed rapid pony and stagecoach delivery of passengers, goods, and communications. During the 1860’s, the Union Pacific and the Central Pacific railroads extended their lines from California and Nebraska, respectively, to meet in Utah, linking the country from coast to coast. A multiplier industry, railroads stimulated a host of businesses, including iron, steel, coal, and oil enterprises. The Western Union Telegraph company (founded in 1851) had established a transcontinental communication line by 1861.
Wherever transportation and communication improved in the West, settlement and land values of adjacent areas increased. The Great Plains became an agricultural breadbasket, exporting foodstuffs to the industrializing East and Europe. The states formed from the Mexican cession became cattle country, a further source of foodstuffs. One of the largest cattle enterprises was the King Ranch (founded in 1853) in Texas, which eventually reached more than a thousand square miles and supplied countless herds to the railroad shipping pens in Kansas. Along with the cattle industry, various leather goods enterprises developed, producing saddles, saddle bags, boots, shoes, and other accouterments. Range wars raged between cattlemen and farmers, but the introduction of barbed wire in Texas during the mid-1870’s and the state’s mass commercialization over the next two decades rapidly reduced the amount of open range. The occupation of the West was sometimes violent and subject to attack by native fauna and indigenous populations. Facilitating and accelerating this violence were advances in gunsmithing, with companies such as Browning, Winchester, and Smith and Wesson manufacturing ever more powerful guns and rifles.
Military Cost of Mexican War, 1846-1849
- In current year dollars = $71 million
- In constant fiscal year 2008 dollars = $1,081 million
- War cost as percentage of gross domestic product in peak year, 1847 = 1.4%
- Total defense cost as percentage of gross domestic product in peak year, 1847 = 1.9%
Note: Data for war costs extends past war’s end.
Further wealth came from California. The vast central valley of California became a major producer of fruits and vegetables. Watered by the Sacramento and San Joaquin Rivers, the land became doubly productive as engineering enterprises devised more effective water distribution and irrigation systems. Accumulated western transportation and communication projects would produce one of the largest construction companies in the world, the San Francisco-based Bechtel Corporation. The horticulturalist Luther Burbank settled in California in 1875, laying the foundation for its innovative agricultural businesses by developing seeds for hybrid, more productive types of fruits, vegetables, grains, flowers, and grasses. His work would be complemented by the horticultural and retailing advances of the Burpee seed company, with operations on both the East and West coasts.
The Mexican War fundamentally changed the nature of how business was conducted in the West. Under Mexico, enterprise in the region had been corporate and regulated. After the U.S. acquisition of the land, businesses became entrepreneurial and shaped by market competition. Moreover, a culture that was mostly Hispanic and Catholic became predominantly Anglo-Saxon and Protestant.
Crawford, Mark, David S. Heidler, and Jeanne T. Heidler, eds. Encyclopedia of the Mexican-American War. Santa Barbara, Calif.: ABC-Clio, 1999. Concise compilation of information on the issues, regions, and individuals engaged in the events leading up to and through the conclusion of the war.
Frazier, Donald S., ed. The United States and Mexico at War: Nineteenth-Century Expansionism and Conflict. New York: Macmillan Reference USA, 1998. Examines both the war and the desire of the United States to expand to the West Coast.
Hine, Robert V., and John Mack Faragher. The American West: A New Interpretive History. New Haven, Conn.: Yale University Press, 2000. The middle chapters of this work concentrate on the development of the mining, cattle, and transportation industries in the decades immediately after the Mexican War. Includes maps and extensive bibliography.
Rayner, Richard. The Associates: Four Capitalists Who Created California. New York: Atlas, 2008. Traces the lives of Collis Huntington, Leland Stanford, Mark Hopkins, and Charles Crocker, four nineteenth century U.S. railroad and banking investors who laid the foundations of the entrepreneurial wealth of California.
Torr, James D., ed. The American Frontier. San Diego, Calif.: Greenwood Press, 2002. An examination of the history of the American West that looks at how the area was settled and developed. Contains essays covering mining and cattle operations.
See also: Alaska purchase; California gold rush; robber barons; Texas annexation; transcontinental railroad.