Enterprise and Society Advance Access originally published online on February 10, 2007
Enterprise and Society 2007 8(1):68-105; doi:10.1093/es/khm022
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The Indispensable Service of Banks: Commercial Transactions, Industry, and Banking in Revolutionary Mexico
Professor in the Department of Economics of the Centro de Investigación y Docencia Económicas and Peggy Rockefeller Visiting Scholar at Harvard University, David Rock-efeller Center of Latin American Studies during 2006–2007. Contact information: DRCLAS, 1730 Cambridge Street, Cambridge, MA 02138
Centro de Estudios Historicos, El Colegio de Mexico. Contact Information: El Colegio de México, Centro de Estudios Históricos, Camino al Ajusco 20, Pedregal de Sta. Teresa México, D.F., Mexico
agomez{at}fas.harvard.edu
grecio{at}alumni.ksg.harvard.edu
Revolutions have important social, political, and economic consequences with which entrepreneurs have to cope to keep their businesses going. This may involve high transaction costs due to the violence that emerges as a result of armed conflicts. In this article we examine the effect that the Mexican Revolution (1910-1920) had on the banking sector and ultimately on bank clients, since revolutionary policies forced most banks to close their doors from 1915 to 1921. By focusing on a major textile firm, the Compañía Industrial Veracruzana, S.A., we observe that companies used nonchartered banks, which spread in the absence of government regulation, and foreign financial institutions, so that daily business operations could continue amidst the revolutionary upheavals.
We would like to thank Gustavo del Angel, Ken Lipartito, and two anonymous referees for their comments on earlier versions. All errors are, of course, entirely ours.