In contrast to the popular fervor whipped up in response to the Los Pinos Massacre, very few Mexico City residents were particularly outraged by the San Lázaro Fire. After all, the Chamber of Deputies had never had any real power in the legislative process, and any debate that occurred within its walls was utterly irrelevant because the PRI majority invariably approved every Presidential edict put before it. Why should the Mexican people mourn a government building that not even the
government cared about? [1]
By far, those most affected by the San Lázaro Fire lived not in Mexico but in Manhattan. Glued to their television screens as the Mexican equivalent of Capitol Hill went up in smoke, thousands of horrified Wall Streeters let their imaginations run wild. Today, the legislature had burned to the ground. Tomorrow, the severed head of the President would be paraded around the city on a stick. Texas would fall to invasion within a week, and by next month, nuclear bombs would be falling on Philadelphia. And—most importantly—all of their investments south of the Rio Grande would disappear! At precisely 9:30 in the morning on Friday, September 16, 1988, thousands of anxious investors flooded through the doors of the New York Stock Exchange looking to get their money the hell out of Mexico as fast as humanly possible. By the time the markets closed at four that afternoon, Mexico had lost $953 million. Almost one billion dollars—enough to feed the entire population for a day—gone, vanished from the country in seven-and-a-half miserable hours. Worse, as investors frantically exchanged their pesos for dollars, Mexico's Central Bank was forced to spend almost one-sixth of its foreign reserves to protect the peso from a catastrophic collapse in value.
Traders on the floor of the New York Stock Exchange rush to pull their investments from Mexico on September 16, 1988.
President Miguel de la Madrid was horrified by this sudden outflux of currency. He knew that if the country kept losing capital at this rate, then the foreign reserve would quickly be depleted, there would be no way to curb inflation, the peso would fall off a cliff and the entire economy would come tumbling after. If a recession was to be avoided, de la Madrid would have to act, and he would have to act
now. Conferring with President-elect Salinas, de la Madrid formed a plan: on September 17 and 18, the markets would be closed for the weekend, and large-scale capital flight would cease momentarily. Those forty-eight hours were de la Madrid's chance to prove to the world that he was in complete control of his country, and for that, he would have to crack down on the riots with as much force as the Geneva Conventions allowed. On the night of September 16, de la Madrid announced that a temporary state of emergency had been declared in the Federal District (which comprised Mexico City), and that civilian rule would be “temporarily suspended until such time as order [could] been safely restored”.
The contrast between the night of the 16th and the morning of the 17th was whiplash-inducing. At the time of de la Madrid's declaration on the 16th, Mexico City was in open rebellion, both from groups protesting the Los Pinos Massacre and from
Cárdenistas heeding their beloved President's call to arms. The police were so overstretched that law enforcement had collapsed entirely in large parts of the city, leading to widespread looting and vicious street battles between
Cárdenistas and
priístas. Then, the Army was called in. Overnight, more than 30,000 troops arrived in the capital city, and the atmosphere changed completely. As dawn broke, stone-face soldiers and riot police marched in lockstep down every block. By Presidential order, anyone could be detained for "suspected involvement in terroristic activities", and police were using this pretext to corner, beat and arrest practically every passing pedestrian they could find. Anything resembling a public gathering was immediately attacked with teargas and rubber bullets. Those that surrendered were taken in custody, while those that ran were chased down, beaten, and
then taken into custody. By Saturday night the city had been purged of all activity, and by Sunday morning the city was as close as it had ever been to silent.
Because de la Madrid and Salinas were preoccupied with the markets, the task of managing the military occupation of Mexico City fell to the Secretary of the Government, Manuel Bartlett Díaz [2]. Bartlett was a staunch PRI hardliner who believed that the best way to deal with threats to the system was with physical force. He instructed the police and the Army to maintain order by any means necessary, and both groups immediately began exploiting this power for monetary gain. Walking down the street soon became an endless succession of arbitrary police "searches" that were really just state-sanctioned muggings, and as often as not, those who didn't have any cash to hand over were arrested as "terrorists" and held for days or weeks until their families could raise enough money for a bailout.
Police arrest a young man for taking part in an anti-government demonstration on September 26, 1988.
When they weren’t out committing crimes themselves, these “peacekeepers” were busy profiting off of someone else’s crime. Policemen would often look the other way as shops were looted in exchange for a cut of the takings, an enterprise which was so profitable for both the police and the looters that, in many neighborhoods, the heavy police presence ironically led to an
increase in crime rates.
The Army was getting in on the gravy train too. Secretary Bartlett gave mid-ranking officers the power to shut down any organization they deemed to be a “front for seditious activity”, which in practice became nothing more than a license for them to set up protection rackets in their corners of the city. As the weeks wore on, the police and the Army over which organization had jurisdiction over which section of the city, small but bloody skirmishes between soldiers and policemen became increasingly commonplace. As instances of particular brutality and impunity became public knowledge to the residents of the Federal District, fury and vengefulness began to build up and threatened to blow up once more into open resistance to government-imposed order.
By the end of September, Mexico City was consumed with fear and fury. Thousands of innocent individuals had disappeared into crowded holding cells based on nothing more than groundless "suspicions". The city's economy was paralyzed because millions of employed people were too frightened to come to work, and the few establishments that stayed open saw little business because, after two weeks of incessant police “searches”, no one was foolish enough to go outside with money in his pocket. Only the most fervently devout Catholics mustered up the courage to attend mass on Sunday the 25th, and the memorial service held that day for the victims of the San Lázaro Fire drew fewer attendees than had perished in the fire itself. Although the Federal District would remain under martial law long after 1988, the initial months were particularly unpleasant because the soldiers and policemen (believing that the “temporary” suspension of civil liberties actually would be temporary) worked to extort as much money as they could before their position of power was revoked. In his later writings on the Revolution, Enrique Krauze would refer to these first two months as
El Otoño Terrible: the “Autumn of Terrors”.
Worst of all, despite all of the blood that was being shed in the name of economic stability, de la Madrid’s and Salinas’s plan was failing. At first, world markets had responded positively to images of the nascent Mexican police state; only $115 million was removed from the country on Monday the 19th, a much more sustainable loss than that which Mexico had suffered after the San Lázaro Fire. But, rather than slowing to a halt as expected, the capital flight simply continued at a slower rate. Much of the fleeing capital belonged not to foreigners, but to wealthy Mexicans who sensed the kleptocratic mood in the capital and feared no less for their fortunes. And as they informed their friends in New York that tensions were bubbling just beneath the authoritarian surface, the nation continued to bleed capital at an alarmingly steady rate. As October neared, Mexico had expended nearly half its $6 billion foreign reserve just to keep the peso stabilized. As capital continued to stampede from country with end in sight and Mexico City at an economic standstill, the economy seemed increasingly likely to collapse once more into recession. Student groups from the National University began organizing protests that energized the sinking civic spirits of the people and pushed them to the brink of renewed rebellion. And when areas far away from the capital started experiencing upheavals of their own that further eroded investor confidence, de la Madrid and Salinas began desperately searching for some way—any way—to save the entire country from backsliding into economic catastrophe.
On October 2, 1988, their fateful attempt to blame juveniles for the crisis would seal the fate of Mexico.
__________
[1] This isn't an exaggeration—the government really didn't care much at all about the Palacio de San Lázaro. Case in point: after the building burned down in OTL 1989, it still had not been rebuilt eight years later (despite years of economic growth) because the government did not think it worth the expense to rebuild.
[2] This cabinet position, referred to in Spanish as
Secretario de Gobernación, is typically rendered in English as "Secretary of the Interior". But I prefer to use "Secretary of the Government", for two reasons: one, because the English word is closer to the corresponding Spanish word, and two, because while in America, the Secretary of the Interior is among the least important cabinet positions, the Mexican
Secretario de Gobernación is probably the most important post in the Mexican cabinet, dealing with matters of national and internal security, intelligence gathering and domestic affairs. Therefore, I feel "Secretary of the Government" is a better translation to use, and will use it henceforth in this project.
Oh, and that Manuel Bartlett Díaz guy? Remember him, because he's going to be important later.
