Ericsson's telephone operating company in Mexico City got off to a difficult start. Shortly after the establishment of Mexikanska Telefonaktiebolaget Ericsson (Mexeric) on January 1, 1909, two of the company's board members and most prominent instigators died. H T Cedergren, president of SAT, passed away in April and Ericsson's president Axel Boström three months later, in July.
In a letter to Ericsson's newly appointed president Hemming Johansson, dated September 19, 1909, Mexeric's president Erik Östlund raises several compensation issues that were still unresolved as a result of the deaths of the two board members. Between the lines, the writer's concern about the company's future can be discerned.
However, by the time the company's first year of operations had been concluded, the number of subscribers connected to the Mexeric network had more than doubled. Earlier concerns quickly gave way to jubilation.
But the euphoria was to be short-lived. Mexico itself was on the threshold of chaos. In 1911, the year that Mexeric's large Victoria telephone exchange was completed in central Mexico City, the country's president and dictator, Porfirio Diaz, was driven from power. This marked the beginning of a long and bloody civil war. For nearly ten years, various revolutionary factions fought against the country's conservative establishment and between themselves.
Sigfrid Mohlström, one of Östlund's closest colleagues, was assigned to try and remonstrate with Pancho Villa, later to become a legendary revolutionary figure. Since there was a scarcity of trees in the city and surrounding area, Villa and his men had taken to cutting the telephone lines in order to hang their opponents from the poles. Mohlström convinced Villa that it would be easier to remain informed about the activities of opponents through a functioning telephone system, so Villa promised to leave Mexico's telephone poles in peace.
Mohlström also led the workforce when the Victoria exchange came under fire from grenade launchers and other weapons during ten days of street fighting in 1913. One fatality was recorded when members of a patrol demanding admittance fired through the outer door of the exchange and the bullets struck and killed a Mexican employee. Despite extremely trying working conditions, the Mexican operators and repair personnel were able to keep the exchange running throughout the ten-day period.
The company's situation deteriorated even further when the First World War broke out in 1914. Maritime blockades created major difficulties in delivering telephone materials to Mexico.
The very difficult situation in the middle of the second decade of the 20th century impacted severely on the Mexeric workforce and abrasive relations developed between the employees. Erik Östlund's position now began to be challenged in certain quarters. In a report to the board in Sweden, Mexeric's technical director Helge Rost noted that in principle everything undertaken by Östlund was wrong. He claimed that Östlund "mismanaged the ongoing business", and was "inconsiderate in his treatment of customers". Sweden's consul-general in Mexico, Folke Cronholm, was influenced by these allegations and joined in the criticism being leveled at Östlund. In 1916, the board dispatched Oskar Grabe, an engineering expert, to Mexico to investigate the situation within the Mexican company.
Grabe found no grounds for the complaints made against Erik Östlund and reported that in his opinion the situation was solely due to "rumor-mongering". Shortly after Grabe's return to Sweden, Östlund found himself in jail. Due to the risk of inflation, Mexeric had rejected the banknotes printed by the Mexican government and was only prepared to accept coinage as payment. This was regarded as a criminal act by the regime of the time. Östlund was released after three days following pressure from consul-general Folke Cronholm and others. Cronholm was extremely unwilling to act as guardian angel and later wrote a sharply critical letter to Östlund following his release. In the letter, he noted that this was his "Final Warning" to Östlund.
But the Mexeric board voted the company president its full support and Cronholm's attitude toward Östlund led to his forced dismissal as consul-general. He was considered to have damaged Swedish business interests in Mexico. Another contributory factor was that Cronholm's principal superior, Sweden's Minister for Foreign Affairs, was at that time K A Wallenberg, half brother to Mexeric board member Marcus Wallenberg.
Despite difficult internal conflicts and the civil and world wars, Erik Östlund and his colleagues managed to increase the number of Mexeric subscribers during the 1910-1920 decade. At the beginning of 1910, after the first year of operations, the company had 3,781 subscribers. At year-end 1919, this figure had risen to 12,680. In fact, Mexeric showed an annual profit throughout the 1910s. Due to the constantly depreciating Mexican peso, profits were invested primarily in real estate - as well as in corn, rice and beans.
When peace was finally achieved in the civil war at the beginning of the 1920s, the future looked bright for Mexeric, but new problems lay just around the corner.